Telecom Reforms: Relief - With Hope?

 

This could be a good first step towards a real transformation.

  Shyam Ponappa    |   October 7, 2021

At first glance, the big-bang telecom relief package last month might seem disappointing. A closer look shows the possibility of real promise. Could it be a subtle masterstroke, the first in a series of steps that will revive the sector? Here’s why.

• By not fully resolving the debt burden to result in sustainable cash flows, it gives the impression of a grudging debt-restructuring that doesn’t quite revive the patient, while prolonging the agony.
  
  
• However, it provides immediate relief with a four-year moratorium on cash outflows.
  
  
• An issue that defied resolution since 2003, of what constitutes revenues for sharing, has been defined rationally as revenues from telecom.
  
  
• The spectrum usage charge has been rescinded.
  
  
• Solutions for revival are to be worked out as next steps.
  
  

Although the last three are prospective, telcos get immediate relief without awaiting the formulation of complex solutions. The relief is temporary though, as outstanding dues must be paid with interest. Unless much more is done, there will be a prolonged attrition, with high opportunity costs from the continuing non-availability of services that severely constrain our capacity and productivity.

Meanwhile, another significant reform was introduced unobtrusively: Active network sharing. Blocking active sharing amounts to depriving the country of full utilisation of capital-intensive resources. Imagine having separate private road systems, or gas pipelines, and insisting that vehicles (or gas) must go from place to place only on their own networks. This was the situation in telecom until interconnection was made mandatory, but the latter did not eliminate network duplication, whereas active network sharing allows for eliminating it.

Thereafter, news that the government may change its position on spectrum charges due suggests more pragmatism. If the above interpretation is correct, the subtlety and quick action while avoiding opposition by not seeming to give away too much augur well.

For transformative reforms and a genuine revival, the Ministry of Communications and Information Technology could take the approach that worked reasonably well for NTP-99, with coordinated planning and initiatives through the PMO across ministries and corporations, and external advice as appropriate. While it was not perfect, the NTP-99’s adoption of revenue sharing succeeded in expanding mobile telephony enormously. Learning from that experience in handling the details may help to avoid situations such as the legal wrangles on the scope of revenues, and the false starts. For instance, the government’s share was set too high initially at 15 per cent, and thereafter, spectrum auctions after the “2G scam” crippled the sector because of the “winner’s curse”, as auctions did in much of the world. We had best avoid such situations.

Wi-Fi Small Cells

The ongoing evolution to small cells amplifies the need for sharing. Mobile handoff to Wi-Fi is already the norm for 4G. Ubiquitous 4G networks and later upgrade to 5G and 6G will require the installation of many more small cells, with Wi-Fi for high-speed user access. These could augment existing Wi-Fi bands (2.4 and 5 GHz) with 6 GHz and 60 GHz when these bands are permitted. Proliferation of small cells will be more feasible because of lower costs and easier installation with wireless point-to-point links instead of fibre, and mandatory sharing. “Wireless fibre” links could use light-licensed (open access to licensed service providers for connecting to the internet) spectrum in the 60 GHz (V-band) and 70-80 GHz (E-band). Gigabit delivery at far lower cost than fibre could be deployed across urban, semi-urban, and rural markets.

Small cells for users need to be built out with “wireless fibre” links from where fibre terminates in much of the country, in urban as well as rural areas. An alternative depending on costs is satellite links to small cells. In effect, the need is for the national fibre network, BharatNet, to be extended to non-urban users outside district and block headquarters. Small cells funded by the Universal Service Obligation Fund combined with the BSNL’s and other installed networks could fulfill this need, with service providers given non-discriminatory access on payment through revenue sharing. A consortium approach with private sector leads could be considered.

Shared Spectrum & Infrastructure

A burdensome remaining constraint for network proliferation is licensed spectrum costs. Yet, the alternative of giving access to a spectrum pool without auctions for a share of revenues would probably result in much higher government revenues, as happened with licence fees after NTP-99 (see charts).

Chart 1: Operator Revenues ($ Billion)

https://www.ibef.org/download/Telecommunications-June-2020.pdf

Chart 2: Revenue Share Collections Exceed Auction Payments After NTP-99

          Telecom Auction Fees Foregone vs Licence Fees + Spectrum Charges

For explanation, see: https://organizing-india.blogspot.com/2020/08/configuring-indias-digital-ecosystem.html

Shared access by licensed telcos to pooled spectrum will enable broadband for more areas and people, with full utilisation of unused spectrum greatly increasing traffic and revenues. The DoT needs to start with regulations for spectrum bands in 60 GHz, 70-80 GHz, and 6 GHz. Thereafter, regulations could be considered for shared spectrum without auctions. (1)

Debt Resolution for Cash Flows

An immediate priority for the sector is sustainable cash flows. The burden of adjusted gross revenue (AGR) and spectrum usage dues arose from misconceived policy errors, by efforts to include unrelated revenues, and overcharging for spectrum. Debt restructuring customarily involves elements such as reduced principal (“haircuts”), interest waivers, and extension of repayment periods, to enable sustainable cash flows. Much of the principal for AGR dues was created by including revenues unrelated to the licences to be paid for, an error corrected going forward. Past licence-related revenues would be much less, and favourable judgments prior to 2019 upheld this. The interest component in AGR dues is about three times the principal. The government could justifiably adopt policies to reduce most or all outstandings with this reasoning, as also consideration of the effort, cost and hardship endured by service providers, their employees, and the public for service deprivation of the critical support that broadband can/could have provide/(d). Further, this would also facilitate investment for better services.

Corrective Policies, Laws, Regulations

A participative process on these issues starting with debt resolution could be used to frame policies going forward, including the requisite legislation and regulations. The above measures can revive and invigorate our telecom sector.

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Shyam (no space) Ponappa at gmail dot com

(1): See “Enable Spectrum Usage on Feasible Terms” at:  https://organizing-india.blogspot.com/2020/03/indias-self-goal-in-telecom.html

Backsliding Without Broadband

We are losing out on so much of our potential because of regulatory constraints.

[But of course, that is only a part of the story.  The rest of it is lack of organization, and of discipline, which is a long, long story.]

Shyam Ponappa      |    April 1, 2021

Not being permitted to use available spectrum in line with technological developments and global applications is like being deprived of access to the air around one. That our way-below-par broadband is not systematically addressed as a critically important way to provide requisite infrastructure to improve people’s lives is troubling. We lose out on the facilitation of education, healthcare, productivity, commerce, industry, government services, and entertainment. Is the government unaware of our deprivation? Surely the authorities are capable of devising ways to use spectrum for the common  good. 

Whatever other matters they are busy with, this is an area that should have priority.

The difficulty is in satisfying competing demands arising from what can best be described as our collective gnarled psyche. One preoccupation is with making corporations alone pay for public resources without allowing for profits. This apparently pervades not only the government’s thinking, but extends to many people at large, in the press and media, polity, civil administration, and judiciary. Compounded with the anxiety of decision-makers to protect themselves from overzealous future witch-hunts, this ensures there are no innovative attempts at resolving our communications infrastructure needs. One also sometimes encounters sentiments questioning whether we need 5G, or faster internet, or notions that we already have adequate broadband, and so on. We are inured to dysfunctional infrastructure support, and have become habituated to accepting deficiencies in our daily lives. Whether it is dropped calls, slow internet, or sporadic failures in electricity, water supply, or logistics, we treat this shoddy state as acceptable, despite its immense drag on effectiveness and productivity.

Meanwhile, we have just embarked on yet another 4G spectrum auction, while 5G, where we are way behind global developments, seems a lifetime away. If only our policymakers and administrators actively sought ways to improve our communications, including rural broadband, for instance, we might learn from practices elsewhere in the world of adaptations that could be implemented here. One interesting instance is that of the Federal Communications Commission (FCC) in the US. Seeking to improve broadband in underserved markets, in 2019, the FCC began the Rural Digital Opportunity Fund (RDOF) initiative, to channel universal service obligation funds collected from telecom operators to get high-speed networks built and services provided in rural areas. This replaced the prior Connect America Fund programme with its lowest-bid awards that had not worked. In 2020, the FCC conducted a reverse auction for broadband services to rural users, allowing for slower delivery in more remote locations. The tentative award for Phase I is $9.2 billion (Rs 67,000 crore) over the next 10 years in monthly instalments, with time-bound completion requirements. (India has about Rs 55,000 crore in a comparable Universal Service Obligation Fund.)

Over 400 entities, many of them consortiums including electricity distribution companies, have won RDOF contracts to build networks and provide services. Most plan fibre-optic networks, but the biggest winner for $1.3 billion, LTM Broadband, plans to also use high-speed fixed wireless. Another winner, SpaceX, plans Low Earth Orbit satellites to deliver 100 Mbps. There has been criticism from some analysts and contenders who question the feasibility of gigabit wireless networks in place of fibre. This may be uninformed, but it remains to be proven that delivery is on time and profitable.

Despite the difference in our environments, the FCC’s example has useful pointers for India. One is a practicable way to channel USO funds to develop rural broadband, with performance monitoring every six months. Second, a model and time frame to design and conduct a reverse auction, and award the 10-year contracts, with minimal hype. Third, allowing for choice of technologies, including high-speed fixed wireless, satellite, and so on. Finally, a solid foundation is provided by FCC’s supportive approach to making spectrum and infrastructure sharing a reality, including 6 GHz Wi-Fi. This is the sort of action we need in place of more rhetoric.

A complementary approach is that of Sweden and other Nordic countries. Telecom operators there have been sharing infrastructure and spectrum from 2G through 4G, which is now being extended to 5G. Note that all levels of technology (2G, 3G, 4G and 5G) coexist in their networks (1).

For India, policy-makers have to develop approaches, policies, laws, adaptations, and so on that are specific to our context, including culture, institutions, practices, and geographic and social circumstances. One element likely to be necessary for ubiquitous broadband is shared networks in rural areas as well as in dense urban environments. Mandatory provision of shared infrastructure was being considered in Sweden over a decade ago. Given that government’s initiatives and Sweden’s experience with sharing thereafter, network sharing is likely to be extended for internal use without mandatory requirements. In India, too, there is need for government initiatives and incentives. This is because extensive changes in policies, laws, and regulations must be effected, requiring inter-agency coordination and convergence in government departments, legislative agencies, institutions, and among stakeholders. The latter will include service providers, manufacturers, and user groups. Sweden’s experience shows there are compelling cost and energy saving reasons for sharing, apart from environmental impact mitigation, but that without government initiatives and facilitation, the common-good outcomes are not likely to evolve naturally in India, where passive sharing has been permitted and practised for years.

Our desperate need is for revamped spectrum regulations, making the relatively straightforward changes aligned with the FCC model to the extent feasible, after due consultation with industry and other stakeholders. Extending Wi-Fi on the lines of what has already been done for 5 GHz is the first step. The target bands are 6 GHz for Wi-Fi, 60 GHz for indoor Wi-Fi and outdoor authorised shared access by licensed operators like Wi-Fi, and similar outdoor regulations for 70-80 GHz. After that [the end-to-end connectivity is enabled -- which is infeasible now], a systematic initiative is required for network sharing through consortium ownership, with similar holdings in verticals with infrastructure providers, and government participation through BSNL. All concerned government agencies will need to be involved, as must all stakeholders.

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Shyam (no space) Ponappa at gmail dot com

1: https://www.nokia.com/blog/the-well-kept-secret-of-2g-3g-4g-5g-dynamic-spectrum-sharing/

Fix Problems Before Complete Failure

We need some real solutions on the ground.  Examples - Jet Airways post mortem findings applied as the way forward for difficult NPAs; and a radical change of course as strategic participants in consortiums led by the private sector for BSNL and MTNL.

Shyam Ponappa  | July 4, 2019 

There is much talk about improving the big picture in India. What we really need, though, is some successes on the ground — some actual resolution of problems as building blocks for further success. Two instances are discussed below.

The first is a puzzling business failure: Jet Airways running aground in slow motion. It is already bankrupt, but unravelling the sequence could make such financial predicaments, of which there are many, more tractable. India’s once dominant airline slipped up and, inexplicably, was allowed to collapse. Over 16,000 employees are affected, and India’s airline services are in turmoil. One estimate of liabilities was Rs 26,000 crore.

Why didn’t lenders and government agencies use a combination of executive action, judicial process and bridge financing to keep the airline afloat? Did legal obstacles genuinely prevent resolution? Or was it irresolute collective action, including lenders being gun-shy because of the Non-Performing Assets (NPAs) and witch-hunts, or manipulation, complicity, or vindictiveness? Answers and corrective action could help fix other high-profile NPAs.

The second is a macro-level example from telecom: The mishandling of BSNL and MTNL. Since the 1990s, successive governments have repeatedly attempted to give a fresh impetus to these hapless telecom entities, while depriving them of what could actually have made them successful, namely, strong, informed leadership, with independence/non-interference. Consequently, BSNL’s accumulated losses amount to nearly Rs 1 trillion. This is nearly five times Jet Airways’, and double Air India’s accumulated losses until March 2018, the latter being roughly the size of India’s annual health budget.

Sorting out these infrastructure service problems is crucial because of their effect on everything from security, education and healthcare, to work and entertainment.  If BSNL and MTNL can change course constructively, we may be able to get them off their collapsing trajectory. Resolving this situation would remove severe impediments to our effectiveness and convenience, and an enormous drag on productivity. Connectivity and communications are so critical to social and economic capabilities, and our approach for decades has been so flawed and on a disastrous trajectory, that it is incomprehensible that we should be resolutely following this failing path without changing it. Now, the government is reportedly considering infusing thousands of crores into the same business, together with monetising land and assets.

What Is In The Public Interest?

The first step is setting appropriate objectives for BSNL and MTNL. What public-interest needs do they serve? The communications minister mentioned strategic areas like home and defence, and services for crisis management during times of disaster such as cyclones and floods. Two others that he mentioned appear unjustifiable: That they are national assets, and leading providers of free services. The first is just an assertion, while the second is inappropriate for commercial undertakings. It’s time to drop wishful thinking and take honest stock. For instance, after policy statements supporting spectrum sharing, regulations were framed to be so restrictive as to make it not worthwhile. Instead, policy-makers should set objectives that actually serve the public interest.

Thus far, we have had confused and absurdly contradictory objectives in practice: High government collections from auction fees and charges, while expecting ubiquitous, reasonably-priced, good-quality services. It seems self-evident that such contradictory objectives cannot possibly be achieved. The fact that high government charges deprive networks of funds and increase user costs are documented in the following reports:

“A Study of the Financial Health of the Telecom Sector”1 and 

“The Impact of High Spectrum Costs on Mobile Network Investment and Consumer Prices”2

Suggested Objectives

A genuine reset could be attempted on the following lines:

• Connectivity is the most essential objective. The ideal must be balanced with the practical, through trade-offs and phasing. The top cities and clusters have a major share of economic and social activity and are therefore a priority, of which 35-50 may be the fastest growing, with the next 50 requiring attention because of sheer size. For instance, Sweden’s phasing for 2025 is for 98 per cent of the population to have a minimum of 1 Gbps at home/work, 1.9 per cent at least 100 Mbps, and 0.1 per cent at 30 Mbps. But to the extent communications are available in our hinterland together with roads, water and sanitation, activity and prosperity will spread, with less pressure to migrate to urban centres. The longer term objective therefore needs to be good connectivity everywhere (within reason).
• An equally important objective is to safeguard the public interest, while ensuring good, reliable services at reasonable prices. The question is not whether to shut down BSNL and MTNL, but how to provide the right structuring and support including reskilling and continuing education, so that they participate effectively in consortiums and provide safety, security, and oversight in the public interest.
• A third is to avoid disrupting markets with unsustainable prices, including free services. Governments have done this repeatedly in telecom, airline and electricity services. It needs to stop. People need high-quality infrastructure for productivity, not shoddy services that undermine productivity and waste their time, pre-empting better services because of low pricing.
• A fourth is to actively ensure adequate capacity and quality in services to not constrain or waste public resources and potential. This is to avoid the shoddy services referred to above, that are bottlenecks that subvert alternatives as low-priced barriers to competition, through constraining revenues while draining public resources.
• Finally, we must embrace infrastructure- and spectrum-sharing. Sweden provides a model not only for the European Union, but also for India. Singapore had a model public-private partnership until some years ago, when SingTel, a passive anchor partner, took over OpenNet. We need mandatory active network sharing (including spectrum) through consortiums run by the private sector, with BSNL and MTNL as guardian anchor participants. A report by Stokab in March 2017,³ the City of Stockholm’s IT infrastructure company, provides details of an operator-neutral fibre and mobile infrastructure. 

Resolving connectivity problems that affect many people may be more easily doable than, for example, clearing the NPAs, or reconfiguring agriculture.

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Shyam dot Ponappa at gmail dot com 

1: http://icrier.org/pdf/Working_Paper_380.pdf

2: https://www.nera.com/content/dam/nera/publications/2017/PUB_High_Spectrum_Costs_0517.pdf

3. https://www.stokab.se/Documents/Nyheter%20bilagor/Provins%20rapport%20mars%202017_en.pdf

More On Those Dropped Calls

A basic problem is that the cost of spectrum and licences relative to earnings is too high, structurally.

Shyam Ponappa   |  September 3, 2015

Will the government's variant of "speak softly and carry a big stick" deliver Digital India in a hurry? Unlikely, because the problem is an overloaded system with a too-spare design, and insufficient cash flows. Increasing call drops are a symptom of inadequate carrying capacity for the demands of traffic, from voice to data in 3G and 4G. These are structural problems, because the system doesn't generate sufficient investible funds; nor are conditions right to develop such investment capacity; nor are the prospects demonstrably healthy. The situation requires the policy changes outlined below, which only the government can bring about, as it has in the past.

A fundamental aspect of the problem is low spectrum availability. India's operators have 12-15 MHz, compared with a global average of 45-50 MHz. Leading countries have even more; for instance, operators in Seoul reportedly have 10 times more spectrum than operators in India. Limiting the spectrum available to operators compels them to invest more to deliver a given level of traffic and quality than if more spectrum were available.

There are other aspects as well:

• high charges for licences and for spectrum, 8+4 per cent of (adjusted) revenues in addition to auction payments,
   
• imported equipment paid for with a weak stream of local-currency revenues,
   
• changes in spectrum holdings that require adjustment in equipment after older spectrum assignments lapse and new spectrum has been acquired, and
   
• the burgeoning need for new investments for 3G and 4G services. Embedded in the latter is the additional overload caused by tower shut-downs and the difficulties in getting additional sites, apart from the need for more capital.

Add regulations that hinder spectrum trading and sharing, and we have a sector that is structurally weak and restricted in scope.

As for call drops, operators in developed markets experienced similar capacity pressures when there was very rapid growth in data usage, for instance AT&T in the US and O2 in the UK some years ago. The difference is that they were able to invest rapidly to shore up their networks. By contrast, Indian operators had to invest disproportionately in acquiring spectrum, leaving less capacity for investment in networks. For example, in 2014 operators in China reportedly invested $35 billion in 4G equipment, whereas in India, only $3 billion went into equipment. Most of its $32-billion investment - $29 billion, over 90 per cent - was for spectrum. There has also been the diversionary effect because difficult business conditions in the sector led to profits being invested elsewhere, instead of back into communications infrastructure. The difference in approach and functional capacity is stark: China is moving ahead with building high-speed data capability, while the struggle in India is with dropped calls and simply keeping users connected. The government, therefore, needs to facilitate conditions whereby operators invest substantial amounts every year.

For this to happen, the structure of high charges for spectrum and licences relative to earnings has to change, as do restrictive regulations. The monthly average revenue per user in India at the end of 2014 was of the order of Rs 110-120. Capital expenditure ranged from 13 to 15 per cent of revenues in 2014, rising to 20 per cent in 2015. The latter exceeds the percentage invested in the US - but the revenue in India is about 25 times less than the $50 revenue in America, and the US has had well-developed networks for decades. Meanwhile, the recent spectrum-sharing guidelines that restrict more than enable effective sharing epitomise our dysfunctional regulations.1  It is baffling why the government would issue such retrograde regulation if the goal is digital development, because these guidelines do exactly the opposite of what is needed.

Government versus Private Sector

Meanwhile, there has been an escalating war of words between the government and service providers. The latter are trapped in a vicious circle of heavy investment requirement with low revenue-generation capacity, as explained above. Breaking out of this trap is possible only if the government develops conducive policies, as it did with the path-breaking changes associated with the 1999 New Telecom Policy (NTP-99). The change at that time was from up-front licence fees to revenue-sharing. It fell short because the government's share was too high, and began to work only after 2003, when government charges were reduced. In like manner, the government needs to frame policies applying similar principles to spectrum, and ultimately to network infrastructure, so spectrum and networks become more productive.

Our problems arise from three sources: regulations and government charges, operator behaviour and responses, and public opinion and the perceptions and actions of the judiciary. The government can take the initiative through creating policies that facilitate investment and service delivery. Many changes are purely administrative, such as permitting unrestricted spectrum sharing without additional "conversion" charges, or reducing licence and spectrum charges. Surely the department of telecommunications, the finance ministry, and the prime minister's office understand the logic of higher net present values that accrue from incremental revenues to operators. Conversely, any restriction of revenues or opportunity loss reduces the government's share, resulting in lower net present values. For example, restricting 3G roaming or insisting on payments to convert administered spectrum before it can be shared limit revenues, resulting in opportunity losses.

The government needs to be persuasive while acting decisively, to influence operators and public opinion through well-formulated systematic initiatives. Tighter monitoring of quality, including dropped calls, and related penalties are needed - but balanced with constructive policies. These could cover enabling regulations such as for roaming and secondary spectrum sharing with the government, and in developing a consortium approach for active network sharing initiated by the government with broad private participation, led by a private-sector partner. Other potential areas include enabling, organising, and facilitating broadband through cable networks, and inducting technologies such as TV White Space and satellites.

This is where the rhetoric of leading Team India has to be walked and not just talked, to persuade and lead the sector to collaborate and not undercut institutional development.

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Shyam no-space Ponappa at gmail dot com

1 E.g., see https://www.linkedin.com/pulse/sharing-spectrum-operators-steeplechase-parag-kar

Comments

JAHAR

The huge bids while acquiring spectrum at the auctions held recently were bound to impact operator's short run cash flow and investment capability. This in turn impacts network management and up-gradation at least in the short run. No amount of dictats will change this

ASHOK

Would it be over dramartic to say that call drops are the gasps of an industry that is drowning in something other than windfall profits ! Indian businessmen are not saints, true, but they need a more sympathetic hearing in the government's court. If the Savile Row types are in distress, what will happen to the rest of us ?

MANOJ

Nice article, and good points about institutionalizing, not just doing jugaad. However, the point about equipment is not valid, falling capacity costs are the main reason telecoms are able to deliver such good service in India. (not customer support). Call drops are far lower in India than many far richer countries in the world. Some leading operators in UK & US both have much higher incidences of call drops. Instead of absolutism, the government should link the maximum charges leviable by the operator to Quality of Service, and let the operators decide how they are going to distribute their services.

Those Dropped Calls!

                                         And what could be done to fix them...

Shyam Ponappa  |  August 6, 2015


Why do we have so many dropped calls on our mobile phones? Operators say it's because of the closure and shortage of cell towers, and too little spectrum. Public opinion is conflicted, wanting better services at low prices, fearful of the hazard of more towers, while also wanting operators to pay dearly for spectrum through auctions. The government asserts there's enough spectrum and operators need only to invest and deliver. Can these be resolved to get better services?

There are several elements in this situation relating to technology, to the regulatory aspects of administration (policies and regulations), or to management aspects (structure, organisation and processes). Understanding these and managing them will be crucial in devising solutions.

First, an overview from a lay perspective. An operator runs a number of "cell towers" connected together, as well as to other operators' towers (mobile networks) and fixed networks. A cell tower in its simple form - for one operator, covering one cell/area - comprises a base transceiver station (radio), antenna (mast), and other equipment. Radios need spectrum for wireless communication between towers, and subscribers linked to towers.

Apart from spectrum and licensing costs, the number of towers in an area drives the capital and operating costs, materials and energy used, and the environmental impact. As each tower covers a number of subscribers and spectrum is used for wireless connections, more subscribers need more spectrum. So, a given set of towers provides greater traffic-carrying capacity if there is more spectrum. Conversely, less spectrum requires more towers and equipment, which means higher costs and environmental impact. In other words, for a given frequency range (spectrum band) and set of towers and subscribers, a small set of broader bands can carry more traffic than can a large set of narrower bands.1

Calls get dropped or blocked if there is too little spectrum for the number of subscribers, because the calls exceed the spectrum's carrying capacity. Users get good reception if they are near towers, but if other towers are too close, interference from signals from those towers can reduce the capacity of available spectrum, and reception may also be noisy. A weak connection with a distant tower results in poor reception. Distance cuts both ways: a short distance from tower-to-user yields a good connection (strong signal), but other towers must be far enough to avoid interference (i.e., have weak signals for the user). For 900 MHz with a mast height of 10 metres, this tradeoff results in distances between towers of under 100 metres in Delhi because of the scarcity of spectrum, compared with 200 metres in Istanbul, 300 metres in Munich, or 350 metres in Berlin.2

An additional benefit of more spectrum is that peak-hour capacity increases, so that more traffic can be carried without calls being dropped or blocked over the same network configuration. Our problem is that we have many operators with narrow, non-contiguous slivers of spectrum. This further reduces the efficiency of the available spectrum.

A reduction of towers because of closure on account of public pressure or for environmental reasons creates genuine problems, but simply adding towers is only a partial solution, as it doesn't remedy the shortage of spectrum. One reason is interference resulting in the reduced capacity of available spectrum - because cells in our urban centres are less than 100 metres apart, much less than in other countries, because sufficient commercial spectrum hasn't been made available. Therefore, more towers alone will cause spectrum to be used less efficiently, but won't reduce dropped calls arising from insufficient, fragmented spectrum. Also, adding towers is expensive, and is detrimental to the environment.

Operators deal with scarce spectrum by deploying more base stations per unit area, and also by using advanced technologies such as adaptive multi-rate codecs and synthesised frequency-hopping. In 2008, Indian operators were among the few worldwide to adopt such techniques, while having the smallest outdoor sites and heaviest traffic densities per MHz.3 This results in higher costs relative to revenues.

Contrast with China

Comparing the approaches taken by China and India, there's little doubt of the need for a change in our approach. China provided operators with low-priced spectrum to scale up and drive economic growth, among other forms of support. Despite foreign holdings, it hasn't imposed substantial fees. India brought in more operators than other markets, didn't provide as much commercial spectrum, fragmented what it had, and priced it out of sight. Consequently, substantial spectrum is idle with the government, while large operators with very little spectrum and the legacy of underdeveloped fixed networks have over 100 million customers each, with high voice and growing data usage. This situation is likely to worsen as more spectrum holdings come up for renewal.

Efficient data transmission requires even broader bands. The charts below show how capacity increases per MHz with broader bands, and the bandwidth in terms of megabits per second (Mbps) needed for services.

Capacity Increases with Broader Bands

Source: Search on Google for: "Optimising mobile broadband performance by spectrum refarming"; white paper by Nokia Networks.

http://www.slideshare.net/allabout4g/mobile-broadband-explosion-ppt-rysavysept2011

Possible solutions

One possibility is to adopt policies and regulations that facilitate spectral efficiency, e.g., allowing roaming and spectrum trading. This wouldn't mitigate the problem of excessive capital expenditure on spectrum auctions that exceeds investment in networks (according to an industry estimate), but would probably improve spectrum utilisation.

Another is to share all spectrum through pooling, allowing common-carrier access on payment to Radio Access Networks including spectrum. If charged only a reasonable revenue share with incentives such as reductions for rural services, there is likely to be explosive growth in broadband delivery with an increase in government revenue, if the organisation and coordination is done right. The government needs to bring together operators and other stakeholders, including the Ministries of Communications & Information Technology and of Information & Broadcasting, and with expert help, work out how to organise and deliver the promise of Digital India.

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Shyam nospace Ponappa at gmail dot com

1. An assessment of spectrum management policy in India, 2008; p 10: http://www.aegis-systems.co.uk

2. For GSM, there is a 50 per cent increase in the capacity per MHz using two channels of 12 MHz each instead of two channels of 6 MHz each. Ibid., 15.

3. Ibid.,28.