Thursday, October 18, 2007

Spectrum Wars in India

Okay this story continues on the last one. Spectrum... In a story attributed to IE I read about the big problem at hand for the regulators in India on allocating spectrum to the existing and new licensees.

The players like - Bharti Airtel, Vodafone and Reliance have among themselves earmarked $8billion worth of plans for expansion and this is not going to happen without addtional spectrum.

On the other hand there are new players who are awaiting their licenses and in turn their spectrum allocations - AT&T/Mahindra (see previous post), Verizon/Videocon are some. The regulators would like the new players to come in as it is bound to be beneficial to the consumer with better services and better tariffs - but can they ignore the existing players and their long pending requests for addtional spectrum ?

Well the spectrum allocation issue is bound to get very contentious and the authorities should given premium to greater transparency and do a fine balancing act with respect to existing players and new licensees. The government has said that it will announce new terms and condtions for the sector within a week. If there is going to be no change in the first-come-first-serve policy of spectrum allocation followed by the government, then the existing players who have long pending applications would walk away with the spectrum and the new entrants would have to wait for 3G spectrum auction whenever that happens. However in an ET report , CCI has approached the authorities to moot an auction mechanism which by which the available spectrum can find a market determined price. It is not known if this proposal cuts favor with the government.

In the ensuing scenario, new players may find that they will have to defer their expansion plans for want of spectrum. They may have to wait as the existing players did for their expansion plans. If the spectrum allocation has to be so finely balanced then entry of more than one new player would be a doubtful at least in the present scenario. Of course there is the M&A route too.


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