Articles
Radio Spectrum : Auction & Usage Charges
Dt: 24/12/19
Radio Spectrum : Auction & Usage Charges
Dr T.H.Chowdary*
Recommended by the Telecom Regulatory Authority of India ( TRAI), the Department of Telecoms (DOT) of the Government of India(G.O.I) intends to auction 5G spectrum next year . It expects to get more than Rs.5 lakh cr for the auctioned spectrum. This humongous amount, if at all bidden by P-Telcos will be a cost to them, to be realized through prices for subscribes. It means that the DOT /G.O.I is willfully planning for a costly telecom service. Today, as a result of the hyper - competition in the Telecom sector the poorest of the poor in India are able to have mobile telephony. The average revenue per user (ARPU) per year is not more than Rs.1500 which is about one 100th of the per capita income of Indians . It is about three days wages for unskilled labour. Due to such cheapness now, even beggars are having cell phones. If Indeed , the DOT/G.O.I gets Rs.5 lakh cr through auction of the spectrum , the poor may have to give up mobile telephones. It is appropriate to question the fundamental morality behind the auction of this spectrum .
2. Government does not auction wind which is used by companies producing electricity. Government does not auction sunlight which is used by companies to produce electricity. Both sunlight and wind are inexhaustible or exhaustible only with the death of life on this planet. Radio spectrum is not generated by government. It is generated by the companies that can use it under licence. For orderly use of the spectrum for different services like navigation, broadcasting , telecommunications etc., the spectrum which extends to some giga (109) hertz is
sliced up into different bands and allocated for different uses by mutual agreement of the nation states which are members of the International Telecommunication Union (ITU) through its International Consultative Committee for Radio (CCIR). Every country can use those different bands, for different services. Within our country, a body in Ministry of Communications earmarks spectrum’s bandwidths meant for different services, for providing various services. In India the Wireless Planning and Coordination (WPC) unit in the Ministry of Communications does this function.
3. In cellular mobile telephony, the radio spectrum bandwidth is generated by the service providing company in the band the company is authorized to use. That company splits it up into smaller bands and through them it provides mobile service. Cell towers and optical fiber cables or terrestrial microwave radio connects the equipments mounted on the towers the radio base stations to switching centers . The company can use the bandwidth that is authorized to it again and again in non-adjacent cells into which its service area is divided. Unlike coal or oil or gas or other minerals, the spectrum generated for use by authorized service providers can be used again and again in cells sufficiently removed from one another. In this sense the spectrum is an inexhaustible resource ( and is available in full to every country, small, tiny and big) unlike oil or gas or any other minerals, all of which are generated in the course of earth’s evolution and existence by natural forces. But they are exhaustible and can’t be regenerated .
4. Can one sell what he does not produce and own ? When spectrum is generated by the P-Telcos to provide services which are licensed, how is the government justified in auctioning the spectrum which it does not generate but is generated by the companies licenced to provide services? According to the Indian Telegraph Act use of wireless i.e radio spectrum to provide services has to be licenced by the government alone . The assignment of parts of spectrum to different companies (which produce that spectrum to provide specified services ) so that two or more companies do not use the same bandwidth in the spectrum at the same place, there should be regulation and this regulation and monitoring of its compliance are costs to the government. Government is therefore legitimate in realizing the costs of regulation. It has no morality in claiming the ownership of the spectrum generated by the service companies and auction it. The cost of regulation can surely not amount to Rs.5 lakh cr. Government is obviously immoral in auctioning somebody else’s property and thereby increasing the cost of service to the citizens of this country.
5. Currently, not only the spectrum is auctioned and sold and the sale proceeds go to the government but the companies which have bought this spectrum are having to pay the spectrum usage charge ! If a person sells his flat or house or building and gets the money for the sale, will he be justified in requiring the buyer to pay charges for usage of the building that he has purchased ? The spectrums usage charge being realized from the telecom companies is just like that greedy land lord collecting usage charges from the buyer to whom he has sold. Is it moral or immoral exercise of power ?
6. Government may ask why is this question of auctioning of spectrum being raised now. Is not spectrum sold in other countries also by the respective governments? In no country in the world is spectrum so costly as in India. It appears that spectrum is about five times more costly in India than anywhere else in the world. And the per capita income in India is about one sixth of the average in the world. 25% of the people are below poverty line (BPL) . 75% of rural population (of over 80 cr ) and two thirds of the urban population (over 45 crores) are covered by the Food Security Act. Today because the mobile telephone service is cheapest in the world, almost all the people are having mobile telephone - telephone density in India is now 93%. Only children and some super senior citizens who cannot handle telephones don’t have a cell phone. This happy situation is going to be jeopardized if the government does indeed realise over Rs. 5 lakh cr by auctioning the 5G spectrum . Should not the intelligent and responsible citizens require the government to re-consider its immoral practice of claiming possession and auctioning of the radio spectrum, which is not generated by it.
7. The Indian Private Telephone companies owe Rs. 7,50,000 crs to banks ; their current revenues are less than Rs. 2 lakh crores per year; the state-owned BSNL/MTNL are in addition having an accumulated loss of about Rs. 40,000 cr . According to a judgment of the Supreme Court which does not appear to be fair, the Telcos are to cough out to DOT over Rs. 92,000 cr as arrears because of a seemingly perverse interpretation of what adjusted gross revenue (AGR) is and about twelve years of the case first with TDSAT ( which ruled in favour of Telcos, against which went to the Supreme Court) and then in the Supreme Court . Laws’ delays resulted in more losses to Telcos.
8. A 5G network would require an investment of not less than Rs. 3 to 4 lakh crores. In light of these figures and the current distressed situation in which Telcos find themselves, the government auctioning 5G spectrum to realize about Rs. 5 lakh crores is highly unrealistic. There must be a new Telecom Policy just as we had the NTP-‘94 and NTP –‘99 to correct the distortions. We appear to be heading towards a private company monopoly in telecom services with the government company ever wanting more bailouts .One way to avoid this calamity is to divide the sector into one for infrastructure and another for service provision. There could be competition in each one of them but without any company being allowed to enter into both kinds of service. (1,293 words)
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