After a brief lull which lasted for some months, the old chestnut of spectrum refarming has reappeared this week in India’s telecom radar. The question on most minds is this: Is refarming good or bad, and if it is good, what is the point of doing it?
In most countries, telecom regulatory authorities propose refarming at a point when they see a potential for more efficient use of spectrum compared to its present usage. This typically happens when an industry reaches an inflexion point in the shift of traffic from voice to data, and therefore wants the 900 MHz band to be dedicated to carrying data (which is more efficient than the 1800 MHz band, for instance).
The UK has recently introduced a policy of partial refarming of spectrum amongst its four telecom operators. Whenever refarming has happened in other countries, the programme normally had three features: A reason, consultation, and a phased implementation. These paradigms must apply equally to India to ensure a reasonable outcome.
In India at the moment, a compelling case for spectrum refarming hasn’t been put forward. It is not clear whether the 900 MHz space has to be vacated by its current occupants in order to make way for other uses. (It is also not clear what the other uses could be.)
More consultation would help: Usually regulators follow a process of allowing stakeholders (including operators) to engage in this over a period of time. And finally, refarming is done in stages spread out across a few years, instead of having large amounts of spectrum vacated all at once.
Full spectrum refarming as proposed by the Telecom Commission appears to be risky. Firstly, it could lead to higher prices and poorer quality of service, since operators will have to dismantle and rebuild their network at a high cost, and move traffic to the 1800 MHz band, which in many areas has weaker propagation qualities than the 900 MHz band.
We’re told by the industry that full spectrum refarming would lead to the replacement of the active equipment on about 287,000 sites across India; it would also require the construction of an additional 172,000 sites to service extra 1800MHz band needs. If we assume that these additional costs cannot be absorbed by telecom operators, which is likely given their low profitability, we could expect tariffs to go up. How much: Almost 27 paisa per minute!