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It was wrong to sell wireless spectrum (1)

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It was wrong to sell wireless spectrum. …

It was wrong to sell wireless spectrum.
Having been actively associated in the implementation of one of the early GSM systems in India in 1995, I choose to remain stead fast in my opinion I had on this subject from the inception of GSM, that in the fast changing Technology oriented systems, networks, product and services, any planning on long term basis is unworkable both on the technology front as well as in its business propositions. Therefore, the wireless spectrum needed for the operation need to be planned according the same philosophy according to the facts mentioned below. The Government, the regulators and Telecom Industry need to understand and take the issues involved in close coordination between the stake holders so that right decisions are made at the right time, as otherwise it will not only hamper the growth of telecom industry as a whole but also will be harmful for the end users as it will push the country towards losing the benefits of privatization in the long run. In addition to killing the Telecom Goose that lay golden eggs it will also lead to never ending litigation. I have been writing about this to all concerned and also in various print and visual and social media websites for many years now.
Government, the Regulatory authorities and CAG and the Judiciary dealing with Telecom issues should reexamine with an open mind whether giving out Spectrum, a limited national resource to Private industrialists in a long term contact basis is the right choice for the government and a workable business proposition for the Telcos based on the following facts:- See link http://wp.me/p1ZsI2-3

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  • 1. It was wrong to sell wireless spectrum by auction route or else.http://wp.me/p1ZsI2-3Having been actively associated in the implementation of one of the early GSM systemsin India in 1995, I choose to remain stead fast in my opinion I had on this subject fromthe inception of GSM, that in the fast changing Technology oriented systems, networks,product and services, any planning on long term basis is unworkable both on thetechnology front as well as in its business propositions. Therefore, the wireless spectrumneeded for the operation need to be planned according the same philosophy according tothe facts mentioned below. The Government, the regulators and Telecom Industry needto understand and take the issues involved in close coordination between the stakeholders so that right decisions are made at the right time, as otherwise it will not onlyhamper the growth of telecom industry as a whole but also will be harmful for the endusers as it will push the country towards losing the benefits of privatization in the longrun. In addition to killing the Telecom Goose that lay golden eggs it will also lead tonever ending litigation. I have been writing about this to all concerned and also in variousprint and visual and social media websites for many years now.Government, the Regulatory authorities and CAG and the Judiciary dealing with Telecomissues should reexamine with an open mind whether giving out Spectrum, a limitednational resource to Private industrialists in a long term contact basis is the right choicefor the government and a workable business proposition for the Telcos based on thefollowing facts:-Basically, growth of Telecom in the country is more in the interest of the nation than ofthe Industrialists. The policies of Govt. on Service industries like Telecom need to bepeople centric, not money centric.1. Technology is changing fast. What is best today will become obsolete tomorrow. It isan unworkable proposition to undergo cumbersome sell and buy process of fresh wirelessspectrum every time there is inception of new technology, like 3G, 4G, LTE and othernew generation networks yet to come.In fact giving out a particular band width of spectrum on long term contract can never bean option any where in the world as it does not fit into any long term business plan duebeing a technology oriented business of fast changing nature. It is more so especially forIndian Telcos as everything needed here in telecom business except some basicinfrastructure like towers are imported and hence dependent on the suppliers whocontinuously innovate the technology, systems and products. Different technologieswould need different frequency layer and band width making it necessary forGovernment and Indian telecom Industrialists to closely follow the world trends.2. Wireless Spectrum is a non-renewable national resource and as such need to behandled scrupulously and judiciously by Government and Regulatory authorities. Theownership of the spectrum shall remain with Government, allowing only right to use so
  • 2. that spectrum can be withdrawn and reallocated where it is not being put to intended useby any Agency or Operator. Therefore, re-farming and reallocation of the requiredamount of spectrum on short term basis from time to time as and when required withouttoo much varying in its cost implication is the only way out, and not in selling out byauction or otherwise every time when changes in technology happen.3. Fast growth of telecom being the prime object, it is more in the interest of the nationthan for the Industries that required amount of spectrum is made available and given outas and when needed, on lease and /or revenue sharing basis, initially for setting up thenetworks and later for its expansion needs on right of usage basis in a way to ensure itssmooth operation without delays, if necessary at subsidized rates so that the service costto end users will continue to remain low and the service is more and more available,accessible and affordable to common man.4. Telecom business houses are becoming behemoths and M&As are going to be theorder of the future. Giving out spectrum by open auction will end up in hoarding of thislimited national resource by few business houses and ownership of sold out spectrum tomany current service providers will ultimately end up in the hands of few Corporate. Itwill have many negative impacts like blocking competition, non-availability of spectrumfor new technology roll outs by fresh entrants etc. Even the Government will find itdifficult to have spectrum for its own future needs.5. With mergers happening, ownership of spectrum reaching the hands of companiesfrom other countries can pose various forms of security risks to the our country.6. The complexity of de-linking spectrum from license and Pan-India License. In asituation where Spectrum is de-linked from License or Network Operation /Serviceprovision as being proposed now, a situation will arise that will make it very complex tofollow the concept of various forms inter-working between different Pan India licensednetworks, and those Network operators who do not have Pan India License. This isbecause for those who have Pan India service, the entire country becomes one servicearea where it can have regional roaming with no extra roaming cost. Whereas a customerof non-Pan India license holder roams into a Pan India network, it becomes nationalroaming with implication of roaming charges. It also brings out technology related issuesof inter-operation of different networks using different frequency layers and differenttechnology devices. Please see my blog "A new outlook to usher in Pan India Telecomand Unified Licensing. http://wp.me/p1ZsI2-8WWhile there is still no clarity on the issues related to technology based spectrum needs,the proposal of de-linking spectrum from license also raise many more questions:-a. Will both License and Spectrum be given with auction process? Which will beauctioned first, License or Spectrum? For new entrant Telcos, what need to be obtainedfirst, License or Spectrum? What will happen if some one get License first and do notqualify in spectrum auction or the other way around? Will an operator getting spectrumfirst by auction automatically given license? If so what is this big idea of de-linking?
  • 3. b. What happens to the incumbent Telecom operators? Building up of Telecom businessis a continuous process, of expansions, upgrades and migration to new technology.Telecom being a service industry providing service to huge base of customers andtherefore, license of operation cannot be cancelled on a cut off date for whatever reason.Being it so, how can Govt. ask an incumbent operator to get fresh license through auctionon expiry of existing tenure? How an incumbent operator can make sure that they can getlicense through auction? What happens otherwise? Even if the License is being obtainedby auction, what about spectrum? What happens if they are not successful in gettingspectrum at affordable cost through auction process? Since the Spectrum is also proposedto be given on a long term contract, what will the operator do if it had to change over toother technology that work on entirely different layer of spectrum which the operatorneed to buy by auction making the earlier investment redundant? How can an operatorplan for change over to new technology system for which he will have to obtain Licenseagain through auction process? And then for obtaining spectrum required for it? Itbecomes a situation that operators can plan new systems only after getting License andspectrum before hand?c. Re-farming is expected to make available enough spectrum causing a situation wheresupply far exceed demand. In such a situation how can auction be an option? In thatsituation, first of all the basic bid price need to be low as there is no justification to keepthe cost high when enough spectrum is available to be given out for all.Secondly, in a situation where everyone is sure to get spectrum at the minimum bidprize, why should any bidder will quote higher price? Then it goes back to the mode offirst-come- first- served.If none of the incumbent operators participate in auction process, can Govt. imposepenalty or ask them to shut down operation? Ultimately Govt. will have to give requiredspectrum as maintaining Telecom Service at affordable cost is more in the interest ofpeople, that is the Government, than that of the Industrialists.7. It is mandatory to provide access between users of every Public Land Mobile Network.How to charge for it, is just a matter of commercial policy. Otherwise a non-Pan Indiaservice provider who do not have 3G licensed spectrum cannot facilitate its customers toaccess a 3G customer in a Pan India network which is against the concept of PLMN. Inessence it makes it necessary for every Network operator to become Pan - India serviceprovider if it has to enter in 3G business and same will be true for 4G and other newtechnology based business also. Such problems could be resolved only if spectrum isgiven based on the principle of right of usage instead of selling at high cost with soleintention of making money out of it with no concern about its impact on the industry.8. The need for segregation of Network Operation and Service Provision:At some point it will be necessary to limit the number of network operators. In not farfuture, India will have the second largest volume of telecom usage. For making available
  • 4. required spectrum and its effective deployment, segregation of Network Operation andService Provision and will become inevitable.With fast changing technology needing frequent inflow of fresh CAPEX, most of thesmall players will not be able to sustain their business. The cost of rural networks beinghigh and revenue potential low, to enable quicker telecom penetration increases in ruralareas, it will become inevitable to segregate Network operation and Telecom ServiceProvision so that the systems and networks set up by few operators and spectrumavailable with them could be efficiently shared by dozens of Service Providers asMVNOs, to keep the service cost low. Please see my blog Segregation of ServiceProvision from Network operation / Universal Numbering Plan. http://wp.me/p1ZsI2-tSegregation of Service Provision from Network operation will ensure better andefficient usage of spectrum. If the spectrum is sold out to large number of licensees it willdefeat the concept of MVNO which is going to be the path of telecom growth in thefuture.9. New Generation Technologies will make umbrella spectrum usage redundant. Themobility scenario in the higher data range will demand smaller and smaller cell areas andhence closer handovers. As data rates going higher and higher, it cannot be managed bythe conventional Microwave linked cell sites of 2G/3G/4G etc., with the method ofspectrum utilization as being done now. The new generation mobile networks willcomprise Optical Fiber cable connectivity in most part of its network topology and WiFIand other developing wireless technologies as the last mile and end links limiting thespectrum needs as such. Please see my blog: Who need spectrum? http://wp.me/p1ZsI2-8210. Convergence will be order of the future. With the advent of LTE and other newgeneration technologies making the wireless portion of the network less and less, it willlead to convergence of Systems, Network and user devices. The net effect is going to be areduced need for umbrella coverage of Wireless spectrum for various technology basedsolutions in the future. As the scenario changes, the spectrum bought by many Telecomproviders at high cost now will be of less use later. Please see my blog Convergence ofWired and Wireless networks. http://wp.me/p1ZsI2-26Auction of spectrum can never be an option. With the inevitable segregation of serviceprovision, the spectrum issue will change to a scenario where supply exceeding demandwhich by itself eliminates the workability of auction route. Governments idea to counterthis by creating more players in telecom industry to keep up the demand for spectrumwith sole object of milking the telecom industry and that is perhaps the route cause ofmost of the problems we see in the past few years. It will impact the entire scenario ofdiscrete needs and utilization of spectrum for various types of systems, network andtechnologies from what is envisaged now.
  • 5. If the spectrum given on long term contract at considerable high cost need to besurrendered for change over to new technology system and network before the expiry ofits contract period, the proportionate amount shall be reduced from new spectrum cost.The mess all these can create in Telecom Industry in India is anybodys guess. It isastonishing why no one from the Industry bother to explain these facts to the Governmentand Government in turn to the judiciary that is now made itself grossly involved in thedecision making process.Considering above facts, the right decision shall be to continue allocation of requiredbandwidth of spectrum to each Network Operator along with license for its right to usageand additional license on a time to time basis on a fixed basic cost and/or revenue sharingbasis. It shall be on condition that the Network Operators who are given spectrum as persuch a license conditions to operate their network cannot sell it or lease it directly toothers and shall vacate the spectrum and surrender it back to Govt. when not used and notrequired by them.It is only prudent for the Government and TRAI, CAG etc., to take help of right Telecomtechnocrats with futuristic vision and knowledge, to come to proper Governmental andregulatory decisions. Otherwise it will end up in opening a Pandoras box landing theIndustry into endless litigation and hampering growth of Telecom penetration in thecountry as well end up in killing the industry as a whole.Conclusion: It is easy to understand now from what we have learned from the muddlecreated in selling out 3G spectrum through process of auction for Government tohas become totally overshadowed with the resultant acrimonious and unending debatesand turmoil in governance and political arena with regards to some speculative loss dueto 2G spectrum allocation according to then standing principles.Another fact is that with the advent of modern technology systems that work in muchhigher frequency layers, the earlier technology systems become obsolete and thespectrum used for it also become redundant drastically impacting its pricing. Hence theargument that 2G spectrum could have been procured more income for government had itbeen auctioned is illogical as the fact is other way around.Please see my blog: The never ending Telecom muddle in India. http://wp.me/p1ZsI2-gGIf someone cares to analyze closely, it can be seen that all these current fuss aboutspectrum is meaningless and will become a non issue later. I am sure, it will finally cometo pass that what Government did on 2G spectrum allocation was right and what it did on3G spectrum sale is wrong and all these commotion is "Much a do about nothing". Ihope CAG will surely introspect about the propriety of selling out of wireless spectrum toknow whether his contention of loss in not selling 2G spectrum is right or not and willchose to reconsider issue based on the above facts. In fact what CAG should have done
  • 6. was to object selling out spectrum, a limited national resource by auction indiscreetly toprivate industries on long term basis.What went improper is Government trying to create to push in more stakeholders in thetelecom industry, perhaps to create artificial demand for spectrum for government tomake some quick money, or to counter the inertia of incumbent private operators intaking expansion of telecom into rural areas. Of course, if any politicians or bureaucratsdid not care to follow the rules and procedures with obnoxious intentions to makepersonal gains out of spectrum allocation, law should take its own course to punish them,but definitely not by changing the right philosophy and methods that help people centricpolicies of government.Author: Abraham Paul. P. e-mail: papaul@hotmail.com Tweet @PA_Paul

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