What is Spectrum Refarming?

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 to take a final decision on the issue.

Spectrum Refarming

Spectrum re-farming is the process of re-deploying spectrum from available users and re-allocating it to others.

In India, GSM technology works in the frequency band of 900 MHz and 1800 MHz while CDMA in the 800 MHz band.

Telecom providers used 900 MHz band to provide services. But, this 900MHz band is more efficient than other bands say 1800MHz. The reason being lower the frequency, larger the distances that it can travel.

If the operations in the 900MHz band is shifted to 1800MHz band, then it is termed Spectrum Re-farming.

The Government found that 900MHz band is valuable, so it is drafting policy that reads, the 900MHz licenses once it comes for renewal in 2014, will be void, unless the operator buys the spectrum through the auction route.

Since the 900MHz spectrum will now be auctioned in 2014, it will cost a lot for the telecom operators. Also the equipment that is used in the 900MHz band will not be compatible to work in the 1800MHz band. This increases the cost for the companies.

900MHz is being vacated to incorporate high-end services like 3G.

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