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Unified license is now a reality. Companies like Reliance Infocomm, Tata
Teleservices, Shyam Telelink and HFCL Infotel have all moved from basic services
to a unified access (basic and cellular) service license. Reliance Infocomm paid
Rs 1,542 crore as migration fee to get a unified license while Tata Teleservices
paid about Rs 545 crore for its six existing circles–Andhra Pradesh, Delhi,
Maharashtra, Karnataka, Tamil Nadu and Gujarat.
Meanwhile, Bharti Televentures, not wanting to be left behind, has applied
for six new circles–Rajasthan, Uttar Pradesh (E), West Bengal and Andaman
& Nicobar, Orissa, Bihar and Jammu & Kashmir. Tata Teleservices has
applied for seven new circles–West Bengal, Rajasthan, Bihar, Orissa, Uttar
Pradesh (E), Himachal Pradesh and Madhya Pradesh. Both Bharti and Tata
Teleservices have got LoIs for all circles except West Bengal.
With Reliance and Tata moving to unified access service, the first phase of
unified license is in place. But the bigger picture of unifying other services
like national long distance (NLD), international long distance (ILD) and ISP
services is still being worked and it will take another six months before it
takes shape. So why was government moving at a supersonic speed for a unified
license? That was just to meet the TDSAT deadline of four months–for creating
a level-playing field and for determining additional entry fee.
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Moving ahead on the unified license roadmap, TRAI is planning for a unified
license regime covering all geographical areas using any technology. TRAI is of
the view that choice of area/service should be left to the operators but should
be implemented through automatic licensing or authorization. TRAI is looking at
three approaches–class license, facility/non-facility based license and the
Communications Convergence Bill structure, which was dumped earlier but has been
mentioned in the consultation paper.
To move ahead, TRAI floated a preliminary consultation paper on the unified
licensing regime on 15 November 2003. It is a bit confusing because this is for
the first time that TRAI has floated a preliminary consultation paper as it
usually publishes a consultation paper. So, one can expect to have another paper
once TRAI gets a feedback on the preliminary consultation paper.
Having brought out a unified license regime, TRAI has to now work on three
important issues. First on the anvil is the spectrum issue. TRAI will bring out
a consultation paper for this.
Second, the choice of service providers with the incorporation of carrier
access code and number portability and third, is rollout of services in
semi-rural area. Only ff these issues are settled soon, can one really avail the
benefits of the unified licensing regime.
No Roadmap
It is quiet amazing that when cellular service providers demanded more
frequency spectrum and was quiet vocal about it all the forums, TRAI released
additional frequency spectrum to a lot many operators. But suddenly during the
unified licensing process, TRAI felt that spectrum is not efficiently used by
access providers say basic and cellular operators. TRAI also feels that spectrum
pricing is also an issue as it promotes non-efficient spectrum deployment by
service providers. Why has been there a sudden turnaround? Is there pressure on
TRAI, that if more operators apply for unified access service license, there
would not be enough frequency to be given. So, is the government also looking at
auctioning ? This would not be fair to the new entrants as the earlier operators
got frequency by paying 2 percent on the adjusted gross revenue (AGR).
As in the earlier regime, the government had allotted 5 MHz frequency for
four operators for basic services and in cellular services it was 6.2/4.4/5 MHz
frequency for both the 900 as well as the 1800 MHz band. Spectrum being scarce,
TRAI should have looked at utilizing it optimally, from the beginning itself and
not after unified licensing.
In India, basic service providers have opted for CDMA technology whereas
cellular operators have gone for GSM technology. Now with one license–the
unified access service license–basic operators have an advantage that they can
switch to 3G whenever there is a demand for these services. On the other hand,
to move to 3G, cellular service providers have to go for a different spectrum
like the 2.1 GHz (currently used by the defense establishment), which will have
to be first vacated by the defense establishment. TRAI’s spectrum policy
should hence focus on a roadmap for 3G services. This will help cellular
operators getting a level playing field in comparison to basic operators.
The other big question is who is going to fund the defence services for
shifting to a new spectrum? Will it come from the Finance Ministry or from the
Department of Telecom (DoT). And if DoT is planning to raise the amount what
process will it follow?
TRAI feels that spectrum is being used inefficiently by both basic and
cellular service providers and is also priced in such a way that it encourages
non-efficient deployment by the access service providers. Presently, basic
operators have been allotted 20 MHz in the 800/900 MHz band whereas cellular
operators were allotted frequency spectrum in the 900 MHz and 1800 MHz band. And
with increase in base, service providers will need more spectrum. TRAI needs to
preempt future disputes by specifying clearly the terms and conditions for extra
spectrum.
No Choice
TRAI says that unified license will help in lowering of costs due to economies
of scale. But, it is an irony that NLD and ILD services has long been privatized
but one cannot avail the benefits of competition as the carrier access code is
not in place. Even now, one cannot choose the best service provider in terms of
quality of service (QoS) and has to stick to a particular service provider
depending upon the access providers. TRAI should try to work on this at the
earliest as they have already missed deadlines in the past. They should strictly
implement it as it helps customers exercise their choice both in terms of QoS
and price.
With QoS going for a toss after the lowering of tariffs, TRAI needs to ensure
that a customer gets the minimum guranteed service for the price they pay or go
for number portability so that the best service provider will get an edge in
comparison to others.
Easing Rollout
According to the basic service license terms, BSOs have to fulfill rollout
in all SDCAs in four phases by setting up points of presence in each SDCA. The
time period for these phases are two, three, five and seven years respectively,
with a cumulative percentage of coverage at the end of each phase to be 15
percent, 40 percent, 80 percent and 100 percent respectively.
Further, in each phase the rollout has to be completed in equal proportion–urban,
semi-urban and rural SDCAs. The performance bank guarantee is to be released on
fulfillment of the rollout obligations: 20 percent on completion of phase II, 30
percent on completion of phase III, and rest on completion of phase IV.
On the other hand, cellular service providers have to cover only 10 percent
of the district headquarters in the first year and 50 percent of the district
headquarter (or any town in lieu) are to be covered in three years time. And
with the new license, the government has eased out rollout obligations as they
will be under a fourth CMSP license.
BSOs have already gone on record saying that cellular rollout obligation is
only about 1/10th of their obligation. Easing out rollout obligations will have
long term ramifications for the objectives of NTP ’99 and semi-rural areas
will continue to be neglected. Operators will go where there is demand and not
where there is necessity.
Though there is no rolling back of unified licensing regime, COAI has knocked
on the doors of the Supreme Court and has filed an appeal against the TDSAT
judgement of 8 August 2003 permitting basic operators to offer limited mobility
services using WLL.
In its petition, COAI has asked for the implementation of minority judgement
that declared services illegal. Though Supreme Court has heard the petition it
has refused to order a status quo and has fixed the final hearing for the first
week of December. It is still a long way for cellular operators, but TRAI should
definitely take a hard look at these issues before it implements phase II of
unified licensing.