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Rollout relief in the air

New Delhi, April 12: The new telecom policy, which would be introduced by the end of this year, is likely to free operators of rollout obligations for three years.

Current rules mandate new telecom operators to provide network coverage in 90 per cent of service areas in metros and 10 per cent in district headquarters within 12 months of receiving the licence. Moreover, 50 per cent of the districts should have mobile services within three years of the effective date of licence.

Telecom minister Kapil Sibal had yesterday said “existing rollout obligations need to be modified”.

While Sibal did not give details, sources said under the new policy, telecom operators would be monitored on network coverage and service offering only after the first three years of operations.

Industry experts contend that such a move would be beneficial for cost-intensive sectors where operators are already fighting falling average revenue per user and increasing infrastructure costs.

“As the telecom industry is subject to hyper competition and is bleeding as a whole, this move would give scope for consolidation of the industry and an opportunity to optimise cost and networks. It could lead to avoiding duplication of infrastructure cost,” Hemant Joshi, partner at Deloitte Haskins & Sells, told The Telegraph.

Analysts feel with sharing of passive infrastructure such as telecom towers already available and sharing of radiowaves likely to be made available under the new policy, operators will not find it difficult to meet network obligations.

Sources added that the new rollout rules would also give greater importance to rural coverage of mobile services and expansion of broadband Internet.

However, sources said the penalty would be increased manifold for defaulters who did not have adequate network coverage after three years of operations.

At present, the department of telecom (DoT) imposes a fine of Rs 5 lakh a week for the first 13 weeks of delay, Rs 10 lakh for the next 13 weeks, and at Rs 20 lakh per week for delays up to 26 weeks.

Meanwhile, the government has already collected over Rs 300 crore in penalties from new telecom service providers that failed to roll out their networks within the stipulated timeframe.

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