 "Telcos allowed to liberalise 800 & 1,800 MHz")
The move is expected to benefit the spectrum sharing arrangement planned between Anil Ambani’s Reliance Communications (RCom) and Mukesh Ambani’s Reliance Jio, to offer fourth-generation (4G) services pan-India.
RCom has already applied to the department of telecommunications (DoT) for liberalising its 800 MHz spectrum in seven of the country's 22 telecom circles and will soon apply for liberalisation of this frequency in another 10 circles, according to people in the know. This could mean a payout of about Rs 2,000 crore from its kitty. The move will also help other entities such as Tata Teleservices to liberalise their spectrum and share/trade with other operators.
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RCom and Tata Tele are the main holders of 800 MHz spectrum. Sistema (MTS), a pure-play CDMA operator, has liberalised 800 MHz.
RJio acquired liberalised 800 MHz spectrum in 10 of the 22 circles. It holds 1,800 MHz and 2,300 MHz spectrum but needs 800 MHz to offer better connectivity. Also, with announcement of the RCom and Sistema merger, another nine circles with liberalized 800 MHz has come.
RJio can trade/share 800 MHz spectrum in most circles (where it does not hold this frequency) and offer 4G services pan-India with better connectivity/coverage.
The government has recently allowed spectrum sharing and trading between operators. After liberalisation, operators are allowed, as mentioned earlier, to deploy any technology with the spectrum but have to pay the market price discovered in the latest auction of the past year.
The latest auction-determined price on the spectrum to be liberalised is of March 2015. If the auction price is more than a year old, the prevailing market rate would be determined by indexing the latest auction price to that prime lending rate of State Bank of India, say the guidelines.
“Existing CMTS/UAS/UL with access service authorisation licensees may liberalise their entire administratively allotted spectrum holding in 800 MHz and 1,800 MHz band in a service area for the balance validity period of right to use spectrum," went the guidelines.
“Administratively allocated spectrum in the 800 MHz and 1,800 MHz bands refers to the spectrum allotted prior to auction of right to use spectrum in November 2012.”
Over the past few months, the GSM operators association, COAI, and RCom-RJio have been clashing on the issue of 800 MHz. COAI in September had written to telecom minister Ravi Shankar Prasad and telecom secretary Rakesh Garg to increase the price for liberalisation of 800 MHz and not link it with the latest auction of March 2015.
It said in circles where less than five MHz of the 800 MHz bnad was sold, not enough to offer 4G services, the auction-winning price couldn't be taken as the market-linked one.
COAI also asked the government to reduce the spectrum cap an operator could hold in the 800 MHz frequency.
RCom and RJio had said if COAI’s proposal was accepted, it would mean retrospective change in the auction process, and that the spectrum cap was fixed in the merger and acquisition rules.
DoT had earlier raised a demand for one-time spectrum charges (OTSC) on incumbent telecom operators, cumulatively amounting to Rs 31,000 crore, for those interested in liberalising the spectrum held by them. The companies have challenged this in various courts, where it is pending.
To liberalise their spectrum, the companies would have to give a bank guarantee equal to the OTSC amount demanded by the government till the matter is decided by the courts, the guidelines add. The spectrum will be liberalised for the remaining period of their right to use, as in the licence terms. An operator must pay the auction-determined price pro rated for the balance validity period.
Telecom companies will be required to make payment within 30 days from the date a demand note is issued to them. Also, they will have to apply in writing, with a non-refundable fee of Rs 50,000.