Is spectrum policy responsible for lack of rural coverage?

Introduction

Since May 2017, TRAI has started reporting wireless rural subscribers for all operators on a Pan India basis. The table depicting data for last 11 months is aggregated below.

One can see that the last month's number stands at 44% of the total. Though there has been a slight improvement in the penetration number - From 42.07% on 31st May 2017 to 44.04% reported in the last month. But why is the rural subscriber density still very low, that too even after 20 years since the wireless revolution got triggered in our country?

In my view, spectrum policy played an important role in this matter, i.e demotivating operators from expanding into rural areas. But how? Let's discuss.

Initial Spectrum Policy

It all started in early 2000 when spectrum was assigned to the operators based on their subscriber count. This was done to release the pressure on the government to assign spectrum to the operators, as most of the spectrum bands suitable for commercial operation was occupied by the armed forces. Since more spectrum translates into less equipment, it (spectrum) became a sought-after commodity, and to get more of it the operators got focussed in rolling out networks in the urban areas, where the subscriber density is high, thereby neglecting the rural areas.

Current Spectrum Policy

In 2013, the spectrum was delinked from the license. This meant that the operators had to acquire it through an open auction process. But unfortunately, the 3G auctions were held in an environment when many operators were allowed entry at a subsidized rate (at the price which got discovered in the year 2001). This led to a huge enthusiasm in the players bidding for 3G auctions, thereby creating a demand-supply mismatch. The situation got further aggravated due to auction "closing rules", which forced the bidders to continue bidding in every round to guarantee a win. All these factors contributed to raising the price of 3G spectrum to an unimaginable level, which in turn fueled the 2G scam - leading to a circular situation. In order words, if the 2G scam did not happen (licenses were not given at a subsidized rate), then 3G auction wouldn't have seen this exponential increase. Thereafter DoT/TRAI played a passive role, i.e they never tried to curate reserve prices and linked it to the last auctions. Why? They feared the allegations of them causing loss to the exchequer. All this made the industry poorer by lakhs of Cr, the money which otherwise could have used to expand rural networks was consumed in buying spectrum.

Conclusion

Lack of rural coverage cannot be attributed to just operator's unwillingness to venture out there. It is our responsibility too (i.e all stakeholder's involved). The public got carried away by the politics of power play - each trying to score points against the other, and hence kept the pressure on bureaucrats, who due to the alleged fear of causing loss to the exchequer never curated spectrum prices. Hence, the gain to the exchequer in terms of auction receipts actually translated in a loss to the rural areas in terms of coverage - which even after 20 years is lacking both in voice and data. It is high time we all understand this issue clearly and not get carried away by irrational scaremongering of "loss to the exchequer", thereby preventing our rural brothers from precious data/voice connectivity.

(Views expressed are of my own and do not reflect that of the employer)

PS: Find the list of other relevant articles in the embedded link.