SSTL calls TRAI's proposal to bar it from CDMA spectrum auction "unfair"

Sistema Shyam Teleservices, which operates under the MTS brand, on Wednesday termed as "unfair" Telecom Regulatory Authority of India's (TRAI) proposed view that SSTL be restricted from buying CDMA spectrum in auction of airwaves.

"TRAI has raised an issue on possibility of imposing restrictions on SSTL for participation in next 800MHz auction.We are of view that these restrictions are not called for various technical and commercial considerations and also these restrictions would be unfair," Sistema Shyam Teleservices Ltd (SSTL) in its reply to a consultation paper floated by TRAI.

After a long stand-off with government, TRAI has started consultation process on determining the value of 800MHz spectrum which at present is used for CDMA mobile services.

The last date for submission of comments ended Wednesday.

While SSTL is a pureplay CDMA operator, Reliance Communications and Tata Teleservices also use CDMA technology to provide mobile services.

Telecom majors including Airtel, Vodafone, Idea Cellular are pureplay GSM operators.

SSTL, a venture involving equity participation by Sistema Joint Stock Financial Corporation of Russia, the Russian Federation and the Shyam Group of India, was the lone bidder in March 2013 auctions for CDMA spectrum.

The regulator is of the view that SSTL has already acquired 3.75MHz of spectrum in 8 service areas -Delhi, Kolkata, Gujarat, Karnataka, Tamil Nadu, Kerala, Uttar Pradesh (West) and West Bengal.

TRAI has expressed concern that SSTL will be able provide 4G (LTE) services by buying additional spectrum at half of the reserve price compared to other frequencies suitable for providing similar service.

SSTL contested views of the regulator and demanded reduction in prices of the airwaves like the way TRAI did it for GSM spectrum.

(Also see: TRAI recommendations favour incumbent 2G operators: SSTL)

It said spectrum available in CDMA band is not fit for providing 4G services like the GSM airwaves being put for auction in February and the company will have to incur heavy expenditure for providing this next generation service.

"There was no participation for 800MHz in 13 circles in the previous auction. Thus, there is a strong case to reduce 800MHz reserve price and revive operator's interest in 800MHz band," SSTL said.

The company claimed that any attempt to increase reserve price would again see no participants in 800MHz band auction.

Such a step would also be inconsistent with methodology TRAI used for 900MHz and 1800MHz which resulted in significant decrease in reserve price.

"Like 900/1800MHz bands, there was no participation in 800MHz band in most circles experience shows that due to high reserve price, there was total lack of interest in the auction and the participation was almost nil. There is need to look afresh at 800MHz reserve price and reduce it," SSTL said.

TRAI recommended about 62 percent cut in base price of premium 900MHz airwaves and about 37 percent in price of 1800MHz band known as 2G spectrum.

(Also see: TRAI reiterates spectrum auction proposal to cut base price by 60 percent)

SSTL said that 4G device eco-system for 1800MHz band, which is priced less than 900MHz band, is more mature compared to that in 800MHz band.

"The economies of scale for infrastructure and devices are available only for LTE1800. Thus valuation of 800MHz would also have to take this issue into consideration," it added.

SSTL stated that out of total 1,240 LTE (4G) user devices that have been announced, about 412 devices are in 1800MHz band in the form of handsets, tablets, and dongles.

"LTE1800 networks have already been commercially launched in 58 countries. The 850 LTE commercial networks are less than 5. The economies of scale for infrastructure and devices are available only for LTE1800 valuation of 800MHz would also have to take this issue into consideration," SSTL said.