Spectrum auction leaves more knowledge economy issues to be solved by the government

Game changer for the economy -the expansion of mobile broadband network seems to be sluggish from the trends in the latest spectrum auctions. As per the final calculations, government is going to corner Rs 1.1crore from the acution and equally, the consumers will be compelled to pay more for their services to the telecom companies.

The high auction amount indicate that the telecom companies are about to increase the rate for the critical data transfer services because of the high auction amount they have made. This means that the niche segment of mobile broadband may well beyond the reach of average income customers for the coming years.

The distribution of the spectrum among the companies shows an interesting trend. First three telecom companies – Airtel, Vodafone and Idea have emerged as leading players as they have increased their spectrum possession compared to the existing. On the matching side, Reliance, Tata and other small players have lost their holdings.

The emergence of big three indicates the consolidation in the industry. In future, these three will share the market by avoiding the waste of competition. Consolidation may induce them to negotiate a cartel type arrangement invisibly. Hence, there is every chance that the period of rate cut oriented has gone in the telecom industry.

Secondly, the big three have increased their spectrum holding by at least 20-25% compared to their present holding. Here lies the opportunity to serve broad band with the limited resources. More transfer of the spectrum from the marginal players to the big three through policies of spectrum trading and spectrum sharing will benefit the economy as a whole to spread mobile internet.