Towards a new policy framework for spectrum management in India Varadharajan Sridhar a,n , Rohit Prasad b,1 a Sasken Communication Technologies, 139/25 Ring Road, Domlur Bangalore 560071, India b Management Development Institute, Mehrauli Road, Sukhrali, Gurgaon 122001, India article info Available online 19 January 2011 Keywords: Spectrum allocation Spectrum trading Mergers and acquisitions Consolidation Fragmentation abstract With more than 500 million subscribers, India is the second largest mobile phone market in the world after China. With an average of 15 operators having been given licenses and 8 operators already providing the second generation (2G) mobile services in each service area, the Indian mobile market is also the most competitive in the world. Spectrum which is a constrained essential input for mobile services is also highly fragmented leading to possible industry inefficiencies. The future of the market lies in the roll-out of services in rural areas and the adoption of mobile value added and data services. This paper critically examines the current policy framework of spectrum management in India and provides policy prescriptions for the future. & 2010 Elsevier Ltd. All rights reserved. 1. Introduction India currently boasts of the second largest subscriber base in the world even though it adopted second generation (2G) digital cellular technology only in 1995. With an average monthly addition of about 6–7 million, the mobile subscriber base exceeded 500 million well ahead of the target set out by the government. The widely used S-curve model of growth as illustrated in Singh (2008) is used to predict the mobile density and hence the subscriber base until the year 2015. Table 1 gives a summary of the projections. As indicated, the mobile subscriber base is expected to grow to 1 billion by 2014. The Indian mobile market is also one of the highly competitive in the world with a Herfindahl–Hirschman Index of about 0.19. There are 15 licensees, out of which 8 actively providing Global Systems for Mobile (GSM) and/or Code Division Multiple Access (CDMA) technology based mobile services in each licensed service area in the country. While intense competition has brought down prices, it has also created excessive spectrum and market fragmentation. The allocative inefficiencies in the mobile market in India caused by fragmentation of spectrum are quantified by Prasad and Sridhar (2009). In this paper, the spectrum allocation mechanism in India is critically reviewed and the need for removing regulatory restrictions is highlighted. The paper is organized as follows. In the next section the 2G spectrum allocation in India is discussed and subsequently the techno-economic features of the industry are analyzed. Then the regulatory inhibitors in the management of spectrum are illustrated followed by policy recommendations. The concluding section summarizes the contribution of this paper and formulates future research directions. Contents lists available at ScienceDirect URL: www.elsevierbusinessandmanagement.com/locate/telpol Telecommunications Policy 0308-5961/$ - see front matter & 2010 Elsevier Ltd. All rights reserved. doi:10.1016/j.telpol.2010.12.004 n Corresponding author. Tel.: +91 99 7259 5708; fax: +91 80 3981 3329. E-mail addresses: v_sridhar@acm.org (V. Sridhar), rohit@mdi.ac.in (R. Prasad). 1 Tel.: +91 124 4560 306; fax: +91 124 2341 189. Telecommunications Policy 35 (2011) 172–184