New telecom policy: Market-priced spectrum, no roaming charges, broadband on demand

Communications Minister Kapil Sibal on Monday announced a radical recast of the telecom policy with five major objectives and several minor ones.

The five big objectives of the New Telecom Policy (NTP) 2011 are: broadband on demand, a simple one-nation-one-licence policy that will end roaming charges, separation of telecom network operations from service delivery, and sale of spectrum at market-determined prices. The fifth goal is to allow for the orderly exit of operators who are unable to fit in.

The biggest change in the context of the new policy is the proposed separation of network operation from service delivery. Currently, mobile operators operate their own networks and deliver the service. In future, separate licences would be required for both - though it should be possible for the same operator to have both licences.

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Related to this is the delinking of spectrum from licences. Currently, all operators get “free” spectrum as part of the licence, with additional spectrum being paid for at various rates. In future, the policy says all additional spectrum will be given only at market-determined prices.[caption id=“attachment_103843” align=“alignleft” width=“380” caption=“Telecommunication Minister Kapil Sibal. Image courtesy PIB”]  [/caption]

To enable the “broadband for all” vision to take shape, some 500 Mhz of additional spectrum will be sold through auction by 2020 - with 300 Mhz of that coming up over the next five years.

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The main implications of a “one-nation-one-licence” policy are that mobile number portability will become national - you can take your number with you to any part of the country - and roaming charges will be abolished. Currently, MNP is restricted to one circle. In the short-term, the abolition of roaming charges will dent operator revenues on this account, but as business picks up it will even out.

The spectrum policy will be administered though a new Spectrum Act, and those who receive spectrum will be allowed to pool, share and trade it. To ensure that spectrum is not hoarded or wasted, the ministry will ensure periodic audits of spectrum usage.

However, there is a huge period of uncertainty ahead as current operators will have to be migrated to the new regime in due course - hopefully through a compromise route and without recourse to courts battles.

The New Telecom Policy, which is being announced against the backdrop of the 2G spectrum scam that has already sent Sibal’s predecessor to jail, will create a new legal environment for this technology-driven industry. In the brave new world where voice, data, multi-media and internet services will be delivered through the same network, the old laws will simply not do.

Sibal said a key objective of NTP 2011 is to erase the rural-urban digital divide. As against the current rural teledensity of 35 percent, the policy objective is to achieve 60 percent by 2017, and 100 percent by 2020. In other words, every Indian will have a mobile or fixed line at his disposal.

As for broadband, the targets are to achieve 175 million broadband connections by 2017, and 600 million by 2020, with every village being connected by a broadband network by 2014. “We want broadband to be a matter of right,” said Sibal.

Talking about other policy objectives, Sibal said the idea was to make India a major global telecom hub, with 80 percent of domestic consumption being met through domestic production. Appropriate policies of preferential purchasing will be put in place to encourage domestic manufactuirng of telecom gear and related products and services.

But while the broad vision is unexceptionable, the devil will be in the details.