World Markets Research Centre
Government to Announce 'Technology Neutral' Spectrum Policy in India
November 22, 2004
The DoT has announced that it will adopt a 'technology neutral' policy to radio spectrum allocation, which will mark a win for the CDMA operators.
WMRC Perspective
Significance A 'technology neutral' approach will signify a loss for the country's GSM operators, who have been lobbying for exclusive rights to the 1900Mhz band for 3G services.
Implications The ruling will mean that the market's CDMA players will be able to apply for extra bandwidth in the 1900Mhz band.
Outlook A 'technology neutral' regime will be help bolster growth rates in the mobile sector, allowing CDMA operators to carry on expanding their networks.
Technology Neutral Spectrum Policy
After months of lobbying from both the GSM and CDMA mobile operators of India over the 1900Mhz spectrum band, the DoT has announced that it will introduce a 'technology neutral' policy for radio spectrum allocation. The new automated regime will be introduced by December 2004. The forthcoming regime will be introduced despite lobbying from the GSMA that the frequency band ought to be set aside exclusively for GSM-based 3G mobile data networks. Indeed, according to the National Frequency Plan of India, the 1920-1980MHz band is currently reserved for 3G services (along with the 2110-2170MHz band). To push the issue further, the operators have already applied for 3G licences.
Outlook and Implications
A Win for the CDMA Operators: The announcement heralds a win for the country's CDMA players. The operators, led by mobile market leader Reliance, have been lobbying hard for a portion of the 1900 Mhz band as a means of upping their capacity. The country's CDMA operators were originally issued with just 2.5MHz of the 800-frequency band when they began operating. The maximum allocation reserved for each CDMA player (per circle) is just 5MHz. In contrast, most GSM operators currently operate with 6.2MHz of spectrum, while some have been allocated up to 10MHz. As the 1900MHz band is one of the most commonly used bands for CDMA players the world over, the operators have been lobbying for a portion of this band.
A Boost to Market Growth: Allowing CDMA operators access to the 1900 band will no doubt provide extra impetus to their network investment plans. Expansion of CDMA services has been the key market growth driver in 2004, as price cuts and new lines introduced, primarily by Reliance Infocomm, have triggered similar moves by GSM operators. This is not something that the government has any intention of limiting, given the low telephony penetration levels in India (at approximately 7% at June 2004), and a government mandate to double teledensity (mobile and fixed lines) over the next two years. As for the mobile data future of India, given that both GSM and CDMA players are already investing in and offering data services indicates that opening the 1900 band to both technologies will not mean insufficient capacity for higher end services.
