Telecom firms frown at spectrum refarming

The government’s proposed solution to end the wrangling among telecom companies over scarce spectrum is refarming, but in its current form that could backfire, driving up operational costs and directly hit operator profitability.

The idea of spectrum refarming was first mooted by the Telecom Regulatory Authority of India (TRAI) in 2010 and has since then captured the imagination of the Department of Telecom (DoT), which has reportedly included it in the draft Spectrum Bill likely to be released soon for public consultation.

The telecom regulatory body, in its recommendation, has proposed refarming of 900 megahertz (MHz) spectrum when operators’ licenses come up for renewal between 2014 and 2025.

However, the suggestion is not going down well with the telcos, who believe it will involve huge costs and would disrupt services.
They say, it would also be challenging to move subscribers from a “fully functional” network to a new one.

“It (spectrum refarming) is unviable and would be a big challenge. As of now, there is no clarity on how they (the government) will take back a running spectrum. That is bound to have impact on our operations. Investment already made by us on developing a network will go waste and we will have to make fresh investment in new spectrum,” said a senior executive with Vodafone, who did not want to be named.

According to him, any refarming of spectrum should be considered only when there was a “good and robust reason” for it. “It should be introduced only after a thorough study of its impact on consumers, operators and investment.”

Another executive with a leading teleco said since local operators were running their services on lower spectrum, which worked on tight technology architecture, it would prove to be expensive proposition for them.

“It (spectrum refarming) should be done in cases where spectrum was being underutilised, used inefficiently or being hoarded. So, if I am holding some spectrum and am not using it then it should be taken back,” he said.

Many believe if the Spectrum Bill came through, state-owned telecom firms BSNL and MTNL would be most affected as they own huge amount of spectrum that is lying idle. “They (BSNL and MTNL) are sitting on huge quantum of spectrum when many of the newer players were starved for spectrum. Since spectrum, like other resources, does not deplete it can be refarmed,” he said.