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The Ministry of Telecom mulling major policy changes in the sector

27 Jun 2011 Evaluate

The Ministry of Telecom is mulling significant policy changes in the telecom sector on the recommendations made by the Telecom Regulatory Authority of India (TRAI). The Ministry is likely to propose policy changes on pricing of excess spectrum and delinking of spectrum from license, these expected changes in policy will be sent to Cabinet for final decision.

The Telecom Commission, the highest decision making body of the Department of Telecommunications (DoT), was expected to meet next month to consider the recommendations of the Telecom Regulatory Authority of India (TRAI) on spectrum management and other licensing issues. However, after the deliberations in the Telecom Commission on all the issues, the main policy changes would be referred to the Cabinet for a final decision.

The telecom commission has members from the various ministries and governmental bodies related to the sector. “The major proposed policy changes such as revising the structure of the unified access service licence and delinking of spectrum from licence and pricing of excess spectrum will be taken to the Cabinet since these decisions were earlier taken by the Cabinet under the aegis of the National Telecom Policy, 1999. Any change in the letter and spirit of this policy on licence and spectrum issues has to be subjected to the scrutiny of the Cabinet and Parliament,” the department said in a note for Telecom Commission.

The DoT has acknowledged in principle a majority of the suggestions of TRAI, including a one-time fee on operation for holding spectrum beyond contractual limits and mergers and acquisitions rules, under which a combined entity after merger will have a total market share of 30 % and not more than 14.4/10 MHz of spectrum.

The suggestions made by Telecom Regulatory Authority of India have became important inthe wake of increasing need for consolidation in the telecom industry, which has been observing low tariffs and reducing revenues due to increased players in the sector. After the entry of new plays in the telecom sector in late 2008, the average revenue per user with the profits of the operators has started falling due to low tariffs. If Department of Telecom, accepts the suggestions of TRAI on pricing spectrum will increase exchequer’s revenue realization.

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