Wish List From National Telecom Policy 2011

Wish List from National Telecom Policy 2011On 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.

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20 Comments on "Wish List From National Telecom Policy 2011"

 

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Bhupendra Katariya
February 25, 2011 10:59 pm 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 3:47 pm 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.

January 5, 2011 8:14 pm 8:14 PM

3G issue almost resolved. Govt to issue guidelines soon.
-Kapil Sibal

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