COAI bends to end spectrum row

GSM lobby says it is open to auctioning frequencies beyond 10MHz.

In a strategic climb-down, key members of the Cellular Operators Association of India (COAI) have come to a consensus that they are willing to go for open auction of spectrum for second-generation (2G) services beyond 10 MHz.

This might bring the curtain down on several months of controversy over the issue of pricing spectrum, the radio frequencies that enable wireless communications, to incumbents facing rapidly expanding subscriber bases.

Till today, COAI, the lobby representing mobile service providers offering GSM technology, had vehemently opposed the auction route for 2G spectrum.

2G services refer to the current level of services. 3G services, which are yet to be introduced, provide high-speed internet access for customers.

COAI had earlier asserted that the government should continue to provide additional spectrum to GSM players, which account for more than two-thirds of service providers in the country, up to 15 MHz linked to a minimum subscriber criterion. The government had committed to this some years ago.

The COAI climb-down could help the Department of Telecom (DoT) come out with a solution to the contentious issue of spectrum pricing. Auctioning means that the minimum subscriber criterion to qualify for additional spectrum can be scrapped.

The subscriber criterion had become a contentious issue after a government body suggested a hefty increase in the minimum qualifying norm by four to 12 times for additional spectrum. The norms suggested were higher than what the telecom regulator had recommended.

This would have ruled out virtually all the incumbent GSM operators. COAI has already appealed against the issue to the telecom tribunal.

Today's move by COAI members goes much beyond the telecom regulator's recommendation that operators should pay a one-time charge on allotment of spectrum beyond 10 MHz.

The regulator had suggested that operators should pay Rs 80 crore for the Delhi, Mumbai and A circles for 5 MHz of additional spectrum, Rs 40 crore for the Kolkata and category B circles and Rs 150 crore for C circles.

As things stand, many of incumbent GSM operators have already received up to 10 MHz of spectrum from the government. These include Bharti and Vodafone in Delhi, BPL and Vodafone in Mumbai, Idea Cellular in Maharashtra, Bharti in Karnataka and Aircel in Tamil Nadu.

In other service areas, operators that have received spectrum close to 10 MHz include Bharti in Mumbai (9.20 MHz), Vodafone in Kolkata (9.80 MHz) and Gujarat (9.80 MHz).

All these players have applied or will require additional allocation of spectrum based on the current subscriber criterion.

Confronted with strong opposition from the GSM lobby, DoT had decided to set up another committee to re-examine the matter.

Today's softening of stance comes against recent moves by COAI to challenge several recent government decisions before the telecom tribunal.

The two principal cases centre on dual-use technology (GSM or CDMA) on the same licence and the subscriber base criterion suggested by the regulator. COAI is also considering going to court on allowing new players to enter 3G spectrum auctioning.