India’s leading GSM operators seem to be gearing up for a big fight over the allocation of spectrum. While Aditya Birla-owned Idea Cellular has sought priority treatment for 2G spectrum allocation on account of what it describes as past injustice, Vodafone Essar has warned that any such move would have ‘severe implications’.
“If any player is given priority over the other licensee who is awaiting his initial allocation by jumping the queue, the move will have severe implications,†the company said in a communication to Trai.
Vodafone Essar has also asked Trai not to entertain demands of pan-India operators seeking reservation of spectrum for their expansion before new players are given licences. That seemingly brings it into conflict with Bharti Airtel, which wants such reservation.
Bharti Airtel has demanded that the government reserve spectrum of up to 15 Mhz for existing players before allowing new players to launch services. Currently, GSM operators can avail a maximum of 15 Mhz spectrum per circle. But the allocation is in phases and is linked to the operators’ subscriber base. Vodafone Essar has said that any reservation for the future needs of existing players would lead to a “situation where hoarding of spectrum would become prevalent and would be against the public interestâ€.
In an apparent reference to Idea’s demand that it should be allowed to jump the queue, Vodafone Essar, in its communication, said that if any operator was awarded spectrum out of turn it would amount to “a gross violation of the existing first-come-first-served policy, which is the very fabric of our existing spectrum allocation policy based on fairness and transparency.â€
The company has also said that if the queue system is violated, it would lead to a policy regime that is not in the interest of natural justice. Vodafone’s comments assume significance since it is ahead of Idea Cellular in the queue for 2G-spectrum allocation in several circles. Essar Group-owned BPL too has supported Vodafone’s stance and in its communication to Trai, said: “The spectrum should be allocated to existing licensees on first-come-first-served basis, based on the date of their application/entitlement.â€
Idea Cellular, in a communication to telecom minister A Raja, has said that it has “prior and overriding rights†to be granted spectrum first since its applications prior to 2006 were not processed on account of the Tata Group’s stake in the company that violated the crossholding norms in the licence. As per guidelines, a company/promoter can’t hold more than 10% stake in two competing telcos operating in the same circle. The Tatas, who held 48.14% in Idea Cellular at that time, also held a controlling stake in Tata Teleservices. Idea re-applied for licences after the Tatas exited in June 2006.
Vodafone Essar, which currently offers services in 16 telecom circles, has got department of telecom (DoT) clearance to launch services in seven other circles, but has not been allotted spectrum so far. At present, Idea Cellular offers services in 11 circles and has also received clearance to launch services in Mumbai for which it’s awaiting spectrum. Its applications in nine other circles are still awaiting sanction.
On the reservation of spectrum for pan-India operators, the Vodafone Essar communication gives the example of the ‘C’ telecom circles in the country where only 30 Mhz of spectrum is available per circle, the operator said, “Even if we consider additional 20 Mhz is made available, it’ll lead to a total of 50 Mhz altogether for GSM operators.
Now consider the situation wherein four existing GSM operators demand up to 15 Mhz to be reserved, then this 50 Mhz will also be inadequate for these four GSM operators and hence, the licensee who’s legitimately waiting in the queue for his initial allotment will never get the spectrum allocation despite having paid the entry fee/licence duly awarded by the government,†the company said.
“The issue gets further amplified in view of the fact that these “C†circles are border-states and hence, total availability of spectrum will become even more scarce and difficult. Hence, there is no justification, whatsoever, for any claim by any existing operator to jump the queue over the other existing operator waiting for spectrum after the award of licence,†Vodafone Essar added.