DoT revises bidding norms for basic services

NEW DELHI, SEPT 25: The Department of Telecommunications DoT has proposed several changes in the licensing norms for the next round of ...

NEW DELHI, SEPT 25: The Department of Telecommunications DoT has proposed several changes in the licensing norms for the next round of bidding for basic services licences. These will include a licence period of 20 years, up from the present 15 year term of a licence.

DoT is also likely to do away with any precondition on the technology used by private operators to set up their networks. The matter was discussed in the meeting of the full telecom commission earlier this week though it is expected to be discussed again before the proposals are finalised.

The Basic Services wing of DoT has also suggested that the precondition of a foreign equity participant as a licensee would also be removed. This has been decided in the light of several foreign partners walking off mid-way leaving the Indian partner in the cold. Bell Canada which had a joint venture with the Tatas has called it almost quits, US West has broken off with BPL and Nynex is reported to have minimal interest in the Reliance project aspartners. In the next round of bidding Indian promoters would be allowed to bid for the circles.

DoT has proposed that the effective date for commencing operations after a company signs the Licence Agreement would be 18 months.

DoT has also proposed that for the evaluation of the bids, it would be necessary to have a fixed component to the licence fee as well as a variable component which should be based on a revenue sharing formula yet to be finalised. The fixed part of the licence fee so as to be able to rate the companies in order of their bids and award the circle to the highest bidder.

DoT has also proposed that unlike the previous time, there would be a capping on the number of circles that a company can ultimately take would be two irrespective of the category of the circle 8211; A, B or C. In the previous rounds, the capping was upto a maximum of three circles per category for any company.

DoT has also proposed to remove the network experience criteria which was why the foreign partner8217;s presencehad been made mandatory in the earlier rounds. Sources in DoT explain that this has not helped the cause of stepping up the pace of privatisation in the basic services sector which is why the department is planning to have a liberal view on such issues to enable private operators to hasten the pace of their projects.

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DoT has also proposed to combine non-remunerative circles like the North East and Jammu amp; Kashmir with other neighbouring circles to improve the viability of the circle. For example, DoT has suggested that the North East circle be clubbed together with the Assam circle and the J amp; K circle be merged with the Himachal Pradesh circle. In some extreme cases of non-remunerative circles, it has also been suggested that one company be given the licence for providing both basic and cellular services in order to make the circle more attractive for private participation.

The circles that are likely to be included in the next round of licensing would include West Bengal, Kerala, J amp; K, HimachalPradesh, Uttar Pradesh east, North East, Assam, Andaman and Nicobar as well as the pending circles earlier won by Himachal Futuristic Communications Ltd HFCL 8211; Uttar Pradesh west, Orissa and Delhi even though the and HFCL are currently involved in litigations as the company has expressed its desire to opt out of these circles. This would only leave out Haryana where DoT is still corresponding with HFCL which has expressed its desire to operate.

Highlights of new guidelines

8211; New licences to be for 20 years

8211; No foreign partner necessary

8211; Licence fee to have two components -fixed and variable

8211; Maximum of 2 circles per company

8211; Non-remunerative circles to be merged to improve viability

8211; Orissa, Delhi and UP west to be included in the next round