India’s future growth depends on affordable wireless spectrum

Mobile devices are making a big difference in the lives of billions of people around the world who use them every day. Internet-enabled smartphones and tablets provide access to information and a channel of communication for users. Building wireless networks to support mobile devices requires large capital investments from wireless carriers who must purchase wireless spectrum and infrastructure. To ensure that mobile services are reliable and affordable, national governments must allocate enough wireless spectrum to commercial carriers to satisfy demand. This is the subject of a new paper from Shamika Ravi and Darrell M. West titled “Spectrum Policy in India.”

A scarce resource

Mobile devices typically operate on frequencies from 30 kHz to 300 GHz on the radio spectrum. Unless spectrum is allocated efficiently, the scarcity of available frequencies leads to poor quality and high costs for mobile broadband. The growing demand for mobile service in India currently exceeds the amount of spectrum available to wireless carriers. The scarcity of wireless spectrum limits reliable Internet access for mobile subscribers who have no alternative point of access. According to the Cellular Operators Association of India, nearly 60 percent of Internet users only have access through their mobile phones.

Mobile service in India is relatively expensive for many consumers because the Indian military reserves so much spectrum for their own use. Much of this spectrum goes underutilized, even as commercial carriers plead for more spectrum to be released. When the Indian government does release spectrum, it is typically through auctions with high starting bids. Setting high starting bids for blocks of spectrum can lead to high selling prices that force wireless carriers to take out large loans. Higher prices for spectrum raise costs for consumers and reduce private sector investment in wireless infrastructure. Rather than make spectrum artificially scarce, the Indian government should work with wireless carriers to lower the prices for consumers. 

Investing in India’s future

Reliable mobile service has the potential to greatly enhance economic growth in India. Analysis from the Boston Consulting Group found that the India’s mobile sector grew at 12.4 percent annually from 2009-2014; it now accounts for 2.2 percent of India’s gross domestic product. Potential growth comes from filling gaps in educational and health care spending in rural communities. Innovative mobile applications provide a low cost method of sending education and health care resources to underserved rural communities that lack physical infrastructure. In India’s rapidly growing cities, mobile services are seen as a way to improve the quality of government services and promote entrepreneurship. Prime Minister Narendra Modi recently designated 100 “smart cities” that would use technology to overcome the challenges of India’s rapid urbanization.

India could free up spectrum by adopting the “NATO Band” of spectrum for military uses and auctioning off the remaining spectrum.  The NATO band is used by the militaries of NATO member countries and several of their allies, and it already overlaps with much of the Indian military’s spectrum.  Furthermore, the Indian government must lower the minimum bids at spectrum auctions and lower taxes so that wireless carriers have enough profits to build their networks.  Mobile technologies are rapidly evolving, and each new generation has greater demands for spectrum. Regulators in India will not only have to maintain affordable prices for the current generation of mobile technology, but also anticipate upgrades that will deliver more data at faster speeds.