Do we smell legal tangles in the Indian telecom sector?

The 3G spectrum controversy is taking a dramatic turn with former GSM allies Bharti, Essar Vodafone (earlier Hutch) and Idea are now taking different positions. This division among India's largest mobile operators, who together control over 50 per cent of India’s subscriber base, is expected to have a telling impact on the spectrum policy, which primarily seeks to address how best to allocate this scarce resource.

In the past, 3G had successfully put GSM and CDMA service providers on opposite sides of the fence, but this discord among three of GSMs largest players is unprecedented. Confirming the development, T V Ramachandran of COAI (Cellular Operators Association of India) said all three companies had sent in separate representations to Trai in response to its consultation paper on review of license terms and capping of number of service providers. COAI's submission to Trai on this consultation paper represents the majority and not unanimous view of the GSM industry, he admitted.

At the heart of this split is the question of who should be allotted 3G spectrum. Bharti, which holds licenses in all 23 telecom circles, wants 3G spectrum to be given on a priority basis to operators, who currently provide mobile services under their licenses in the circles in question. Only after 15 MHz of spectrum has been reserved for existing operators, should the government entertain any request from those who have a license without spectrum or those who have applied for but have no license, says a senior Bharti official. For Vodafone, which operates in 16 circles, with license applications pending in the rest, Bharti's position is untenable. “We are license holders. If we have still not been allocated spectrum for operations, we cannot be penalised for it,” counters a senior Vodafone official.

Idea, Aircel and Spice are learnt to be supporting Vodafone's position. These companies seek parity between those who provide services and those who either hold licenses or have applied for one. Idea operates in 11 circles. It has two licenses for Mumbai and Bihar, but no spectrum and another nine pending license applications. Idea officials say licenses already qualify for spectrum. “Spectrum is bundled with the license and the license fee represents part payment for spectrum. So how can license holders be asked to participate in an auction,” they argue.

Trai had recommended auctions for 3G spectrum in September last year. GSM players are facing a growing squeeze, with CDMA operators also laying claim to GSM spectrum over CDMA spectrum in their service areas. This division in the GSM ranks will considerably weaken their strategic play in the 3G spectrum battle. These hardening positions are further placing pressure on government to deliver a fool-proof 3G spectrum policy.

Is there a possibility that India's telecom sector witnesses a repeat of the massive legal tangles of 2001-03, following the policy shift?