Why the big fight over spectrum

The venerated New York Times columnist William Safire called spectrum the most valuable natural resource of the information age.

Senator Larry Pressler, who is also on the board of Infosys, says radio spectrum is to the information age what oil and steel were to the industrial age.

But the problem is, as the US General Accounting Office pointed out, although the radio spectrum spans the range from 3 kilohertz to 300 gigahertz, 90% of its use is concentrated in just 1% of its frequencies — that which lie below 3.1 Ghz, because these frequencies have properties that make it well-suited for many important wireless technologies.

Spectrum pertains to a range of radio frequency or electromagnetic radiation — or, as the Americans call it, airwaves — that exists on earth.

The frequencies include x-rays to white light to gamma rays, and range from low to high.

The spectrum that your mobile phone operator wants lies in the low ranges between 1Mhz and 3 Mhz because that’s the frequency which allows signals to pass through layers of walls and other geographical impediments and the call reaches you at home or inside office.

Telecom firms are forced to own large slices of spectrum because only then can they ensure that emerging bandwidth-heavy technologies such as streaming music and mobile TV can be offered to their clients.

SCARCE RESOURCE: The main problem is that spectrum is a scarce natural resource, says Prashant Singhal, telecom industry leader at Ernst & Young. While GSM operators are saying that spectrum is in short supply, the government wants them to spend more on infrastructure so that they can become more-spectrum efficient.

Incidentally, CDMA is a more spectrum-efficient platform - that is, players using this technology can make do with less spectrum. Also, all over the world, operators are using newer technologies like SAIC-enabled handsets which are spectrum-efficient.

GROWING COMPETITION: How much spectrum should be given to whom is at the heart of this ongoing battle, says Arpita Pal Agrawal, associate director, PricewaterhouseCoopers (PwC). While existing GSM operators such as Bharti, Vodafone Essar, Idea, Aircel and Spice want new players to get spectrum only after there is enough for the existing players, while RCom wants those with spectrum above 6.2Mhz to return it. Apart from RCom, there are over 45 firms who have applied for telecom licences recently in the queue. The list includes names like Unitech, Videocon, Parsvnath, Moser Baer, ByCell, S Tel, and AT&T. Many among these, who applied before September 25, are likely to get letter of intent soon.

HOT MARKET: India’s teledensity is just 22.52% — or only 22.5 people out of 100 have a phone — as against the ultra-saturated or “mature” markets in the west. That makes the Indian telecom sector extremely lucrative, and explains the fight for it. India has a total of 217.14 million mobile subscribers and the market is growing by 7 million to 8 million a month. The next boom in India will be in the rural areas. That’s where Reliance Communications plans to concentrate using the GSM technology.

VACATION OF SPECTRUM: While the DoT and the defence ministry have been in negotiation for long for getting some spectrum vacated from the army, air force and navy that can be deployed among the telecom firms, no MoU has been signed yet. A group of ministers to deliberate on this issue was set up two years ago, but there’s no headway yet. Defence may vacate around 45 MHz of spectrum sometime in the future, but only when an alternative optic-fibre communication platform is readied by DoT for use by the defence forces.

VALUING SPECTRUM: A pan-India telecom licence costs Rs 1,650 crore. Once paid, the operator waits in queue for allotment of spectrum, but there is no additional payment required for it. But now that Bharti has made a monetary offer to the government for additional spectrum, things could change bigtime.