A big telecom battle quietly rages

Some things never change in India's fractious mobile telecommunications industry. Yes, global system for mobile (GSM) companies are in an eye-ball-to-eyeball confrontation once again with their code division multiple access (CDMA) rivals "� and the matter could be heading for the courts.

At the heart of the latest brouhaha is access to spectrum, or the airwaves that mobile phone users use to speak or send data to one another. Every mobile services company wants more spectrum.

For the uninitiated, GSM is the technology adopted by most Indian mobile service companies. CDMA, a proprietary technology promoted by the US-based Qualcomm, is used in India by Reliance Infocomm and Tata Teleservices.

Spectrum and the right frequency bands are crucial to mobile service companies and mobile phone users. If mobile service providers don't have adequate spectrum, the quality of service will dramatically drop. Handset users will be confronted with call drops, engaged tones and calls that don't connect at all.

Even more spectrum is required to transmit data (images, video and so on). So a mobile service company that has inadequate spectrum won't be able to attract new subscribers, to say the very least.

GSM service companies have been given two bands for their existing operations: 800 mhz and 1,800 mhz. Their CDMA rivals were allowed spectrum in the 900 mhz band and in the 1800 mhz band (which actually has not been allocated so far because frequency is available in 900 mhz).

The battle began when CDMA service companies petitioned the government seeking the 1,900 mhz band instead of the 1,800 mhz band for their existing 2G services.

One snag: in line with an International Telecommunication Union (ITU) recommendation, the government has reserved this band for 3G services, whether GSM or CDMA.

Against this backdrop, accusations and counter-accusations are now flying thick and fast.

1,800 mhz and 1,900 mhz

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The CDMA service companies' case

• 1,900 mhz is required because equipment for 1,800 mhz is either not freely available or is very expensive. Using 1,800 mhz would force them to jack up tariffs. So we'll lose ground. No handsets compatible with both the 800 mhz and 1800 mhz bands are manufactured. So subscriber roaming is out.
• Most countries (the US, Canada, China, Brazil) have earmarked 1,900 mhz for CDMA services, the exception being Korea where 1,800 mhz is used.
• ITU which has mandated 1900 mhz for 3G services does allow the band to be allocated to others. And we are willing to share the band with GSM service companies.
• We require a lot of spectrum to launch data applications through EVDO services. So 5 mhz is not sufficient spectrum.

The GSM service companies' case

• There's no shortage of equipment or handsets. Motorola, Lucent, Ericsson, Samsung, LG and Daewoo make equipment in the 1,800 band. Samsung, LG, Telson, Pantech and several others manufacture handsets that work on the 1800 band.
• Countries like China and Brazil are now reworking their frequency allocation plans to be in consonance with ITU's recommendations.
• Earmarking 1,900 mhz for CDMA service companies will block the migration of GSM companies to 3G. Says COAI director general T V Ramachandran: "3G equipment for GSM is available only on this band, nowhere else." The band can't be shared because the level of interference between the two would affect the quality of service.
• The licence agreement CDMA service companies signed while migrating to a unified licensing regime, from WLL to a fully mobile service, clearly states that CDMA companies will be given extra spectrum on 1,800 mhz. So offering them spectrum on 1,900 mhz violates the licensing agreement.

The GSM camp alleges that their CDMA counterparts are hell bent on torpedoing the proposed roll out of 3G services (which will make high speed data services available to subscribers) by GSM mobile service companies, and that they're trying to do this by grabbing spectrum reserved for them.

Says an agitated T V Ramachandran, director general of the Cellular Operators Association of India (COAI), which represents the interests of GSM service companies: "How can you deny 30 million mobile customers 3G services? That is grossly unfair."

Another argument advanced is that the licence agreement CDMA service companies signed while migrating to a unified licensing regime, from wireless in local loop to a fully mobile service, clearly states that CDMA companies will be given extra spectrum on 1,800 mhz. So offering them spectrum on 1,900 mhz violates the licensing agreement.

Exclaims a GSM cellular service company head: "It looks like dadagiri "� obey what you want, disobey what you don't like. They got away with it once, they are trying it again"

The CDMA camp retorts that the GSM mobile service companies are trying to scuttle the huge growth in the number of CDMA mobile service subscribers, by raising the spectrum bogey.

They say that the GSM lobby wants to make their business model unviable so that they cannot offer low tariffs by pushing for spectrum for which equipment is either not available or is so expensive that their operations will become unviable.

In essence, the GSM side argues that CDMA companies should stick to the 1,800 mhz band. But CDMA companies want the 1,900 mhz band "� reserved for 3G services "� because they say that equipment and handsets aren't available for the 1,800 mhz band, only Korea uses this band, and so their projects will become unviable if they're forced to stick to this band.

Vows S C Khanna, secretary general of the Association of Unified Telelcom Service Providers of India (AUSPI "� formerly called Association of Basic Telecom Operators), which represents the interests of basic service companies and CDMA mobile service companies: " The GSM lobby does not want us to grow at all. It wants to stifle competition by using spectrum as the weapon. And we will not let this happen."

With things getting out of hand, the Telecom Commission last week summoned both sides for a meeting. But little headway was made. At the tense one-hour-plus meeting, government officials made it plain to CDMA service companies that any fresh issue of spectrum would be linked to subscriber numbers "� something the CDMA side vehemently opposed.

It said that this was unfair "� the government should meet its commitment in the licence condition to provide each mobile service company with 5 Mhz of spectrum each. The CDMA camp also made it clear that it was peeved that the government had not consulted it "� GSM companies were consulted "� before formulating its policy on allotting new spectrum to CDMA mobile service companies.

For their part, members of the COAI demanded a level playing field between GSM and CDMA companies "� the strict conditions imposed on GSM companies (the number of towers they'd have to install, for example) for them to get fresh spectrum should be applicable to CDMA operators too.

The CDMA side agreed to meet again with government officials at the end of July to work out the basis for their being given additional spectrum.

As if this was not enough, the Telecom Regulatory Authority of India (TRAI) has been drawn into the bitter jousting. In May this year, the industry regulator released a consultation paper on the efficient use of spectrum in the future. While the government does not have to accept its recommendations on spectrum usage, TRAI sought the industry's views on its suggestions.

These started trickling in last week "� and they included a stinging criticism by COAI of the regulator. TRAI, the GSM side's representative association claimed, had exceeded its brief in the consultation paper.

In a terse note to the TRAI, COAI said that it was improper for the regulator to claim that CDMA was a more efficient technology. It said it disagreed and that it was not part of TRAI's mandate to judge which technology was better or worse.

COAI pointed out: "...It is not only outside the framework of reference, but also incorrect and improper to embark upon a comparative analysis of two technologies.....which has lead to erroneous conclusions."

Says a leading member of COAI: "TRAI is clearly favouring CDMA operators by offering them more spectrum and is biased against GSM. It has already made up its mind."

But TRAI took strong exception to the attack. Says a senior member of TRAI: "This is totally wrong. We have clearly said that the regulator will remain technology neutral but it will not price spectrum differently for similar services."

Both the CDMA and GSM camps won't budge from their respective positions. They privately concede that the matter might go to court. Says a top GSM company executive: "It's a life and death battle and is much bigger than the WLL- GSM imbroglio. And it will be decided in the courts."

Agrees a senior executive at a CDMA mobile services company: "I think they will go to court once the TRAI recommendations on spectrum management are announced. It suits them as they want to delay any decision about our spectrum allocation. They don't have a problem "� they have enough spectrum in the 1,800 band."

The action on the ground, meanwhile, is getting hotter. With the stakes high, Reliance Infocomm sent executives to Korea to get a first hand knowledge of the difficulties faced by Korean CDMA service companies that use a similar spectrum.

The CDMA camp is also flying down a senior Qualcomm executive for its meeting with the government in July end to explain to the government the key issues involved.

The CDMA side has got a shot in its arm because TRAI officials say that the key element they are looking at is whether equipment is available for a particular spectrum band and that there's no reason spectrum policy can't be changed if it is in subscribers' interests.

Yet the whole affair has a certain piquancy. Qualcomm has always said that CDMA's call carrying capacity is five times higher than that of a GSM network.

The GSM camp has seized on this and turned the argument on its head. A GSM company that starts operations gets 4.4 mhz of spectrum and in some cases 6. 2 mhz. Further allocation of spectrum is based on increases in the number of subscribers.

Says a senior COAI executive: "Going by Qualcomm's assessment, the 2.5 mhz that CDMA companies have been given is equivalent to 12.5 mhz. So they already have so much surplus spectrum."

Just how valid is this argument? Notes a senior executive at a US company that makes CDMA as well as GSM equipment: "I think the difference in spectrum efficiency is not as big as it is made out to be. In today's competitive world you cannot survive with such a difference anyway."

Whatever the case, COAI is pushing the government to find out whether mobile service companies that use CDMA technology have effectively utilised their spectrum.

Says a senior executive of a GSM services company: "Imagine, in Delhi we have put up 725 towers but CDMA companies have not put up more than 350 for a similar number of subscribers. In our case the government looked at all these issues before giving us fresh spectrum. Why doesn't it do the same for CDMA companies?"

Indeed, GSM companies claim that their CDMA rivals are wary about disclosing subscriber numbers because these will suggest that they don't have enough towers and that they don't need more spectrum.

That is why, they say, CDMA service companies are objecting to the recommendations of a committee set up by the Telecom Commission which linked subscriber numbers with the issue of fresh spectrum.

The committee submitted an internal report which suggested that an additional 1.5 mhz would be released in category A circles when the number of subscribers touches 7 lakh and another 1.5 mhz when it hits 14 lakh. Similarly, the threshold subscriber limit in metros would be 4 lakh and 8 lakh; in category B circles it would be 5 lakh and 10 lakh.

CDMA companies, however, maintain that the argument is flawed. They say that CDMA is more spectrum efficient technology "� but only if a minimum amount of spectrum, namely, 10 mhz, is given. Says Khanna: "If you give us 2.5 mhz, we can't have similar efficiency."

Secondly, they say that one CDMA company has put up over 440 tower sites in Delhi with only 3.75 mhz of spectrum allotted to it. "With 5 mhz, it will put up more than 600 sites. So you have to compare apples with apples," says a CDMA company executive.

Thirdly, AUSPI asks why it has to justify to COAI its fresh spectrum requirement. In the earlier limited mobility regime, the number of subscriber s was not the criterion for getting more spectrum, except in the metropolitan cities; new spectrum allocation was based on rollout obligations.

Companies like Reliance Infocomm have already completed their roll out obligations in many circles. So they should have got up to 5 mhz of spectrum but are stuck with less.

CDMA companies argue that three years after spectrum was allotted to them, the criterion for spectrum allocation is suddenly and unfairly being changed to the number of subscribers and towers.

"If we knew that this would be the criterion, we should have been told earlier so that we could have planned our network differently and would not have made such large investments in achieving rollout obligations," observes a CDMA company executive.

Some CDMA service companies say that they have no objection to the government proposal to link fresh spectrum allocation with subscriber numbers.

But this should be done after a level playing field is ensured "� if GSM service companies get 4.4 mhz while starting operations, CDMA service companies should be given the same spectrum and not asked to give their subscriber numbers and towers.

TRAI is veering around to the view that the number of subscribers is not the best way to earmark scarce resources like spectrum. It is essential to measure how efficiently spectrum is being used before more spectrum is granted.

Says a TRAI official: "Auctioning spectrum, which has happened globally, is the best way of giving fresh spectrum. But there is always a chance that operators will overbid, as happened in Europe for 3G spectrum."

As the arguments rage, only one thing is certain "� more fireworks will burst in the coming months.