Well ahead of a third round of spectrum auction expected in January 2014, one is seeing formation of some gray clouds on the horizon. Yes, the reference is to the ongoing exchange of statements between presiding Telecom Minister and former Finance Minister Yashwant Sinha, who belongs to the country’s main opposition party.

Could these seemingly minor tiffs with political overtones have some relevance for the telecom sector? Why?

Well, macroeconomic and political factors external to an industry should warrant closer analysis if they hold the potential to develop into direct threats for the industry at a later stage.

It is not a matter to be brushed off lightly that the former FM has reportedly raised concerns about the government standing to lose Rs 27,000 if Telecom Commission’s recommendations on reserve price are to be accepted for the upcoming auctions. The statement could be revisited as a basis for reviewing the auction process just in case Sinha’s party happens to form the government at the center after the general elections next year.

Also, given that the allocation of spectrum has become an ultra-sensitive and closely scrutinized event due to reasons widely known, the potential consequences of a possible review later could be anybody’s guess.

It therefore becomes important for the industry stakeholders to mull and bring in safeguards that could ensure a greater protection for the investments that telcos would make in the event of winning and acquiring spectrum in the coming auctions.

Foolproof assurances from apex levels to the effect that the wins awarded after the auction could not be reversed at later stages would be useful. The telcos could be taking pointed legal counsel in this direction, among other measures.

In the meantime, telcos could also work towards expanding and strengthening their existing networks and coverage, with the added advantage that these measures need not be spectrum-linked only. For example, backhauling is one area that has not been adequately attended to, and in the wake of burgeoning data traffic, it demands immediate and ongoing focus.

A combination of fiber-to-the-sites, small cells and Wi-Fi could be used to effectively improve the efficiency and quality of the existing mobile networks. While there certainly is a greater attention towards this, the momentum is yet to set in.

Another area where increasing the ratio of investment would be strategically beneficial for telcos would be the migration from TDM to IP, which would enable better monetization of the networks in a rapidly digitized era, where M2M is also fast coming up as a next wave of opportunity. 

(As first published in Light Reading India.)

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