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Cellular operators ring in alternative growth model

New Delhi, Dec. 10: Cellular operators have suggested that the telecom sector should not be viewed as a source of revenue for the government exchequer since high licence fees add to costs and translate into higher tariffs.

As per a growth model developed by the Cellular Operators Association of India (COAI), it has been demonstrated that huge benefits accrue to the government through sizeable revenue increases of between Rs 5,000 crore and Rs 13,000 crore over the balance tenure of licence (despite reducing the licence fee for the revenue share arrangement) and to the consumers (in the form of lower tariffs).

The operators have also urged that infrastructure sharing must be permitted as well as encouraged between different operators in the same service area and the same operator in different service areas.

In its suggestions to the Telecom Regulatory Authority of India’s (Trai) preliminary consultation paper on unified licensing regimes, cellular operators have recommended that all types of communications facilities and services should be permitted under a single unified telecom licence. This is necessary to avoid future litigations.

Cellular operators suggested that the entry fee paid by existing licensees should be divided into two segments — a nominal one-time registration charges and payment of entry/ licence fee for spectrum, for those operators desirous of offering any type of wireless service.

The annual licence fee must be sufficient only to cover universal service obligation (USO) levy and the costs of administration and regulation of the sector. All operators must contribute towards the USO Fund. The cost of administration and regulation may be prescribed at up to 2 per cent of the revenues, COAI has suggested.

“Trai must independently assess and recommend a registration charge for a unified telecom licence. This fee must then be used as the benchmark and all operators must be equated around this benchmark. The excess money paid by existing operators must be adjusted either in the form of one-time lump sum refunds, reduced revenue share of licence fee, waiver of licence fees till the amount to be refunded is fully adjusted,” states the letter from COAI.

Usage charges for spectrum should be enough to cover the costs of administration and regulation of this resource. Hence, there should not be any additional cost for spectrum retention, says COAI.

The cellular operators have sought permission for inter-circle connectivity across service areas. This would help increase competition, lower long-distance tariffs, and ensure growth of services — all of which will benefit the end-consumer.

It will also help in optimal utilisation of existing infrastructure of all operators who have made significant capital investments in putting up their networks and creating a back-up network, which could be useful in the event of natural or man-made calamities.

It has warned that if rollout obligations are not prescribed in case of services that use radio spectrum, it may result in hoarding. COAI has suggested that Bharat Sanchar Nigam Ltd (BSNL) may be given the status of default USO operator responsible for meeting universal service obligations as also for bridging the digital divide. They have suggested that “in addition to access to the USO fund, BSNL could also be entitled to some special privileges”.

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