Consolidation, tech-neutral licences prompt calls for revised rules

India’s embattled operators should be allowed to own more spectrum, advised the Telecom Regulatory Authority of India (TRAI) this week.

The watchdog on Tuesday recommended that the current cap on total mobile spectrum in a given telecom service area, or circle as they are called in India, should be lifted to 35% from 25%. The TRAI also recommended scrapping the 50% cap on spectrum in any single frequency band, replacing it with a 50% cap on total sub-1-GHz frequency holdings instead.

"[The] overall spectrum cap of 25% was imposed at a time when there were six-10 TSPs (telecom service providers) in an LSA (licensed service area)," the TRAI explained. "After the ongoing consolidation in the sector, the number of TSPs in an LSA may be much less."

The TRAI also pointed out that capping spectrum caps on specific frequency bands is unnecessary now that spectrum licences are technology neutral.

"Asking a TSP to acquire spectrum in [a] different band to deploy the same technology increases the cost of [the] network with no real gains," the TRAI said.

However, sub-1-GHz spectrum is optimal for providing reliable coverage over large areas, the watchdog said.

"Therefore, spectrum in [the] sub-1-GHz range…should be treated separately and special provisions have to be made to safeguard against the creation of [a] monopoly," the TRAI said.

The recommendations were made in response to an inter-ministerial group (IMG) that called for close examination of the existing rules. This particular IMG has been convened to review industries that are currently under stress, which most certainly includes telecoms.

Fierce competition has led to some big names heading for the exit, including Telenor, Tata Teleservices and Tata Teleservices Maharashtra, Aircel, and Reliance Communications.

Even the country’s leading operators in terms of subscribers are having a hard time, with Bharti Airtel’s revenue falling, and Vodafone and Idea Cellular resorting to a merger in a bid to drive scale.