TRAI proposes changes to spectrum cap rules

27 Nov 2015

The Telecom Regulatory Authority of India (TRAI) has published a consultation paper on the valuation and reserve price for spectrum in the 700MHz, 800MHz, 900MHz, 1800MHz, 2100MHz, 2300MHz and 2500MHz bands, in which it has proposed substantial changes to the current rules on spectrum caps.

The TRAI’s paper suggested that the spectrum caps should no longer be band-specific, with telcos limited to a proportion of the total spectrum an operator can acquire all together. As an exception to this, the sub-1GHz bands (700MHz, 800MHz and 900MHz ranges) would be grouped together, with a separate cap. ‘As all [of] these bands are lower frequency bands, all of them have better propagation characteristics and, hence, can be treated alike,’ the paper notes. The TRAI did not propose specific levels for the caps, but to illustrate its point suggested that telcos could hold 25% of spectrum assigned in all bands, but 50% of all assigned airwaves in the sub-1GHz ranges.

The TRAI drew attention to the need to review the rules on spectrum holdings, noting that under the current guidelines none of the existing cellcos with spectrum in the 2300MHz or 2500MHz bands would be eligible to purchase new spectrum as they would be crossing the 50% threshold, adding that there are unlikely to be any new entrants in those bands as ‘the ecosystem … is still not fully developed’. Further, the upcoming auction of the 700MHz range cast further doubt on the suitability of the current system. Provided the spectrum is sold off in blocks of at least 2×5MHz, the TRAI pointed out that a minimum of three providers could purchase spectrum, with each limited to a cap of 2×15MHz (of a potential 2×35MHz per circle). The TRAI claimed a change to the spectrum cap rules would be necessary to ensure that at least four service providers could gain access to this ‘premium’ spectrum band, adding that it would prefer to avoid implementing new restrictions solely for the 700MHz band.

The measures would help ease the process of consolidation in the sector, and allow the nation’s larger cellcos to scoop up much-needed extra spectrum without falling foul of caps. The TRAI invited stakeholders to submit their comments by 21 December 2015.