Joint Owning of Spectrum

Why in news?

Chairman of Bharti Enterprises has made a case for shared active infrastructure, including spectrum, to restore the telecom sector’s profitability and credibility.

What is the idea and why it is necessary?

• At present, each operator builds its own network. If there is a common network, the capital expenditure will come down sharply.
• In the proposed scheme of things, spectrum could be jointly owned by ‘a network operating company’ from which all service operators can take it on lease.
• This will transform the telecom operators into purely marketing companies and strengthen their balance sheets.
• This will also lead to increased efficiency in usage of the scarce natural resource.
• This idea makes sense, since, the profits of telcos are at an unprecedented low on account of the high price of spectrum and the tariff war between them.
• Also, recently Indian telecom stocks and its overseas interests have taken a huge fall indicating there is no sign of any improvement in the business scenario in near future.
• The case was made for turning the entire country into one telecom circle also.
• Currently, country is divided into 22 circles. And for each circle, an operators needs a separate team. Thus, one circle means lower costs.

What is the way forward?

• The transformative impact of telecom is well known to all, and yet the sector is faced with bleak prospects.
• So, the govt needs to consider all the above suggestions.
• The sub-sea cables are all owned by consortiums of operators. There is sharing of telecom towers as well.
• Thus, pooling of passive infrastructure has already happened in telecom.
• But, the need of the hour is to extend this idea to the active infrastructure: Spectrum, base stations, fibre optic etc.,

Source: Business Standard