Telecom industry may face crunch of 2G spectrum

India may soon face a temporary crunch of second generation (2G) spectrum if the defence sector is unable to vacate the same. According to an analysis conducted by the Department of Telecommunications (DoT), the entire available spectrum in 10 of the 22 telecom circles in the country has been exhausted.

What it means is that unless the defence forces vacate additional spectrum, DoT may not make any further allocations in these circles. Spectrum is a crucial resource for telecommunications necessary for carrying both voice and data. Currently, all mobile services in the country are offered 2G airwaves.

While DoT has put on hold the allocation of 2G spectrum in all circles as it waits for a consensus policy towards allocation, the lack of spectrum in certain circles may force telecom companies operating in these circles spend more on capital equipment to tackle deteriorating call quality. These circles include Maharashtra, Kerala, Punjab, Gujarat, Haryana, Rajasthan and Madhya Pradesh.

There is a trade-off between the quantity of spectrum and capital equipment required to manage particular telecom operation. For example, it is technically possible to have increased number of subscribers without degrading call quality with the same amount of spectrum, but only through increased number of base stations. However, this naturally means excess expenditure for the operator. In this scenario, Indian telecom companies will have to spend more as letting the call quality deteriorate or not adding subscribers will be detrimental in current hyper-competitive industry.