According to an India Rating research report, spectrum sharing will benefit both large and small telecom operators in the country. The former will be aided in their quest to reduce the network congestion plaguing the nation currently and the latter will be able to provide advanced mobile technologies like 4G and 3G.
The document went on warn that companies would have to strike a balance in order for this to be possible. They would have to stabilize the higher cost incurred from the 0.5% increase in band utilization charges with the benefits derived from spectrum sharing. The government allowed the practice to occur earlier this month from August 12.
It sanctioned the trading in order to reduce the incidence of call drops in India. However, it did not allow network providers to lease the spectrum they hold. There is also currently a lack of clarity on the rules and norms. Together they pose a serious threat to the financial health of smaller mobile operators.
Many of these minor players are cash-strapped and would profit greatly from renting out underutilized bands. As per the regulations, telecom companies can pool together their spectrum holdings but cannot charter them to other brands. India Rating feels this is a major negative for the industry as it bars the efficient allocation of a scarce resource.
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The research firm believes that spectrum sharing could result in two large players joining forces to address the problem of crowded network, while also promoting smaller ones with less than 5MHz in spectrum. A PTI report says a provider has to pay a one-time charge to liberalize its government-allotted spectrum block.
India Rating thinks the 800MHz and 1800MHz bands will receive the most interest since they have the capability to provide 4G services. More than 85% of the broadband subscriber base in India accesses data through wireless networks, thus leading to an increasing demand for the available spectrum to support the growth in data.