Ind-Ra: Spectrum Sharing a Shot in the Arm for Small Players; to Enhance 3G, 4G Services

Spectrum sharing among telecom operators will benefit large players in terms of spectral efficiencies and small players in terms of advanced mobile technologies and thus is a positive for the sector and customers, says India Rating and Research (Ind-Ra). Operators however would need to strike a balance between the costs of sharing (0.5% increase in spectrum usage charges) and the benefits derived from spectrum sharing. Disallowing spectrum leasing and a lack of clarity around trading norms at this point are negatives since many small players are cash strapped, which otherwise could have helped monetize underutilized spectrum holdings.

Sharing will be economically viable for both large and small players. Two large players can come together to address the issue of network congestion. Small players without enough spectrum (less than 5MHz) can provide advanced mobile technologies namely 3G/4G. Sharing will also benefit players looking for additional spectrum to augment their current holdings. However, the sharing of liberalised/auction allocated spectrum with administratively allocated spectrum is a roadblock. An operator needs to pay one-time spectrum charges to liberalise his administratively allocated spectrum block.

 

Sharing of spectrum is applicable on the entire spectrum holding of sharing parties across the whole licensed service area (LSA). Thus, operators cannot selectively choose cities or regions within an LSA to share spectrum. Also, spectrum usage charges are to be paid for the entire LSA's adjusted gross revenue.

Contiguity of shared spectrum is of utmost importance. Contiguity is essential to provide high-end technologies such as 3G and 4G. Even if operators want to share spectrum holding, the lack of contiguous blocks will cause the whole idea behind sharing to fail. Department of Telecom needs to take steps to re-farm spectrum holding to provide contiguous blocks as much as possible.

Disallowing spectrum leasing means that operators that were hoping to monetize their underutilized spectrum holdings cannot do so. Operators can pool their spectrum holding for a common use, and cannot lease out additional/unutilized spectrum held by them. Not allowing efficient allocation of a scarce resource is a negative for the industry.

There are a number of permutations that can be worked out to combine the current fragmented spectrum holding of operators to derive benefits. However, the operators would make decisions considering the 0.5% increase in spectrum usage charges and the competitive scenario. Some of the possible ties for spectrum sharing are as below:

- Bihar: Bharti Airtel holds 3MHz, Aircel Limited holds 3.8MHz and Tata Teleservices Limited holds 4.4MHz in the 1,800MHz band. If any two operators combine their holding, they can provide 4G services utilizing the 1,800MHz band.

- Delhi: Aircel holds 4.4MHz and Reliance Communications Limited holds 4.4MHz in the 1,800MHz band. Together they can provide 4G services.

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