A Brief Institutional Analysis Of Indian Spectrum Allocation
July 22, 2021
As we enter the new status quo of a post-pandemic world where we have witnessed an exponential rise in the usage of the internet and other corollary services, the process of spectrum allocation as an enabler of the same is something that must be recognised, and granted its due importance.
In the post-digitisation global order, spectrum is an indispensable resource for any modern economy, comparable to other limited natural resources in its fundamental necessity in functioning of the state and society. In that context, optimal utilisation of the same is paramount, and the broader consensus on the means for securing it has been through establishing a market based regime towards distribution and allocation of the said spectrum. This is usually achieved through auctions, or tender offers, aiming to not only provide the spectrum to entities that have demonstrable expertise and know-how to effectively provide spectrum bandwidth as an end product, but also to maximise revenue for the government through the sale of the spectrum.
However, in practice, this process is highly complex, requiring not only a stable and competitive market regime backed by the state to ensure that private entities are encouraged to invest in long term growth and development of the country with a measure of confidence that the government’s stance on the same would not shift substantially. Further, owing to the highly sophisticated and technical nature of the technology involved with various different bandwidth frequencies required for different kinds of services, and different providers taking up the same in different geographical bands, there is a need for not only technical expertise, but also a strong regulatory institutional framework for the allocatory body and process.
In the infancy of the telecom industry, Indian telecom was a wholly state-owned entity due to a lack of broader demand for the services, and the corollary lack of profit incentive for private entities, and the high entry costs into the market. Further, the Indian state followed a more centrally planned model of economy, where the commanding heights were occupied by state entities, which further restricted the entry of private entities into the sector. Post 1991, as India transitioned into a neoliberal model of the state, there was a shift in the approach towards the telecom, and private entities were allowed to participate. However, the transition was not a smooth one on account of the complexities involved in changing the model for a highly technical sector, especially in a developing country without historical expertise on regulating and overseeing the private sector.
This report briefly examines the evolution of Indian spectrum allocation policy, from its initial inception as a state enterprise, to the current state of affairs where a strong market regime operates in the sector, through an institutional perspective. The report provides a structural analysis of the allocation process and the entities involved, highlighting the key institutional drawbacks that the current allocative process suffers from, and briefly summarizes its long term consequences on the landscape of Indian telecom industry, and the development of the nation.
