With 14 mobile operators operating in India, the issue of a crowded telecoms market has been plaguing operators for years. The issue has reached such an impasse that the telecoms minister Kapil Sibal, who took office in November 2010, is actively looking at steps to promote consolidation, saying that he “will look at all aspects of facilitating M&As”.
The New Telecom Policy 2011, currently under development by the Department of Telecom (DoT), could take a similar approach to promoting closer working relationships between telecoms players.
According to the Economic Times in India, the DoT looks set to introduce recommendations by the Telecom Regulatory Authority of India (TRAI) in its ‘Spectrum management and licensing framework’. This would allow two or more service providers to share spectrum, which would be permitted as long as neither operator holds more than 4.4 MHz of GSM or 2.5 MHz of CDMA spectrum. However, the TRAI has added that leasing of spectrum should not be permitted.
Similar trading activity will not be permitted with the 2G spectrum, however, due to the fact that the 2G was initially bundled with the licence, and therefore its price has not been determined by the market.
The decision to allow spectrum sharing would allow service providers to lease surplus spectrum to their competitors. Due to the overcrowding in the Indian market, many service providers have not acquired enough subscribers to utilise their spectrum allocation completely.
While the move may be radical, it is not a new idea. The TRAI has been contemplating the introduction of spectrum sharing since at least 2007.
For more information about TRAI's recommendations, see here.
