What is Spectrum Cap?

The spectrum cap is the limit of radiowaves a telecom operator can hold for providing wireless services. Spectrum cap rules prevent an operator from buying additional spectrum in a respective band. The idea is to prevent operators from acquiring a disproportional amount of spectrum compared to its peers thereby preventing market dominance. As per existing rules, there are two types of spectrum cap:

• Band cap – which is set at 50% of the total spectrum in each band
• Total cap – which is set at 25% of the total spectrum of all bands aggregated together.

The percentage cap is calculated by DoT based on the total spectrum assigned to all the operators at any point of time. This excludes all spectrum returned subsequently (by operators) or were left unsold in any of the auction processes.

Telecom operators are asking the government to increase the cap to at least 30 per cent of total spectrum assigned to all operators in a circle, and 60 per cent of total spectrum assigned in a particular band.

However, in July 2015, TRAI said that there was no need to modify the existing spectrum cap of 50 percent of the spectrum assigned in each of the spectrum band and 25 percent of the spectrum assigned in all these bands put together in each service area. But, TRAI said that while calculating the percentage cap, unallocated telecom spectrum should also be counted. This suggestion if implemented would widen capacity of telecom operators to hold more spectrum.

On November 15, 2015 Telecom Commission has in-principle approved TRAI’s recommendation on determining spectrum caps and asked suggestions from the sector regulator to implement it in future auctions.