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THE STAGE IS set for switchover to a regime of a "Unified Licence" for the entire spectrum of services in the telecom sector with the in-principle nod given by the Group of Ministers (GoM) on Telecom. No doubt, a move towards a unified licence is the most prudent long-term solution to resolving the controversy over limited mobility service offered by basic telephony operators in the sector.

But the telecom regulator (TRAI), charged with the responsibility of working out a plan to be presented to the GoM, has a tough job. Basically, building a consensus between basic and cellular operators on the key issue of `one-time entry fee' may hit a roadblock on two fronts. First, the cellular operators are fundamentally opposed to the idea of a unified licence. They have consistently held that it legitimises the back-door entry of the limited mobility players into the cellular domain. And the recent Telecom Disputes Settlement Appellate Tribunal (TDSAT) had also said that limited mobility services (offered by basic operators) and cellular services are non-substitutable. With the GoM proposing a unified licence and putting the Convergence Bill on the backburner, it is likely that the cellular operators will appeal against the TDSAT verdict in the Supreme Court.

Even without recourse to legal redress, there may be prolonged wrangling between these two over any terms proposed by TRAI as additional one-time entry fee payable by the former to enter the cellular fray. As things stand, the benchmark for arriving at the entry fee may be based on what the private cellular operators bid for the fourth licence in each circle. While this makes sense, there appears to be little common ground between these two players. Recent indications by basic operators suggest that they may be inclined towards paying an additional entry fee of Rs 3,500-5,000 crore for a nation-wide unified licence. But the cellular operators may not be satisfied with these entry fee levels.

The GoM decision to provide an additional 25 per cent investment by foreign institutional investors in Indian telecom companies is a progressive move. With additions to the cellular subscriber base growing at the rate of nearly one million per month in the last quarter, this move will help cater to the growing capital requirements of the cellular players. But maintaining the foreign direct investment cap at 49 per cent and restricting the additional investment flows to only FIIs defies logic. The telecom sector can grow to the required scale and size as envisaged in the New Telecom Policy, 1999 only if global telecom majors are allowed to make sizeable and stable investments with controlling stake in the venture. In a liberalised economic environment, where global players are allowed to hold controlling stake of 74 per cent equity stake in most sectors, maintaining this artificial restriction in telecom hardly makes sense.

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