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Cell cos likely to get up to 8 Mhz of 2G spectrum free
NEW DELHI/KOLKATA: THE telecom regulator may rule that mobile phone companies are entitled to have up to 8 MHz of 2G wireless spectrum without any additional payment, a development that could dampen the enthusiasm of operators to acquire 3G airwaves in the ongoing auction. The Telecom Regulatory Authority of India (Trai) will also recommend that 2G spectrum beyond 8 MHz must be auctioned, two people aware of the matter said. Trai officials declined to comment.

Mobile phone companies now offer services on 2G spectrum, but further allocation of the resource have been put on hold until the government finalises a new allotment method. Before March 2009, when the allocations were stopped, operators got spectrum based on subscriber numbers.

A panel set up by the communications ministry had earlier said that cellphone operators must pay a one-time fee or a higher revenue share for airwaves over 6.2 MHz. With an assured 8 MHz of 2G spectrum at no additional cost, mobile phone companies such as Bharti Airtel, Vodafone Essar, Idea Cellular, Aircel, Reliance Communications or Tata DoCoMo may not bid aggressively in the ongoing auction for 3G airwaves that allows services such as high-speed internet.

Earlier, the view was that the lack of clarity on the pricing of 2G spectrum would force telcos to leave no stone unturned in their efforts to acquire 3G airwaves and migrate their top customers to 3G services to ease the pressure on their spectrum-starved 2G networks.

The 8 Mhz threshold may also apply to new entrants like Loop, Etisalat, Datacom and Uninor that were given telecom licences in early 2008. These new players hold 4.4 MHz of 2G airwaves, that came with the licence.

While the GSM platform-based operators such as Bharti Airtel, Vodafone Essar, BSNL and Idea Cellular point out that the existing regulations entitle them up to 15 MHz of airwaves per circle, rivals such as Reliance Communications and Tata Tele that offer services on both GSM and CDMA platforms claim that current licences cap the holding of airwaves at 6.2 MHz per circle. Reliance Communications claims that GSM operators who hold over 6.2 MHz “have enjoyed benefits of supernatural profits for a large number of years” and that the “government has every right to take a share of these profits by levying a one-time charge based on the years the benefit has accrued to the operators.”

A top executive with a telecom company said dual technology licence-holders such as Tata Tele and Reliance Communications seem to have got wind of the fact that the regulator would set the threshold for 2G airwaves at 8 MHz. This has prompted their industry grouping, the Association of Unified Telecom Service Providers of India (Auspi), to write on Tuesday night to Trai saying that the GSM-based mobile operators should not be allowed to retain spectrum beyond 6.2 MHz.

“GSM spectrum beyond 6.2 MHz has allowed incumbent GSM operators with high quantum of spectrum to abuse market power and (they) have already gained abnormal benefit over their counterparts,” Auspi wrote.

“If the spectrum is not recommended for surrender by the incumbent GSM operators, then Trai should realise the full value of spectrum from the date of allotment,” it added.

Most incumbent GSM operators have less than 8 MHz of 2G airwaves in most circles. In some circles, however, leading operators such as Bharti Airtel, Vodafone Essar and BSNL hold 10 MHz of 2G spectrum.

Auctioning 2G frequencies, only beyond the 8 MHz limit, will not be in line with the recommendations of a panel appointed by the telecom department. It had recommended that only start-up spectrum, which is the minimum amount of radio frequencies required to launch services, should be given for free to existing telcos. All subsequent allocations should be only through auctions, the panel had said.

It recommended a flat fee for radio frequencies allocated to telcos since January 17, 2008, the date on which the committee was set up, and added that this one-time fee must be determined based on the 3G auctions.

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