With the defence services agreeing to vacate 10 MHz of additional spectrum immediately across the country, the department of telecommunications would have enough spectrum in most circles to allow between four and 12 operators (including BSNL and MTNL) for 3G services in some circles.
The sole exception would be the Rajasthan circle (which can accommodate only two operators). The West Bengal and North-East circles would be able to accommodate only four operators. The numbers are based on the latest note prepared by the DoT.
The availability of spectrum is a key element that determines the auction price of spectrum. Higher availability means a lower price. Communications minister A Raja has said that he hopes to mop Rs 25,000 crore (Rs 250 billion) from these auctions.
Metros like Mumbai can accommodate eight operators (each operator gets 5 MHz), Delhi can accommodate five operators, while Kolkata, Karnataka, Andhra Pradesh and Tamil Nadu can accommodate 12 operators each.
The analysis of the availability of spectrum by DoT is crucial, as a fierce debate is on between ministries on whether the government should auction the entire spectrum available in one go or limit the number of operators to only four-five players in the initial stage so that there is spectrum available when some of the operators require more than 5 MHz.
The DoT note on issues related to 3G auctions take into account the opinion of the Telecom Regulatory Authority of India and the solicitor general of India, who said that all available spectrum should be auctioned. Through this, more service providers can be accommodated, leading to more competition in the telecom sector.
However, on the other hand, the auction of all available spectrum would mean that there would be no spectrum left for the future needs of operators. Also, an auction of a large number of blocks would lead to fragmentation of spectrum, which could lead to an inefficient utilisation of spectrum.
On May 22, DoT and the defence ministry had signed a memorandum of understanding after a deadlock for over two years over the release of spectrum used by the defence forces. According to the MoU, the armed forces will immediately release 10 MHz of 3G spectrum and 5 MHz of 2G spectrum.
The rest will be released according to timelines agreed on by the two ministries, which are contingent upon DoT placing the supply order for setting up an optic fibre cable network for the defence services, the supply of the equipment, its installation and commissioning.
The defence forces have always been major users of spectrum for various security-related operations like air defence, command and control, information services, communication and early warning.
They have spectrum along the border, as well as in the hinterland and mainland, for low-intensity conflicts. The defence ministry's view has been that it could part with some spectrum by shifting the use of some systems to an exclusive fibre-based network.
With the entry of at least six new operators on the Indian telecom scene, the fight for spectrum has only intensified. And, with the average revenue per user on a constant decline, operators want to capitalise on 3G services which will help them to offer high-end data services for higher revenue per user.