Lok Sabha Question No. 3475 (UNSTARRED), answered on 2016-12-07
Subject: Sharing of Spectrum
Ministry: COMMUNICATIONS
Asked by: NARAMALLI SIVAPRASAD

## GOVERNMENT OF INDIA MINISTRY OF COMMUNICATIONS DEPARTMENT OF TELECOMMUNICATIONS

## LOK SABHA UNSTARRED QUESTION NO.3475 TO BE ANSWERED ON 7 TH   DECEMER, 2016

## SHARING OF SPECTRUM

3475. DR. NARAMALLI SIVA PRASAD:

Will the Minister of COMMUNICATIONS be pleased to state:

- (a) whether the Government has recently allowed sharing and trading of spectrum in order to improve telecom facilities in the country;
- (b) if so, the details thereof;
- (c) the response of telecom service providers thereon;
- (d) whether there is any data collected by the Government on how the services have improved in the light of this decision; and
- (e) if so, the details thereof and the other measures taken to improve the telecom services?

## ANSWER

## THE MINISTER OF STATE (IC) OF THE MINISTRY OF COMMUNICATIONS & MINISTER OF STATE IN THE MINISTRY OF RAILWAYS (SHRI MANOJ SINHA)

- (a) Yes Madam.
- (b) The  guidelines  on  spectrum  sharing  and  spectrum  trading  were  issued  on 24.09.2015  and  12.10.2015  respectively.  The  salient  features  of  spectrum  sharing and spectrum trading are attached at Annexure I.
- (c) Spectrum sharing and spectrum trading are being facilitated by the Department on request of telecom service providers. So far 21 cases of spectrum sharing and 13 cases of spectrum trading in 800 MHz band, 6 cases of spectrum trading in 1800 MHz band and 8 cases of spectrum trading in 2300 MHz band have been cleared by the Department.
- (d) & (e) There is no specific data about  the quality of service of cellular mobile telephone service being improved  on account of the recent decision of the government allowing sharing and trading of spectrum. However, the performance of Cellular  Mobile  Telephone  Service  providers  (2G  &  3G)  on  the  network  related parameters in the last one year upto June 2016, as per the Performance monitoring Report  (PMR)  submitted  by  service  providers  to  Telecom  Regulatory  Authority  of India  (TRAI),  shows  that  the  service  providers  are  generally  complying  with  the benchmark  for  the  various  Quality  of  Service  parameters.  Further,  monitoring  of network performance of services by TRAI indicate that there has been improvement in the quality of services in general.

## Salient features of Spectrum Sharing and Spectrum Trading

## Spectrum Sharing

Spectrum sharing allows operators to pool their respective spectrum for usage in  a  specific  geographical  area  and  thus  complementing  each  other's  needs  and ensuring  more  efficient  utilisation  of  the  spectrum.    Moreover,  the  pooling  of  the spectrum increases the spectrum efficiency for both the operators as the capacity to carry telecom traffic is not in linear proportion to sum of their spectrum holding but is much larger than the sum of the traffic capacities of individual service provider.

The salient features of the spectrum sharing include:-

- (a) Spectrum  sharing  shall  be  allowed  only  for  the  access  service  providers holding  Cellular  Mobile  Telephone  Service  (CMTS)  /Unified  Access  Service License  (UASL)  /Unified  License  (Access  Services)(UL(AS))/Unified  License (UL) with authorisation of Access Service in a Licensed Service Area (LSA), where both the licensees are having spectrum in the same band.
- (b) Sharing is permitted in the following scenarios:
- (i)  For  the  spectrum  where  both  the  licensees  possess  the  spectrum  for which  market  price  has  been  paid  with  the  clarification  in  respect  of spectrum  in  800  MHz  acquired  in  the  auction  held  in  March  2013, sharing of spectrum shall be permitted only if the differential of the latest auction price and the March 2013 auction price on pro-rata basis on the balance period of right to use the spectrum is paid.
- (ii)  In case both the Licensees who plan to share spectrum are having the administratively allotted spectrum in that band, the sharing of spectrum is permitted only when both the licensees have paid One time Spectrum Charges (OTSC) for their respective spectrum holdings, above 4.4 MHz (GSM) /  2.5  MHz  (CDMA)  based  on  reserve  price/auction  determined price. However if the said amount is not paid due to judicial intervention in judicial forums barring any coercive action, in the interim, sharing of spectrum in such cases will also be permitted subject to submission of a bank  guarantee  for  an  amount  equal  to  the  demand  raised  by  the department for one time spectrum charge pending final outcome of the court case.
- (iii)  where  one  licensee  has  spectrum  acquired  through  auction/trading  or liberalised spectrum and the other has spectrum allotted administratively,  sharing  is  permitted  only  after    the  spectrum  charges for liberalising the administratively allocated spectrum are paid. Further, in case of spectrum acquired in auction held in March 2013, differential amount as indicated in para (b)(i) above shall be payable in respect of 800 MHz band.
- (c) Spectrum  Usage  Charges  (SUC)  rate  of  each  of  the  licensees  post-sharing shall increase by 0.5% of Adjusted Gross Revenue (AGR).

- (d) Spectrum sharing shall be available for upto the balance period of the licence or upto the period of right to use spectrum, whichever is earlier.
- (e) The  prescribed  limits  for  spectrum  cap  shall  be  applicable  for  both  the licensees  individually.  Further,  the  spectrum  holding  of  any  licensee  postsharing shall be counted after adding 50% of the spectrum held by the other licensee in the band being shared being added as the additional spectrum to the original spectrum  held by the licensee in the band.
- (f)  A  prior  intimation  by  both  the  licensees  shall  be  given  jointly  for  sharing  the right to use the spectrum at least 45 days before the proposed effective date of sharing.  Both  the  licensees  shall  also  give  an  undertaking  that  they  are  in compliance with all the terms and conditions of guidelines for spectrum sharing and the licence conditions and will agree that in the event, it is established at any stage in future that either of the licensee was not in conformance with the terms  and  conditions  of  the  guidelines  for  spectrum  sharing  or/and  of  the licence at the time of giving intimation for sharing of right to use the spectrum, the Government will have the right to take appropriate action which inter-alia may include annulment of sharing arrangement.

## Spectrum Trading

Spectrum trading allows parties to transfer their rights to use the spectrum and obligations to another party. This allows better spectrum usages as the idle spectrum from the hands of one service provider gets transferred to the other service provider who is facing spectrum crunch. This also improves customer satisfaction and services of the service provider acquiring spectrum.

The salient features of spectrum trading are as below:

- (a) Spectrum trading shall be allowed only between two access service providers, holding  Cellular  Mobile  Telephone  Service  (CMTS)  License,  Unified  Access Service  License  (UASL),  Unified  License  (Access  Services)(UL(AS))  and Unified License (UL) with authorisation of Access Service in a licensed service area.
- (b) Only outright transfer of right to use the spectrum from the seller to the buyer shall be permitted. Leasing of spectrum is not permitted.
- (c) Spectrum trading will not alter the original validity period of spectrum assignment as applicable to the traded block of spectrum.
- (d) The  seller  shall  clear  all  its  dues  prior  to  concluding  any  agreement  for spectrum trading. Thereafter, any dues recoverable up to the effective date of trade shall be the liability of the buyer. The Government shall, at its discretion, be entitled to recover the amount, if any, found recoverable subsequent to the effective date of the trade, which was not known to the parties  at the time of the  effective  date  of  trade,  from  the  buyer  or  seller,  jointly  or  severally.  The demands, if any, relating to licenses of seller, stayed by the Court of Law, shall be subject to outcome of decision of such litigation.

- (e) Only the spectrum in the 800/900/1800/2100/2300/2500 MHz  bands  is permissible to be traded which has either been assigned through an auction in the year 2010 or afterwards, or on which the Telecom Service Provider (TSP) has already paid the prescribed market price.  In  respect  of  spectrum  in  800 MHz band  acquired  in  the  auction  held  in  March  2013,  trading  of  spectrum shall  be  permitted  only  if  the  differential  of  the  latest  auction  price  and  the March 2013 auction price on pro-rata basis on the balance period of right to use the spectrum is paid.
- (f)  Buyer will be allowed to use the spectrum acquired through trading to deploy any technology by combining it with their existing spectrum holding in the same band  after  converting  their  entire  existing  spectrum  holding  into  liberalised spectrum in that band as per the prevalent terms and conditions.
- (g) The buyer should be in compliance of the prescribed spectrum caps declared from  time  to  time.  The  spectrum  acquired  through  trading  shall  be  counted towards the spectrum cap by adding to the spectrum holding of the buyer.
- (h) The seller should clear its Spectrum Usage Charges (SUC) and its instalment of  payment  (in  case  seller  had  acquired  the  spectrum  through  auction  and opted for deferred payment) till the effective date  of trade and thereafter, the buyer shall clear all these dues.
- (i)  A non-refundable transfer fee of one percent (1%) of the transaction amount of aforesaid trade or one percent (1%) of the prescribed market price, whichever is  higher  shall  be  imposed  on  all  spectrum  trade  transactions,  to  cover  the administrative  charges  incurred  by  Government  in  servicing  the  trade.  The transfer fee shall be paid by the buyer to the Government. Transaction amount refers to the amount payable by the buyer to the seller to purchase the rights to use the spectrum block(s). It will be decided exclusively by the buyer and the seller.  The  market  prices  shall  be  equal  to  the  auction  determined  amount prorated for the balance validity period of spectrum assignment. In case more than  one  set  of  market  determined  prices  are  available,  the  latest  market determined  price  available  at  the  time  when  the  TSP  wants  to  trade  its spectrum  holding,  would  be  applicable.  If  the  auction  determined  prices  are more  than  one  year  old,  the  prevailing  market  price  shall  be  applied  by indexing the last auction price at the rate of SBI PLR.
- (j)   The amount received from trading shall be part of Adjusted Gross Revenue (AGR) for the purpose of levy of License fee and Spectrum Usage Charges (SUC).
- (k) Both the licensees trading the spectrum shall jointly give a prior intimation for trading  the  right  to  use  the  spectrum  at  least  45  days  before  the  proposed effective date of the trading. Both the licensees shall also give an undertaking that they are in compliance with all the terms and conditions of guidelines for spectrum trading and the licence conditions. In the event, it is established that any of the licensee was not in conformance with the terms and conditions of the guidelines for spectrum trading as well as the licence at the time of giving intimation  for  trading  of  right  to  use  the  spectrum,  the  Government  will  have right  to  take  appropriate  action  which  inter-alia  may  include  annulment  of trading agreement.
- (l)  Existing rates as prescribed by the Government from time to time for Spectrum Usage Charge (SUC) shall continue to apply on spectrum held by the buyer and seller.  The spectrum held by buyer shall include the spectrum acquired through trading. Spectrum acquired through spectrum trading shall be treated akin to spectrum acquired through auction.

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