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Telecom Commission for refarming entire spectrum in 900 Mhz band

Existing operators will be allowed to bid in the auction of 900 MHz band and if they fail to win the spectrum, they will be given 18 months to move to 1800 MHz, which may put an additional burden of over Rs66,000 crore

 
New Delhi: The Telecom Commission has recommended that existing mobile operators will have to fully give up airwaves in the superior 900 MHz band at the time of licence renewal in 2014 -- a move that GSM players said would cost them over Rs66,000 crore in replacing infrastructure, reports PTI.
 
"The entire spectrum in 900 MHz will be refarmed," Telecom Secretary R Chandrashekhar said after meeting of the panel.
 
Chandrashekhar, who also heads the Commission, said three different options were put before Telecom Commission including refarming (or redistribution of airwaves held by existing players) of all airwaves held by incumbents, or allowing the operators to retain either 2.5 Mhz or 5 Mhz of airwaves frequencies in 900 Mhz band.
 
"The commission decided that entire spectrum will be refarmed which means above 0 (Mhz)," Chandrashekhar said.
 
The recommendations of the commission -- the highest decision making body of Department of Telecom (DoT) -- will now be put before the Empowered Group of Ministers (EGoM) headed by Finance Minister P Chidambaram for a final decision when it is likely to meet on Thursday.
 
Terming the decision as "death knell" for the GSM players, COAI said: "Operators with 900MHz band will need to replace 286,590 base stations and install an additional 171,954 base stations to provide equivalent coverage on 1800MHz." 
 
Such a replacement of base stations and deployment of additional sites will result in an incremental capex of Rs54,739 crore, and incremental annual opex of Rs11,762 crore, COAI said citing an independent study by Analysys Mason.
 
However, dual-technology operators' association AUSPI welcomed the decision saying it will create a level playing field among operators.
 
"The decision of TC is in accordance with the NTP 2012 which delinks licenses from spectrum and hence, at the time of renewal the operators will have to get it by competitive and transparent methods," AUSPI said in a statement.
 
Chandrashekhar said the existing operators will be allowed to bid in the auction of 900 MHz band, which is likely to take place in the first half of 2013. If they are successful, they can retain the spectrum, he added.
 
However, if the incumbents fail to win the spectrum, they will be given 18 months to move to 1800 MHz for which an equivalent amount of spectrum will be made available for them in the new band.
 
"...if the same operator succeeds, he will retain it, if a new person succeeds, than the existing operator has 18 months to make his alternative plans and the new operator will have 18 months to put his infrastructure in place before he gets the spectrum," Chandrashekhar said.
 
The licences of existing players for metro circles are coming up for renewal in November 2014 and for other circles in 2015 and 2016.
 
The government has in-principle approved the concept of spectrum refarming under which old operators including Bharti Airtel and Vodafone have to surrender spectrum allocated in 900 Mhz band (being used for 2G services which gives wider coverage) on expiry of their licences.
 
The base price for 900 Mhz band spectrum is proposed to be charged at double the price of 1800 Mhz spectrum band.
 
The government had allocated spectrum in 900 Mhz band to companies from 2001 for Rs1,658 crore for pan-India services.
 
Telecom companies have been against refarming, saying it may result in call rates going up by as much as 64 paise a minute.
 
The Telecom Regulatory Authority of India (TRAI) has proposed allowing players, including existing operators, to bid for these spectrum at new prices.
 
The Cellular Operators Association of India (COAI) said, "operators will also have to write-off their existing 900MHz assets at an estimated cost of Rs22,310 crore. At an industry level, an additional capex of about Rs 26,653 crore will be required to deploy new towers to support the incremental base stations." 
 
But Association of Unified Telecom Service Providers of India (AUSPI) said: "The incumbents have reaped significantly high benefits by exclusive use of 900 MHz spectrum for a decade and have gained market leadership and have achieved profitability due to very high quality of service and significantly lower cost associated with 900 MHz". 
 
Following the decision, Bharti Airtel was trading 1% down at Rs267 and state-run MTNL was also marginally down at Rs28, while Reliance Communications at Rs61, Idea Cellular at Rs81.6 and Tata Teleservices (Maharashtra) at Rs11.7 were marginally up in the early afternoon trade on the BSE. The benchmark Sensex was also marginally up at 18.718.
 

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