Breakthrough in the Telecom Dept – Defence Spectrum Tussle; 3G Swap Agreed

In a pivotal breakthrough in the long-standing spectrum negotiations between the Department of Telecommunications (“DoT”) and the Ministry of Defence (“MoD”), the swapping of high-speed 3G airwaves has now been confirmed. According to recent media reports, the MoD has in a letter to the Telecom Regulatory Authority of India (“TRAI”) confirmed its willingness to swap 15 MHz of 3G spectrum in the 2,100 MHz band with an equal amount of spectrum in the 1,900 MHz.

Earlier, the MoD had written to the DoT about the possibility of the swap. However, now it is understood that simultaneous auction for 2G and 3G spectrum may be possible, thereby eliminating the artificial scarcity. Please refer our previous post Department of Telecom May Conduct Simultaneous Auctions for 2G & 3G.

The TRAI had earlier this month issued a consultation paper seeking comments / inputs for the valuation and the reserve price of spectrum in the 2,100 MHz band. In the said letter, which is in response to the TRAI consultation paper, the MoD has agreed in principle to vacate and release 15 MHz (1,939-1,954 MHz of spectrum) in 2,100 MHz band in lieu of the same amount of commercial EVDO spectrum, (i.e. 1,900-1,907.5 MHz and 1,980-1,987.5 MHz). This can be seen as a rebuttal to an extract of the TRAI consultation paper, where DoT was quoted stating that the simultaneous auctions for 2G and 3G may not be possible. A Memorandum of Understanding to this effect is likely to be signed between the DoT and MoD.

The MoD has categorically agreed for the swap proposal only and with regard to the release of the other 5 MHz block of 2,100 MHz spectrum in 17 service areas, the MoD has clarified that the same would be done only upon completion of the alternate optic fibre network. This is in terms of the Memorandum of Understanding dated May 22, 2009 between the DoT and MoD.

The Telecom Commission, earlier this month, had decided on the base price in relation to the bands for 2G spectrum for the upcoming auctions. Please refer our earlier post on the Telecom Commission’s decision on the base price here. The cabinet approval for 2G spectrum base prices is likely to be issued this month.

As per press reports, a cabinet note has been circulated by the DoT, which seeks notification of the defence band and the defence interest zone, essentially the frequency bands for the exclusive use by defence forces of the country.

With the issuance of such letter, auction of sufficient quantum of spectrum is assured to the respite of the telecom operators and consumer. According to recent press reports the TRAI was expected to give recommendations on 3G spectrum base price by early January. However, some reports also suggest that it is expected that the process of TRAI recommendations on the base price for 2,100 MHz spectrum would be completed by the end of this month and the cabinet approval in about two to three weeks time thereof.