Telecom Engineering
The Sad Story of Spectrum Sales
Dt: 30/3/15
The Sad Story of Spectrum Sales
Dr T.H.Chowdary*
Coal, oil , gas, iron and such other ores when dug out and used are consumed. They cannot be regenerated for ages. Sunlight will be there as long as the Sun is there and it can be used by generations of men without exhaustion. Radio spectrum can be like Sun’s energy
available everywhere and in an equal measure for every country big and small. It is generated by electronic equipment in radio transmitters for eg: cell sites at the base of the cell towers and very happily, in the hand- held cell phones also. Different frequencies in the spectrum (eg: 800 MHZ, 1800 MHZ, 2100 MHZ...) propagate differently; that is, for the same power radiated, the distance over which they can be detected and for the information carried by them to be articulately reproduced, is different. That is why different bands have different economic values for their utilisation .
2. Government does not create radio spectrum. It is the service Telcos who create this spectrum. Iin a given place the same band in this spectrum cannot be simultaneously used by everybody. That is why regulation is required. Licences and spectrum are allotted to different companies. The same spectrum can be used again and again by the company that gets it by appropriate engineering. This is what lies behind the cellular mobile telephony and data services.
3. Government is selling the spectrum, a resource which it has not created by exercise of its privilege of allotting it to different companies. It is sold as property . The period for which it is sold is 20 years now. The buyer puts thousands of crores of investment in setting up the network to roll out services. He pays the sale amount. just like one pays for a flat or a building that he purchases. The building or flat buyer can use it; he does not pay for its use. The government sells spectrum and gets money but for using the spectrum, though bought and paid for by the companies has to be paid for use. It is like one buying a flat and for using it, having it to pay rent . Is this just?
4. The existing licences and the spectrum use could have been extended and the financial terms could have been renegotiated. Only the Additional spectrum that had become available from its release by the Defence Department could have been put to auction. This is sensible because if at the end of the first 20 years, if the same spectrum is put to auction and somebody else gets it, the investment in the network equipment, building up the brand
and in the marketing and sales and service organisation is all destroyed. At what prices the licence and spectrum should be extended can be a matter of negotiation . That is not very unfair but extortion of money would certainly be unfair. Some Telcos’ petitions on some issues are before the Supreme Court Government eager to get money before 31st March sought and got the Supreme Court’s nod to collect the first instalment of over Rs. 20,000 cr. But the Supreme Court has not yet delivered its judgment on the Telcos’ plaint!
5. In the last 20 years government has received from the telecom companies over 6 lakh cr of rupees by way of licence fee, spectrum sales, spectrum usage charges, revenue share and universal service fund (USF) levy. This country is not creating any intellectual property through R&D for the equipment and the systems and the software and the hardware that is required for the telecom networks. Almost all the equipment is imported most of it from China. We used to have R&D in this country from the mid 1950s onwards under the aegis, of the Telecom department. That is more or less totally discontinued. C-DOT was a great effort in the mid 1980’s to develop the knowhow and manufacture of telecom equipment in the country by co-opting several private sector companies . That has withered as its founder hobnobbed with the Dynasty . That person like a summer soldier and a sunshine patriot makes his appearance in the country only when the Dynasty is in power . Much of the huge amount (Rs. 30,000 cr) collected as USF lies unspent. It is expected to be utilised for the National Optical Fibre Network to (NOFN) to extend broadband to 250,000 villages.
6. Is it fair that government which has collected so much money by just exercising power issue licences and sell the spectrum , not to utilise even a few thousand crores for promoting R&D and subsidising indigenous production ? Make in India movement makes no sense if the money realised through spectrum sales and its utilisation is consumed for poverty preserving but not eliminating welfare schemes?
7. It would be fair, responsible, intelligent and patriotic for the NDA government to utilise much of the amount realised from the Telcos for launching a great mission like the Manhattan Project which developed a nuclear bomb and established military superiority for the USA . It is not too late . Patriotism demands this. Private Telcos and regulated competition have done a marvellous job with more than 100% Teledensity in urban areas and nearly 50% in the rural areas. The dream of haath haath mein telephone has been realised but at the terrible cost of the destruction of indigenous industry . We must make amends decisively and quickly. (905 words)
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