The Communications and IT Minister Mr Kapil Sibal, on Monday, announced a slew of initiatives for the telecom sector, including free roaming, unrestricted Net telephony and a new licensing regime for operators under a draft New Telecom Policy 2011.

The policy gives specific emphasis to push broadband uptake and increase local manufacturing of telecom equipment.

The policy document is, however, silent about when and how the proposals will be implemented. Mr Sibal said that the proposals will be implemented over the next ten years.

When implemented, it will bring cheer to consumers who have been reeling under recent tariff hikes.

The biggest gain would be for those who travel a lot, as roaming charges are set to be abolished. This means that subscriber will get free incoming calls and outgoing calls at local tariffs anywhere in the country.

Inter-circle MNP

Introduction of inter-circle Mobile Number Portability will enable users to carry their phone number from one State to another. For example, an Airtel user in Delhi can shift to Vodafone's network in Chennai and retain the phone number. Currently, MNP is allowed only if the user wants to change operator in the same circle.

The other major gain for consumers will be on the proposal to allow unrestricted Internet Telephony. This will allow subscribers to use the Internet to make local and STD calls to a fixed or mobile user. Under the existing rules, consumers are allowed to make only PC-PC calls on the Internet.

For the operators, the NTP brings some relief in terms of permitting them to share and trade spectrum. This will not only open up new revenue streams but also enable operators to utilise spectrum efficiently.

Infrastructure status

The policy also envisages giving infrastructure status to the sector which could result in tax breaks for the operators. Mr Sibal said that he will convince the Finance Ministry to rationalise taxes and levies.

“The proposals are progressive, which will provide much needed capacity augmentation to this vital sector. This will help in further expansion of networks thus realising the Government's vision of providing connectivity and affordable telecom services to all,” Bharti Airtel said.

But operators face loss of revenue due to abolition of roaming charges in the short term. “The downside due to the removal of roaming charges will be short term as I expect usage to increase,” said Mr Romal Shetty, National Head - Telecom, KPMG.

For new players, the policy talks about an exit route which, on the one hand, will help beleaguered operators to surrender licences and, on the other, free up spectrum for those who remain.

“For us, the Government's intention to bring out an exit policy that allows non-serious operators to vacate spectrum, provision for spectrum sharing, and according infrastructure status to telecom are the highlights,” said Mr Rajiv Bawa, Chief Corporate Affairs Officer, Uninor.

Operators can also hope to get airwaves more freely as the policy envisages about 300 Mhz of 3G spectrum by 2017. Mr Sibal also said that future spectrum allocations will be based on market linked pricing mechanism.

Giving a broad direction

The new policy comes at a time when the telecom sector is reeling under the multiple impact of the 2G spectrum scam, falling revenues for the operators and the resulting tariff hike.

The policy is being seen as an attempt by Mr Sibal to give a broad direction for the sector in a bid to bring it back on track. But the proposals miss out on key aspects, including 2G spectrum pricing and detailed mergers and acquisition guidelines.

“There is a lot of uncertainty in the sector and this policy gives some sense of the broad direction which the Government wants to take.

“But how and when the policy will be implemented is important,” said Mr Prashant Singhal, Telecom Industry Leader, Ernst & Young.

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