Friday, December 7, 2007
MUMBAI’s trains are famous for carrying what is officially called a ?super-dense crush load? of passengers during rush hour. Judging by the complaints of some of India’s mobile operators, its airwaves are just as overcrowded. The operators added more than 8m mobile-phone subscribers in October, bringing the total to over 217m. India has met its ambitious target, set two years ago, of 250m fixed and mobile-phone connections. But the government is sadly unprepared. It has not given India’s mobile operators enough space on the radio spectrum to carry calls crisply and reliably. India, the operators complain, faces a ?spectrum crunch?.
In November Sunil Mittal, the chairman of Bharti Airtel, wrote to India’s telecoms secretary describing the ?extreme anguish? caused by the ?pitiful? amounts of spectrum granted to operators using GSM technology, the dominant standard that is used by three-quarters of Indian subscribers. The government had said it would provide extra spectrum to firms once they had amassed enough subscribers. Airtel, for example, was supposed to receive an additional allotment in Delhi once it passed 1.6m subscribers. It now has over 3.6m and is still waiting.
The speed of mobile telephony’s spread has caught the telecoms regulator by surprise. Its engineers have proposed raising the subscriber thresholds at which GSM operators are granted more spectrum, in some cases increasing them 15-fold. Operators are outraged. Efforts are now being made to reach a compromise.
One operator that agrees with the regulator is Reliance Communications (RCOM), which serves 39.4m subscribers, mostly using a rival technology called CDMA. Its chairman, Anil Ambani, now wants to start offering GSM services across the country. In October RCOM paid 16.5 billion rupees ($418m), a price that has not changed since 2001, for a new GSM licence. Having joined the queue of licence-holders awaiting ?start-up? spectrum, Mr Ambani thinks the incumbents already have more space than they deserve. Their demands for another helping will only deprive new entrants (such as himself) of the spectrum they need to compete, he argues.
Mr Ambani can be persuasive. But nobody can claim India’s mobile-phone market lacks competition. Kunal Bajaj of BDA, a telecoms consultancy, thinks that when the GSM incumbents bought their licences after 1999, they had some right to expect further allocations of spectrum as their subscriber bases grew. Paying 16.5 billion rupees for a licence in 2001, before India’s market took off, was a much bigger gamble than paying the same sum now.
How much damage will the impasse do to Indian telecoms? In a recent presentation, the regulator’s technical advisors compared ?dire predictions? about the scarcity of spectrum to Thomas Malthus’s grim prognostications in 1798 about the scarcity of food. Just as Malthusians were wrong to assume that the productivity of crop-land was fixed, so pessimists are wrong to assume that a unit of spectrum can support only so many subscribers. If spectrum is tight, operators will find ingenious ways to squeeze more out of it, the engineers reckon, using new technologies such as smarter antennae. Like Mumbai’s commuters, who hang from carriage doors and windows, the GSM operators should tuck in their elbows and make more use of the available space.