Case of Indian Spectrum Market AyushiTandon FPM ... · @PTCouncil #PTC18 STORY OF INDIAN TELECOM...

STRATEGIC THEORIES ON SPECTRUM MANAGEMENT:Case of Indian Spectrum Market

Ayushi Tandon

FPM| Information Systems |IIM Ahmedabad

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INDIAN TELECOM SECTOR

• According to report released by Telecom Regulatory Authority of India in June, 2017 the spectrum availability isbiggest challenge since the 2G technology dominated the market then.

• The increasing 3G and 4G subscriber base, demand for Internet of Thing add to this problem.

• Foreseeing this issue some restructuring of telecom policies has been announced recently including allowingspectrum sharing and trading in the secondary market.

• Liberalization of the spectrum making it technology, service neutral was announced earlier.

• As on 30th April, 2017, the top five Wireless Broadband Service providers were (TRAI 2017 REPORT)

• Reliance Jio Infocomm Ltd (112.55 million)

• Bharti Airtel (50.17 million)

• Vodafone (39.75 million)

• Idea Cellular (24.09 million)

• Reliance Communications (14.00 million).

Ayushi Tandon |FPM| Information Systems |IIM Ahmedabad

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STORY OF INDIAN TELECOM SECTOR

• India adopted the New National Telecom Policy (NTP) in 1994

• Basic service provision had been planned as a duopoly between the Department of Telecommunications (DoT) and a selected service provider

• The country was divided into 21 circles for the administrative purpose

• Telecom Regulatory Authority of India (TRAI), an independent regulator was established in February 1997

• National Telecom Policy (NTP) in 1999 suggested shift from existing license fee system to one based on one-time entry fee combined with revenue share payments

• By 2004 most of the telecom operator in India switched to unified licensing

• An auction-only policy for spectrum allocation was formally announced in the National Telecom Policy of 2012.


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STORY OF INDIAN TELECOM SECTOR

• Telecom service roll out obligations were made strict

• In 2015, delinking of spectrum services from licenses for future auctions In 2015, delinking of spectrum services from licenses for future auctions In 2015, delinking of spectrum services from licenses for future auctions In 2015, delinking of spectrum services from licenses for future auctions

• Telecom operators were provided with the option of converting their licenses to UL by making one-time fees payment

• Indian telecom industry is highly fragmented, having low rural penetration, heavy dependence on wireless telecommunications and telecom companies are not able to develop the network (in reach and capacity) because of high CapEx and operational costs

• In September 2015 TRAI released guidelines on sharing of access spectrum by access service In September 2015 TRAI released guidelines on sharing of access spectrum by access service In September 2015 TRAI released guidelines on sharing of access spectrum by access service In September 2015 TRAI released guidelines on sharing of access spectrum by access service provider.sprovider.sprovider.sprovider.s


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STUDIES ON INDIAN TELECOM SECTOR

• Role of state as constrained entrepreneur (S. Jain & Sharma, 2013)

• Reforming telecom sector in consultation with various government departments and other stakeholders like business people (R. Jain, 2010).

• Indian telecom sector as “managed competition”, unchecked power to the regulator (Fink, Mattoo, & Rathindran, 2001)

• Litigious environment influencing incremental policy making approach (Liu & Jayakar, 2012)


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SPECTRUM IN INDIAN TELECOM

YEAR FREQUENCY BAND ALLOCATION METHOD ADDITIONAL DETAILS

1994 900MHz Beauty Parade CMTS using GSM

1995, 1997 900MHz Auction (Single bid) Two operators per circle

2001 1800MHz Auction (Informed

Ascending Bid)

800MHz Administratively allocated Allowed for WLL

2004 900MHz Administratively allocated GSM, Allocated at varying

costs

2008 1800MHz Administratively allocated Largely used for 3G now,

2G scam

800MHz Administratively allocated To MTS


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YEAR FREQUENCY BAND ALLOCATION METHOD ADDITIONAL DETAILS

2010 2100MHz Auction 3G airwave

2300MHz Auction 4G, Internet only initially

2012 1800MHz, 800MHz Auction Less participation, No for

800MHz

2014 900MHz, 1800MHz Auction High revenue

2015 800MHz Auction Fragmented, picked by RJio

900MHz Auction License expired

1800MHz Auction Less contiguous spectrum

bands (LTE ecosystem

required)


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• In 2004, amendments were made in telecom regulations to allow telecom companies to shareshareshareshare theirtheirtheirtheir passivepassivepassivepassiveinfrastructureinfrastructureinfrastructureinfrastructure....

• Since 2008, sharingsharingsharingsharing ofofofof activeactiveactiveactive infrastructureinfrastructureinfrastructureinfrastructure like RAN, antennae, feeder cables, etc. is also allowed, but littleprogress has been made in this regard since then because of spectrum interference related issues

• The mobile ecosystem around 2100 MHz band, the 1800 MHz band and the 900 MHz band is most developed tooffer speed in the range of 3G, 4G, and 2G technologies

800MHz Problem due to unavailability of guard band

900MHz Band- available in few circles

1800MHz Band is highly fragmented and available in limited parts of LSA only


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GUIDELINES FOR SPECTRUM SHARING IN INDIA Both the access providers should have spectrum in the same band.

Both parties should have either spectrum acquired through the auction or administratively allotted spectrum

Interference norms and technology use guidelines must be finalized and shared with TRAI.

Spectrum cap limits shall be applicable

The increase of 0.5% in Spectrum Usage Charges (SUC) for both the parties post sharing agreement.


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INSTANCES OF SPECTRUM SHARING IN INDIA

The spectrum sharing agreement for 800MHz band between RCom and Reliance Jio

Bharti Airtel, Vodafone and Idea Cellular could not execute spectrum sharing deal as they do not have 3Gspectrum in same bands. At present Vodafone and Idea Cellular merger is in news and this will make merged entityhave 3G network across India and highest 4G spectrum of 1800 MHz

October 2017, Idea and Vodafone India have entered into Active Infrastructure sharing arrangement, to avoidduplication of capital expenditure


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ANALYZING SPECTRUM SHARING IN INDIA

The way spectrum was allocated in India and technological advancement in communication domain hashappened, propertypropertypropertyproperty rightsrightsrightsrights ofofofof spectrumspectrumspectrumspectrum useuseuseuse werewerewerewere notnotnotnot easilyeasilyeasilyeasily transferrabletransferrabletransferrabletransferrable (Faulhaber & Farber, 2002)

Providers innovatedinnovatedinnovatedinnovated inininin thethethethe allocatedallocatedallocatedallocated frequencyfrequencyfrequencyfrequency bandsbandsbandsbands, this restricted the innovation because of strict enforcement

Litigations were costly

TechnologicalTechnologicalTechnologicalTechnological restrictionsrestrictionsrestrictionsrestrictions like ‘guard bands’ imposed between two frequency bands

Jensen and Meckling (1979) gave production function incorporating the constraintconstraintconstraintconstraint duedueduedue totototo propertypropertypropertyproperty rightsrightsrightsrights structure,structure,structure,structure,availabilityavailabilityavailabilityavailability ofofofof technologytechnologytechnologytechnology andandandand knowledgeknowledgeknowledgeknowledge totototo makemakemakemake useuseuseuse ofofofof thatthatthatthat technologytechnologytechnologytechnology, along with other inputs like capital, labor,material input (Eggertsson, 1990). This we have applied to analyze the spectrum sharing scenario in India.


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ANALYSIS OF FEASIBLE SPECTRUM SHARING

OutputOutputOutputOutput Type of ContractType of ContractType of ContractType of Contract CapitalCapitalCapitalCapital MaterialMaterialMaterialMaterial TechnologyTechnologyTechnologyTechnology Property RightsProperty RightsProperty RightsProperty Rights KnowledgeKnowledgeKnowledgeKnowledge

Sharing between

incumbents

Horizontal Overall

ecosystem

change

(mobile

devices,

transmitters,

etc.).

Additional

active and

passive

infrastructure

might be

required

Spectrum use

database or

cognitive

radio

Not strictly

defined by

regulator,

left open

to parties

Technology

validation

studies

required.

Sharing between

incumbents and

new

entrant

Vertical Overall

ecosystem

change

(mobile

devices,

transmitters,

etc.).

New entrant

could

leverage

existing

infrastructure

Priority

allocation

Tier based

use rights

is an

option

Technology

validation

studies are

required.


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ANALYSIS OF FEASIBLE SPECTRUM SHARING

Output Type of Contract Capital Material Technology Property Rights Knowledge

Sharing between

defense (govt.)

and

private access

providers

Vertical Feasibility issues, due to security concerns

Sharing of TV

white

spaces i.e.

sharing in

unlicensed

bandwidth

Across

network

Changes in

receiving

devices

required

Infrastructure

already exists

Spectrum use

database or

cognitive

radio

Transfer of

use rights

Technology

validation

studies are

ongoing.


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SUGGESTIONS FOR SPECTRUM SHARING

Technology validation on parameters like protecting the interest of incumbents, minimum impact on quality of service

An optimum number of access providers in a geographical area must be maintained to enhance spectrum use efficiency without impacting competition because of consolidation

The model must not violate legal and privacy conditions (since spectrum sharing technologies requires maintaining a database)

The contract details between two parties must be transparent and enforceable.

A change in objective is required so as to promote newer technologies and minimal administrative charges from licensees


THANK YOU


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REFERENCE

Jain, R., & Dara, R. (2016). Framework for evolving spectrum management regimes: Lessons from India. Telecommunications Policy, 41(April), 473–485.

Jain, S., & Sharma, D. (2013). Institutional logic migration and industry evolution in emerging economies: The case of telephony in India. Strategic Entrepreneurship Journal, 7(3), 252–271.

Jain, R. (2010). Challenges in adopting market mechanisms for spectrum : Lessons from India and the Philippines. Journal of Telecommunications Management, 3(1), 78–99.

Jensen, M. C., & Meckling, W. H. (1979). Rights and production functions: An application to labor-managed firms and codetermination. Journal of business, 469-506.

Liu, C., & Jayakar, K. (2012). The evolution of telecommunications policy-making: Comparative analysis of China and India. Telecommunications Policy, 36(1), 13–28.

Faulhaber, G. R., & Farber, D. (2002). Spectrum Management: Property Rights, Markets, and the Commons. Telecommunications Policy Research Conference Proceedings, 11(1),

Fink, C., Mattoo, A., & Rathindran, R. (2001). Liberalizing basic telecommunications: The Asian experience.

Eggertsson, T. (1990). The Role of Transaction Costs and Property in Economic Analysis. European Economic Review, 34, 450–457


Case of Indian Spectrum Market AyushiTandon FPM ... · @PTCouncil #PTC18 STORY OF INDIAN TELECOM...

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