Telcos to add Rs 92,000 crore debt; another auction to hit Airtel, Idea and Vodafone finances severely
Here's what I think just happened: Reliance bid up the 2G spectrum, so that Airtel, Idea and Vodafone see a huge increase in costs, without the ability to substantially increase tariffs. Isn't anyone else shaking his head at India still auctioning 2G spectrum, when probably nobody else in the world is deploying anything less that 4G?
As regards 3G, I read an article that pointed out that only a very tiny fraction of mobile users have 3G. The huge costs incurred for the spectrum have not borne fruit. If anyone else read such an analysis, please share. Now, with Reliance heavily investing in 4G, the people who took 3G for the faster data will swiftly migrate to 4G -- the last nail in the coffin for 3G, which some of us have been predicting was doomed for over 10 years now -- only because the spectrum was to be auctioned?
Auctions for spectrum do not work. We have discovered that time and again in this country, and the experience of other countries isn't that great either. I know I'm repeating myself, but it is now no longer necessary for people to have exclusive spectrum. As long as rules are framed, as in the case of WiFi, which allow spectrum to be shared, corporates no longer have to make unrealistic guesses as to how much spectrum they will need a decade or two from now. They could be allowed to use the spectrum at a certain percentage of the revenue they make from the spectrum. Those offerering free services would get free spectrum, and the rest would ramp up their payments for spectrum as their revenues went up.
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