Indian GSM Lobby can smile

The department of telecom (DoT) is learnt to have prepared a settlement offer for GSM players, in a bid to resolve the stand-off over the new spectrum allocation norms and end all litigation over the new telecom policy.

According to an internal note of DoT, the seven-point compromise formula involves accepting telecom regulator Trai’s recommendation that existing service providers increase their subscriber base between two to six times before being granted additional spectrum (radio frequencies on which mobile services operate).

This is far less stringent than the Telecom Engineering Centre’s recommendation that the subscriber density should be hiked 4-15 times. DoT has added another sweetener: operators will not be asked to surrender any part of the already-allocated spectrum although the enhanced subscriber density norm would render part of the allocated spectrum excess. However, no fresh spectrum will be allotted until they fulfil the eligibility criteria specified by Trai.

The settlement package also involves operators like Vodafone, Idea and Aircel being awarded 4.4 MHz of spectrum to launch operations in new circles, operators being allowed to offer services on both GSM and CDMA platforms under the same licence, and two new entrants being given licences in each circle to launch services. Besides, it states that auction of 3G spectrum will be conducted within the next 90 days and mobile number portability extended across the country, not just the metros as announced initially.

Currently, Aircel holds licences for 14 circles, Idea for two and Vodafone for six, but they have not been able to launch services as 2G spectrum has not been allocated. The compromise formula, while addressing this issue, also states that the new licence applications of ‘existing GSM’ players will also be approved.

This implies, the applications of Idea Cellular and Spice, which have sought new licences in nine and 20 telecom circles, respectively, will be cleared. Besides, GSM players must drop all objections to the use of cross-over technology, thus paving the way for players like Reliance Communications, HFCL, Shyam and Tatas to launch GSM-based mobile services.

The settlement solution also envisages that two new entrants be granted licences based on spectrum availability. Under the existing policy, licences are awarded on a first-come-first-served basis, and the queue of new entrants is headed by Swiss-based Bycell followed by Swan and Cheetah (both are linked to Reliance Communications), S Tel and Parsvnath Developers.

Significantly, the compromise formula also addresses two key concerns of GSM operators with regard to number portability and auctioning of 3G spectrum. “Mobile number portability (MNP) to be allowed across India and not just the four metros, direction for unlocking CDMA handsets to allow CDMA customers to move to other operators be given, road map for number portability for fixed line also be announced,” states the DoT’s internal note. GSM operators had been demanding that MNP be extended across the country while adding that the same be extended to fixedlines also.

With regard to 3G spectrum, the compromise is that DoT will drop its initial plan to restrict it to just three GSM-based operators with each getting 10 MHz each. “3G auction to be conducted within the next 90 days. The announcement to be made right away—6 licences of 5 MHz each,” the DoT note added.

While 5 MHz will make it impossible for a new player to enter the telecom market as it will require additional start-up spectrum, it will be enough for existing GSM players to migrate to 3G. If the government limits allotment of spectrum to 5 MHz, it will effectively rule out foreign players from 3G spectrum bidding and ensure that foreign players can bid only in theory.

Indian telcos, both CDMA and GSM players, have been bitterly opposed to the entry of foreign players in 3G. They have even written to DoT threatening legal action if new players are allowed to participate in the auction.

Via ET