Telecom and Postal Sector – Spectrum Allocation, Call Drops, Predatory Pricing, etc

Revitalizing India’s Spectrum Policy

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Telecom Spectrum

Mains level : Spectrum policy, auctions, Digital divide, issues and Solutions

Spectrum

Context

  • It is widely acknowledged that spectrum policy in India has had ups and downs, regretfully more downs than ups. Despite the recognized failure, India hosts 800 million internet users and host the second-largest telecommunications network in the world. We wonder what might have been achieved with a more reasonable and transparent spectrum policy.

Background

  • On September 22, the government released the draft Indian Telecommunication Bill, 2022 seeking to replace the colonial era Indian Telegraph Act, 1885.
  • The draft bill compares spectrum to aatma: “In a way, spectrum is similar to aatma, like aatma, spectrum too does not have any physical form, yet it is omnipresent.” And yet there is one immutable difference in this material world. While the value of aatma is inestimable, spectrum has always had a banal price tag associated with it.

Spectrum

What is Draft Indian Telecommunication Bill, 2022?

  • The draft Indian Telecommunication Bill, 2022 is an attempt by the Department of Telecommunications (DoT) to consolidate various legislations presently governing the telecommunication landscape in India.
  • The Bill seeks to replace three laws, the Indian Telegraph Act, 1885, the Indian Wireless Telegraphy Act, 1933 and the Telegraph Wires (Unlawful Possession) Act, 1950.
  • The new regulatory framework is to bring the law at par with technological advancements and remove obsolete provisions from the colonial era laws.

What is mean by Spectrum?

  • In physics, it’s a word that describes the distribution of something, like energy or atomic particles
  • Spectrum refers to the invisible radio frequencies that wireless signals travel over. Devices such as cell phones and wireline telephones require signals to connect from one end to another.
  • These signals are carried on airwaves, which must be sent at designated frequencies to avoid any kind of interference. The frequencies we use for wireless are only a portion of what is called the electromagnetic spectrum.
  • The Union government owns all the publicly available assets within the geographical boundaries of the country, which also include airwaves.
  • With the expansion in the number of cell phones, wireline telephone and internet users, the need to provide more space for the signals arise from time to time.

The status of Spectrum policy in India?

  • Host the second largest telecommunications network despite of failures:
  • It is widely acknowledged that spectrum policy in India has had ups and downs, it has for the most part failed to capitalize on the ubiquity of the electromagnetic spectrum to provide meaningful connectivity to all citizens.
  • Despite the recognized failure, we boast of a billion plus mobile subscribers, 800 million internet users and host the second-largest telecommunications network in the world.
  • Ineffective access widening space of digital divide:
  • The intent of the draft bill is to correct past sins so that the benefits of spectrum and technology are better shared, and the quality of access improved for everybody.
  • In other words, since effective access to spectrum has remained a significant barrier to facilitating meaningful connectivity for Indians.
  • Spectrum’s potential is huge but with technical limitations:
  • The draft bill rightly refers to the spectrum as having the characteristics of a public good. It is also an inexhaustible resource. But while spectrum per se is not depletable, there are technical limitations to its optimum utilization at a given point in time.
  • Consequently, it is viewed as a scarce natural resource and what’s more, expensive auctions have made the spectrum dear and arguably exclusionary.
  • High cost of spectrum acquisition:
  • Since 2010, the government has consistently used auctions for spectrum allocation and in only one of the seven auctions held since then, the government was successful in selling 100 per cent of the available spectrum. One reason for this lukewarm response, barring the 2010 auction, is the high cost of spectrum acquisition.
  • High cost of auctions leading to revenue loss for the government:
  • Due to the high reserve price, the most recent auction witnessed spectrum being sold at the reserve price, effectively rendering the basis of an auction moot.
  • If almost all spectrum was sold at its reserve price, and a significant amount goes unsold, it implies that the price was too high, to begin with. It also implies a loss of revenue for the government for spectrum unsold is spectrum squandered.
  • Finally, it results in areas being underserved or unserved affecting quality and quantity.
  • High network charges by operators impacts compromising equal distribution and quality:
  • According to one estimate, at 7.6 per cent of their aggregate revenue, spectrum cost in India is amongst the most expensive in the world.
  • Since network operators incur a significantly higher cost for spectrum compared to other emerging markets, the ability to invest in network upgradation and infrastructure is severely impacted, resulting in uneven distribution of service and poor quality to boot.

Spectrum

What Could be the fresh approach?

  • Acknowledging and addressing the issues:
  • It must be recognized that the spectrum needs to be combined with other infrastructure to enable service delivery.
  • The cost of deploying other infrastructure in remote areas is nearly twice as much, while revenue opportunities are far lower, damaging if not destroying the prospects of rural businesses. Plugging the digital divide, therefore, needs a fresh approach.
  • Correcting the cost of spectrum and boosting investment:
  • Since licences and spectrum are typically assigned for service areas that are, for the most part, identified by state boundaries.
  • Since operators predominantly cater to urban markets, the spectrum in remote areas remains under- or in places un-utilized due to a lack of investment in allied infrastructure.
  • Reviving the old and executing the fresh provisions enshrined in draft bill for equitable sharing:
  • The draft bill incorporates practical provisions on the spectrum such as use it, share it, or lose it – an awaited policy that, however, needs innovative support to be successful. The idea of “niche operators” providing services including to telecom operators and manufacturers, introduced in 2005, needs revival in this regard.
  • If licensed operators are unable to utilise the assigned spectrum, the same could be given to local entrepreneurs who understand the needs of rural customers and are better placed to develop a more effective business case more quickly than the larger telcos. Active promotion of the idea of niche operators might just jolt operators out of their lethargy towards rural services.
  • Adopting innovative methods:
  • Alternatively, the government may explore innovative methods of spectrum access such as a non-competitive licensing framework for certain specific use cases.
  • Canada, for instance, has initiated consultations on a non-competitive local licensing framework in the 3900-3980 MHz Band and portions of the 26, 28 and 38 GHz bands to inter alia facilitate broadband connectivity in rural areas.
  • Emphasizing on Transparency and enhancing healthy competition:
  • The government should build an ecosystem that inspires trust so that transparency in assignment can be secured at a reasonable price for operators with strict service obligations without the phantasm of auctions.
  • At the same time, there should be no unsold spectrum. Niche operators should be invoked to engender competition, and government could yet collect revenue for itself.

Spectrum

Conclusion

  • The telecom is no longer an end in itself. It exists for user industries much more than ever before. The spill over benefits are far greater than what the sector commands within. Thus, to state the obvious, the vision that is “Digital India” can never be realized if affordable broadband connectivity remains only within the reach of a few.

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