It expects to take rural teledensity from 39 to 70% in the next 5 years

The National Telecom Policy (NTP) 2012, approved by the Union Cabinet on Thursday, promises broadband for all with a minimum download speed of 2 megabits. But it will be a challenge since broadband penetration has been an abysmal policy failure.

The policy aspires to make India a global hub of domestic manufacturing, though not much detail on how this mammoth objective will be achieved is available. The draft policy had mentioned preferential market access for Indian vendors as one of the tactics to ensure a boost to telecom manufacturing in India. This drew severe criticism from the Commerce Ministry on grounds that it violated India's commitments at WTO and GATT. The DoT was forced to give an explicit commitment that WTO and GATT's concerns would be kept in view while issuing guidelines on operationalisation of the policy.

The NTP 2012 expects to take India's rural teledensity from 39 to 70% in the next 5 years with the target that every single Indian will have a phone by 2020. The policy also gets a formal approval of the new unified licensing regime which allows companies to provide ISP, fixed line, international long distance, national long distance, and a few other services through a single licence, whose cost has been proposed by the DoT at Rs. 10 crore. So far, very few companies, if any, have shown a desire to acquire the new unified licence.

Director-General of telecom industry body COAI Rajan Mathews told The Hindu that there was concern among the existing players over the commercial, technical, legal and security aspects of migration to the unified licence.

The policy envisages delinking of licences from spectrum. However, post the Supreme Court judgment of February 2, 2012, which mandates spectrum auctions, the separation of licence and spectrum has already become an undeniable reality. Regardless of the NTP 2012, the DoT would have to separate licences from spectrum just as it did through an executive order following a Group of Ministers (GoM) direction to auction 3G and BWA spectrum in 2010.

The policy also seeks liberalisation of spectrum even though the TRAI, in its latest recommendations, while setting up the reserve price, has already cleared service and technology neutrality with regard to future spectrum auctions. Critical of this move, industry body AUSPI says the proposal to liberalise spectrum in the 1800 MHz band is one of the policy's biggest flaws.

Earlier policies

In the final analysis, the policy will be seen as driving small incremental changes with very little ability to solve the existing sector crises, unlike the NTP 1994, which spurred not just private sector investment in mobile and fixed line services but also initiated 49% FDI for the first time — ushering in telecom liberalisation.

Later, in 1999, a second policy — which lasted nearly 13 years — slashed costs across the board for the operators and by extension the consumers by moving from a licence fee regime to a revenue share structure.

It also opened up the sector to future competition, breaking the duopoly contractual arrangements which had existed in mobile and fixed line telephony till 2000.

Later, starting 2002, additional competition was introduced in the national and international long distance sectors, which led to the slashing of tariffs, in some cases, by more than 90%.

More In: National | News