Dropping the barrier is a win-win prescription

Updated: Nov 22 2005, 05:30am hrs
The recent government initiatives in announcing further liberalisation in terms of licensing for NLD & ILD, widening the reach of internet telephony and allowing access providers to go in for broadband services along with the recent relaxation in FDI norms represents a comprehensive measure in the complete opening up of the telecom sector.

This is an extremely well-crafted policy, which has something positive for each stakeholder. Let us consider from the perspective of some important constituents:

For the customer the prime benefit revolves around:

Enhanced affordability of long-distance calling

Wider choice of service providers for making long distance calls

Introduction of a wide range of broadband-based innovative services

For operators, liberalised entry into NLD/ILD as also the existing unified access services licence together represents a universal licence for offering all services and thereby, removes a major competitive disadvantage for pure-play access providers so far.

This also ensures cost-effective and optimum utilisation of resources, enabling direct connectivity between operators and helping in reducing carriage costs which ultimately will go to customer advantage for long-distance call charges.

In the same vein, sharing of resources of ILD/NLD infrastructure and using IP-based technologies will help maximise productivity of network infrastructure not only for long-distance services but also for circle-based broadband services.

For operators, it will also open up new revenue streams, particularly with the ability to access international carriers and offer greater scope of termination of international calls within India and more innovative packages for out calling.

This policy will also encourage many new NLD/ILD players to come up, including existing PSUs like Railtel, GAIL, PowerGrid Corporation, etc. This will widen the choice to operators/access providers, which in turn will translate into more affordable service for the customer.

Even for existing NLD/ILD operators, there are several advantages with the new policy. Most encouraging for them is the reduction of revenue share licence fee and removal of roll-out obligations. It will also generate new revenue opportunities through the leasing of bandwidth and offering of ready-made infrastructure to potential new entrants.

For technology providers, this policy initiative marks the advent of significant encouragement to IP-based technology and encourages convergence between the two main growth engines in the telecom industry i.e.

Cellular mobile

Broadband services

With the latest techniques in IP technology, it will enable bandwidth-consuming services like video to be brought on mobile phone. It will also address several spectrum-based issues by encouraging introduction of new technologies such as wi-fi/wi-max, using alternate spectrum bands.

One can clearly see that this policy will spearhead the convergence of mobile technologies with IP-based services and in the long run, help us advance into the next generation of customer-centric services viz. IP TV.

From the governments perspective, NLD/ILD services will lead to new revenue streams of license fee through revenue share compared to the earlier scenario of high licence and high bank guarantee regimes.

The new policy move will also help curb the grey market and protect revenue for the government. There will also be a fresh impetus on IT-enabled services, particularly in the BPO/ KPO industry where the new policy provides for permission for last mile access, as also sharing of infrastructure to boost the domestic BPO industry significantly.

The author is managing director, Spice Communications Ltd