Friday, April 27, 2012

TRAI recommendations threaten mobile broadband investment and deployment in India

LONDON, UK: The GSMA stated that the TRAI's recommendations on the "Auction of Spectrum" will set India back in its goal to deliver "Broadband on Demand" to the citizens of India. The proposals disregard international best practice in spectrum policy and jeopardize the investment of billions of US dollars in new mobile infrastructure in a sector that either directly, or indirectly, employs almost 10 million people and serves more than 911 million consumers.

The European 3G experience more than a decade ago made clear that auctions designed to maximise revenue, hinders the development of the mobile sector and the socio-economic benefits that mobile delivers to the public. Reducing the ability of mobile operators to invest in network upgrades and expansion would undermine the ability of India to leverage its telecom infrastructure to empower citizens and businesses, especially those in rural communities, to participate equitably in the Internet economy.

For example, the TRAI's proposed reserve prices for upcoming spectrum auctions are so prohibitively high that they will inevitably curtail mobile operator investment in mobile broadband infrastructure and increase prices to consumers.

Given the strong correlation between mobile penetration and socio-economic development – with a 10 percent increase in Mobile Broadband penetration delivering as much as $80 billion (Rs. 3,506 billion) of extra revenue for India's transport, healthcare and education sectors by 2015 – the TRAI's recommendations will not serve the interests of the broader Indian economy.

"Efforts to squeeze money out of mobile operators for some perceived short-term gain will only reduce investment in networks, inhibit growth of mobile services and drive up consumer prices – limiting the value the public will derive from the spectrum resource in the long term," said Franco Bernabe, chairman of the GSMA and chairman and CEO of Telecom Italia Group.

TRAI's recommendations would not only drive up the cost of the mobile spectrum, but would also create artificial scarcity of this critical resource. In advance of license renewal, TRAI has proposed to force current 900 MHz licensees out of the band into the 1800 MHz band. As a result, TRAI would limit the available spectrum in the upcoming 1800 MHz 2G auction and leave the remainder under-utilised for a significant period, creating unnecessary scarcity at a time when India has an opportunity to shape the future of the mobile industry. This effectively means that billions of US dollars of investment would be wasted.

Earlier this month, the GSMA announced that India was positioned to surpass the US as the second largest mobile broadband market in the world within the next four years.

In recognition of the threat to this potential, Anne Bouverot, director general, GSMA, commented: "The GSMA's member operators in India have invested heavily and worked hard to deliver innovative services to consumers and positively impact the broader Indian economy. They are naturally very concerned about the TRAI recommendations, which have the potential to stifle investment in India's mobile sector.

"The GSMA and its members are seeking an open dialogue with the Government of India on the licensing of the critical spectrum with the aim of finding a solution that will drive investment and growth in mobile communications and more broadly in the Indian economy."

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