The next big telecom battle is set to happen in the 900 MHz band, with the Telecom Regulatory Authority of India's recommendations ending the monopoly over this efficient spectrum among just a few operators such as Bharti Airtel
, Vodafone, Loop and state-owned MTNL
Trai has rejected a demand by incumbent GSM operators that at least 2.5 MHz in the 900 MHz band be reserved for them. Currently, there are only three operators in these circles with 900 MHz spectrum. With its recommendations, the regulator has opened the doors of competition to more and newer entities. Reliance
Jio, Videocon and even Telewings are expected to join the battle when the licences are due for renewal from next year.
The incumbent GSM operators are, however, pushing the government to open another 10 MHz in the 800 MHz band, which was meant for future growth of CDMA entities, on the auction table for them. This would increase the total availability of spectrum in what is considered to be more efficient bands by the telecom industry.
The battle between operators to grab more spectrum in the 900 MHz band is because it is at least 1.5 times more efficient than the 1,800 MHz band, which means lower capital expenditure and operational cost. By Trai's own calculation, using this band leads to a saving in capex costs by 40 per cent and of overall costs by 30 per cent when compared to the 2,100 MHz band. This band is being used by Reliance Jio to offer fourth generation (4G) services. However, globally, the 900 Mhz band is used to offer both 3G (third generation) and 4G services, rather than voice. So, control over this spectrum gives telcos a major edge in the market.
Says Arvind Bali, chief executive officer of Videocon Telecommunications: "Yes, surely we are looking into 900 MHz, as we can offer 4G services on it and it is more efficient." Those in the know say Reliance Jio, which is using the 2,100 band for 4G, which requires nearly three times more towers and has issues of penetration in homes and offices, would surely prefer to also go for a more cost-effective and efficient spectrum. Especially as these three markets, especially Mumbai and Kolkata, constitute a major part of the high-speed data revenues which 4G will offer.
Currently, there is 22 MHz of spectrum available in the 900 MHz band, all in use. Trai has said each player has to bid for a minimum of 5 MHz but could go higher. So, there is just about enough spectrum available for four players. Currently, in the three cities of Delhi, Mumbai and Kolkata, the spectrum is controlled by two private operators, apart from BSNL/MTNL.
But Bharti and Vodafone already have 8 MHz spectrum in Delhi, andVodafone and Loop have a similar amount in Mumbai. In Kolkata, Bharti has 6.2 MHz of spectrum, while Vodafone has 7.8 MHz. Both companies will fiercely compete to retain the spectrum they have. Also, MTNL and BSNL, which have 6.2 MHz, will continue to maintain their existing allocation of spectrum in the three cities. In that case, the action can accommodate only three players. But with at least two to three new ones expected to join the battle, the auction price could got up steeply, despite the 60 per cent reduction in the base price recommended by Trai.
Aware that the battle could be bitter, GSM operators want part of the 800 MHz band (between 880-890 MHz), meant for ensuring the growth of CDMA prvoders. This would bring an additional 10 MHz to the table. Again, the spectrum is far more efficient than 1,800 MHz, whether used for voice or 4G services. In case this band is also available, about 32 MHz of spectrum will be there (combining 900 and 800) for auctioning. This should not only be enough for the incumbents to increase their allocation beyond the 8 MHz they have at present but not be a worry for them if a fourth player comes in.