Call drops may become fewer and consolidation moves among telecom companies get a fillip as the telecom department has given its final clearance to long-awaited rules on sharing and trading of airwaves.
"We have finalised the view on spectrum sharing and trading guidelines. We will try to send the norms to the Cabinet by the end of this month," Telecom Secretary Rakesh Garg said on Thursday after a meeting of the Telecom Commission, the highest decisionmaking body of the telecom depart ment.
To become operative, the rules still need Cabinet's approval, but getting that is unlikely to be problem. Trading allows operators to sell airwaves that they aren't utilising, offering an exit route for struggling operators. Through sharing, operators can pool in their spectrum resources to create a larger bank and each partner can use the airwaves from the pool as per its needs.
Both moves provide another avenue for stronger operators such as Bharti Airtel, Vodafone India and Idea Cellular to beef up their bandwidth holdings, without having to buy airwaves though expensive auctions.
Others like Reliance Communications, Tata Teleservices and Aircel will get a way to trade or share their underutilised bandwidth. For smaller players, such as the local units of Norwegian firm Telenor and Russian firm Sistema, which have been clamouring for these rules, these proposed norms offer an option to expand their now-stunted operations.
For consumers, this could mean better quality of voice services and faster data speeds, as sharing could reduce traffic congestion on the network. Telcos have often cited lack of airwaves amid increasing voice traffic as the main reason for rising call drops. And, as sharing of spectrum could allow operators to cut down on capital expenditure, they could pass on the benefit to subscribers through lower tariffs.
Garg declined to share the details of the guidelines, but a person familiar with the matter said that they are broadly the same as those recommended by the Telecom Regulatory Authority of India (Trai) last year.
"This is clearly in the right direction of providing adequate spectrum to a spectrum-starved industry," said Rajan Mathews, director-general of the Cellular Operators Association of India, a lobby group of GSM companies. The rules provide an "exit option" for some companies who want to monetise their spectrum assets, he said.
Finalisation of these guidelines "is a positive step towards efficient utilisation of spectrum. We hope that the Union Cabinet will come out with a relaxed norms soon, which is very important in a spectrum-starved nation like India," Uninor, the local unit of Telenor, said in a statement. "However, we will await details to evaluate the effect."
A Sistema Shyam spokesperson said "clarity on spectrum sharing and trading policy is bound to act as a catalyst in the consolidation process".
Analysts said spectrum sharing would allow telcos to aggregate spectrum which was split up between many operators at present and also allow them to gather contiguous spectrum, which is essential for offering 3G and 4G services. Fourth-generation services can't be offered without at least 5 Mhz of continuous airwaves.
"It will be a boon for the Industry, which will ultimately benefit the end consumer through better services," said Hemant Joshi, partner at Deloitte Haskins & Sells.
As per Trai recommendations, telcos will be able to share spectrum acquired through trading. It had also suggested allowing two telcos to share any category - 2G, 3G or 4G - of similar spectrum in a circle, including airwaves allotted through government-set prices before the current auction process started. However, it didn't recommend sharing by internet service providers.
In case where the spectrum is allotted at administrative or government-decided prices, sharing will be permitted only for those services which can be provided through the administratively allocated spectrum. This anomaly will fade away with continuing auctions, Mathews said.
The regulator had also suggested that operators be allowed to sell the spectrum through trading only after two years from the date of its acquisition. Administratively assigned spectrum can be converted to tradable spectrum after paying a prescribed market value.
The regulator had maintained that post sharing, spectrum usage charge rate of each of the licencees shall increase by 0.5% of adjusted gross revenue (AGR) of wireless services.
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