Military occupation of spectrum holds up refarming plans; banks approve spectrum mortgaging

14 Jun 2012

Indian regulator the Department of Telecommunications (DoT) is looking to hasten the retrieval of 55MHz of spectrum from the Ministry of Defence (MoD) in order to clear the way for the proposed refarming of spectrum, reports the Business Standard. The watchdog intends to refarm the 800MHz and 900MHz bands, currently used by incumbent cellcos such as Bharti Airtel and Vodafone Essar, substituting the spectrum for frequencies in the 1800MHz and 1900MHz ranges. However, according to the Telecom Regulatory Authority of India (TRAI), there is insufficient spectrum in ten of the nation’s 22 service areas to cater to the refarming of spectrum whilst retaining 10MHz for the reauction of concessions cancelled by the Supreme Court in February this year. In order to cater to the spectrum demands, the DoT has again called on the MoD to vacate spectrum currently used by defence forces, in particular those in the 1800MHz band, but it will also be expected to relinquish its 1900MHz frequencies at a later date. The MoD has so far delayed its migration from spectrum earmarked for commercial use however, and with the two ministries have locking horns over the issue, the matter has been referred to the empowered group of ministers (EGoM).

In related news, the Reserve Bank of India (RBI) and the department of financial services (DFS) have approved proposals that will allow mobile operators to mortgage spectrum with banks and financial institutions to raise funds. According to the Indian Express, the RBI and DFS have agreed to the recommendations with a number of caveats which will then need to be accepted by the DoT. The TRAI had suggested that operators be allowed to mortgage its frequencies in order to offset the extremely high cost of purchasing the spectrum rights: as previously noted by CommsUpdate, the regulators’ controversial plans for the spectrum base prices are expected to force cellcos to hand over up to ten times the amount paid in previous auctions. For example, Aircel paid INR64.99 billion (USD1.165 billion) for 2×5MHz of 3G spectrum in 2010; under the new proposals, 10MHz of frequencies in the 1800MHz band would cost an operator a minimum of INR362.2 billion, an almost six-fold increase on the 2010 price.