After India’s huge spectrum auction, the operators are weighing up their next moves, and those will be critical to the shape of the mobile landscape in this massive but overcrowded market.

Although the biggest players have acquired new spectrum in some or all of the bands in play – 800MHz, 900MHz, .18GHz and 2.1GHz – most still lack the essentials of a first-class, profitable mobile broadband business, including adequate capacity for high speed data services across all operating regions. Already saddled with patchy and sometimes sparse 2G and 3G spectrum, which leads to poor quality of service and helps keep ARPUs low, some carriers have now had to pay large sums to retain their 900MHz holdings, while others will need to engage in complex spectrum aggregation, sharing or roaming strategies to make 4G ends meet.
While 3G and 4G spectrum was mainly acquired by the top six mobile operators, moving on from the large number of small carriers present in 2G, a new and powerful presence may still disrupt the LTE space. Reliance Jio Infocomm, which re-entered the mobile market by acquiring Infotel – which had secured the only national licence for 2.3GHz TDD broadband wireless spectrum. It has been hesitant to deploy its planned TD-LTE network, instead focusing on the roaming and infrastructuring sharing deals which will make it commercially viable.

But now it is taking clear steps to create a national dual-band system across 2.3GHz and 800MHz, which would be a real threat to the more established cellcos. While the TDD band has limitations of range because of its high frequency, and therefore carries high costs if used alone, it is ideal as a capacity band focused on small cells, if the operator can deploy a parallel coverage-focused macro network in sub-1GHz spectrum. This is the approach adopted by many operators round the world, including the US leaders.

To be able to achieve this perfect balance, Jio will need to get regulatory approval, and negotiate hard with rivals, in order to swap spectrum and achieve contiguous coverage in 800MHz. It acquired 49 units across 10 circles in this band during the auction, spending INR78.76bn ($1.25bn), but only gained contiguous spectrum in four circles, according to the Economic Times. Its ability to swap spectrum with other operators will depend on government approval of new trading rules, although Jio insists that the regulations have already been liberalized to allow swapping.

“With this investment, in addition to pan-India 2.3 GHz spectrum, Reliance Jio Infocomm has spectrum in either 800MHz or 1800MHz or both, in 20 out of total 22 circles in the country,” the operator said in a statement. “This combined spectrum footprint across frequency bands provides significant network capacity and deep coverage.”

Meanwhile, third-ranked MNO Idea Cellular is also using its winnings from the auction to try to disrupt the entrenched position of leaders like Bharti Airtel. It was the biggest spender in the auction, accounting for 28% of the INR1.099 trillion (€16bn) total raised, or INR301bn rupees (€4.4bn). However, it stayed out of the 800MHz band, where the highest interest was focused, though it is currently deploying India’s first 3G network in 900MHz spectrum, in Delhi, to improve its coverage.

Most operators are complaining at the high reserve prices set by the government, at a time when most are struggling to deliver return on their 3G spectrum investments. “The auction design and the scarcity of spectrum have resulted in exorbitant bids to secure the spectrum, particularly in renewal circles, where huge investments have already been made on the assurance of a continuity of business enshrined in the licences issued by the DoT,” said Gopal Vittal, Bharti Airtel’s CEO for India and South Asia. “We hope that in future auctions, the government will make available adequate spectrum by securing it from agencies and operators who are underutilising this vital resource.”

Source: Rethink Wireless