Trai at it again

Since access to pre-specified air wave frequencies or spectrum is to mobile phone companies what supply lines are to armies, it is no surprise that the battle between various mobile phone companies has really been over the allocation of spectrum over the past year or so.

The mobile phone firm with more spectrum will be able to service its customers better, and indeed as firms offer customers a higher level of service (termed as third generation, or 3G), including video streaming of TV and movies, the first one to get extra spectrum in the desired frequency will have a head start.

It is in this context that you hear a howl of protest from the GSM mobile phone companies, and a token one from the CDMA-mobile ones, over the latest spectrum recommendations of the telecom regulator, Trai.

On the face of it, Trai has been fair to both sides since it has recommended a dramatic hike in spectrum allocations for both sets of mobile companies (ironically, when Trai first issued its consultation paper on the subject a year ago, its view was that the spectrum allocated was more than enough!), and has asked the government to ensure that spectrum used by the defence forces is freed up for use by phone operators.

What is notable about the latest recommendations is that they seek to tilt the spectrum balance in favour of the CDMA-mobile players.

What Trai is saying is that the CDMA players are allocated less spectrum (per lakh subscribers) in comparison with the cellular ones and that this needs to be changed now and spectrum allocation should be “technology neutral”—in other words, give the CDMA companies more spectrum allocation.

The problem with this argument is that CDMA licences were given in the past only because it was claimed that CDMA was five times more efficient in terms of spectrum utilisation! It is disingenuous of Trai to argue the contrary now.

What Trai has recommended is that the CDMA players be allocated more spectrum in the 800 MHz frequency on some revised formula immediately—this, Trai itself admits in its recommendations, will allow the CDMA firms to offer 3G services.

But while Trai says GSM operators can offer 3G services only if they are allotted 2 GHz frequency spectrum, the recommendations leave the time frame of this allocation wide open, depending upon how fast, or slowly, the defence forces vacate this spectrum which they use for various applications.

Allowing one lot of mobile phone companies a head start in 3G services is patently tilting the scales in their favour—and this is not for the first time.

Trai’s recommendation that the spectrum be given free, needless to say, is inexcusable in the light of Ratan Tata’s offer to pay Rs 1,500 crore for fresh 3G spectrum.

With six all-India mobile firms, that’s a booty of at least Rs 9,000 crore waiting to be taken.

The general ruse to give spectrum free, that charging for spectrum will increase consumer costs, can easily be taken care of by putting a cap on mobile tariffs, for instance, and then asking all parties concerned to bid for the spectrum—the money thus obtained can perhaps be given to the defence forces to recalibrate/modernise their equipment so that they can vacate the spectrum.

Ignoring this offer and giving spectrum free will, and should, attract the attention of the 3Cs, the CBI, the CVC, and the CAG.