The telecom overhaul

The Asian Age, February 02, 2016

A couple of months back came the government’s “eureka” moment when it agreed on spectrum sharing and trading between telecom operators. Telecommunications fireworks have since shown no symptoms of stopping. The department of telecommunications (DoT) is planning a massive spectrum auction in June this year and has even gone beyond, urging the International Telecommunications Union (ITU) to identify additional usable spectrum bands for 3G and 4G services. So basically, the government has gone all out to put to bed the issue of spectrum scarcity.

For mobile services with persistent issues of call drops, poor Internet and bad reception, the operators had always put the blame on spectrum scarcity. Not any more! Additional spectrum at auction, and an option to share/trade spectrum, is likely to optimise spectrum utilisation and, in the process, raise the quality of service (QoS) for mobile services. Poor infrastructure is another grouse, but that is a different story.

From creating artificial scarcity of spectrum, by restricting spectrum from changing hands, to launching a revolutionary drive to make additional spectrum available to operators, it seems like DoT has gone from being a villain to a hero. Some government enterprises, sitting on the bulk of unutilised spectrum, have started pondering over (considering) its release to help addressing the spectrum scarcity. The ministry of defence is thus expected to release 150 Mhz of spectrum in the second quarter of 2016.

Since the release of sharing/trading guidelines, there has been a downpour of prospective deals and collaborations. Examples may be drawn from: Reliance Communications Ltd (RCom) acquiring Sistema Shyam TeleServices Ltd (SSTL) and getting into a prospective merger deal with Aircel; Videocon selling spectrum for two circles to Idea and possibly to Telenor as well and; Bharti Airtel acquiring a stake in Augere Wireless. RCom has also got into a strategic alliance with Reliance Jio, which shall soon launch its 4G services in India, to share a combined rich pool of spectrum. Now the most speculated unanswered question is: How will this transform mobile connectivity in India?

The guidelines have definitely brought a respite for some players. Some operators may now seek a graceful exit from the sector by selling spectrum. After procuring spectrum at insanely high prices in auctions, some operators, despite making losses, could not exit their business as they didn’t have the option to sell off their spectrum. They could only pray to be acquired, for which the unfriendly DoT’s mergers and acquisitions guidelines offered little help. The DoT is now said to be considering guideline-related issues on a case-by-case basis. However, establishing a more transparent process in this regard would be useful.

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