No area-wise limit on number of telecom operators

Thursday, 30 August 2007, 07:00 Hrs
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New Delhi: Keeping in mind the rising number of telecom users in the country, the Telecom Regulatory Authority of India (TRAI) Wednesday said there would be no limit on the number of service providers in a particular area.

The Indian telecom watchdog submitted a set of recommendations to the Department of Telecommunications (DoT) in its aggressive efforts to reform the telecom licensing policy and liberalise the merger and acquisition norms in the sector.

The body gave this recommendation even as leading operators like Airtel, Reliance Communications, Vodafone-Essar, Tata Teleservices, BSNL and MTNL, have been lobbying hard to prevent the entry of new players due to the limited space in the airwaves.

TRAI has said the allocation of the airwaves, which is vital for the development of any telecom operator, would be based on the number of subscribers.

The operator wishing to offer services in Mumbai and Delhi would have to pay 160 million for 1 MHz (mega hertz) of the spectrum as one-time spectrum acquisition charge.

This proposal has drawn widespread criticism from several GSM operators.

According to the Cellular Operators Association of India (COAI): "The imposition of a steep one-time charge, as also the enhanced spectrum usage charges for allocations beyond 10 MHz, is both incorrect and unfair and would add significantly to the cost of service and adversely impact the achievement of national telecom objectives."

Terming the move as "extremely arbitrary and stringent", COAI added, "The recommendation had proposed a tightening of subscriber linked criteria by more than four-five times, which is completely arbitrary and not backed by any scientific/technical logic."

TRAI said operators which use a combination of both technologies of telephony - GSM and CDMA - would be allowed to use the existing license to provide services through both technologies under certain conditions such as upfront payment of the license fee and maintaining separate details of the subscriber base data for the purposes of spectrum allocation.

To prevent a possible cartelisation by the operators TRAI has ruled that all spectrum excluding the one in 800, 900 and 1,800 bands would be allocated through a certain auctioning process in future to ensure optimum and effective utilisation.

The regulator has also ruled that the market share of a merged entity would not be allowed to exceed 40 percent from the current 67 percent both in terms of subscriber base and revenue in case of mergers and acquisitions (M&A).

No M&A activity would take place in an area where the number of service providers is less than four as against the current rule of six.

TRAI has also recommended to DoT to increase the stake an operator can acquire in another operator in the same area from 10 percent to 20 percent.

To give a boost to rural connectivity, TRAI said any operator that covers 75 percent network in any service area, excluding the four metros, would be paying the Universal Service Obligation (USO) fee at a reduced rate of three percent instead of the current five percent.
Source: IANS
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