21, అక్టోబర్ 2012, ఆదివారం

Spectrum should not be allowed to kill BSNL/MTNL


How the spectrum which is nothing but the electro magnetic waves in the air can kill BSNL or MTNL? Spectrum as it is cannot kill. But the decisions being taken by the Government on spectrum are going to kill BSNL and MTNL. These decisions are going to be finalized before 12th November 2012. The only way to avoid this killing of BSNL and MTNL is to stop the Government from implementing such decisions.

The EGoM (Empowered Group of Ministers) that met on 08.10.2012 has recommended that all the existing telecom services companies have to pay a one time fee for the spectrum they are holding beyond 4.4 MHz, prospectively for the remaining period of their present license. This will come into effect from the date of approval of this recommendation by the Cabinet.What will be this amount to be paid by the telecom companies? The amount depends on the price to be found in the auction to be held in November 2012 for the 2G spectrum. The minimum price decided by the Government for this auction is Rs 14000 crore for 5 MHz spectrum for all the circles in the country. At this minimum price, for the remaining period of its license which is upto 2020, BSNL has to pay Rs 6250 crore and in this, one third has to be paid immediately and the remaining amount in annual instalments. If the auction found price for the spectrum is more, it has to pay still more. At the same time Airtel, Vodafone etc will pay less for the spectrum they are holding beyond 4.4 MHz since their license period of 20 years will be over in 2014/15 etc. Due to the refusal of the Government to grant mobile license for DoT/BSNL until 2000, the BSNL got 2G spectrum free of cost till now, only for 12 years and it has to pay the above said huge sum for its remaining license period of 8 years. On the other hand, the private operators like Airtel, Vodafone etc who were given license in 1994/95 enjoyed the 2G spectrum at no cost or nominal cost till now for 17/18 years and they now have to pay only for the remaining 2/3 years of their present license period.

Again, on 18.10.2012, the EGoM decided that the telecom operators have to pay the amount for the spectrum they are holding beyond 6.2 MHz for the period July 2008 to till now. BSNL also has to pay this amount.

The amount to be paid by BSNL on account of these two decisions will be, in any case, around Rs 6500 crore at the minimum and it may increase also if the price for spectrum in the auction goes up.

On 19.10.2012 the Telecom Commission has taken a decision regarding the contentious issue of spectrum refarming. Refarming means taking away the spectrum in a particular band from the telecom companies having it and then redistributing it to who ever purchases it in the auction. At present the 2G services are given on 2G spectrum in two bands-900 MHz band and 1800 MHz band. Among these two bands, 900 MHz band is of high quality since the equipment cost required for it is less compared to 1800 MHz band, and also 4G services can be given on the 900 MHz band by using LTE technology at less cost. But the present license condition is preventing the provision of services other than 2G services on this 900 MHz and also on 1800 MHz band. The operators who were given license for mobile services before 2001 were initially allotted the 2G spectrum in 900 MHz band and their equipment cost was less. Airtel, Vodafone, BSNL and MTNL were allotted with spectrum in 900 MHz band. But it was exhausted by 2001 and the companies that were allotted 2G permits since 2001 were allotted with spectrum in 1800 MHz band only and they had to incur more cost for the equipment. The Airtel, Vodafone, BSNL and MTNL are having spectrum in 900 MHz band as well as in 1800 MHz band since they were allotted spectrum initially in 900 MHz band and when it was over, in 1800 MHz band.

The operators like Tata, Reliance and others who entered   GSM 2G services since 2001 or there after were provided with spectrum in 1800 MHz band only. They are complaining that there was no level playing field since Airtel, Vodafone etc got the advantage of providing services by incurring less cost for equipment due to the allotment of 900 MHz band whereas they had to incur more cost for equipment since they were allotted spectrum only in 1800 MHz band. Hence they are demanding that the spectrum in 900 MHz band allotted to only to a few operators should be redistributed to avoid this discrimination.

After the judgment of the Supreme Court cancelling 122 licenses for 2G spectrum, the TRAI, as per the directive of the Supreme Court, gave certain recommendations on the auction of the spectrum including on the refarming (redistribution) of 900 MHz band spectrum. Based on these recommendations, as said above, on 19-10-2012, the Telecom Commission has taken a decision regarding the refarming of the 900 MHz band spectrum. As per this decision, the 900 MHz band spectrum allotted to the few companies Airtel, Vodafone, BSNL, MTNL will be taken back by the Government on expiry of their present license period and it will be auctioned so that all the telecom companies will get a chance for acquiring it in the auction. The present license period of Airtel, Vodafone will be over by 2014/15. Therefore the entire quantity of 900 MHz band spectrum with them will be taken away by 2014/15 and it will be auctioned. But the auction will be held in advance in 2013 itself so that the buyer will get the 900 MHz band spectrum immediately in 2014/15 without any delay. Therefore there are two options before Airtel and Vodafone. Either they have to participate in the auction and get the minimum 5 MHz quantity of 900 MHz band spectrum for their next license period starting in 2014/15 so that they can continue thir services on their existing network built for the 900 MHz band spectrum. If they do not want it, then they have to replace their existing network with a new network suitable for 1800 MHz band spectrum. Both options will be costly and each of them  may have to incur more than Rs 20000 crores for this purpose. That is why they are opposing the decision of the Telecom Commission and demanding the Government not to accept it so that they can continue with their 900 MHz band spectrum by paying less  amount.

What about BSNL? The license period of BSNL will be over by 2020. Therefore until 2020 it can continue to have the 900 MHzx band spectrum without any extra payment. But there is a problem here. The present license condition allows only 2G services on 900 MHz band spectrum. The operators who acquire it again on the expiry of their license in 2014/15 or the operators, who acquire it afresh, will be allowed to provide any service including 4G services on 900 MHz band using any technology including LTE technology. Thus they will go ahead with providing 4G services. Since the trend in telecom business is increase in the revenue for data services and decrease in the revenue for voice services, whichever company provides 4G services with highspeed data will gain more and whichever company is unable to provide 4G services will lose more. Therefore to with stand in the competition it is necessary for BSNL also to start providing 4G services along with others. To do this, it has to get its 900 MHz band spectrum liberalized, that is, it has to pay the same amount as per the price to be discovered in the auction in2013 for the 900 MHz band spectrum and have it for 20 years since 2014 so that it also will be allowed to provide 4G services from 2014. Hence it has to pay an amount which may be more than Rs 20,000 crore for this purpose.

Recently Airtel has started providing 4G services by utilising the BWA spectrum it got in 2300 MHz band. BSNL also got BWA spectrum by paying Rs 8500 crore to the Government in 2010. But it was in 2600 MHz band which was not suitable for providing 4G services utilizing the cost effective LTE technology. Therefore it   surrendered   it to the Government, but the Government not yet refunded the amount. Hence the only way for BSNL to provide 4G services along with other operators is to get its 900 MHz band spectrum liberalized by paying the huge amount of more than Rs 20,000 crores.

Thus, BSNL has to pay a huge amount of more than 27000 crores on account of these payments for spectrum over and above 4.4 MHz, 6.5 MHz and for spectrum liberalization. When it is already in heavy losses since the past 3 years and when its cash reserves are finished, where from it can get this money? It has to take a huge loan for this, but the servicing of such a loan will be difficult in view of its heavy losses. Therefore these decisions on spectrum will kill BSNL as a PSU. Spectrum has thus become a tool In the hands of the policy makers to kill the PSUs BSNL and MTNL.

But these are not the finalized decisions. These are subject to the final decision of the Cabinet. The Cabinet has to take the final decision on these issues before the starting of the auction of the 1800 MHz band spectrum on 12th November 2012. The only way to save BSNL is to get exemption from these payments for the spectrum exceeding 4.4 MHz/6.2 MHz and for spectrum liberalization. The private operators are demanding the Government not to give any such exemption to BSNL. They are creating pressure on the Government. It is now the time for the Unions and Associations of BSNL, MTNL as well as the managements of the BSNL and MTNL to fight and get the exemption from these payments. Otherwise there will be no scope for the survival of BSNL and MTNL.

----P.Asokababu


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