Mobile Tarrifs might go up on account of spectrum costs

Navjot Singh

Navjot Singh

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Industry body COAI has said mobile tariffs may go up soon as telecom operators are expected to pass on to customers the burden of spectrum cost they will incur in the upcoming auction.

Telecom operators have been cutting back on freebies and discounted minutes to maintain profitability. Analysts say this trend may continue as they have to pay for the fresh spectrum purchases.

After the last auction held in February this year, Vodafone India CEO Marten Pieters had said the telecom industry in India has reached a point where the tariffs need to increase every year to sustain itself.
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Source
 
Right, now that all Indians* have mobile phones. And many percentage also have 2 SIM.

Its time to increase rates! 😀

(* = not literally!)
 
With MNP, there will NOT be much hike, as much the telcos want... Irony is, all they can do is hike poor prepaid users (thats almost 85+%) and middle class people using individual postpaid plans for whom the hike will affect most.. They can't touch corporate customers' tariff, who in real can bear the hike, imho...
 
Reason for price hike - Telcos face Rs 1-lakh cr hit on 900 Mhz band re-farming | Business Line
Bharti Airtel, Vodafone India, Idea Cellular and Bharat Sanchar Nigam Ltd face a Rs. 1-lakh crore outgo with the Telecom Commission deciding to re-farm the entire spectrum held by them in the 900 Mhz frequency band.
The Commission’s views will be referred to the Empowered Group of Ministers (EGoM), which is expected to meet on Thursday to take a final decision on the issue.
Re-farming essentially means shifting operators from one frequency band to another. In this case, operators will be shifted to the 1,800 Mhz band.
A report from research firm Analysis Mason said the operators using 900 Mhz spectrum will need to replace 286,590 base stations and install 171,954 more base stations to provide equivalent coverage using 1800 Mhz spectrum. This would require an incremental capital expenditure of Rs. 54,739 crore and incremental annual operating expenditure of Rs. 11,762 crore. An additional capital expenditure of about Rs. 26,653 crore will be required to deploy new towers to support the incremental base stations.
If the incremental investment incurred due to re-farming is passed on to the customers then tariffs would increase by 64 paise a minute, the report commissioned by the incumbent GSM operators said. If the re-farming cost is not passed on to the consumers, then operators' EBITDA margins will decline by 8 per cent, it said.
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So old operators (Airtel, Idea, Vodafone) were operating on 900 Mhz spectrum while new operators (like Tata, Reliance, Aircel, etc) were using 1800 Mhz. But now govt wants all GSM operators to operate on 1800 Mhz spectrum, so old operators would have to replace lots of existing equipment.
Technically 900 Mhz is better in coverage. Perhaps govt wants to allocate 900 Mhz spectrum for 4G?
 
Incidentally I got this on Whatsapp today 😀

You must be knowing ....
what u hv to do on 31/10/2014

If u dont know then read down..
The rate of net recharge is increasing day by day, that's why Mr Narendra Modi has asked to switch off mobile data for that day, it's only one day you have to keep ur internet off.
Bcz of that all sim companies will suffer loss of approx 300 to 400 crores and they will reduce net prices upto 90%
It's a request to all to keep off the net pack for that one full day on 31/10/2014.
Share this message. It is helpful.
Janhit me jari.
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Old article - Airtel should pull out of race for 900 MHz & switch to 1800 MHz band: Analysts - Economic Times
The price of 900 MHz spectrum in the lucrative circles of Delhi and Mumbai is over double that of 1800 MHz, as per the current bid levels in the ongoing bandwidth auction which enters its ninth day on Wednesday. The operational cost of 1800 MHz band is estimated to be around 25% higher than 900 MHz, but analysts say this would be offset by the higher price.

"Along with the one-time cost of converting the existing network to be 1800 MHz ready, the value of 900 MHz will be around 1.8 times the price of 1800 MHz airwaves for an incumbent player," said an analyst who could not be named as he is a consultant on bidding strategy to one of the auction participants.

While the intrinsic value of 900 MHz over the long haul may be high, it makes sense for Bharti Airtel, which has already deployed fourth-generation Long Term Evolution technology, to drop out of the race, said several analysts and industry experts ET spoke to. According to them, the company could also use 1800 MHz to expand in 4G. "The ecosystem for 4G LTE over 1800 MHz is developing rapidly globally, which is not the case for 900 MHz which is great for 3G and is no doubt a more cost efficient band," said one of them.
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So still I am not sure which spectrum is profitable to operate for operators, 900 Mhz or 1800 Mhz.
 
Traditionally, 900Mhz is more profitable, AFAIK, because it requires less number of sites.

Not sure how the numbers stack up now, with the increasing spectrum prices.
 
SVK said:
So still I am not sure which spectrum is profitable to operate for operators, 900 Mhz or 1800 Mhz.
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First things first, lower the frequency value, better will be coverage (both street level and in-building) and penetrating power of signal... So in order to expand network fast and cheap (with way less number of towers) 900MHz is twice better choice than 1800MHz THEORETICALLY...

But the spectrum auctioned currently are LIBERATED, that is one who bought them can use it for ANY TECHNOLOGY, either 2G or 3G or even 4G... And 900MHz is most suitable for 3G than 4G.. Also almost all 3G handsets (default 2100MHz) support 3G on 900MHz too.. Where as 1800MHz is best suited for 4G LTE-FDD.. More than 50% of existing 4G LTE networks are using 1800MHz FDD on Band 3.. Most 4G handsets support Band 3 (1800MHz LTE-FDD)

So the TWICE coverage advantage of 900MHz over 1800MHz is already cancelled by its almost TWICE costlier price.. Further 4G on 1800MHz supports more data users, gives better speed. So in real 1800MHz is better if operator has capacity to install more number of towers (one time investment)...


WRT Coverage:-
900MHZ [Best] >> 1800MHz [Ok] > 2100MHz > 2300MHz [Bad] > 2600MHz [Worst]

WRT COST of Spectrum:-
900MHZ >> 1800MHz > 2100MHz >>> 2300MHz == 2600MHz
Huge cost paid for 2100MHz is due to limited availability in the auction

Let me summarize the possible technology below:-
900MHz -- Used for 2G and 3G mainly (Very very very rarely used for 4G LTE-FDD as Band 8)
1800MHz -- Used for 2G and 4G (as Band 3 LTE-FDD widely all over the world)
2100MHz -- Used for 3G only (Very very rarely for 4G LTE-FDD as Band 1)
2300MHz -- Used for 4G only as Band 40 LTE-TDD [in China and now in India mainly]
2600MHz -- Used for 4G only as Band 38 LTE-TDD AND Band 7 as LTE-FDD

During BWA (4G) auction [along with 2100MHz 3G auction], 2600MHz is alloted to BSNL and MTNL for the same price of 2300MHz paid by RelianceJio, which is a very much biased move and hence BSNL/MTNL returned the spectrum back to Govt...
 

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