 "We expect Trai to be unbiased: C S Rao")
It has repeatedly said CDMA operators would need more spectrum for growth. The Telecom Regulatory Authority of India (Trai) suggests adoption of the extended GSM (EGSM) band, taking spectrum out of the existing 800 MHz CDMA band.
Yet, the Telecom Commission has asked Trai to give recommendations on valuation of the 800 MHz spectrum, that the government wants to auction in January. AUSPI president C S Rao speaks to Sounak Mitra on what CDMA operators believe they need for growth. Edited excerpts:
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Trai has said there is no need to auction the 800 MHz spectrum and the EGSM band should be adopted. It has also said the value of EGSM band spectrum would be three to four times more than that of the CDMA band. You have protested at adoption of the EGSM band. Do CDMA operators actually need more spectrum?
The proposed EGSM band is premature. There are many reasons and enough contiguous spectrum is also not available. The CDMA band in India, namely 824-849 MHz and 869-894 MHz, has a total of 25 MHz spectrum.
This 850 MHz CDMA band is also designated as a global FDD LTE frequency band. However, only 20 MHz of this is available for allocation in India to operators. For 4G (fourth-generation services) usage to be techno-commercially feasible, it is imperative to meet a primary prerequisite of having 5 MHz in contiguous mode.
Spectrum in the 925-935 MHz band is currently with the defence ministry, which it does not want to vacate. EGSM is also not possible because the device and equipment ecosystems are not ready; not only in India but even globally.
CDMA operators will be the ultimate losers if the EGSM band is adopted. It will block the growth path the CDMA operators. We need spectrum for growth. We expect Trai to be unbiased and do justice to CDMA operators as well.
Except Sistema Shyam Teleservices, no CDMA operator participated in the March auction, even after the reserve price was reduced. Also, Tata Teleservices has surrendered CDMA spectrum in some circles. If CDMA operators need spectrum, why did not they participate in the previous two auctions?
The government had auctioned 244 blocks of 1800 MHz GSM spectrum, of which 102 blocks were sold. This is about 41 per cent. In 900 MHz, 44 blocks were auctioned and not a single block was sold. On
the other hand, 76 blocks of 800 MHz CDMA spectrum was auctioned and 30 were sold. This is 39 per cent. So, the statement that there was no demand from operators for CDMA spectrum is baseless. The demand from GSM and CDMA operators were almost at the same level. This is an unfair argument. We are interested in participating in the upcoming auction, provided we get contiguous liberalised spectrum in the 800 MHz band.
How much spectrum do CDMA operators actually need?
Each operator would need a minimum of contiguous 5 MHz of liberalised spectrum. The fact is that the government does not have contiguous 5 MHz of spectrum in the 800 MHz band in most of the key or active circles. To be specific, 5 MHz of contiguous spectrum for two operators is available in only two circles, Jammu & Kashmir and the northeast.
Trai has also stated that the reason why CDMA operators are asking for a lower reserve price for the 800MHz spectrum is not that they would buy it. It would reduce their burden for the one-time fee that would be fixed, based on the market-determined price of spectrum.
The one-time fee is a convoluted statement. And, all the operators, both GSM and CDMA, have gone to court; the matter is pending. There has to be a clear road map of what will happen in the medium to long term, so that the operators can better plan for participation and acquisition of spectrum.
The government should clearly spell out and auction concurrently the type of spectrum band available, its quantum and pricing, so that operators get the flexibility to choose from the basket of spectrum offered to meet their business plans and utilise their cash flows in the most optimum manner. This would also bring credibility with lenders and foreign investors.
But if the government has decided not to have any reservation for GSM operators in the 900 MHz band, why should there be any reservation for CDMA players?
The rationale behind not reserving any spectrum for the 900 MHz band is different. This cannot be considered for the CDMA 800 MHz operators. CDMA operators’ licences would be due for renewal after seven to 20 years from now.
Also, in the NIA )Notice Inviting Applications), it was mentioned that the 900 MHz spectrum holders would need to buy the spectrum after 20 years, when their licences come up for renewal. 800 MHz is a harmonised CDMA band internationally. This is not a question of reservation.
The Telecom Commission has asked Trai to give its recommendations on the valuation of 800 MHz spectrum within 15 days. Have you given your suggestions on this?
No. We were not asked to give any. If they ask for our views, we will.
To determine the valuation of the 800 MHz CDMA spectrum, Trai needs to be fully aware of the market conditions. CDMA has better value and would always give better revenue as compared to that of the EGSM spectrum band. Valuation of spectrum depends on the device ecosystem, availability of spectrum and also global harmonisation.
Also, the 1800 MHz spectrum, currently used as a 2G GSM band, is a globally harmonised LTE (long-term evolution) band. But you can’t take 1800 MHz spectrum from 2G and use as a 4G band.
Then, what should be the process to determine valuation and price of the 800 MHz band spectrum?
The regulator should determine techno-commercial efficiency, depending of availability of spectrum. A greater part of the value of the spectrum actually comes from the market scenario and it depends on the readiness of the ecosystem. You have to see what is available today. Not what may happen after 20 years.
Trai, as the regulator, needs to consider globally approved spectrum valuation models. Considering all the factors, the 800 MHz pricing has to be relatively much lower than the 1800 and 900 bands, which also are much more popular for LTE. It is extremely unfair for the regulator to be not considering these global facts and known global models while arriving at the pricing for the 800 MHz band.
So, what should be the value of 800 MHz spectrum?
It should be priced lower than that of the 1800 MHz spectrum band. The EGoM had set the price of 800 MHz spectrum at 65 per cent of the 1800 MHz spectrum price during the March auction. It should be proposed to retain this ratio while deciding the reserve price of 800 MHz spectrum.