Government to get Rs 300,000 crore from refarming of spectrum

Telecom Lead India: The refarming of spectrum will bring
Rs 300,000 crore to the Indian government, projects TRAI.

In a letter to the secretary of the department of
telecommunications (DoT), the regulator said that only by refarming the
government can realize true value of spectrum in the precious 900 MHz and 800
MHz bands.

The regulator has recommended that that the 900 and 800
MHz bands should be replaced with the 1800 MHz band and the vacated bands
should be auctioned.


The regulator said that the amount of Rs 300,000 crore
could be received over four years. The Telecom Commission is likely to take a
decision on refarming in its meeting on Thursday, May 24.


The reallocation of spectrum to auction its most
efficient bands could turn the bands into prime wireless real estate.
Currently, old incumbent operators such as Airtel, Vodafone, and Idea hold
spectrum in these two bands. Spectrum in the 900 MHz and 800 MHz bands is
considered valuable as they involve must lower costs in setting up
infrastructure to harness the bands, according to a report in Hindustan Times.


Re-farming of spectrum will harm incumbents: Assaocham


The re-farming of spectrum will affect the profits of
incumbent service providers, according to Assocham (Associated Chambers of
Commerce and Industry).


In a letter to Prime Minister Manmohan Singh and
Communications Minister Kapil Sibal, Assocham said, “The proposed
immediate re-farming of spectrum would be detrimental for incumbents like
Bharti Airtel, Idea Cellular, Vodafone, MTNL/BSNL, Reliance Communications and
Tata Teleservices who have considerable share of spectrum in the 900/800 MHz


The letter further noted that the re-farming is likely to
impact profitability owing to an increase in network operating expenditure.


Assocham also said that the operators whose licenses have
been cancelled and who have to re-bid may not be able to put together a viable
business case with recommended reserve price for spectrum.


The regulator has recommended that the reserve price of
spectrum in 800 MHz and 900 MHz band should be R7,200 crore per MHz – double
that of the 1800 MHz band.


The Authority would however like to underline that
spectrum required for refarming be set aside since the value to be realised
from the auction of 800 and 900 MHz spectrum is very large – of the order
of Rs. 3 lakh crore at the reserve price – besides involving issues
of level-playing field,” said a recent letter written by TRAI secretary to DoT


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