The Hindu Business Line : One licence is good call

THE PROPOSED MOVE by the Telecom Regulatory Authority of India to consider a Unified Licensing/Authorisation Regime for all telecom services is desirable, considering the long-term growth of the industry. There is a broad consensus among the various stakeholders on the need for a unified licence regime and to move away from the existing service-specific system. But the modus operandi of ushering this in may turn out to be a tricky exercise for TRAI. This is evident from the divided opinion in the Preliminary Consultation Paper issued on this subject in mid-November. In progressing towards this regime, three categories of licences have been mooted — unified licence for basic, cellular and long-distance services, a class licence for Internet Service Providers or radio paging, and, finally, a separate one for pure infrastructure providers.

For TRAI, sticking to one unified licence for all telecom services, without making any distinction between categories, may be the best course of action. Breaking down the services under different categories will unnecessarily create room for further misinterpretation or litigation over licence terms and conditions, something that has dogged the sector in the past. And by doing this, in one stroke, the regulator will be able to encourage free growth of new applications and services which leverage on technological developments, such as third generation mobile telephony. But before working on the unified licence regime, the regulator will have to spell out the "spectrum policy" in unequivocal terms. Take, for instance, the introduction of third generation mobile telephony. New operators will be reluctant to enter the telecom arena as long as there is lack of clarity on the issue of frequency spectrum. After all, given the paucity of spectrum, it will always be one of the key factors dictating entry choices in the mobile arena. Fixing the entry fee and the revenue share at a low level will not automatically attract new players, as long as the spectrum allocation is inadequate or too highly priced to make a viable business case for entry into the sector. In a sense, the attractiveness of the unified licence regime will hinge on the terms of the spectrum policy.

Second, for TRAI, ironing out the glitches in the regulatory regime and bringing it in alignment with the unified licence regime will be a tough challenge. There are at least four points — entry fee, revenue share, interconnection, and direct inter-circle connectivity — where TRAI may be forced to reconcile opposing views of different operators in the telecom arena. Keeping the entry fee as low as possible, bringing down the revenue share to 6-7 per cent (with 5 per cent for Universal Service Obligation and 1-2 per cent for Administrative and Regulatory costs) and allowing direct inter-circle connectivity will be in the long-term interest of the industry. Any recommendation by TRAI that encourages free growth of new telecom services and applications and increases consumer choice at lower tariffs is welcome.

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