In a set of far-reaching recommendations for India?s telecom sector, the Telecom Regulatory Authority of India (Trai) is expected to clarify today norms for industry consolidation, method of spectrum allocation, need for more telecom licences and permission for spectrum trade, among others. With this, the debate on second-generation airwaves, which was pushed to the background during 3G spectrum auctions, is back in the limelight.
Though not directly, it is also expected that the Trai recommendations would incorporate an exit route for new operators finding their operations unviable. Since accepting the wide-ranging Trai recommendations would amount to rewriting the National Telecom Policy of 1999, the government is likely to set up a ministerial panel to take a final decision.
The telecom industry is most anxious about spectrum allocation, which is currently linked to an operator?s subscriber base. There has been no allocation for over two years, a period that witnessed explosive growth in telecom subscriber base. A telecom tribunal has ruled that the allocation be kept on hold until the new norms are finalised.
Given the runaway success of 3G auctions, everyone expects the same route to be recommended for 2G as well. However, the fineprint will be worth watching.
Currently, operators get 4.4 MHz spectrum bundled with a telecom licence. While new service providers hold 4.4 MHz, older players like Airtel, Vodafone and Idea Cellular hold spectrum beyond 6.2 MHz. It remains to be seen whether Trai recommends auction beyond 4.4 MHz or 6.2 MHz and what criteria it will recommend to charge incumbents holding spectrum beyond which auctions are held. The industry is also waiting with bated breath to know the regulator?s views on sharing and trading in spectrum. If allowed, it can open revenue streams for some, simultaneously enabling some others to roll out services at a faster pace.
The government also stands to benefit from the revenue share, a model practised globally. In order to encourage domestic consolidation, Trai is also expected to recommend an overhaul of norms for mergers and acquisitions. The regulator is widely expected to recommend a relaxation of the amount of spectrum a merged entity can hold, which is currently at 15 MHz. The cross-holding norms could be tweaked too. The first restricts an operator from buying more than 10% in another operator within the same circle, while the second caps the combined market share of a merged entity at 40% within a circle. Trai is also expected to clarify issue of new unified access service licences. There are already 14 operators allowed per telecom circle, which is a global record. Trai needs to be specific on this count, because the reiteration of status quo by former Trai chairman Nripendra Misra was cherry-picked by telecom minister A Raja to allot licences to eight new operators in January 2008, a move which kicked up controversy.
However, any capping policy would not apply to over 300 applications pending before the DoT since 2007, because the government has given an undertaking to the Delhi High Court as well as the Supreme Court that they have not been rejected but kept in abeyance and would be processed as and when spectrum is available.