Spectrum crunch hits telecom sector

The unavailability of spectrum has hit the telecom industry so acutely that the Department of Telecom is now considering to limit the number of operators in each service area to maintain a minimum quality of service.

"The Government is contemplating to review its policy and put a limit on the number of access service providers in each service area," a DoT letter top TRAI said.

DoT said in the letter that the step was necessary as "spectrum is a scarce resource and to ensure that the adequate quantity of spectrum is available to the licensees to enable them to expand their services and maintain the minimum quality of service."

There are 23 telecom circles in the country.

Currently, there is no cap on the number of service providers in a service area.

As on date, 159 licenses have been issued for providing access services in the country and generally there are 5-8 providers in each service area. Since any Indian company can apply for unified access license, this is increasing the demand for spectrum in a substantial manner.

In an evolving sector like telecom to ensure that the policies keep pace with the changes, DoT is seeking TRAI's recommendations on the issue of limiting the number of Access Providers in each service area.

The Department is considering to review the whole set of crucial guidelines in the terms and conditions of access providers (cellular/unified access/basic) licenses.

The terms and conditions slated to be reviewed are "substantial equity holding by a company/legal person in more than one license company in the same service areas, transfer of license and merger and acquisition guidelines."

Besides, other guidelines like permitting service providers to offer access services using combination of technologies (CDMA/GSM and or any other) under the same license, roll-out obligations and requirement to publish printed telephone directory will also be reviewed.

TRAI's decision could also decide the fate of Reliance Communications which is aspiring to enter the GSM space in a pan India presence and has thus applied for spectrum.

As per DoT norms, no single company can have more than 10 per cent stake in two different cellular operators in the same circle.

The guidelines also deal with market dominance and stipulate that the total market share of the combined entity cannot exceed 67 per cent in any circle.