They are planning to ask the Department of Telecommunications (DoT) to relax the ceilings on spectrum ownership.
What is the spectrum cap?
Energy travels in the form of waves known as electromagnetic waves.
These waves differ from each other in terms of frequencies.
This whole range of frequencies is called the spectrum.
In telecommunication like TV, radio and GPRS, radio waves (electromagnetic waves) of different wavelengths are used. They are divided into bands based on frequencies.
The spectrum cap is the limit of radio-waves a telecom operator can hold for providing wireless services.
What is the current rules?
Spectrum cap rules are to prevent an operator from accumulating unreasonable amount of spectrum that might result in the monopoly of the operator.
At present, a single telecom network cannot own more than 50% of the wavelengths in a single band and 25% of all the wavelengths assigned in a telecom circle.
Why the ceiling should be reduced?
If these two telcos actually merge, the resultant entity would need to surrender a significant amount of spectrum under these current rules.
Irrelevant - These restrictions were put in place when there were 8 - 10 networks in each circle to protect the smaller networks from the bigger ones.
But this hyper-competition has been reduced leading to around four large networks in each circle. Hence the current rules become irrelevant.
CCI - Though cartelisation amongst the networks is a genuine threat, but there is Competition Commission of India to ensure that it doesn’t happen.
Quality - If the base of a network’s subscribers rises, its inability to buy spectrum will severly impact the quality of its service.
Restricted choices - A smaller network can’t sell its spectrum since the caps restrict their choice. It can only negotiate with those networks which have spectrum way below the ceiling.
Consumption increase- In the last few years, there is a steep rise in data consumption. So, the networks need more wavelengths. But their efforts are hindered by the caps.
It also impacts the ease of doing business as the exits of network and consolidation are being difficult because of the cap.
The government wants to leverage mobile networks for better governance which would also require more spectrum.
