3G Spectrum Dispute

The Indian telecom sector has been caught within the clutches of the spectrum dispute. Demand for fresh spectrum is gaining momentum as the over all cellular industry is experiencing steady increase in number of cellular users. Along with that Indian GSM companies are going forward with the rolling out of 3G technologies. This standard requires more bandwidth of radio frequency for better transfer of data. DoT has already declared their strategy for the auction of 3G spectrum. The dispute mainly started when some providers like Vodafone Essar, Bharti and others wanted new players to join the rally in acquiring spectrum, provided that there is sufficient stock for the formers. However, Reliance Communication asked existing players, sitting on excess spectrum to return the same, so that the players waiting on the queue get a chance to enter the industry. DoT and the Defence Ministry negotiated to release some of the spectrum they are using. With that free spectrum, Telecom Ministry decided to initiate fresh auctions. This initiative has aroused the concern regarding the efficiency of auction process and the Central Government is asking for optimum collection as fees from the 3G spectrum allocation.

This dispute is affecting the market sentiment on those telecom companies. More ambiguity on the issue will deter not only the growth of the sector as a whole but will also adversely affect the fresh capital accumulation in the business.