The government had put the industry on the back foot for some time, after it had dropped the 900-MHz-refarming stone with a sudden thud. The move amounted to the creation of an artificial scarcity of spectrum, forcing telcos to scramble for frequencies in the less efficient bands of 1,800 MHz.
In this pursuit, the government had gone as far as working against the very basic objectives of Telecom Policies of 1994 and 1999:
The first listed objective under the Telecom Policy of 1994 states, “The focus of the Telecom Policy shall be telecommunication for all and telecommunication within the reach of all.” (http://www.trai.gov.in/Content/telecom_policy_1994.aspx)
Again, the first objective under New Telecom Policy of 1999 says, “Availability of affordable and effective communications for the citizens is at the core of the vision and goal of the telecom policy.” (http://www.trai.gov.in/Content/ntp_1999.aspx)
So both the telecom policies have had affordable communication for all as the primary objective. Now, obviously the lower frequency bands would be more cost effective for providing telecom voice services and therefore the tariffs for end-users, especially those coming from towards the bottom of the socioeconomic pyramid, would be more affordable. That, in turn, would also further the objective of increasing tele-density in rural areas and hence align with the goal of ‘telecom for all.’
By forcing telcos to move to higher frequency bands like 1,800MHz, the government has worked against the very policy objectives, as this would increase the cost of delivering the services and therefore lead to rise in tariffs, which in turn would make the services unaffordable to potential users coming from the bottom of India’s socioeconomic pyramid. It is a well-known fact that telecom towers mounted with antennas in the lower frequency bands can cover far greater areas than those using 1,800 frequency bands. This makes 900MHz especially suited for delivering basic telecom services like voice in areas of rural India that are relatively sparsely populated.
As we have already seen, the average tariff has notably gone up in the past months and there are all indicators that it would remain northbound in the coming months too.
The government has been acting with the attitude of an unreasonable boss whose favorite number looks to be ‘it’s my way or the high way.’ In fact, already many telcos have preferred to take ‘high ways’ that lead them away from the sector that was once bustling with positivity and growth. The likes of Aircel and Uninor have already scaled down their operations in a number of circles, while those like MTS and Tata Teleservices decided not to participate in the 800 MHz auctions.
Interestingly, with no takers for the 800 MHz band, the ball is now back in the government’s court. It can either see and realize the opportunity to respectably end the ongoing ‘tug of war’ or continue to take steps that make the telecom sector further unattractive to investors, while also making telecom services unaffordable for millions of potential users who, until recently, were seeing it coming within their reach but would increasingly find it getting out of bounds.
Whatever good use the government wanted to put the re-farmed 900 MHz frequencies to and was therefore insisting that telcos move to higher frequencies, could now indeed be accomplished with the no-more-sought-after 800 MHz frequencies too. That would end the need to re-farm the 900 MHz spectrum, at least for now.
It is, however, for the government to say so.
(The article was first published in Light Reading India at http://www.lightreading.in/document.asp?doc_id=226833&site=lrindia&)
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