3G spectrum-sharing off the cards in India?

A new proposal may spell the end of 3G roaming alliances between Indian operators – as they are reportedly losing revenue for the country’s government. Changes to the country’s legislation could provide the government with an addition INR7 billion (US$134 million).

The current law stipulates that operators which own 3G spectrum pay an additional share of their revenue to the government as a ‘spectrum usage fee’. However, operators which do not own frequencies – and instead share them as part of an agreement – are not legally obliged to pay this charge.

As no operator in India holds a 3G licence which covers all of the country’s telecom circles, spectrum-sharing arrangements are necessary in order for operators to provide nationwide coverage without any ‘dead’ zones.

Spectrum-sharing arrangements between operators have reportedly been declared illegal by both the Indian DoT (Department of Telecommunications) and the regulator TRAI (Telecom Regulatory Authority of India). However, none of the operators in question have yet been punished, and confusion over 3G roaming means that clearer legislation on the issue may be welcomed by operators.

The government is due a standard revenue share of 6% from operators; if operators own spectrum in the telecom circle, this rises by 1%. The new proposal would apply this fee to operators that are offering services in a telecom circle where they do not own spectrum via a sharing agreement.

Controversially, operators could be charged retrospectively for the entire period that their sharing agreements have been active. Major Indian operators – including Vodafone Essar, Bharti Airtel and Idea Cellular - have been demanding that the fees they have already paid be refunded if national roaming agreements are ruled illegal, on the ground that they had previously received approval for such agreements.

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