On Saturday, Mr. Sibal set out a 100-day timeframe to begin the process of charting a new telecom policy, to be called National Telecom Policy 2011 (NTP11).
Considering the changes in the telecom sector in the last 11 years since the New Telecom Policy 1999 was framed, a new look at the policy was now required.
We believe the NTP 2011 Should address the following issues:
Merger and Acquisition
According to NTP 99 and later 2008 guidelines on merger and acquisition, for any kind of merger,
1.Approval by the department of telecom (DoT) is required.
2.The combined market share of the merged entity shouldn’t be more than 40 %, which was 67% before 2008.
3.The service provider must have operated for a period of three years before considering any sort of merger and fourthly, the merged identity needs to pay extra for the spectrum.
4.A single entity cannot have more than 10 % share in two different telecom companies operating in the same circle.
5.The number of operators left per circle post any merger has been raised from 3 to 4.
According to the current guidelines, any operators in case of merger or acquisition would need to pay extra for the spectrum. This clause needs to be amended along with the one that restricts entity to own less that 10% in two different telecom operators, since the high churn in the telecom industry and need to pay for the spectrum, have created an environment where acquisitions or mergers do not have a business case.
As a result for the new and old operators there is no way to exist from the industry. As part of the NTP 2011, the guidelines for the merger and acquisition should be relaxed, to encourage consolidation and help operators move out in case they are not doing well.
Also the clause which restricts any entity not to have more than 10% in two different companies should be changed to allow investments in telecom operations. With more than 12 operators in each circle, the government should restrict access to 10% of equity in case the combined operators constitute more than 65% of the market share per circle.
Strategic Review of Spectrum
Recent spectrum auction fetched INR 61,750 for 20 MHz of spectrum per circle in 2.1 GHz band whereas as part of the BWA auction government could fetch only 38,543 Crore for 40 MHz per circle in 2.3 GHz.
Though the frequencies were different, 3G spectrum was oversubscribed at least 2 times. The oversubscription can be attributed to lack of clarity on the strategic spectrum planning; had the government declared the future roadmap for spectrum auctions, the bidder would not have quoted amounts at which business becomes a fight for survival. As part of the NTP 2011, we believe government would ensure the following:
•Allocate 20 MHz (5MHz each operator) extra to the current bidders, given that 5MHz spectrum is actually too less to offer any real 3G services like video calling etc.
•Come out with a future roadmap for further allocation of 3G and 4G Spectrum, this would help operators define their services delivery framework for the future.
•The Government should also allow operators to monetize the spectrum through other sources, which may include
Spectrum trading for 3G Spectrum: This would not only help in monetizing the spectrum with the current bidders, but will create competition within the industry.
Spectrum Farming and Technology Neutrality: Given the rate at which technology is changing in telecom landscape, the authority should leave the choice of technology for operators to decide and in what spectrum bands. Therefore unlike the current Auction being labeled as 3G or BWA auction, the auction in the future should be technology agnostic.
oCreate uniform licensing and Spectrum Charge regime with respect to technology, this will bring all stakeholders offering telecom services of the same ground.
MVNO related Guidelines: India is a land of diversities and therefore telecom services needs to be customized for different communities, especially for the rural markets and therefore large operators should be allowed to work along with small entities as MVNO’s. This would ensure that targeted services are offered. For example like microfinance institutes in rural banking sector, we might see an MVNO offering telecom services to the rural markets.
Spectrum Auditing: Given that the spectrum is a scare resource, the government should conduct spectrum auditing to enforce utilization of spectrum within government agencies, defense, operators, etc. This information should be made public and insufficient utilization of spectrum should be taxed. This should also be accompanied with future roadmap for the spectrum auction in the future. (The government can also look to auction 700-800 MHz of spectrum for offering mobile services)
Accruals of VAS revenue and Handset Revenue from AGR: Currently many operators offer VAS services, as part of the current regime the revenue from these services are liable for Spectrum charges and licensing Fee. We believe government would encourage Operators to offer transparent business models to other VAS operators, if they can be allowed to treat VAS services as separate IT service. The amount eligible for spectrum and licensing charge should be based on business model on offer to other VAS players. Similar treatment should be offered in case of handset bundling.
Utilization of Unlicensed Spectrum: Recently FCC and Ofcom have issued Guidelines for the auction of unlicensed spectrum. We believe TRAI would also issue guidelines on the same. This would help in better utilization of spectrum and multiple services would be offered using the same.
Telecom Equipment Manufacturing: One of the Key objectives of the NTP 99 is to “strengthen research and development efforts in the country and provide an impetus to build world-class manufacturing capabilities”. These objectives have not had the desired result and may need to be address in the next National Policy as telecom import bill today stands only next to Oil import bill. In this direction TRAI has recently come out with the consultation paper.
Need for Green Telecom: The Telecom industry can immensely contribute in reducing carbon credits. The TRAI may look at the Bharat Norms for the Automobile industry and issue similar guidelines for the use of alternative sources of energy and reduction in the carbon emission.
Other Wish lists from the NTP 2011 will include Infrastructure status to herald tax breaks for the telecom equipment industry, disinvestment in the public PSU’s, Guidelines to connect towers through optical fibers to manage line of sight issues, etc.
About The Author
Varun is the CEO and Co-founder of InCights Mobile Solution Pvt. Ltd. The previous association includes IIM Ahmedabad, TATA Consultancy Services, Rise India and few others.
He has also represented InCights at various national and International Conferences and as a result InCights has been acknowledged as one of the best Start-ups at IIM Ahmedabad Power of Ideas and IIM Calcutta I2i and e-summit.
InCights was Kit sponsor to “Mobile Broadband: Igniting the service revolution” by IIM Ahmedabad Telecom Centre of Excellence and provides next generation of Enterprise Communication services.
Bhupendra Katariya February 25, 2011 at 10:59 pm
govt should want to regulate the telecom company and proper monitoring the working of the company, and the roaming charges and control the corruption by forming new telecom policy………and thanks to Mr. Kapil sibble(Cabinet Telecom Minister) for initiate this thing.
Gurmukh Singh February 4, 2011 at 3:47 pm
Hon. Minister’s move to frame new telecom policy is a welcome step. At present, what we need is broadband penetration throughout our country. Issue of telecom penetration in our rural areas also needs to be looked into. I hope both these issues will be properly addressed in the NTP-2011.
Manoj Abhigyan January 5, 2011 at 8:14 pm
3G issue almost resolved. Govt to issue guidelines soon.
-Kapil Sibal
jdjain January 5, 2011 at 2:10 pm
dud, there is lot and lot of other things where we need Mukhteeeee,
Roaming is one of it’s part
Keshav Jha January 5, 2011 at 10:20 am
Hame to ab sirf roaming se chhutkara chahiye.
jdjain January 5, 2011 at 3:22 am
Clear roadmap for 4G spectrum auction,
also 450MHz spectrum band must be given to free of cost to cdma operator for low cost broadband service in India through usfo fund
also, taxes and licence fees must be brought down for further reduction in tarrif
Sam January 5, 2011 at 1:33 am
@Talwar
Is there any announcement from the TRAI that it has been delayed to 11th March?Coz itz already running well in Haryana.
Raghu January 4, 2011 at 10:43 pm
@Abhijit
that definitely will happen sooner rather than kater
Manoj Abhigyan January 4, 2011 at 8:32 pm
Bharti Electoral Trust, a subsidiary of the Bharti Airtel Group headed by Sunil Mittal, made the single largest donation to any political party in the financial year 2008-09. The party was the Congress and it received Rs.100 million.
Abhijit January 4, 2011 at 7:47 pm
Agree with you 100%…..
3G January 4, 2011 at 7:46 pm
any one can tell me after 100 days docomo can start their service in delhi??????
Talwar January 4, 2011 at 7:23 pm
TRUE.It’s an open secret that Airtel+Vodafone+Idea CARTEL is behind the MNP delay. These sadist b****** are so incompetent & fearful that they have the capacity and capability to influence DoT and Telecom Ministry by giving them ‘prasad’ to delay MNP even for the next few years. So few months delay is nothing for them. F**** these anti-consumer b********.
XYZ January 4, 2011 at 4:12 pm
Govt should merge all telecom circles and cancel Roaming charge, why we has to pay for roaming with in country?
pinaki roy January 4, 2011 at 4:05 pm
ong-bong-chong, ong-bong-chong, ong-bong-chong, ong-bong-chong…
Bobby January 4, 2011 at 3:57 pm
Again delayed til mrch 11
PD January 4, 2011 at 3:43 pm
A good and interesting posting by TT (with credit to Mr. Varun)! All the explanatory paras would serve as a purposeful input for the policy makers !
Sr. 1, 2 and 4 of the wish list definitely relate to basics and/or policy/mandatory requirements. Sr. 3 is really the need of the hour – for any Tom, Dick and Harry can not participate in the applying/auction processes with the sole intention of making fast bucks ! However as for Sr.5 – the number of operators in a circle – it should not be 3 or 4 – should be 5 or more than 5 and not in even numbers for there is a possibility of mutual agreements thereby cartelling on controversial issues !
Another possible inclusion on wishlist – There was a time when mobile was exclusively used for voice communications and text SMSing. But now a days, it is, as useful as a ‘mobile office system’ offering services of all kinds of data transferfer (download/upload), and of late, for banking services. All these are offered within the ambit of “VAS”. Subscribers are very much annoyed in the present state of affairs in this servicces because stakeholders are using this medium as a source to augment revenue and that too without propriety ! Therefore a separate and COMPREHENSIVE POLICIY should be formulated to regulate and monitor the use of VAS in mobile – any services other than voice communications.
RAJAN January 4, 2011 at 3:05 pm
WHY TILL 11TH MARCH? MNP IS SUPPOSED TO BE INTRODUCED ON 20TH JAN. IS THERE A DELAY AGAIN COURTESY THE AIRTEL-VODA-IDEA CARTEL?
FED UP OF VODAFONE.. THE MOST WORST MOBILE COMPANY IN INDIA. VODAFONE IS A NIGHTMARE ACTUALLY. CAN’T BEAR THE TORTURE OF VODAFONE ANYMORE… ALSO CANNOT CHANGE MY NUMBER OF MANY YEARS. THOUSANDS OF PEOPLE AND MANY COMPANIES (BUSINESS CUSTOMERS, BANKS, IRCTC, UTILITIES ETC )HAVE IT.
HOPE THE NEW TELECOM MINISTER IS NOT A CHOR LIKE EARLIER TELECOM MINISTER AND WILL IMPLEMENT MNP WITHOUT FURTHER DELAY.
DEEPAK January 4, 2011 at 2:25 pm
wait till march 11
Webly January 4, 2011 at 1:57 pm
Agree with you
RAJAN January 4, 2011 at 1:34 pm
LAUNCH MNP THROUGH OUT INDIA ON PROMISED DATE FIRST, WHICH IS UNFINISHED/HALF-WAY AND DO OTHER THINGS LATER WHICH ARE LONG TERM! MNP WILL GIVE POWER TO CONSUMERS AND WILL AUTOMATICALLY BALANCE A LOT OF THINGS IN TELECOM INDUSTRY!