CDMA, GSM telecom operators clash over spectrum

Trouble is brewing in the telecom industry with Samajwadi party MP Amar Singh writing to the prime minister alleging that spectrum was being hoarded by  GSMoperators beyond contracted limits. He has also said that GSM players should be charged a one-time market rate for all radio frequencies held beyond 6.2 MHz.

The battle lines are now clearly drawn between CDMA operators, Tatas and Reliance, and GSM operators, Bharti, Vodafone, Idea and Aircel. The latter have offered a united defence against Amar Singh's allegations and have sent a letter to the prime minister's office making a counter allegation against "dual spectrum holders", through its body COAI.

COAI's director general TV Ramchandran arguing against a one-time fee for spectrum allocation beyond 6.2 MHz to a GSM player, has requested the PM to "disregard attempts to destabilise the performing telecom sector and harm operators who have demonstrated their commitment to the sector, made investments, rolled out networks and delivered benefits to the consumers, the economy and the government."

He has said that the charge of hoarding spectrum can actually be applied in respect of some dual spectrum allocations, where a recipient got 4.4 MHz spectrum on virtually an all-India basis, in a selective and preferential manner, de-linked from all requirements of justification and need and at the cost of several new licences that were awarded recently.

He further said that any attempt to rewrite government policies with retrospective effect, will imply that no government order has any sanctity, finality or credibility.

Further the COAI has said that levying a one-time fee would completely destroy investor confidence.

If Amar Singh's demand is accepted, the government can make around Rs 10,000 crore, according to some estimates.

In a letter to the Department of Telecommunications (DoT) on Wednesday, TRAI refused to recommend a one-time charge for additional spectrum beyond 6.2 MHz allocated to telcos, unless the government clarifies what this would translate into.

The regulator also wants to examine the DoT proposal from legal and financial perspectives.

Trai's letter was in response to a July 9 proposal by the DoT seeking changes in the Trai recommendations of last year on spectrum charges. Trai in 2007 had recommended a one-time spectrum enhancement charge for spectrum allocated beyond 10 MHz.

DoT now wants the regulator to suggest 'a one-time suitable charge' for additional spectrum beyond 6.2 MHz.

It may be noted that some existing service providers have been allocated spectrum beyond 6.2 MHz in GSM and 5 MHz in CDMA, without the government charging any extra one-time spectrum charges.

The maximum spectrum allocated to a service provider is 10 MHz so far.

Trai chairman Nripendra Misra says that the details of the one time charge would be necessary for examining the proposal from a legal and financial point of view and on receipt of the same, the Authority would send its recommendations to DoT.

Some time ago, just after the DoT had issued several new mobile phone licences (2G) without changing the spectrum allocation pricing modalities, the PM had said that spectrum was a scarce resource and that the government should garner sufficient revenue from spectrum allocation to telecom companies.

Trai and the finance ministry are said to be in favour of auction of spectrum.