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Cabinet approves liberalization of spectrum at TRAI rates; RCom & RJio win

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The Union Cabinet has cleared liberalization of spectrum at rates that were previously suggested by the Telecom Regulatory Authority of India (TRAI), a release by the Press Information Bureau (PIB) noted.

This will allow the government to allocate its currently managed spectrum to telcos, wherein auction/market determined price is not available for that particular spectrum in a given circle. The move is expected generate around Rs 1,300 crore in revenue to the government.

Liberalized spectrum will be provided at a provisional price (as suggested by the TRAI), and once the spectrum auctions are complete, the provisional charge will be adjusted with the auction determined price on a pro-rata basis, added the PIB report.

What this means for telcos

Liberalized spectrum will allow telecos to use any kind of technology to build and deliver mobile services under 3G and 4G standards. Besides this, telcos with liberalized spectrum will be allowed to test newer technologies and share/trade it with other operators, noted a PTI report.

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The previous government’s cabinet had decided that liberalization of spectrum would be done on the basis of market determined prices, in which telcos were also subjected certain limitations on usage under the license. However, recently some spectrum like the 800 Mhz band were not allocated in many states, and also remained unsold (during auction) in many circles.

With the new guidelines in place, telecom operators can go ahead to liberalize its spectrum and trade/share it with other operators, without having to consult with government bodies for permission.

Win Situation for RCom and RJio: The Cabinet decision will come as a benefit to Reliance Communications (RCom) which had applied to liberalize its spectrum under the 800 Mhz band in 20 circles a few months ago. In January, RCom said that it had paid Rs 5383.84 crore as a liberalization fee to the telecom department under the 800 Mhz band in 16 circles. For the reaming four circles in which auction determined price is not available, RCom is expected to pay Rs 1,300 crore, added the PTI report.

Additionally, both Reliance Jio (RJio) and RCom shall benefit from the cabinet move, as both telcos had previously entered into a strategic partnership to share spectrum to provide LTE services. RCOM and RJio signed agreements in spectrum allotment in 800 MHz band across 9 Circles from RCOM to Reliance Jio. The companies also agreed to share spectrum in 800 MHz band across 17 Circles.

The arrangements were subjected to liberalization of RCOM spectrum in the 800 MHz band, which now has a green signal from the union cabinet.

Recent regulatory developments

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– Last month, an inter-ministerial panel approved VoIP and VoLTE (IP based connections) interconnection in India, paving a way for VoIP & VoLTE users to make and receive calls to and from non-IP based networks and vice-versa.

-In the same month, the Department of Telecommunication (DoT) had approved the entry of Virtual Network Operators (VNOs) in India, which will allow them to buy spectrum or infrastructure from existing telcos to provide service under its own brand.

MediaNama’s Take: As Reliance Jio has been gearing up for a commercial 4G launch for the last couple of months, the recent arrangements passed by both DoT and the Union Cabinet seems to benefit  RJio and RCom. This is quiet odd as the recent approval of VoIP interconnection and the green signal towards spectrum liberalization coincides with the planned launch of RJio’s 4G services.

It is also to be noted that the current move is totally against the guidelines (pdf) issued by the Wireless Planning & Coordination (WPC) for liberalization of spectrum in 800MHz and 1800MHz frequency bands in November 2015. It stated that:

-Liberalization of spectrum will be considered only after a written request, accompanied by a non-refundable processing fee of Rs 50,000/- per service area.

-The fee will be determined based on the latest auctions held for the respective frequency band. If the auctions are over a year old, then prevailing market rates will be determined based on the last auction price.

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But the cabinet has gone ahead with using TRAI’s high reserve prices that were questioned by the DoT just last week.

Image Credit: Flickr user Michael Dorausch under CC BY-SA 2.0

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