I would like to continue the discussion on spectrum pricing in continuation to my earlier post. In my last post I discussed, why the logic of fixing 1800 MHz spectrum price at par with 3G auction price is false, keeping in view the ultimate beneficiary i.e. subscriber. Now next we come to discuss the issue of fixing the price of spectrum in 800/900 MHz band and pricing the spectrum beyond allocated limit of 6.2/5MHz in case of GSM/CDMA. Let’s go one by one.
TRAI recommends (3.91) that:-
The Authority accordingly recommends that the Currentprice of spectrum in the 900 MHz band be fixed at 1.5 timesthat of the 1800 MHz band. The Authority recommends thatthis be also fixed as the price of Spectrum in the 800 MHzband.
The issue comes into picture in two cases. When price of 1800 MHz band spectrum is brought at par with 3G spectrum price, the same treatment should be given to 800/900 MHz band. And when spectrum refarming will be done, where licensee will vacate its spectrum in 900 MHz band and move to 1800 MHz band, the vacated spectrum will be re-auctioned for 3G at later date at said price. This has been recommended in 1.73 & 1.74 as:
The Authority recommends that spectrum in 800 and 900 MHz bands should be refarmed at the time of renewal of the licenses. For holders of spectrum in 900 MHz band, substitute spectrum should only be assigned in 1800 MHz band and for licence holders of 800 MHz band, spectrum should be assigned in 450 /1900 MHz bands.
The Authority will carry out a separate consultation process on the issues involved in the refarming of 800/900 MHz spectrum and shall endeavour to give its recommendations before the licences come up for renewal.
This assumption is based on following charts:-
TRAI has also referred to study, which says that 900 MHz band can reduce 40{af589cdba9d77786c8c861317dbad60bba1e2ebbf56e2ffab874a1b59fde9ce3} CAPEX and 30{af589cdba9d77786c8c861317dbad60bba1e2ebbf56e2ffab874a1b59fde9ce3} in overall costs as compared to deployments in 2100 MHz band.
It’s really unfair to say that 900 MHz band has no advantages over 1800 MHz band. If you are aware of Radio Wave Propagation then you could easily figure out that, 900 MHz has higher reach and high indoor penetration. So it wouldn’t be surprising that number of Cell Towers needed while rolling out network on 900 MHz band is quite lesser than 1800 MHz band.
But then how TRAI came to conclusion that 900 MHz band spectrum price should be 1.5 times of that of 1800 MHz isn’t clear with these assumptions and facts. But this recommendation is quite suited to network rollouts in 1800 MHz category as telcos has to pay lesser on spectrum( which can then be compensated with more BTSs rollouts) as compared to 900 MHz rollouts.
In next writeup I would continue with detailed analysis of fixing prices of spectrum beyond allocated 6.2MHz band. Stay Tune!
