Trai backs hybrid model for spectrum

Sanjay Anand / TNN / Sep 26, 2006, 23:53 IST

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Telecom regulator Trai is likely to recommend a hybrid model for allocation of spectrum for 3G (third generation) cellular services.

NEW DELHI: Telecom regulator Trai is likely to recommend a hybrid model — a combination of licence/entry fee and a selection process — for allocation of spectrum for 3G (third generation) cellular services.
Cellular operators need new spectrum — radio frequency waves/bands that carry voice and data to/from cellphones — to offer 3G. Trai will make final recommendations on allocation and pricing of 3G spectrum to government on Wednesday for framing the policy.
However, sources said a combination of a reserve price and an auction can also be considered.
"It is going to be a hybrid model,"said an official source. He however did not specify the combination likely to be recommended, but it is most likely that cellular operators like Airtel, Hutch, Idea, Reliance and Tatas would have to pay certain amount up front (say Rs 200-300 crore each) and then go in for a selection process based on certain financial and operational parameters.

According to sources, Trai officials on Tuesday found that criteria and weightages for an elaborate beauty contest alone may not be perceived to be objective and lead to protracted litigation. They met later in the evening again to finalise recommendations.
Among the options being considered were: bidding for spectrum through auction, payment of entry fee pre-determinted by the government and a ‘beauty contest' with pre-announced criteria.

Stakeholders have been largely wary of the auction because in several countries it led to hyper-bidding creating financial mess for the telecom sector globally, delaying 3G launch and making the services expensive.
A pre-decided entry fee, on other hand, has been widely believed to be a better option, where industry pays government for getting the specturm vacated from the defence. The GSM cellular industry has agreed to shell out about Rs 1,000 crore as entry fee, covering the vacating costs.
Meanwhile, Tatas alone had offered to pay Rs 1,500 crore for the spectrum and they are believed to be open to the idea of auction.
But, Trai is believed to have decided on a combination of fee and selection process.
On the frequency band to be allocated for 3G services, sources said that Trai was expected to recommend 2.1 GHz demanded by GSM players like Airtel and Hutch, instead of 1900 MHz sought by CDMA operators like Tatas and Reliance.
"There have only been lab tests for 1900 MHz band but not field tests, and going in for mixed bands which causes interference between the two technologies (GSM and CDMA) has been found to be problematic by GSM players,"said one source.
"Although filters could be added to check interference, it is likely to add to costs and waste scarce spectrum,"he added.
Although there has been controversy around 3G spectrum issues, and some low-key trials have begun in the 2.1 GHz, industry observers say services will not be commercially launched before 12-18 months.
GSM operators say by then adequate spectrum would be available to accommodate more players, avoiding possible litigations by smaller companies that may be left out.

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