India’s Telecom Commission unveils raft of policy decisions

3 Aug 2011

India’s apex decision making body of the Ministry of Communications, the Telecom Commission, has reportedly reached a final decision on a number of major policy changes, including the introduction of a uniform fee for revenue sharing for mobile network operators, a limit of the maximum amount of frequencies a cellco can hold, and the delinking of spectrum from licences in the future. According to India’s Economic Times, the rulings represent the first steps towards the creation of a new telecoms landscape in the country, with the government currently examining all aspects of India’s telecoms sector as it works on the National Telecoms Policy (NTP) 2011.

As part of this latest round of decisions, the Commission rejected proposals set forth by the Telecoms Regulatory Authority of India (TRAI) which called for a reduction in the percentage of revenue that operators are required to share with the state. The TRAI had suggested that the rate be reduced gradually over the next four years to 6% – at present it is between 6% and 10% dependent on the circle of operation – but the Telecom Commission has instead set a standard 8.5% rate for revenue sharing. The regulator’s suggestion that mobile operators be given spectrum as part of any licence renewal or award, only if paying the equivalent of the market value of the frequencies, has however been followed. With GSM licences having previously included 6.2MHz of spectrum and CDMA licences 5MHz of spectrum, the implication is that cellcos such as Bharti Airtel, Vodafone Essar and Idea Cellular, all of which currently hold up to 10MHz of 2G spectrum, will only be given the smaller amount when they come to renew their respective concessions. The Commission, however, said pricing for spectrum, alongside the issue of imposing a one-time fee for excess airwaves, had not yet been discussed, with the matter expected to be examined later this week. The panel’s latest decisions meanwhile, did reveal that all existing mobile licences will be delinked from spectrum in the future, and will be renewed only for a ten-year period instead of the current 20 years, after their existing tenure expires.

Stricter rollout norms mandating mobile phone companies to offer services in all regions that have more than 500 residents were also approved, a move that it has been suggested could significantly increase capital and operating expenditures for operators. Incumbents will be given a year to adhere to the new rollout obligations while new entrants will be given three years.