The Telecom Commission has decided to change the frequency bands associated to the mobile operator’s GSM technology that was flagged by the companies, who claimed that they had to right away compensate INR 55,000 Cr for adding the infrastructure.
R Chandrashekhar, telecom secretary head for the telecom commission panel said that operators said that the additional burden will prompt them to increase the call charges, which are lowest now. The entire frequency spectrum of 900 MHz will get reframed. Recommendations have to get endorsed by the ministers empowered group and that is scheduled to meet this Thursday.
Starting from 2014, when mobile operator licenses come for renewal, operators like Airtel, Bharti, Idea and Vodafone have to change their frequency to 1,800 mega hertz. It is the proposal that was endorsed by telecom regulator.
For this new frequency band, telecom companies have to pay the price that is determined by the market. However, there will be few technical issues if all the operators switch to the 1,800 Mhz. More base stations and signal boosters are required for signal penetration through building walls.
The companies have the option for retaining the frequency in 900 MHz band, when it is auctioned in 2nd half of 2013. Operators who were not successful in bidding, have to vacate 900 MHz frequency band within eighteen months.
Operators will oppose this as they want to avoid the additional investment when they find that intense competition will reflect the overall margin.
In a study, Cellular Operators Association of India representing GSM players said that almost 1.72 lakh base stations should be added to the current 2.86 lakh base stations. It results in total capital expenditure of around INR 55,000 Cr. Annual operating expenses are projected to get increased and cross INR 11,750 crore.
This switching decision will be a death knell to mobile operators, since they are facing a hard time due to unreasonable harsh and irrational government decisions on the spectrum reserve pricing, one time license fee, and usage charges.
The lobby groups that represent dual technology firms like Tata and Reliance Communications have welcomed this particular move saying that they will make level playing field.
Chandrashekhar said that the Telecom Commission panel has considered 3 alternatives, which include allowing re-framing half of 5 MHz spectrum available with the companies but settled for complete frequency switch.