The Telegraph
Since 1st March, 1999
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Stage set for single phone licence

New Delhi, Oct. 30: The government appears to be in a tearing hurry to push through the proposal for a unified licensing regime in the telecom industry which, it reckons, will create a level-playing field and stop the loads of litigation in the dispute-riven sector.

On Monday, the telecom regulator unveiled the blueprint of a plan that will allow all telecom service providers — fixed-line, cellular and WiLL (M) telephony operators — to migrate to the unified licensing regime within the next six months. The communications ministry accepted the proposal in toto the same day.

Today, the group of ministers (GoM) put its seal of approval on the proposal that many industry mavens feel will hugely benefit limited mobility operators like Reliance and the Tatas.

The next stop is the Union cabinet which is scheduled to meet tomorrow. The GoM has already urged the cabinet secretary to append the item to the agenda for the meeting.

“The GoM has accepted the Trai recommendations on unified licence and fee to be charged for WiLL operators in toto. A cabinet note in this regard shall be prepared tonight to be placed before the cabinet tomorrow,” communications minister Arun Shourie said after the final meeting of the GoM.

However, the other issue that the telecom industry has been clamouring about — raising the limit on foreign direct investment (FDI) in telecom companies to 74 per cent — is almost certain to hit a roadblock as one of the intelligence agencies had raised some concerns over the move. The current FDI limit in telecom is 49 per cent.

The GoM had approved the proposal at an earlier meeting but the latest development will stall progress. Shourie said, “We shall report the existing position and the consequences as pointed out by intelligence agencies to the cabinet.”

There has been a lot of lobbying against the unified licensing regime but it does look as though the cabinet will also clear the unified licensing regime.

Trai had calculated that Reliance would have to pay Rs 1,581 crore for migrating to a unified regime including a sum of Rs 1,096 crore towards migration fee and Rs 485 crore as penalty for offering fully mobile services.

The Tatas will have to pay only Rs 500 crore. The basic operators will have to pay the difference between fourth cellular licence fee minus the licence fee paid by the basic operator in that circle.

The cellular operators do not have to pay any fee for migrating to the unified licensing regime.

Once the cabinet clears the proposal, telecom operators will be able to offer any kind of telecom service and also levy of additional fee for offering wireless in local loop services as directed by Telecom Dispute Settlement and Appellate Tribunal.

Shourie said that after unification, if the operators seek additional spectrum for new services, they would have to pay according to the Trai guidelines. He also said the government had filed a caveat in various high courts apprehending a possible move by cellular operators to obtain a stay.

Shourie said the GoM had felt that there was a need for proper use of spectrum which was a scarce resource.

“We have asked Trai to formulate a scheme that should contain incentives for efficient use of spectrum and strong disincentives for inefficient use,” Shourie said.

While the cellular operators were peeved with the decision, Shourie said the finance ministry would examine the problems of cellular operators like obligations towards financial institutions. However, he categorically ruled out any compensation for the cellular operators in lieu of unification of basic and cellular licences.

“Both the GoM and Trai have examined this issue and it has been made clear that there is no need to pay compensation to cellular operators,” Shourie said.

Shourie said the GoM will also place before the cabinet a proposal to activate the Universal Service Obligation (USO) fund that would include amendment of Indian Telegraph Act 1885.

However, operators like Bharti who have both basic and cellular licences feel several issues pertaining to migration in their case need to be sorted.

The Association of Basic Telecom Operators (ABTO) welcomed the GoM's decision and said, “It will accelerate the telecom growth in India. Currently, we are growing at a rate of 2 million telephones per month. With this decision we hope to cross the 100 million mark by 2004,” said S. C. Khanna, ABTO secretary general.

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