The New Telecom Policy 2011 that proposes increase in spectrum prices and reduction in licence term will have no impact on tariffs or impact the growth of the telecom sector, Union Minister of State for Communications Sachin Pilot told The Hindu on Tuesday.

“I do not see any impact on the pricing of services being offered by mobile operators. The new policy will further strengthen competition and ensure robust growth of the sector,” Mr. Pilot said, while responding to the telecom industry's fears that mobile services will become dearer.

Mr. Pilot, who is involved in the policy-making process of the Department of Telecommunications, said: “The aim behind NTP 2011 is to ensure that the government gets reasonable revenue while the industry continues to grow at a faster pace while maintaining the quality of service.”

The Minister pointed out that despite the high-priced bidding for 3G, none of the operators was offering the third generation mobile services at higher rates. “Notably, one operator has announced free incoming…this is just the beginning as we will see more operators giving more benefits to subscribers. This is mainly due to competition as each operator knows that if he increases the prices, subscribers will shift to another operator and that too while retaining their mobile numbers, thanks to successful implementation of mobile number portability (MNP),” he added.

Mr. Pilot said the operators had so far enjoyed virtually free spectrum which they got with licence, but now they would be asked to pay for this scarce national resource in such a way that the government also received revenue.

“Despite high growth in the mobile segment, growth potential is immense…90 per cent of revenue still comes from voice and SMS, while value-added service (VAS) segment remains untapped. Growth in VAS services will drive revenues for operators in years to come. So, it is a complete misnomer to say that mobile tariffs will go up,” Mr. Pilot said.

In NTP 2011, the Centre proposed to reduce licence period from 20 years to 10 years, while it was still studying the Telecom Regulatory Authority of India (TRAI) proposals to increase spectrum pricing over six times. TRAI has recommended that the price of pan-India 2G licence (that comes with contracted 6.2 MHz spectrum) should be Rs.10,972.45 crore, over six times higher than the 2001 prices of Rs.1,658 crore charged from new operators in 2008.