India Telecom

September 23, 2003
CDMA interference compounds spectrum problems

NEW DElHI -- Spectrum, is the lifeblood of mobile telecommunications. However, demand for spectrum for mobility is increasing enormously due to the steep fall in tariffs, leading to more usage/subscriber and aggressive spread of service coupled with ever-increasing quality of service (QoS) requirements. Increased availability and optimal utilisation of spectrum is of paramount importance in India today.

Giving a snapshot of the Indian cellular segment, T.V. Ramachandran, director general, COAI, said at a recent event organised by FICCI that 70 networks were currently on air. India had over 17 million subscribers by the end of August 2003. The subscribers are growing at a CAGR of 80 percent since 1997, adding around 8-10 lakh subscribers per month, contributing over 1.7 percent to national teledensity. There has been a 80 percent drop in tariffs since 1996.

These are presently amongst the lowest in the world. In an attempt to increase their coverage, operators have increasingly been venturing into smaller cities and towns. As of August 2003, cellular services are available in over 1,700 cities and towns. The overall investment in the cellular was likely to be around Rs. 25,000 crores by August 2003. So far, the Indian cellular operators have installed approximately 66 MSCs , 214 BSCs , and 6,215 BTSs.

Highlighting the economic importance of spectrum, he said that according to the Radiocommunications Agency, the UK, GSM spectrum adds about £8 billion per annum, (Rs. 60,000 crores per annum) to the economy. In India, if spectrum is managed judiciously, the economic benefits could be several fold than the UK value. “If we do not get it right, the Indian economy will lose out on huge potential gains as well as deny consumers the opportunity to avail of state-of-the-art digital mobile telecommunication services. Spectrum is a key factor for increasing teledensity and GDP growth,” he added.

Explaining the importance of spectrum management, he said that the ITU recommendations on Regulatory Functions regarding Management of scarce resources provide that “management of scarce resources (e.g., frequencies, numbers and orbital positions) is an important permanent element of the national regulatory framework. The allocation and use of scarce resources must be objective, timely, transparent and
non-discriminatory.” He added that to have mutual understanding, a common economic definition should be elaborated for scarce resources.

A study of 114 operators in 31 countries reveals that average spectrum allocated per operator is around 2x17MHz. Pointing out the current spectrum assigned to cellular operators, he said that all licensed cellular operators in 900MHz were initially allotted 4.4 + 4.4MHz. Subsequently, an additional 1.8 + 1.8MHz in 900MHz band was allotted in metro and a few circles. Later, an additional spectrum of 1.8 + 1.8MHz was allotted to cellular operators in Delhi and Mumbai, making it to a total of 8MHz. They were allotted 6.2 + 6.2MHz in the 1,800MHz band. An additional spectrum of 2MHz was allocated to cellular operators in Delhi, besides the 8MHz already available with them.

Internationally, the practice is cellular operators are indicated/allotted the total spectrum that would be made available to them right at the time of issuing the cellular licenses. This gives them the flexibility to design their networks in the most optimal manner so as to maximise the efficiency of this scarce source. A one-time upfront allocation of spectrum also ensures tremendous capex saving resulting in increased affordability of service for the consumers.

Comparing the scenario in China, for example, the spectrum usage charge for China Mobile is 0.02 percent of revenue. It has perpetual right to 2x29MHz of spectrum. However, Indian operators are charged between 100 to 200 times more than their Chinese counterpart for the right to use one third of the same resource.

Ramachandran said: “Spectrum availability has direct exponential impact on capital expenditure in a country like India where capital funds are scarce. Also, the perpetual usage permits an operator proper network planning at the outset to the graded spectrum approval in India, which leads to roll out on the assumption that additional spectrum may not be available and has very significant capital expenditure and operating expense implications.”

Highlighting the challenges faced by the current spectrum allocation practice, he said that the spectrum allocation was far below international norms -- 6.2 MHz vs. 17.1MHz. He added that piecemeal release in small chunks detracts from optimum RF design of networks and increases capex. It results in capacity and QoS problems and increased service costs/tariffs. Compounded by interference from CDMA, the problems relating to the quality of service were accentuated by CDMA using E-GSM band.

According to him, in principle, Indian cellular operators must be granted 2x20MHz spectrum in line with international norms to provide affordable and efficient services. The spectrum charges should be sufficient to cover just the cost of administration and regulation of the sector. It will help achieve further reduction in mobile tariffs. Also, GSM operators should install filters and maintain a guard band of minimum 4MHz prevent interference from CDMA. Acting in unison, industry, government, defence and other users can deliver stupendous economic benefits to nation through improved allocation and utilisation of spectrum.