RComm edges out GSM operators in spectrum race

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A day after the Department of Telecom allowed crossover from one technology to another, it has adopted stricter norms for spectrum allocation. These two changes have enabled Reliance Communication , a CDMA player to edge out GSM operators like Bharti Airtel and Vodafone in the race for spectrum, but with a big catch.

 

GSM operators like Bharti and Vodafone who have long been opposing auction of 2G spectrum and wanted allocation according to number of subscribers, find themselves being upstaged by a player using rival CDMA technology:  Reliance Communications. This is because the Department of Telecom has accepted the telecom regulator's advice making existing players ineligible for additional spectrum if they fail to use the spectrum they have much more efficiently.

 

A day after telecom minister Andimuthu Raja allowed cross over from CDMA to GSM, RCom deposited the entry fee of Rs 1600 crore which entitles it to minimum 4 mhz of spectrum per circle as a new GSM player. RCom is the largest CDMA player in the country and had a universal license before the cross over was allowed.

 

The new norms make it virtually impossible for any existing GSM player to get spectrum in the circles they are operating in. For instance, where earlier, a GSM operator in Chennai was eligible for 10 mhz of spectrum on acquiring 6 lakh subs, they now need 2 million subscribers.

 

Before the criteria was changed, RCOM would have got GSM spectrum in only half of the 15 circles that it has applied for. Now it gains in all circles.

That's because the share of spectrum that would have otherwise gone to existing players can now be allocated to RCom. 

 

Had the allocation criteria not been changed, new players would have got only a fourth of the spectrum in category A circles like Maharasthra, Gujarat etc. The story is the same in Category B and C circles where much more spectrum has become surplus. This revised criteria also enables some of the new applicants like real estate players Parsvnath and Unitech to get spectrum in a few circles.

 

But there is a big catch. RCom and others new players will get the spectrum only if the defence ministry keeps to its promise and vacates spectrum. If that does not happen, or if it delays, Bharti  Airtel will remain the top dog considering that is adding  2 million subs every month.