Telcos get approval to share spectrum but with conditions

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Telcos get approval to share spectrum but with conditions

NEW DELHI: The Telecom Commission, the apex decision-making body of the communications ministry, has decided to allow mobile phone companies to share spectrum, but has limited this facility to 2G airwaves alone. Second generation (2G) spectrum is largely used for offering vanilla voice services.

This means, telcos cannot share 3G spectrums. Incumbents such as Bharti Airtel, Vodafone, Aircel and Idea Cellular, who have taken the government to court, after the telecom department asked these companies to terminate their 3G roaming deals, had hoped that policy changes permitting the sharing of airwaves, would put an end to this controversy. These companies have signed up 3G customers across the country riding on bilateral roaming agreements that allow these firms to use each other's airwaves and offer high-end data services even in regions where they do not have thirdgeneration spectrum.

Leading operators said they were not aware of the TC decision, as the government had not announced it.

The TC has also decided to introduce a slew of riders to govern spectrum sharing. First, only those operators that have airwaves in a particular region can share it. For instance, Uninor or Tata Teleservices which does not have 2G spectrum in Delhi, cannot share airwaves with any other operator that has radio frequencies here and launch GSM-based cellular services. "Spectrum can be shared only between two spectrum holders.... In other words, a non-licensee or licensee who has not been assigned spectrum as yet cannot be party to spectrum trading," said the minutes of the latest TC meeting.

It also adds that two companies can share airwaves only if their combined holdings do not exceed the limits prescribed in the M&A norms. The TC had recently approved sector regulator Trai's recommendation that during mergers, the combined entity be allowed to have up to 25% of the total airwaves in the region. Spectrum sharing deals will also have to be renewed every five years.

When operators share spectrum, both companies will have to pay usage charges on the total airwaves held jointly, the TC said. Currently, operators share between 2% and 6% of their annual revenues based on the quantity of airwaves they hold. For instance, an operator that has only 4.4 MHz of airwaves in a circle shares 2% of its annual revenues towards spectrum usage charge. Now, if two telcos that have 4.4 MHz each of 2G airwaves in a region were to share them, both operators will have to share 6% of their annual sales towards this levy.

The TC also said that telcos sharing spectrum must pay the government the commercial value of the airwaves it is using. This means, an operator that has 4.4 MHz of airwaves, and is sharing radio frequencies with another telco that has the same amount, must pay 'current prices' for additional 4.4 units of spectrum it is using.

"In order that payment of current price does not act a disincentive, licensees may be permitted to pay the current price applicable on the date of permission, on an annual basis, instead of for five years at a time, and this payment will cease if the sharing agreement is annulled midway," the minutes of the TC meet added.

Source : The Economic Times