The Indian Telecom Sector is in Deep mess with Rampant Corruption from the office of Telecom Ministry to DoT. The TRAI may recommend keeping the incumbents (those holding 900 MHz 2G spectrum) out from the first phase of auctioning of 700 MHz BWA spectrum. The idea behind this strategy is to level the playing field between incumbents and new entrants. Incumbents enjoy network capex and opex savings (approximately Rs 150bn and Rs 200bn respectively) by virtue of holding spectrally efficient 900 MHz band vs. 1800 MHz for new entrants.
This also means Allocation of 700 MHz spectrum would put existing holders of BWA spectrum (2300 MHz) at a significant disadvantage. The roll out costs in 700 MHz spectrum are about 1/3rd of the same in 2300 MHz spectrum.
The decision to block the incumbents from participating in 4G auctions would probably be taken keeping in view the refarming of 900 MHz spectrum, as refarming too would help level the playing field. The problem is Government of India is just vocal about establishing level playing field, ultimately who pays the highest bribe has the policy and law in his way.
Govt. agencies hold most of 700 MHz spectrum. The DoT aims to get the agencies to vacate this spectrum by year-end, but this could prove to be quite challenging.
Spectrum Crunch:The DoT is yet to act on 165 applications for the award of additional 2G spectrum across the country. It is worth noting that no new 2G spectrum has been awarded since late 2008, even though over 450mn new subscribers
have been added since.
