GSMA: Spectrum proposals will retard India's growth

Trade association warns TRAI's plans to divert existing 900MHz licensees to 1800MHz and setting "prohibitively high" reserve prices for upcoming auction will slow industry, and ultimately, country's economic growth.
Written by Kevin Kwang, Contributor

Telecommunications industry group GSMA has hit out at the recommendations proposed by the Telecom Regulatory Authority of India (TRAI) with regard to the country's upcoming spectrum auction, saying that the high reserve prices and artificial scarcity of 1800MHz bandwidth will ultimately retard the country's mobile broadband development.

Chris Perera, senior director of spectrum policy & regulatory affairs for Asia-Pacific at GSMA, told ZDNet Asia in a phone interview that the TRAI's recommendations for setting high reserve prices for the 1800MHz spectrum was against international best practice and will only achieve short-term financial gains for the government but result in slowing down of the country's economic development.

She noted that the reserve prices are "prohibitively high" and will inevitably curtail mobile operator investment in mobile broadband infrastructure and increase prices to consumers. Given the strong correlation between mobile penetration and socioeconomic development--with a 10 percent increase in mobile broadband penetration delivering as much as INR 3.5 trillion (US$80 billion) of extra revenue for India's transport, healthcare and education sectors by 2015--she said this would slow India's growth. 

Asked what the proposed reserve prices should be, Perera said GSMA does not propose auction prices as this depends on the specific market conditions and consumer demographics.

Creating more problems
The recommendation to move current 900MHz licensees out of the band to auction for the 1800MHz is another policy that the senior director took issue with. She said there shouldn't be a need for operators to move out from 900MHz as they have already invested significantly into their existing infrastructure.

Additionally, service subscribers in rural areas will be affected as they will get "unplugged" and some might not be able to regain connectivity, said Sandeep Karanwal, GSMA's spectrum policy director for India, in the same phone interview as Perera. This is because the 900MHz band is more suited to broadcasting airwaves further and to rural areas, compared with 1800MHz, which is more suited for built-up, urban areas. So if operators have to operate on the latter bandwidth, this might result in poorer or no network connectivity, he explained. 

Operators will also have to increase their capital expenditure in order to boost existing infrastructure to broadcast the 1800MHz airwaves across a wider distance, he added.

Perera also pointed out that the government is planning to release only 5MHz worth of the 1800MHz bandwidth for this year's auction, and will only release more in the next two years. This means a higher auction price for limited bandwidth, thus creating an "artificial scarcity" that will undermine the country's attempts at shaping the future of its mobile industry, she elaborated.

Furthermore, the high prices will also be used as the benchmark for future spectrum auctions and this might affect the level of investments made by local and foreign operators in the country, she said.

As such, the GSMA and its members are seeking an open dialogue with India's government on these issues with the aim of finding a solution that will drive investment and growth in mobile communications and, more broadly, in the local economy, the trade body stated.

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