Competition in the mobile voice segment is expected to intensify with the Telecom Commission allowing Internet service-providers with broadband spectrum to offer voice services after paying an entry fee of Rs 1,658 crore.
This decision has a direct bearing on Reliance Industries-backed Infotel Broadband, which had sought the Department of Telecom’s permission to offer voice services on top of its broadband spectrum.
From DATA to VOICE
If Infotel Broadband agrees to pay the entry fee, then competition will intensify in the voice space which could trigger another round of tariff war.
Reliance Industries had disrupted mobile tariffs in 2003 when it launched CDMA-based mobile services at about Re 1 a minute at a time when the prevailing rate was over Rs 2 a minute. Coincidently, Reliance was allowed to offer full mobile services after it paid Rs 1,658 crore to convert its fixed line telephony licence to a cellular licence. Now the company will have to pay the same amount once again to convert its Internet licence to a unified licence.
Infotel Broadband had taken an ISP licence in 2010, while buying the broadband spectrum through an auction. At that time, the Department of Telecom had said companies buying spectrum will be bound by the terms of licence they take when it comes to the scope of services.
Since an ISP licence does not permit voice service, Reliance Industries could not offer this service under the existing rules.
While GSM operators represented by the Cellular Operators Association of India supported the move by the Telecom Commission, the CDMA operators opposed it.
“This will allow broadband licensees to offer pan-India voice after paying a paltry incremental amount of Rs 83 crore per MHz. Given that the difference between the prices of 3G and broadband was Rs 1,033 crore per MHz, the above would amount to a huge bonanza for broadband licensees,” said Ashok Sud, Secretary General, the Association of Unified Telecom Service Providers of India, which represents >Tata Teleservices and >Reliance Communications.
Tower companies
The Telecom Commission deferred the decision on bringing tower companies within the purview of the new regime.
The DoT committee had proposed to bring tower companies under unified licence regime with a revenue share of 7-8 per cent.
This would have impacted revenues of tower firms including Bharti Infratel, Viom and GTL. Bharti Infratel’s shares were up 1.80 per cent on the BSE on Monday.