The Supreme Court & Spectrum Management

Only the Supreme Court can rectify spectrum management in line with other resources, but all stakeholders can contribute

Shyam Ponappa / February 6, 2013

Last week, the department of telecommunications initiated another spectrum auction, as directed by the Supreme Court. The auction of 800, 900, and 1800 MHz is to end in March. The winners, if any, must pay in 10 days a third of the amount bid for 1800 MHz, and a quarter for 800 and 900 MHz.

If there are high bids, why should it bode ill for communications services for education, training, health care, commerce, and for future productivity? Because many years must pass for the results to show.

Fallout of auctions: many years away

The expiry of 900 MHz rights starts from December 2014 in Delhi, Mumbai and Kolkata; others will do so only from 2016-2024. The table shows the assignments in each circle, and the market share of revenues in July 2012. The colour of each cell indicates the expiry period.

The first assignments of 900 MHz spectrum to private operators in Delhi, Mumbai and Kolkata expire in November 2014. The second will take up to five years longer, ie, from 2015-2019, eg, Andhra Pradesh, Gujarat, Karnataka, Maharashtra, Vodafone in Tamil Nadu, etc. The third will take even longer. Hence, forcing auctions does not provide a near-term solution.

Technical inputs to judges

Operators with more spectrum or access to more bandwidth can offer higher capacity and data rates at lower cost. Operators try to get as much spectrum as their competitors, because having less spectrum means deploying more cell sites for the same capacity, which means greater capital cost. Hence, in India, pooling and sharing spectrum among operators – providing greater bandwidth dynamically to each operator on demand – will result in better coverage and higher capacity at lower cost. If operators pay only for using the spectrum on demand and do not incur high costs to acquire spectrum rights, they can invest more capital in the “superstructure” of their services, while maintaining lower tariffs. Acting in the public interest, the government should, therefore, keep spectrum costs low for better coverage and services at lower prices. If informed by knowledgeable, unbiased experts, the Supreme Court is likely to accept this conclusion.

The Supreme Court upheld these principles for natural resource allocation on the Presidential Reference. The reference excluded how spectrum should be assigned. A logical extension of these principles requires that spectrum assignment, as for other resources, is for governments to decide.

Spectrum sharing

Developments in spectrum sharing augur a new, collaborative approach, and a change from exclusive rights apart from unlicensed spectrum for Wi-fi. While spectrum sharing was pioneered by the US and the UK, it is being pursued widely, as in trials in Finland for the European Union, and in Singapore, Japan and Korea in Asia. Shared spectrum standards under development for years are now coming to a head. Standards can lead to large volumes resulting in low prices, as for Wi-fi.

• A standard has already been established for long-range TV white space (TVWS) for rural broadband (802.22). This year, another is expected for short-range TVWS (802.11 af). Finland is conducting a commercial trial covering some 300,000 people. Another Finnish trial will address dynamic access to pooled spectrum, or authorised shared access.
  
• Large-scale deployments of TVWS are beginning in America, with two commercially licensed TVWS administrators, Spectrum Bridge and Telcordia, about to deploy networks. In the UK, the regulator is likely to issue rules shortly, after the extensive Cambridge White Spaces Consortium trials of 2011¹.
  
• In America last August, the Federal Communi- cations Commission (FCC) allowed T-Mobile to test spectrum sharing in the 1755-1780 MHz band with federal agencies using this band. Also, the US Congress directed the National Telecommunications and Information Administration (NTIA), responsible for government and defence spectrum, and the FCC to examine whether additional spectrum could be opened to sharing by unlicensed devices. Last week, the NTIA proposed that unlicensed devices be allowed to operate from 5150 MHz to 5925 MHz. This wide band will facilitate gigabit throughput on a new wireless standard, 802.11 ac. Routers are available for this draft standard, although they are expensive at around $200 (Rs 10,600), because of the low starting volumes.
  
  While it may take a year or more to get lower priced spectrum-sharing devices, the fallout of the auctions and their impact will take very much longer to settle. Further, the “eviction” from 900 MHz of GSM service providers like Bharti and Vodafone through refarming may result in chaos and service deprivation for millions of GSM users, unless they win bids to keep their spectrum. In other words, while trials will take some time to conduct in India to prove that pooling spectrum to share among operators is practicable, they are likely to converge far quicker than the disruption by forcing auctions and the likely litigation, apart from being much more beneficial and orderly.

An approach to corrective action

There is an inspiring example from Bihar of how such issues can be addressed through concerted action by stakeholders. The example is from the districts where the Bill & Melinda Gates Foundation works on mother and child care. Something amazing has apparently happened: the various agencies are collaborating, whereas they worked in silos before. Auxiliary nurse midwives, anganwadi workers and accredited social health activists (ASHA) are co-ordinating their activities to achieve better results. There’s a communications angle, too: five major operators (Airtel, Idea, Tata, Reliance and Vodafone) have partnered with the Foundation and reduced tariffs to make their services affordable².

There is something that stakeholders can do for spectrum (the honourable judges, DoT, the Telecom Regulatory Authority of India, other agencies, operators, and independent experts): they can bring their expertise and discretion to bear for beneficial solutions. These may include short-term steps, like more 2.1 GHz to create a pan-India 3G network instead of the CDMA 19003 MHz, apart from exploring possibilities for more unlicensed bands, and other forms of spectrum sharing.

                                                                                                     shyamponappa at gmail dot com

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1.http://www.cambridgewireless.co.uk/docs/Cambridge%20White%20Spaces%20Trial%20-%20technical%20findings-with%20higher%20res%20pics.pdf

2. “Mobile VAS takes healthcare information to Bihar villages”, Business Standard, October 11, 2012: http://www.business-standard.com/india/news/mobile-vas-takes-healthcare-information-to-bihar-villages/190863/on

3. [Added later] "Spectrum and broadband", D.P.S. Seth, The Hindu Business Line, February 8, 2013:

http://www.thehindubusinessline.com/features/weekend-life/spectrum-and-broadband/article4386262.ece

The Supreme Court Delivers

Now, the spectrum and licence issues need resolution

On September 27, 2012, the Supreme Court of India delivered the opinion of a bench comprising five Judges on the Presidential Reference regarding the auction of 2G spectrum.

Shyam Ponappa / Oct 04, 2012


The Supreme Court’s opinion on the Presidential reference* dismissed two preposterous claims. One is that it is beyond the ambit of Parliament and the government to formulate economic policies. The second is that the government must allocate resources only through auctions. It’s like the end of a self-destructive nightmare. True, our heedless kleptocracy as a society of rogue politicians, bureaucrats, defence personnel, and complicit citizens, led to this pass. Even so, the anarchic “destructionism” of these claims is as reprehensible as the kleptocracy they seek to tear down. Fortunately, the Supreme Court opinion rose above the populist clamour.

There’s still a mess to clear. The big picture is that the Supreme Court left its decision on spectrum auctions unaddressed. In matters of detail, some points need resolution based on facts. These are discussed below to dispel prevalent myths.

Myth 1: Auctions maximise govt revenues

“Auctions may be the best way of maximising revenue…”: paragraph 116 of the opinion. This contravenes the evidence after the National Telecom Policy -99 (NTP-99), that revenue-sharing maximises government revenues as well as public benefits. It also ignores the many auction failures.

Consider the evidence: auction revenues foregone were estimated at under Rs 20,000 crore for 1999-2007, because the sector was mired in losses and was unable to provide services effectively or pay those dues. By comparison, actual collections from revenue-sharing by March 2007 were more than double, at Rs 40,000 crore. Collections by March 2010 were Rs 80,000 crore. Current annual contributions to government revenues may be about Rs 18,000 crore on Adjusted Gross Revenues estimated at Rs 1,40,000 crore, plus taxes, amounting to perhaps Rs 36,000 crore.

Re public benefits, access to telephony grew from a few million users in 1999 to about 700 million today (excluding around 250 million shadow subscriptions).

An ameliorating caveat in paragraph 12 states: “…if the State arrives at the conclusion … that maximum revenue would be earned by auction of the natural resource in question, then that alone would be the process”, and this is expanded in paragraph 119:

“Where revenue maximisation is not the object of a policy of distribution, the question of auction would not arise. Revenue considerations may assume secondary consideration to developmental considerations.”

This has not prevented erroneous conclusions in the press that auctions are the only valid process, notwithstanding that the conditions stipulated in the order, eg, that government’s actions be “fair, reasonable, non-discriminatory”, were always operative, if not adhered to in instances of abuse, as in the 2G scam.

Myth 2: Maximum govt collections are in the public interest
Government collections as the public interest criterion may work for colonial powers extorting revenues from subject states, or possibly for utopias whose political economy is so balanced that such cross-subsidisation works. Developing economies like India presumably can and should seek the welfare of their people. The same populists crusading for maximum government collections accuse governments of corruption and waste. This doesn’t provide a coherent approach to infrastructure, where each capital-intensive sector is configured to deliver a specific service. For instance, the energy sector has to deliver power, while telecommunications must deliver communications services. Neither can be expected to deliver toilets or water. Yet, many well-intentioned people seem to nurture such irrational expectations.

The spectrum and broadband link

The first prerequisite for broadband is high-speed connectivity. The second is reasonably priced services. Our objectives are, therefore: (a) a broadband network, (b) available anywhere (c) at reasonable prices. Our networks are deficient, however, particularly in rural and semi-urban areas. A host of factors are responsible, ranging from limited public sector network rollout, combined with a private sector focus on the most lucrative urban centres, with incentives skewed to voice telephony. Applications need connectivity based on networks that require spectrum.

Problems and solutions

Consider an application like distance education. The need is for networks and services of high quality (followed by the additional requirement of content). What is apparent is that such applications cannot be effective without the connectivity. So we’re back to the need for networks, of fibre where feasible, and wireless elsewhere. This brings us back to the need for spectrum.

Reviewing facts

As regards the facts relating to the 2G judgment deserving review:
The solution the Supreme Court has not considered is that operators need only to use spectrum, for which they can be charged a fee. The evidence of widely available Wi-fi shows that innovation and usage thrive if spectrum is available. The Supreme Court, the government, and the public need to recognise that allocating spectrum to operators is only one way to use spectrum.

There need be no alienation of spectrum at all, if policies allow open access and charge fees. Then, spectrum could be used like any infrastructure network, eg, airports, highways, or rail, on payment of usage charges. The sharing could be in at least two ways. Operators could pool spectrum for collective use. For this, (i) regulations must allow pooling/active facilities sharing, and (ii) operators must agree on terms and procedures. Another way is for mandatory spectrum sharing using the database-driven systems being implemented in the US by Spectrum Bridge and Telcordia. Similar deployments are planned in the UK, the European Union, and in Singapore. The TV white space is shared because this range is available for sharing, and not because other bands cannot be shared.

There are immense societal costs of duplication in capital investments in multiple networks, including the last-mile spectrum access, of operators using dedicated networks with limited passive facilities sharing (such as towers), compared with the benefits of open-access to common networks, if policies changed. These would employ active facilities sharing (equipment, and not just construction) to reduce capital equipment, construction costs, energy for towers, carbon emissions from a more limited physical network, possibly reduced radiation from a rationalised network with small cells with lower-powered equipment, and the multiplier effect on the finite available spectrum.

Enormous productivity benefits could accrue through ICT applications in infrastructure such as smart grids for energy, transportation, education, healthcare, and government services, as well as many commercial applications.

The Supreme Court could also uphold contractual obligations, by discriminating against actual transgressors in the 2G spectrum allocation, while rehabilitating those who operated within the law.

  
shyam[no space]ponappa at gmail dot com 


* http://supremecourtofindia.nic.in/outtoday/op27092012.pdf  Changed - corrected below

* RE: SPECIAL REFERENCE NO.1 OF 2012

[Under Article 143(1) of the Constitution of India]

SEPTEMBER 27, 2012

[S.H. KAPADIA, CJI, D.K. JAIN, JAGDISH SINGH

KHEHAR, DIPAK MISRA AND RANJAN GOGOI, JJ.]: 

supremecourtofindia.nic.in/pdf/SupremeCourtReport/2012_v9_pii.pdf  Changed - corrected below

https://main.sci.gov.in/judgment/judis/39596.pdf