Telecom Regulatory Authority of India
Spectrum Management and Licensing Framework
11th May, 2010
Mahanagar Doorsanchar Bhawan Jawahar Lal Nehru Marg, New Delhi 110002
PrefaceIn a world increasingly dependent on communications man to man, man to machine and machine to machine, the need for spectrum cannot be overemphasised. We in India are in the throes of a rapid change in the telecom services, not only in terms of reach of voice communication but also in the induction of new technologies and expanding array of applications. Telecommunications will doubtless continue to play a vital role in the economic and social sphere. Given that wireless services continue to dominate the Indian telecom sector, the need for spectrum will only grow. The next five years mark a decisive phase for the Indian Telecommunication Sector. The challenges before us are many, both in terms of making additional spectrum available for commercial use and to ensure that spectrum assigned is efficiently managed. Spectrum management, always a delicate task, assumes significance more than ever. The licensing framework is equally critical in that it should enable the service providers to be able to perform in conditions of predictability and transparency. The issues, referred to TRAI in July, 2009 pertain to some very fundamental issues of spectrum management. The Authority has tried to handle them in a holistic manner and find reasonable solutions. All the stakeholders who have very handsomely responded to the consultation process and have given us adequately of their time, experience and expertise deserve our grateful thanks. (Dr.J.S.Sarma) Chairman, TRAI
CONTENTSTITLE EXECUTIVE SUMMARY INTRODUCTION CHAPTER I SPECTRUM REQUIREMENT AND AVAILABILITY CHAPTER II LICENSING RELATED ISSUES CHAPTER III SPECTRUM ASSIGNMENT AND PRICING CHAPTER IV CONSOLIDATION OF SPECTRUM CHAPTER V SPECTRUM MANAGEMENT CHAPTER VI SUMMARY OF RECOMMENDATIONS ANNEXURESANNEXURES I TO IV DOT REFERENCES ANNEXURE V - CALCULATION OF 1000 MILLION SUBSCRIBERS ANNEXURE VI GSM CDMA DEMAND TABLE ANNEXURE VII DATE OF ALLOCATION OF SPECTRUM ANNEXURE VIII DOT LETTER DATED 13TH APRIL 2007 ANNEXURE IX LIST OF SERVICE PROVIDERS WHO HAVE BEEN ALLOTTED 6.2 MHZ DIRECTLY ANNEXURE X INTERNATIONAL PRACTICES ON LICENSING ANNEXURE XI- CLARIFICATION DATED 9TH MARCH 2009 REGARDING SCOPE OF IP-I SERVICE PROVIDERS ANNEXURE XII PROJECTION AND COMPARATIVE STATEMENT OF AGR & UNIFORM LICENCE FEE ANNEXURE XXIII- TECHNOLOGY AND SERVICE AREA WISE MARKET SHARE ANNEXURE XIV ROLLOUT OBLIGATIONS IN VARIOUS COUNTRIES ANNEXURE XV- VILLAGES COVERED BY MOBILE OPERATORS ANNEXURE XVI- INTERNATIONAL PRACTICES ON RENEWAL OF LICENSES ANNEXURE XVII- TRAFFIC CALCULATION FOR GSM ANNEXURE XVIII - TRAFFIC CALCULATION FOR CDMA ANNEXURE XIX - 100 MOST POPULOUS DISTRICTS OF INDIA 305 339 340 342 351 353 354 364 365 367 372 377 378 382 385 387
1 7 50 146 210 279 284
ANNEXURE XX- QOS OF VARIOUS SERVICE PROVIDERS ANNEXURE XXI- WPC LETTER DATED 1ST FEBRUARY 2002 ANNEXURE XXII- CALCULATION OF TRAFFIC CAPACITY ANNEXURE XXIII- MERGER GUIDELINES DATED 22ND APRIL 2008 ABBREVIATIONS
393 405 406 408 412
In July 2009, the Department of Telecommunications sought this Authority's recommendations on the recommendations/comments of the committee on Allocation of Access (GSM/CDMA) spectrum and pricing of May 2009. It also sought this Authority's recommendations on the policy of no capping on the number of access service providers in terms of the pending applications for grant of new UAS licences from 26.9.2007 to 01.10.2007. A clarification was also sought relating to auctioning of spectrum other than 800, 900 and 1800 MHz bands.
The Authority issued a consultation paper in October 2009 and also held open house discussions in November-December 2009. These recommendations have been formulated keeping in view the comments received as well as the discussions held during the consultation process.
The recommendations are divided into five chapters. The first chapter deals with the issues of spectrum requirement and availability. An assessment of the demand for spectrum involves both an assessment of the number of subscribers and the nature of telecommunication services in the next five years. Going by the growth trends, the availability of services as well as the emerging trends relating to urbanisation and teledensity in both urban and rural areas, it is estimated that the number of subscribers by the year 2014/15 would be of the order of 1000 million.
undergoing considerable change from provision of only voice communication to increasing provision of data as well as of applications. The next five years are going to see the spread of 3G as well as the introduction of 4G services enabling subscribers to benefit from data and application services. An increasing availability of smartphones with significant processing capacity and a wide array of applications is resulting in higher requirements of spectrum. It is estimated that the total requirement of spectrum in the next five years would be of the order of 500 to 800 MHz including 275MHz for voice services alone. On the other hand, the availability of spectrum is only to the tune of about 287 to 450 MHz. 5. There is, therefore, need to bring in additional spectrum for commercial telecom services. In this direction, the Authority recommends that it should be entrusted with the task of carrying out a review of the present usage of spectrum available with the Government agencies so as to identify the possible areas where spectrum can be refarmed, and to draw up a suitable schedule. The Authority also recommends that a specific fund for spectrum refarming be created. The Authority would undertake regular spectrum audit to oversee the efficient utilisation of spectrum by the service providers. 6. The second chapter deals with licensing issues. The question before the Authority was to determine whether the number of service providers in a service area should be capped. In dealing with this issue, it was felt necessary to address first the question of committed spectrum, so as to determine whether any scope exists iv
for additional service providers. After due examination of the provisions of licences issued from time to time and related factors, the Authority concludes that the committed spectrum is 6.2 MHz in respect of GSM and 5 MHz in respect of CDMA. 7. Having settled this issue, the Authority examined the requirement of spectrum for the existing licensees to meet the contractual obligations and has arrived at the conclusion that keeping in view the scarcity of spectrum, no more UAS licence linked with spectrum should be awarded. In respect of the pending 343 applications received between 26.9.2007 and 01.10.2007, the Authority would like the Government to note that the above recommendation is subject to court decisions in this regard. 8. Currently, the only access services licence that can be given is the Unified Access Services (UAS) licence which is bundled with spectrum. There may however be some service providers who wish to provide services without using spectrum. In order to make provision for such service providers, the Authority recommends that spectrum should be delinked from the licences to be issued in future and that the future licence be unified licence. Since spectrum availability is no longer the consideration, the Authority recommends that there need not be any cap on the number of access service providers in a service area. 9. The Authority then proceeded to examine the licence conditions of the existing UAS licences. Insofar as licence fee is concerned, currently it is not uniform across licences and service areas. The differential licence fee gives rise to arbitrage opportunities which have been identified over the years. The Authority recommends v
that there should be uniform licence fee across all Telecom licences and service areas. With about 2,60,000 towers, the Telecom Tower companies, who hold the IP-I licence (infrastructure providers-I) have a turnover of nearly Rs. 20,000 crore and this is expected to register a growth of 15% over the next few years. The tower companies are often an arm of the Telecom companies. Currently, the infrastructure providers are not covered under any license but hold registration. The Authority recommends bringing of all IP-I into the fold of licensing regime. 10. Internet Service Providers (ISP) hold a licence but pay a licence fee of only Re.1, except in those offering Internet telephony. It is noteworthy that the unified access services licence holders (Telecom companies) account for the major share of revenues from the Internet service provision. The Authority's recommendation is to charge licence fee from the infrastructure service providers as well as the Internet service providers in a graded manner beginning with 4% in the year 2010-11, to reach 6% in the year 2012-13. Currently, access service providers (Telecom companies) are charged a license fee of 10% in the Metros and category A areas, 8% in category B areas and 6% in category C areas. The Authority recommends that this license fee be brought down progressively from the existing rates to a uniform rate of 6% by the year 2013-14. 11. As per the unified access services licence, the licensee is expected to cover at least 10% of the district headquarters in the first year and 50% of the district headquarters within three years of the effective date of licence. The licensee is also permitted to cover any other town in a district in lieu of the district headquarters. In the vi
Metro areas, the license