Introduction
Most of the current discussions on spectrum are anchored around normal access spectrum. These are typically frequencies below 3GHz, namely 800/900/1800/2100/2300/2500 MHz bands. Access spectrum is used to aggregate voice and data packets of the end user’s handsets flowing in and out of the BTS (towers). Microwave spectrum is used to carry these packets from the tower (BTS) to the switching centers for the purpose of routing them to its respective destination. There are two types of microwave spectrum a) Microwave Access Spectrum (MWA) – these are above 10 GHz; b) Microwave Backbone Spectrum (MWB) – these are less than 10 GHz. Microwave access spectrum are currently assigned in 13, 15, 18, 21 GHz bands, whereas microwave backbone spectrum is assigned in 6, 7 GHz bands. Unlike normal access spectrum, microwave spectrum (MWA & MWB) is not assigned through auction, but administratively. TRAI on 24th Aug 2014 recommended to continue with the current practice of administratively assigning MW spectrum, but DoT wants MW spectrum to be auctioned. Through a letter dated 16th Oct 2015, DoT requested TRAI to reconsider the decision of assigning MW spectrum administratively and suggest reserve price for auctions and the associated spectrum usage charges. The purpose of this note is to lay out the facts around MW spectrum and investigate whether it makes sense to auction MW spectrum just like normal access spectrum.
History
In the beginning, MW spectrum was priced based on a complex formula calculated on a link-to-link basis. To simplify the process, DoT on 18th April 2002 decided to price MW spectrum on the basis of revenue share (% of Adjusted Gross Revenue). This was subject to COAI withdrawing all related cases against DoT, and agreeing to accept the proposed pricing arrangement in its entirety. The order was only applicable for GSM operators (CMTS license) since the CDMA operators were holding basic service license (BSO license) at that time, and hence they could not be benefitted from this order and thus continued to pay on a link-to-link basis (though the CDMA operators protested but lost in TDSAT). Then on 3rd Nov 2006, the DoT came out with a combined order for both GSM and CDMA operators holding up to 6 carriers of MWA and MWB spectrum separately. This order was further expanded on 10th Nov 2008 for operators up to 11 carriers of MWA and MWB spectrum. The % of AGR rates in the orders of 2006 & 2008 were increased significantly compared to that of 2002. For example, an operator with 5 carriers, the MWA % rate was increased 3.7 times for Metros and 2 times for other circles, and for MWB the increase was even more- 4.4 times that of 2002. The increase was even more for operators planning to accumulate additional MW carriers. The following table compares the 2002 rates with those of 2006 & 2008.
