This Analysis on how the new TRAI recommendations impact Incumbents and New Operators should have come 2 days ago, but can’t really help it as have to manage too many tasks on hand. Anyway, the rest of the TRAI recommendations Vs Own Views are briefly summarized here.
Now lets Analyze the Impact of TRAI Recommendations,
..all spectrum to be assigned through the auction process in future shall be liberalised. In other words, spectrum in any and can be used for deploying any services in any technology
Positive for Incumbents and Negative for New Operators, provided the Reserve Price comes down a bit.
…refarming of spectrum in the 800 MHz and 900 MHz bands should be carried out progressively at an early date but not later than the due date of renewal of the licences…spectrum available in the 900 MHz band to be replaced by spectrum in the 1,800 MHz band..
No impact on new Operators. Negative for all incumbents (Bharti, Idea, Reliance Communications and MTNL/BSNL). Let us assume that Airtel wins the case to retain until renewal, even then it will have to spend Rs 31,000 Cr to renew 900MHz spectrum at reserve price and Idea will have to shed Rs 20,000 Cr.
…the auction of spectrum in 700 MHz band may be carried out at a later date, preferably in 2014 as and when the ecosystem for LTE in the 700 MHz is reasonably developed, so as to be able to realise the full market value of the spectrum.
Negative for Airtel and Vodafone as they wanted to build backhaul capacities for Data. Idea and Reliance Infotel Broadband are happy 🙂 Postponing the same will help the Government realize far better value than it could realize today.
Auction Format – the Authority recommends that it should be held in single stage…every auction shall be open to all those holding CMTS licence/UAS licence/Unified licence or eligible for grant of Unified Licence…Auction shall not be open to those that hold spectrum above the prescribed cap.
Negative for New Operators and Positive for Eligible Bidders. Confusion prevails on those licences cannot participate who hold spectrum above the “prescribed cap”. Whether this cap is the 8 MHz for pan-India (barring Mumbai & Delhi where it is 10 MHz) or whether it is the 25% cap on spectrum holding (when acquired through auction/merger) needs to be clarified.
…after conducting the auction for spectrum in the 1,800 MHz band, and reserving the spectrum required for refarming, out of the remaining spectrum if any, one block of 2×1.25 MHz of spectrum may be allocated to those licensees having 4.4 MHz of spectrum in the service area, at the auction discovered price for that service area. It should be clearly understood that while this tranche of 2×1.25 MHz will be paid for at the auction discovered price, it will be treated on par with the unliberalised spectrum of 4.4. MHz that is held by the licensee, unless the licensee opts to liberalise the 4.4.MHz spectrum also by paying the auction discovered price…
Negative for incumbents holding 4.4 MHz spectrum because they will have to pay for spectrum at the liberalised value and still the 2*1.25 MHz block will be treated as unliberalised. Neutral for New Telecom Operators.
In the next post we will cover the impact analysis of Deferred Payment, Sequence of auction, Spectrum Trading, Roll Out Obligations, Spectrum Mortgage etc.