Telcos to add Rs 92,000 crore debt; another auction to hit Airtel, Idea and Vodafone finances severely

http://m.economictimes.com/news/news-by-industry/telecom/telcos-to-add-rs-92000-crore-debt-another-auction-to-hit-airtel-idea-and-vodafone-finances-severely/articleshow/30420117.cms

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.

Arun Mehta

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