Telecom Commission decided to Allow Mobile Phone Companies to Share 2G spectrum Only

The apex decision-making body of the communications ministry, the Telecom Commission decided to allow mobile phone companies to share spectrum. The Commission has however limited this facility to 2G airwaves alone. Second generation (2G) spectrum is largely used for offering vanilla voice services. The telecommnication companies cannot therefore share 3G spectrums.

Incumbents such as Bharti Airtel, Vodafone, Aircel and Idea Cellular took the government to court, after the telecom department asked these companies to terminate their 3G roaming deals. These companies had hoped the Commission’s policy changes had hoped that policy changes permitting the sharing of airwaves, would put an end to this controversy. The  companies had signed up 3G customers across the country riding on bilateral roaming agreements that allow these firms to use each other’s airwaves and offer high-end data services even in regions where they do not have 3G spectrum.

The Commission also decided to introduce slew of riders to govern spectrum sharing. The riders are as follows:

•    Only those operators that have airwaves in a particular region can share it. Spectrum can be shared only between two spectrum holders. A non-licensee or licensee who has not been assigned spectrum as yet cannot be party to spectrum trading.
•    Two companies can share airwaves only if their combined holdings do not exceed the limits prescribed in the M&A norms. The Telecom Commission had recently approved sector regulator TRAI’s recommendation that during mergers, the combined entity be allowed to have up to 25% of the total airwaves in the region.
•    Spectrum sharing deals will also have to be renewed every five years.
•    When operators share spectrum, both companies will have to pay usage charges on the total airwaves held jointly. Currently, operators share between 2% and 6% of their annual revenues based on the quantity of airwaves they hold.
•    The telcos sharing spectrum must pay the government the commercial value of the airwaves it is using. It essentially means, an operator that has 4.4 MHz of airwaves, and is sharing radio frequencies with another telco that has the same amount, must pay current prices for additional 4.4 units of spectrum it is using.

To ensure that payment of current price does not act a disincentive, licensees may be permitted to pay the current price applicable on the date of permission, on an annual basis, instead of for five years at a time, and this payment will cease if the sharing agreement is annulled midway.