Trai refuses to cap service providers

No cap on the number of telecom service providers, imposition of a one-time spectrum fee for allotment of spectrum beyond 10 MHz

No cap on the number of telecom service providers, imposition of a one-time spectrum fee for allotment of spectrum beyond 10 MHz, tightening of merger and acquisition M038;A norms, and increasing the lower limit on number of operators required in a service area in the post-M038;A scenario are some of the key recommendations of the Telecom Regulatory Authority of India Trai on review of licence conditions. They were submitted today to the Department of Telecommunications DoT.

As first reported by The Indian Express on August 7, the regulator has not agreed to put a ceiling on the number of operators in a service area. This will come as a major setback to the GSM players, which wanted to limit the number of service providers. 8220;The recommendations will help in increasing competition and customers will benefit,8221; said Trai chairman Nripendra Misra.

8220;We are guided by the fact that the Indian telecom sector has reached a stage where artificial barriers to competition should be removed to achieve the target of 500 million subscribers.8221;

The regulator feels that spectrum is not being utilised efficiently and has suggested that any mobile telephone service provider wishing to get additional spectrum beyond 10 MHz in the existing 2G bands after reaching the specified subscriber numbers would have to pay a one time spectrum charge. 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 proposed fee is Rs 8 crore.

Trai has strongly recommended that the Government should form a new spectrum allocation policy. 8220;A multi-disciplinary committee may be constituted consisting of representatives from DoT/ TEC, Trai, WPC wing, COAI and AUSPI. The committee may be headed by an eminent scientist/ technologist from a national level scientific institute.8221;

The telecom sector watchdog has suggested that as an interim measure, subscriber norms for spectrum allocation should be enhanced. The regulator has recommended that all spectrum, excluding that in 800, 900 and 1800 bands, should be auctioned in future 8212; to ensure efficient utilisation. It has proposed hiking the annual revenue to be paid on the use of spectrum beyond 8 MHz by 1 per cent

Trai has also favoured tightening of M038;A norms. It has proposed that in case of a merger of two service providers, the combined marketshare of the merged entities should not exceed 40 per cent either in terms of subscribers or revenue. The current cap is 67 per cent. The watchdog has recommended that an operator should be allowed to acquire up to 20 per cent equity in a telco in the same circle. At present, the cap is 10 per cent. 8220;Acquisition of equity capital of up to 10 per cent of the target licensee8217;s enterprise shall be permitted by an automatic route and anything beyond that up to 20 per cent of the equity holdings of the target licensee company, shall be approved on a case by case basis,8221; the regulator said.

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On allowing use of GSM and CDMA technology by the same operator, Trai said that existing licensees should be allowed to use alternate technology to provide wireless access services in a particular area after payment of an upfront fee. This fee should be equal to the entry fee for the unified access licence in that area. An operator proposing to use both the technologies would have to pay fees for both the spectrum, it said.