At last, it is the consumer who will enjoy the benefits

The Trai recommendations on licensing policies, if accepted by the Department of Telecommunications, will help enhance competition in telecom services.

The Trai recommendations on licensing policies, if accepted by the Department of Telecommunications DoT, will help enhance competition in telecom services. On the corporate front, CDMA operators Reliance, HFCL and Shyam Telecom will benefit as they will be allowed to offer GSM-based mobile services. GSM players Airtel, Vodafone and Idea may stand to lose as they may have to pay a one-time entry fee for additional spectrum.

The regulator8217;s proposal to impose a one-time fee on spectrum and increase subscriber norms for allotting additional spectrum will help in the efficient use of spectrum by telecom operators. This will help in issuing spectrum to more players and, hence, competition will increase.

Moreover, the merger and acquisition M038;A norms proposed by the regulator will ensure that healthy competition stays. For example, the regulator has said that in case of a merger of two service providers, the combined market share of the merged entities should not exceed 40 per cent either in terms of subscribers or revenue. The current ceiling is 67 per cent. Trai has also proposed that a merger would be permitted only if there are at least four players in the post-merger scenario. At present, this limit is three.

Moreover, Trai has not recommend any cap on the number of operators in a service area, despite strong lobbying by existing large GSM operators. Interestingly, the GSM players today welcomed Trai8217;s decision not to cap the number of service providers.

The Trai decision to allow an existing licensee to use alternate technology to provide wireless access services in a particular area after payment of an upfront fee will benefit CDMA operators Reliance, HFCL and Shyam Telecom. All of them have applied to DoT for GSM spectrum. Now, they can offer GSM-based mobile services by paying a fee equal to the entry fee for the unified access licence in that area. For an all-India licence, the entry fee is close to Rs 1,500 crore. GSM service providers strongly oppose allowing CDMA operators in the GSM space. Trai8217;s proposal to impose a one-time fee on additional spectrum beyond 10 MHz in existing 2G bands also goes against GSM operators. Trai has said that for 1 MHz allotment in Mumbai, Delhi and category 8220;A8221; service areas, the service provider would have to pay Rs 16 crore as one-time spectrum acquisition charge. For category 8220;B8221; circles, this fee is Rs 8 crore.

Therefore, if a GSM service provider wants 5 MHz of additional spectrum throughout India, it will have to shell out about Rs 1,050 crore. This affects GSM players more compared to CDMA as GSM technology is less spectrum efficient. Moreover, the regulator has also enhanced subscriber norms for allotting additional spectrum. Under the new norms, operators will have to cater to more subscribers in the same band of spectrum. This implies that they have to invest more on infrastructure.

No wonder, the Cellular Operators Association of India COAI has opposed the proposals.