The Telecom Regulatory Authority of India (TRAI) has released a paper (pdf) outlining issues relating to spectrum cap and maximum spectrum holding by telecom service providers, in response to a Supreme Court interim order issues in May.
According to the agency, the provision for spectrum caps on spectrum that TSPs acquire through auction or otherwise should continue. It mentions that the caps exist to prevent TSPs from acquiring large holdings of spectrum through auctions, mergers or trading, as it could lead to a non level field.
As per current provisions, a cap of 25% of the total spectrum assigned in all bands put together (800/900/1800/2100/2300/2500 MHz bands) is applied, while a 50% cap within a given band in each LSA is applied. According to the TRAI there is no need to modify the existing spectrum cap.
All spectrum assigned to the TSPs including any spectrum that was auctioned but remained unsold, spectrum which was assigned but later surrendered or taken back, should be counted for calculating the spectrum cap. However spectrum assigned by the government for non commercial purposes, will not be counted toward spectrum caps.
The TRAI mentions that the spectrum which could become commercially available for use after refarming from others sectors such as defence, should not be counted for determining spectrum caps until they are auctioned by the DoT.
Minimum spectrum holding:
According to the TRAI, the government should not take back spectrum acquired by TSPs even if it’s less than 5 MHz in any band. However, the agency mentions that 5 MHz is the minimum required bandwidth to provide newer technologies like LTE, HSPA etc., and hence it would be better for new entrants to obtain at least 5 MHz of spectrum.
For older technologies using GSM and CDMA technologies in 800/900/1800 MHz bands, 5 MHz band is sufficient, and additional spectrum would only be required when traffic increases beyond a point. Given this, the Authority recommends that the licensees should be able to decide for themselves whether or not there is a reason for them to hold on to the spectrum. The agency mentions that once the guidelines for spectrum sharing and trading are ready, TSPs will have other means to deal with their spectrum holdings.
Note that the TRAI released its final recommendations on spectrum trading guidelines in January last year, in which the agency had recommended outright spectrum transfers, no leasing and a 2 year lock in period.