Refarming 900 MHz spectrum will be 'death knell' for the GSM players: COAI

Telecom Commission recommended on Wednesday that existing mobile operators will have to fully give up airwaves in the superior 900 MHz band at the time of licence renewal in 2014 - a move that GSM players said would cost them over Rs. 66,000 crore in replacing infrastructure.

"The entire spectrum in 900 MHz will be refarmed," Telecom Secretary R Chandrashekhar said after meeting of the panel.

Chandrashekhar, who also heads the commission, said three different options were put before Telecom Commission including refarming (or redistribution of airwaves held by existing players) of all airwaves held by incumbents, or allowing the operators to retain either 2.5 Mhz or 5 Mhz of airwaves frequencies in 900 Mhz band.

"The commission decided that entire spectrum will be refarmed which means above 0 (Mhz)," Chandrashekhar said.

The recommendations of the commission - the highest decision making body of Department of Telecom - will now be put before the Empowered Group of Ministers (EGoM) headed by Finance Minister P Chidambaram for a final decision when it is likely to meet tomorrow.

Terming the decision as "death knell" for the GSM players, COAI said: "Operators with 900MHz band will need to replace 286,590 base stations and install an additional 171,954 base stations to provide equivalent coverage on 1800MHz."

Such a replacement of base stations and deployment of additional sites will result in an incremental capex of Rs. 54,739 crore, and incremental annual opex of Rs. 11,762 crore, COAI said citing an independent study by Analysys Mason.

However, dual-technology operators' association AUSPI welcomed the decision saying it will create a level playing field among operators.

"The decision of TC is in accordance with the NTP 2012 which delinks licenses from spectrum and hence, at the time of renewal the operators will have to get it by competitive and transparent methods," AUSPI said in a statement.

Chandrashekhar said the existing operators will be allowed to bid in the auction of 900 MHz band, which is likely to take place in the first half of 2013. If they are successful, they can retain the spectrum, he added.

However, if the incumbents fail to win the spectrum, they will be given 18 months to move to 1800 MHz for which an equivalent amount of spectrum will be made available for them in the new band.

"...if the same operator succeeds, he will retain it, if a new person succeeds, than the existing operator has 18 months to make his alternative plans and the new operator will have 18 months to put his infrastructure in place before he gets the spectrum," Chandrashekhar said.

The licences of existing players for metro circles are coming up for renewal in November 2014 and for other circles in 2015 and 2016.