The Finance Minister boldly proposed a revenue target of Rs 40,800-crore from the telecom sector for fiscal 2013-14 in the Budget, despite the no-show at the auction of 1,800 MHz. There is, however, one decision here that needs mention.
Recently, the Telecom Commission decided to allow broadband providers to provide voice service, a welcome and rather long-awaited step.
However, the charge levied on them of about Rs 1,658 crore for pan-India service, equivalent to the auction price discovered in 2001, is a retrograde step.
The two primary factions of mobile operators — Cellular Operators Association of India and Association of Unified Telecom Service Providers of India — have differing opinions on the above.
Long-distance lobbying
Internet telephony is a technology that allows the user to make voice calls using a broadband connection. India opened up Internet telephony way back in April 1, 2002.
However, with restrictions on the interconnection of the Internet with public switched telephone network/public land mobile network mainly to satisfy the national and international long distance operators, full-fledged service, terminating or originating on a normal telephone or mobile could not be offered. This restriction was removed for unified access service providers and cellular mobile service providers in March 2006.
However, even today, we have not seen any of the operators actively promoting Internet telephony services due to the fear of losing their lucrative traditional circuit-switched voice revenue.
With all good intentions, the Telecom Railway Authority of India recommended in August 2008 that even Internet service providers (ISPs) could provide unrestricted Internet telephony, as it would bring down prices of long-distance calls.
This never got the attention of the policymakers until recently when the Telecom Commission ratified the unified-licence guidelines, the recommendations of which were provided by the Authority on April 16 2012 allowing unrestricted Internet telephony.
Spectrum and licence
These guidelines also clearly separate licence (authorisation to provide a service) from spectrum (the scarce resource required for providing service).
In most countries, licence fees are set to a minimal, while spectrum costs are based on market-determined expected value. ISPs which got the broadband wireless spectrum (in 2,300 MHz) in the 2010 auction were so far constrained to provide voice and full-fledged Internet telephony services due to the restrictive clause in their licence.
It is logical, therefore, for the Government to ask ISPs to migrate to unified licence by paying a nominal fee (Rs 20 crore for pan-India).
By requiring them to pay Rs 1,658 crore for the unified access service licence (which now should be defunct due to unified licence) that also comes (according to the licence conditions) with a bundled start-up spectrum (as and when available), the Department of Telecom is backtracking on its directives of being technology- and service-agnostic in licensing and spectrum management.
One can argue that the broadband-spectrum holders could start providing voice over long-term evolution (VoLTE) — a technology specification (IR.92) ratified by the GSM Association for the provision of voice over IP Multimedia Subsystem (IMS). IMS is packet-switched IP network managed by the operators, and hence is expected to provide a richer call experience and better interoperability, compared with Internet telephony and is comparable to traditional telephony.
Since VoLTE is comparable or even better in terms of call quality, should there be an additional exorbitant tax? The answer is ‘no,’ as the underlying technologies do not need any more scarce public resources (that is, spectrum or infrastructure).
Moreover, as we speak, technologies keep evolving. For example, rich communication services and Web real time communication (WebRTC) provide integrated (chat, voice, video and location) services.
Should the regulator and policymaker micromanage the provisioning of these services and assess how much fee to charge for each and create a bureaucratic hurdle?While the above is the case of voice over broadband, there is a rumour that some broadband service providers are planning to surrender their spectrum holding in the 2,300 MHz band in lieu of the more lucrative 700 MHz band and plan to ask for refund.
Spectrum exchange
The Government-owned BSNL and MTNL also plan to surrender their one block of 20 MHz in the 2,500 MHz band in some circles due to their inability to roll out services, and Department of Telecom has already initiated a waiver of spectrum charges for the same.
This is a serious violation of the roll-out obligations as specified in the spectrum assignment guidelines for broadband services and hence should never be allowed.
The regulator and policymaker should clearly discern what are for and against the basic principles outlined in licence and spectrum allocation and act accordingly, instead of succumbing to pressures of false accusations or intense lobbying. Is there any lesson learnt from the fiasco of the auction of 1,800 MHz and 800 MHz spectrum due to arbitrarily fixed high reserve prices?
(The author is at Sasken Communication Technologies. Views are personal.)