We have a huge spectrum shortage — while we need around 582 MHz of spectrum for all telecom needs by 2014, Trai says only between 287 MHz and 453 MHz can be made available for commercial use, of this telcos have been given just 80 MHz! There’s no point just blaming Raja, there just isn’t enough coordination between various ministries on this since the spectrum has to be vacated by defence, space and other sectors.
It may well be, as many argue, that Trai’s consultation is a delay tactic aimed at allowing Raja to give more spectrum free to the telcos to whom he dished out bargain-basement price spectrum, the subject of the current CBI raids on his ministry. While Raja has given out 4.4 MHz to each player and can dish out another 1.8 MHz, the Subodh Kumar report on spectrum recommended in May that all future spectrum, including this 1.8 MHz, be auctioned.
A report by Plum Consulting of the UK points out that if a company is given 6 MHz of spectrum, it can carry 6 Erlangs of traffic per MHz per sector (that’s how voice/data is measured!), but if the same company is given 9 MHz of spectrum, it can carry 9 Erlangs per MHz per sector, or 50 per cent more. Vodafone has done some further refinements and according to its calculations, if four operators are given the same amount of spectrum which is currently given to 10 operators, they will be able to deliver 10 times the capacity due to economies of scale.
Estimates given by different consultants will vary, but broadly speaking, this means with just the 80 MHz of awarded spectrum, telcos can service the voice needs of around 700-800 million subscribers! And at an obviously lower price since once the operators have more spectrum, they will need to put up less base stations and the savings can be anywhere up to a fourth. So, bye bye falling margins!
Source: Business Standard
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