1 India, 1 licence; roam free to new broadband world

The National Telecom Policy of 1999 kicked off India’s telephony revolution, with affordable voice services reaching nooks and corners of the country. The 2011 avatar, announced by Union minister of communications Kapil Sibal on Monday, sets the stage for a broadband revolution.

That comes at a time when Mukesh Ambani, India’s richest man, plans to roll out broadband services nationwide over the next couple of months and years. Sibal said he was eventually looking at making broadband free with consumers paying for whatever content they choose. “Just like citizens have a right to education and health services, we have to put in place a right to broadband and telecom services for all,” Sibal said.

The government will initially lay optical fibre network up to village/panchayat level through the USO or universal services obligation fund. “Access to the network will be open and will be technology-neutral,” Sibal said. The draft policy envisages one nation, one licence for telecom services instead of the 22 required (India is divided into 22 telecom circles) now.

This will also mean that voice, data, internet and multimedia services will be delivered via the same network. So any company holding the relevant licence can offer any services, said Unmesh Sharma and Kumar Saurabh of Macquarie Securities.

That will change the way telecom companies will look in the coming days. The new draft policy says network operators and service delivery will be separated, unlike now when telecom operators run both. There could even be separate licensing of this.

The draft also plans to make number portability unrestricted (it is limited to a state now) and roaming services free. A separate Spectrum Act will be enacted to cover the whole gamut of issues related to spectrum pricing, pooling and trading, and making available more Spectrum to operators to decongest networks and avoid dropped calls.

Rajeev Chandrasekhar, Member of Parliament, and former promoter of BPL Mobile, said the policy hasn’t really laid out a real roadmap for a more unified approach to growing telecom. “India needed to improve the whole regulatory environment and fix the Telecom Regulatory Authority of India (Trai), which has been the cause of a lot of confusion in the last few years and that opportunity has been missed. The policy seems to have done is essentially address the issues that are emerging from the controversies of the past few months and years,” he said.

On the issue of providing exit policy for investors, Chandrasekhar said investors make investments and whether they succeed or they fail is a market issue and this should not be the focus or concern of the Government of India. “There are many other fundamental policy issues that should have been addressed in the 2011 policy; issues that would have addressed the problems that we have today from 1999 and hope this is not a last word on the policy.”

The policy will also help telecom operators exit when they want to, and encourage consolidation in the industry. The biggest doubt in all this, however, is implementation. Kunal Bajaj, director of New Delhi-based consulting company Analysys Mason India, told Bloomberg the government needed to provide more details of how its proposals would be implemented.

“A lot of people in the industry, a lot of investors, are actually expecting answers to come out of this policy and they are going to be a little bit disappointed,” Bajaj told Bloomberg by phone from Hanoi. “If we get a real spectrum roadmap for the release of spectrum in a reasonable period of time that could be the most positive thing.”

The final policy would be announced before December this year, Sibal said.