The guidelines for spectrum sharing, cleared by the Union Cabinet some days ago, are unlikely to fix the problem of poor connectivity - and its consequences, like a lack of data service and dropped calls. Certainly, spectrum sharing is a step in the right direction. Allowing the sharing of this scarce resource would have gone a long way in ensuring improvement in services. But the restrictions that have been imposed will make any meaningful sharing difficult.
The problem is that there are two types of spectrum with companies: the legacy spectrum which had been allocated in the past at a fixed price and the spectrum which has, more recently, been auctioned. The guidelines say that those that have been allocated spectrum and those that have acquired spectrum in auctions can share spectrum freely within each group. But restrictions come into place when allocated spectrum is shared with a company that has bought spectrum at market price. The guidelines say that in such a scenario, the company that wants to share its spectrum has to first pay to the government the difference with the market price of that spectrum. This will entail a financial burden on the company that wants to share its idle spectrum. It is safe to assume that such a company will be one of the smaller players, and will not have the wherewithal to cough up this money. This problem will go away only when allocated spectrum is fully replaced by auctioned spectrum, which will take several years. For calculating the spectrum user charge, half of the partner's spectrum will be added to each company's spectrum. If both the partners have the same amount of spectrum, the additional burden will be the same. Otherwise, it will be unequally distributed. For example, if one has 5 MHz and the other has 10 MHz, they will be charged for 10 MHz and 12.5 MHz, respectively, if they choose to share spectrum. Also, an additional spectrum user charge of 0.5 per cent has been imposed on all shared spectrum.
With these restrictions in place, telecom companies are unlikely to go for spectrum sharing in a big way. Analysts have given a thumbs-down to the guidelines, saying they're not going to change the game. Many in the telecom industry had expected spectrum trading guidelines to be announced along with those on spectrum sharing. For the consumer, this means that the problem of dropped calls and slow internet will persist.
All eyes are now on the government: when will it come out with guidelines for spectrum trading? Here, again, the government needs to take a pragmatic view of things. The Telecom Regulatory Authority of India had said that all revenue from spectrum trading should be counted as a company's adjusted gross revenue, on which spectrum user charge will be levied. The companies contest this, saying it amounts to collecting spectrum user charge twice on the same spectrum. Instead, they have said that the charge only be levied on the profit that a company makes while trading its spectrum. While deciding on this, the government should be guided by the impact on service quality as well as on its revenue.
