Government introduces new policy for telcos

After an array of changes enforced upon telcos, the government has finally announced new telecom policy (NTP) to help them. The new policy will enable operators with simpler mergers and allow them to lay their hands on a larger spectrum. Moreover, the new policy lets operators share spectrum in the same circle. However, it is applicable among licensees having 3G spectrum.

Illegal 3G sharing

Presently, the prescribed limit is 6.2MHz of GSM spectrum. Telecom Minister, Kapil Sibal announced a part of the policy at a press conference stating, “The prescribed limit on spectrum assigned to a service provider will be 2x8 MHz (paired spectrum) for GSM technology for all service areas other than Delhi and Mumbai where it will be 2x10 MHz (paired spectrum).”

Basically, operators who want to acquire extra frequency more than the prescribed limit can do so. There would be an action of the spectrum, which will be subjected to the prescribed limits for merger of licenses. The new policies would eventually help subscribers to get better services at affordable prices, due to efficient usage of the spectrum. The spectrum would be delinked from license for now and the decision of the pricing, whether it is one-time or otherwise for the additional spectrum held by an operator would be considered later in the view of the Supreme Court judgment.

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A uniform license fee of 8 percent of Adjusted Gross Revenue (AGR) across services and circles in comparison to range of 6-8 percent now was also announced by Sibal. License fee is paid by all operators, as the annual fee and the renewal of licence would be done for 10 years. A liberal merger and acquisition regime in the sector will allow up to 35 percent market share for the merged entity, also taking in to consideration TRAI’s suggestion of considering market share up to 60 percent. So, a decision would be taken soon in this regard, he said. The government takes off distinction between wireline and wireless service for determining market share for M&A deals.

Telecom Secretary, R Chandrashekhar revealed that all decision involving charging of spectrum in any form will be decided later, while GSM operators lobby, COAI, said the announcement was in line with expectations. “Though most recommendations are as per TRAI recommendations, we are disappointed with the uniform licence of 8 per cent. We don’t see any rationale and we had hoped it would have been lower,” COAI General Secretary, R S Mathews said. Currently, access service providers (Telecom companies) are charged a license fee of 10 percent in the metros and category A areas, 8 percent in category B areas and 6 percent in category C areas.