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Mobile service operators may find it tougher and considerably more expensive to access spectrum, the radio frequencies that enable wireless communications, from the government if the expected recommendations of the Telecom Engineering Centre are accepted.
TEC, the technical arm of the Department of Telecommunications, is planning to recommend a steep increase in spectrum usage charges for GSM mobile service providers that seek additional spectrum beyond 6.2 MHz and raised the bar on access.
TEC is likely to recommend an annual additional usage charge that will have to be paid on a per megahertz basis by all operators using spectrum beyond the 6.2 MHz cut-off.
Spectrum usage charges refer to the proportion of annual gross revenue an operator shares with the government.
TEC's upcoming proposals are in response to DoT asking it to examine Telecom Regulatory Authority of India recommendations on the subject.
Significantly, in order to improve spectral efficiency, TEC is also likely to recommend the government allow low-power GSM spectrum (3.3 MHz) for in-building networks.
As 60 per cent of calls are made within building premises, this will lead to a major saving in spectrum for operators. TEC feels that this will suit the many real estate companies who have applied for mobile licenses.
TEC has also gone well beyond Trai's recommendation on hiking the minimum subscriber norms that entitle operators to get additional spectrum and virtually doubled the requirement in most circles.
For instance, while Trai had recommended enhancing the subscriber number for additional allocation in Mumbai to 2 million for 10 MHz, TEC has upped it to 5.8 million.
If these expected norms are accepted by DoT, virtually none of the existing operators will be entitled to additional spectrum beyond 10 MHz.
The issue of spectrum allocation has become complex and a source of litigation since mobile operators need more of it to cope with the unprecedented increase in users -- roughly 6 million mobile customers are added each month in India.
Meanwhile, DoT is waiting for the defence ministry to release spectrum for operators, some of whom have been in queue since December 2006.
The shortage will be compounded once new licenses are issued -- the government is currently evaluating the applications of 46 companies.
If TEC's recommendations are accepted, operators of GSM services, which account for 75 per cent of mobile services in India, will see a significant increase in their payouts to the government. The recommendations for CDMA players are awaited.
"This will kill the industry. You just want to finish off an industry that is growing," claimed T V Ramachandran, secretary-general, Cellular Operators Association of India, the GSM lobby.
Ramchandran added the increase in minimum subscriber numbers by 800 per cent made it clear that "the objective of the report is not spectral efficiency, but spectrum deficiency for GSM operators".
Justifying its stand, TEC has said that increasing spectrum user charges cannot be challenged in court since they are DoT's prerogative. It has also said the net profits of major mobile operators -- who have maximum spectrum -- are Rs 300-400 crore a month.
TEC has also made it difficult for companies like Reliance Communications, which has opted to offer GSM and CDMA operations on the same license to get additional spectrum, beyond what it has at the moment.
That is because TEC has rejected Trai's recommendation of removing the cumulative spectrum cap of 10 MHz (for operators of GSM and CDMA networks).
Since RCom has already been given 5 MHz of spectrum in some circles, and will be entitled to another 4.4 MHz for its GSM operations, it has virtually no scope to get additional spectrum.
The 10 MHz cap also contradicts COAI's contention that the government is entitled to give them spectrum up to 15 MHz based on existing policies.
TEC has also rejected Trai's suggestion that the 10 per cent limit on cross-holdings between operators in the same service area be removed.
