 "Govt to auction 700 MHz with swap option to 4G operators on 2300 MHz band")
Reliance Industries, Bharti Airtel, Aircel and Tikona Digital are among the big boys who had won 20 MHz of spectrum each circle in the 2300 MHZ band to offer 4G services. Bharti has already launched services in a few cities, while RIL is expected to make an announcement sometimes in June this year.
These companies together forked out over Rs 38,543 crore for three blocks (including BSNL) of spectrum out which RIL’s subsidiary forked out over Rs 12,847 crore for pan India operations. Under the swap scheme this money will be adjusted with the value of spectrum which they win in the 700 Mhz band. The modalities of how much spectrum they can swap are still under consultation.
Telecom companies say that the 700 MHz band is one of the most efficient spectral bands, which require half the number of towers in giving the same quality of service compared to 2300 Mhz. It also means a substantial reduction in the capital investment required for a roll out.
Also an eco-system is already in place with globally many countries like the US (AT&T Mobility, Verizon), Latin America, Australia amongst others setting up 700 MHz spectrum band based LTE networks. As a result there are already over 284 4G devices which currently work on 700 MHz spectrum. Just a month ago AT&T Mobility forked out over US $ 1.9 billion to buy extra 700 MHz spectrum from Verizon.
However the Dot official said they are considering the TRAI recommendation which has said that it will be priced four times of the base price of 1800 MHz Many telecom experts say that at this high price, the swap option might not look attractive as it would effectively mean that the base price for 5MHZ of 700 MHZ would be a staggering Rs 47,508 for pan India operations-more than ten times of what they have forked out for an equivalent amount of spectrum in 2300 Mhz. That would virtually neutralize the lower investment required and the advantages of higher spectral efficiency.
As part of the plan which is being worked on about 90 MHz of spectrum will be available in this band for auction. The government is looking at offering at least up to 10 MHz in each circle in eight blocks with no restriction on operators on the number of blocks they want to bid for. I.
A top DoT official said: “We are looking at an auction of 700 MHz in first half of 2014-15. About 90-100 MHz would be auctioned in the band. Most likely 2X45 MHz to be auctioned while; 10MHz will be kept in between as guard band. We may consider possibility of allowing operators to swap spectrum under the 2300MHz band with 700MHz.”
The limit however for an operator in terms of acquisition of spectrum in this band will be 50 per cent of the spectrum assigned in the respective service area and 25 per cent of the total spectrum assigned in all bands in all service areas put together.
As part of the plan a large part of the spectrum in this band which is used by analog and digital broadcasting services will be shifted to a new band.
Highlights:
DOT to auction 700 MHZ spectrum with a “swap option” to operators providing 4G services on 2300 MHZ band
About 90 MHZ of spectrum would be available for auction
Government looking at auctioning up to 10 MHz each circle in the initial phase
TRAI has recommended its base price to be four times that of 1800 MHz
Ecosystem of devices as well as network equipment in 700 MHZ already available