After a much anticipated wait, the telecom minister has unveiled the draft National Telecom Policy 2011. This is the last among the ?Triad of Policies? to drive the National agenda for synergising electronics, information technology and telecommunications. The draft policy comes after more than a decade under the earlier framework created by the National Telecom Policy 1999.

Indian Telecom sector has witnessed a ?revolution? of sorts during this period. Mobile phones have become ubiquitous and tariffs are among the lowest in the world. Economic activity generated through the entire Telecom eco-system has been significant and contribution to GDP has doubled to 3%.

Rapid growth necessitated fresh thinking and ideas to stimulate, sustain and direct this growth over the coming decade. Leveraging existing infrastructure and capabilities, bridging the digital divide in rural and backward regions, harnessing the power of broadband, clarity in spectrum and operating environment, national security, skill up-gradation and providing impetus for growth and investments needed policy level re-thinking.

The draft National Telecom Policy 2011 has addressed a number of these directional goals. The vision of the Policy envisages that every citizen of India will have access to a ?secure, reliable, affordable and high quality converged telecommunication services anytime, anywhere?. Highlights of the policy include enhancing quality and affordability of telecommunication services to all citizens of India ? in the rural and backward regions as well as urban regions. Thrust in inclusive growth has been outlined through time bound targets for increasing rural teledensity and broadband services.

Indigenization in innovation, manufacturing has been sought by providing a target of 80% of local telecom sector demand being met through domestic manufacturing with value addition of 65% by the year 2020. Full mobile number portability across the country and free roaming are thought of in line with the ?one-nation? principle. While roaming and full mobile number portability will have implications from a profit and loss for the operators it will be very good for subscribers. Development of the entire eco-system in value added services segment including enabling the percolation of governance to the common man using telecom enabled services and low-cost indigenous devices are major thrusts.

Need for scarce spectrum including an additional 300 MHz for IMT services by 2017 and another 200 MHz by 2020 has been recognized given the need arising from convergence of data intensive applications such as mobile TV, video calls and broadcasting services. Spectrum has been recognized as a scarce resource which needs to be released through a marked linked process and efficient use of spectrum with provision for regular audit of spectrum usage is considered as an important objective. Green initiatives have also been recognized. For all this, channelising funds to the sector has been accorded priority.

Strategies to achieve these objectives surround 7 key themes ? push for broadband and rural inclusiveness, indigenization, licensing reforms, spectrum management, equipment and network security, strengthening value added services sector, skill up-gradation and regulatory strengthening.

It is envisaged that ?Right to Broadband? be made a basic necessity such as education, health and work. Optical fiber network up to the village panchayat level to enhance high speed connectivity at rural areas is expected through utilization of the Universal Service Obligation Fund (USOF). Enhancing broadband speeds and building synergies with government programs such as e-governance, e-panchayat, NREGA, AADHAR etc is expected to stimulate demand for broadband services. Utilization of existing infrastructure including cable TV networks for providing quality broadband services in rural areas is also expected to increase inclusiveness.

A huge focus on building vernacular, relevant content for stimulating the value added services sector. This is expected through a regulatory framework supporting the sector in working with telecom operators to promote innovation. Quick implementation of these initiatives could make India a global hub for mobile value added services.

Licensing reforms to support convergence are perhaps the most important initiatives announced in the policy and which would have far reaching ramifications. Convergence is now looked upon separately for the various services (such as voice, data, video, internet, VoIP, value added services and broadband) provided on various networks which are converged (access network, NLD networks, ILD networks and broadcast networks etc) on converged devices. This is expected under a reformed unified licensing regime that will spell out the roll-out obligations, indicate the policy on mergers & acquisitions, interconnection etc.

Further, sharing of the active network has been given a tremendous boost by delinking licensing of networks from delivery of service to users. Licenses will now be technology neutral ? one for communication network service operator and another for communication service delivery operator. This is expected to have an impact on license fee costs structure of all existing operators. Further, issue of spectrum is delinked from issue of licenses only in case of all future licenses. An exit policy will also be framed for all licensees.

The new policy also expects government to pass a comprehensive Spectrum Act that deals with all issues connected with wireless (spectrum) licenses, re-farming and withdrawal of allotted spectrum, pricing, cancellation and revocation, exemptions on use of spectrum, spectrum sharing, trading etc. This will ensure optimal utilization which will be audited periodically. Further, a roadmap for the availability of spectrum will be prepared every 5 years to review the demand / supply situation of the scarce resource.

The draft policy has also repeatedly stressed the need for ensuring a secure and reliable network. Various regulatory initiatives are envisaged such as mandating operators to take necessary measures to secure their networks and the data flowing through it, standards for various devices and equipment, and support to law enforcement agencies. An interesting thought is the development of a rational cost sharing criterion for sharing costs of implementing security measures between the government and the operator.

Other initiatives to promote the sector include creation of Telecom Finance Corporation as a vehicle to mobilize funding to the sector, according infrastructure status to the operator which would have an impact on financing and taxes.

While the policy is forward looking and provides clarity to the industry and investors on the future, much needs to be seen in the details surrounding the implementation of the policy through various legislative and regulatory means. Further, the speed at which the government is able to implement this policy would be critical as otherwise it would remain just another wish list.

The author is partner, national head ? telecommunications sector, advisory services, KPMG