Experts want clarity on spectrum pricing

Kapil Sibal's new telecom policy hasn't been greeted with any unanimity in the fractious industry. Even those who have issued words of commendation have been selective at what they've found to be better.

The policy was announced yesterday, changing the rules on issue of licences and spectrum, besides mergers and acquisitions (M&As). They delink spectrum allocation from licence issue, institute a uniform licence fee, cap the spectrum that can be given to any applicant and how this would change with an M&A, and define how the 10-year licences issued in 1994 would be renewed. And, clarify when spectrum may be shared.

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Among the major incumbents, Bharti Airtel and Vodafone welcomed the idea of a uniform fee across licences and areas. Bharti said it was "a welcome step". Vodafone added a word of praise for the delinking of spectrum with licence issue. Though Bharti said the guideline "would benefit the sector immensely in the long run", it didn't expand much on the theme, asking instead for a reduction in the uniform licence fee.

Rajan Mathews, director-general of the Cellular Operators Association of India, said he didn't see "any rationale" for a uniform licence fee of eight per cent or the fact that it would have to be renewed after 10 years. "Telecom was," he scolded, "an investment-heavy sector and we had recommended 20 years (for a licence term)", which Sibal had chosen to ignore.

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As for the government decision to keep away, for now, on the pricing of excess spectrum in the wake of the Supreme Court telling the Telecom Regulatory Authority of India to first work on related guidelines, the government was again rapped. "We are expected to surrender excess spectrum on renewal but the terms are not clear. Even the pricing of the spectrum we can retain at the prescribed limit (2x8 MHz for GSM players and 2x5 MHz for CDMA players, apart from the Delhi and Mumbai circles) has not been revealed," said an executive of one of the companies. Agreed another: "The pricing of spectrum was an important decision and has again been kept vague. This is bound to impact all the plans of operators, adding "the proposals that have been announced are a repetition of the earlier views of the government".

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Sector analysts tended to agree on these and other perceived minuses. "Spectrum should have been shared in all technologies for optimum utilisation," said Hemant Joshi, partner, Deloitte, Haskins and Sells. "Final clarity will emerge only when the full modalities are announced. There are so many 'ifs and buts' currently."

However, he conceded, "The announcements are in the right direction. But, there is still no clarity on pricing and auction of spectrum." Apart, he noted, one type of spectrum 2G, can be shared, subject to conditions, while 3G cannot. Underlining the point about key ambiguities still unresolved.