Swapping spectrum

The Communications ministry and the Department of Telecommunications (DoT) have been looking at various means to solve some of the most compelling problems facing the sector for sometime now. Recently, DoT has come up with a swap formula. Under this Defence has been asked to vacate 15 MHz of spectrum that it has in the 2100MHz band in exchange for the same amount of spectrum in another frequency band--most possibly the 1900MHz band. The 2100Mhz band is being used for 3G services.

What the swap does is provide three bands of 5MHz across the country to mobile operators. That will help operators offer 3G services across the country. Currently, no private operator has 3G spectrum across the country. Bharti Airtel, Reliance Communications and Aircel have 3G spectrum in 13 circles, Idea (11), Vodafone and Tata Teleservices (9 each). In the May 2010 auctions, DoT had offered 20MHz of spectrum in the 2100MHz band for bidding. Of that one band of 5MHz was reserved in 20 circles for state-owned Bharat Sanchar Nigam Ltd (BSNL). In Delhi and Mumbai, it was reserved for Mahanagar Telephone Nigam Ltd (MTNL).

That could well clear up the imbroglio in providing 3G services. What this initiative means is that every existing 3G operator would be in a position to offer services across the country. Currently, operators have gone in for intra circle roaming (IRC) agreements to offer services in circles where they do not have spectrum. This has been deemed inappropriate by DoT. More importantly, defence is currently not using the spectrum.

The other advantage as far as the government is concerned is that it can put these blocks up for bidding and expect reasonable interest from incumbent operators. That should help shore up government revenues too.

It looks that finally the government is looking to untangle the telecom mess.