The Government approved spectrum-sharing guidelines as positive for the incumbents. Operators however, would need to find a balance between the costs of sharing (0.5% increase in spectrum usage charges) with the benefits of spectrum sharing (a cost-efficient mechanism to enhance network capacity and quality). Disallowing spectrum leasing is a negative for challengers.
The spectrum-sharing guidelines approved by the government are aimed at improving spectral efficiency and enhancing network capacity using the limited spectrum available. In our view, it is a positive for incumbents who can now pool their spectrum in various bands and improve network capacity. Network capacity increases non-linearly with quantum of spectrum, e.g., 5 MHz of paired spectrum (in GSM) can be used to carry 33 Erlang of traffic, while 10 MHz can carry 139 Erlang (numbers, as per TRAI). Low size of spectrum blocks (only 5 MHz each) in the 2100 MHz band has been one of the issues highlighted by several operators. Now, operators who hold 3G spectrum in a circle can pool their spectrum to improve data throughput and improve quality.
The approval means that challengers who were hoping to monetize their underutilized spectrum holdings through spectrum leasing would not be allowed to do so. Operators can pool their spectrum for common use, and cannot lease capacity on their networks.