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Corporate Nov 21, 2012

Will GSM players get to bid for 800 MHz?

By Sindhu Bhattacharya

New Delhi: The GSM operators may have been reluctant participants in the recent 2G auctions but that has not stopped them from making fresh demands on spectrum from the government.

Sources tell us the GSM operators are now asking the Department of Telecom (DoT) to enable them to use the 800 MHz band for GSM operations.

"Some discussions have happened between the industry and the government over this. We are saying allow us to use 880 MHz band onwards as extended GSM band, a common practice worldwide. We will write to the DoT formally about this. But till now, only preliminary discussions have taken place," an industry representative told Firstpost.

A high reserve price for CDMA spectrum deterred even telcos like Tata Teleservices. Reuters

If the government agrees to this proposal, it may get willing participants in a re-auction it may hold for 800 MHz band of spectrum. Till now, 800 MHz band has been used for code division multiple access (CDMA) operations in India.

But when the government decided to hold auctions for 800 MHz band along with auctions for 1800 MHz recently, not a single CDMA telco came forward.

A high reserve price for CDMA spectrum deterred even telcos like Tata Teleservices which had lost licences awarded by former telecom minister A Raja and needed to win back spectrum in at least select circles.

But will GSM telcos be willing to pay the high reserve price that CDMA players baulked at, even if the government agrees to let GSM operations happen in the 800 mhz band?

The 800 MHz spectrum was priced 1.3 times the 2G spectrum at Rs 18,200 crore for 5 MHz.

But the CDMA players are none too happy over this development. They pooh-poohed any such demand, saying the government cannot possibly ask them to vacate the 800 MHz frequency just because GSM players may participate in any fresh auctions.

As of now, CDMA operations happen in the 824-844 MHz band for uplinking and 869-889 MHz band for downlinking.

A prominent CDMA telco pointed out that there are four big CDMA players: Tata Teleservices, Reliance Communications, MTNL/BSNL and HFCL (in some circles).

"All of these would be impacted if the government implements the extended GSM concept. Not only will we need to vacate the specific frequency band leading to service disruption, we will also have no scope for future growth left."

This CDMA official also said all the GSM players are vying to get as close as possible to the 900 MHz band, since many incumbent GSM telcos will lose 900 MHz spectrum they already hold by early next year due to 'refarming'.

For now, the ball is in the government's court though. It remains to be seen if the government will put fiscal considerations before telcos' plight and go ahead with reauction of 800 MHz spectrum band by allowing GSM guys to bid for 880-900 MHz frequencies.

Alternatively, it could look at substantially lowering the reserve price for 800 MHz band which may encourage CDMA players to bid in any fresh auction.

by Sindhu Bhattacharya

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