The Telecom Tiff

Cell PhoneThe famous fight for spectrum between mobile operators is going from bad to worse. With Shiv Sena, a right wing political party and Temasek Holdings, a Singapore based Investment Company getting involved, the chances of a settlement look bleak.

The fight began when Reliance Communications, leading telecom operators, issued an official press statement alleging that Bharti Airtel had “illegally captured spectrum in excess of 6.2 MHz by misleading the Department of Telecom and deprived government of thousands of crores of revenues by hoarding valuable spectrum.” It further states that Bharti and other operators have excess spectrum of 50 Mhz across circles, which is far beyond its need. Bharti Airtel responded by commenting “that we would not like to respond to this attempt to blatantly spread incorrect and grossly wrong information.”

The criteria of allocation of spectrum band till now has been on the basis of subscriber base, which is provided by the operators themselves. Under the licence agreement, operators of GSM services are entitled to spectrum up to 6.2 MHz while CDMA operators have been permitted spectrum up to 5 MHz.

The fiasco over spectrum allocation also shows the mismanagement of resources in the fastest growing telecom market in the world. Every month about 8 million new subscribers are added to the market, creating fresh requirements for new spectrum space.

The war for spectrum has not escaped global notice. The CEO of Temasek Holdings has expressed his concerns over the latest proposals. Temasek, which owns Singapore Telecommunications, owns 30% in Bharti Telecom, India’s number one mobile operators. The spectrum allocation by telecom regulator, according to them, may render the Indian operators sub-scale, at the time when they can become successful global players. He has suggested that the regulators should be invited to consider the best practices and exchanges with other regulators.

Adding political shades, Shiv Sena has written to the PM about the issue. They crticised the new allocation norms, which involves accepting telecom regulator Trai’s recommendation that existing service providers increase their subscriber base two-to-six times before they are granted additional spectrum. They suggested that the government should go for auction of spectrum band instead. Reliance is also building a base by finding support in TDP president Chandrababu Naidu. Mr Naidu has already written to the PM, supporting Ambani’s army against GSM operators.

Meanwhile, the GSM operators have strongly opposed the new recommendation by Department of Telecom, and asked for a downward revision. They are also willing to arrive at new spectrum allocation norms, using the current policy as standard. With directions from the Prime Minister, the telecom minister A. Raja is figuring out ways to ensure full competition in this sector.