Sector watchdog the Telecom Regulatory Authority of India (TRAI) has recommend raising spectrum caps following recent developments in the mobile market. At present, operators are permitted to hold up to 50% of the allocated spectrum in a particular band per circle, and up to 25% of spectrum across all bands per circle. Following analysis and consultation with industry stakeholders, the regulator has recommended that the 25% cap be increased to 35%. Explaining its change in stance, the TRAI noted that the previous policy had been enacted during a period of hyper-competition in the sector, with between six and ten operators competing in each circle, but the current move towards consolidation is likely to reduce the number of providers in each circle to between three and four. The current 25% limit could limit operators’ capabilities to bid for new frequencies and complicate current and future consolidation processes, the TRAI has claimed. The regulator went on to point out that merger and acquisition (M&A) guidelines allow for a combined entity to hold a subscriber market share of up to 50%, but the 25% cap on total spectrum holdings in a circle would prevent the enlarged company from serving the larger customer base effectively.
In terms of spectrum limits for specific bands, the TRAI was wary of removing the limitation lest it pave the way for operators to monopolise certain bands. However, the TRAI also noted that the cap could force an operator to purchase spectrum in a different band to deploy the same technology, thereby increasing costs for no real benefit. The policy also leads to fragmentation of spectrum and ‘denies the opportunity to take advantage of large contiguous blocks of spectrum which may offer greater spectral efficiency’. On the other hand, the regulator did note that the propagation characteristics of sub-1GHz frequencies (i.e. those in the 700MHz, 800MHz and 900MHz bands) made the airwaves more valuable and highly sought-after than the higher bands and would need to be subject to additional protections. As such, the TRAI has recommended lifting the 50% cap per band altogether, but imposing a new 50% limit on combined sub-1GHz spectrum holdings.