POLICY: Hope Floats

TRAI has finally come out with the draft recommendations for the second phase
of unified licensing regime (ULR). Though the first phase raised a lot of
expectations, little effect was seen in terms of improvement of services. The
difference between the two phases is that, this time TRAI has brought the
broadcast services also into the ambit of unified licensing. This follows the
logical corollary and falls in line with the NTP 99 vision of convergence.

However, the move gets diluted because before providing wireless broadcast
services, the unified licensee has to seek another license from I&B
ministry. Also, the stand-alone broadcast services license does not come under
any of the categories created by TRAI and here again the I&B ministry comes
into the picture.

License fee: In the second phase, the regulator has considered revising the
license fee structure and have taken into account the hike in service tax from
eight percent to 10 percent. Instead of having a license fee ranging from 0—15
percent and spectrum charges of 2—6 percent, depending on the area of
operation, now it has been restricted to six percent of the adjusted gross
revenue (AGR). With this move, there might be some downward movement of tariffs.
The regulators have done their job and it is now up to the operators to pass on
the benefit.

Niche operators: Already the rural areas have a telecom penetration of 1.3
percent, far below the national average of over seven. The recommendations open
Class Licensee niche operators to offer telecom services, but only in short
distance calling areas (SDCAs) with fixed teledensity of less than one percent.
However, they have been limited to providing fixed or wireless fixed services.
These restrictions again negate the very idea of taking telecom to these areas.
The existing operators might have paid huge license fees, but the figures are
testimony to their failure in providing telephone services in the rural areas. A
technology-neutral approach would be better to achieve the desired goals.

Registration charges: Under the ULR, Internet telephony is being completely
opened and the operator pays only for the unified license fee. However, the
pure-play NLD/ILD operator has to pay Rs 107 crore plus another fee which
depends on the service area. The high fee has been provisioned to maintain a
level playing field between the existing operators and the new entrants. The old
operators have already been getting returns from their licenses, thus it becomes
unfair to charge a hefty fee just because there are older operators in the
market. A low registration fees would fuel competitive pricing and would also
absorb the losses due to low-cost IP telephony.

The draft recommendations are still in the consultation stage and the actual
document will take a few months to take shape. Till then, TRAI has time to mull
on the issues and make a strong case for the second phase of the ULR.

Anurag Prasad