Even as the telecom industry eagerly awaits the government's decision on spectrum pricing, Communications and Information Technology Minister Kapil Sibal on Wednesday announced major contours on spectrum management and licensing framework, which includes allowing operators to hold more spectrum, liberalising mergers and acquisitions, and a uniform licence fee regime.
To be a major component of the proposed National Telecom Policy 2011, the new guidelines say all future licences will be ‘Unified Licences' that will be delinked from spectrum allocation, while all existing telecom licences will be migrated to the new regime.
“There will be uniform licence fee across all telecom licenses and service areas which will progressively be made equal to 8 per cent of the adjusted gross revenue (AGR) in two yearly steps starting from 2012-13,” Mr. Sibal said. At present, this varies from 6 to 8 per cent depending on the telecom circles.
“We hope that these new decisions will help further streamline the sector and bring transparency and efficiency. It will help provide quality services at affordable prices,” Mr. Sibal told journalists here. He, however, refused to comment on the cancellation of 122 licences issued in 2008 by the Supreme Court. “We are still examining the fallout of the judgment…we are studying the ramifications and implications of it,” he added.
The new guidelines also say the licence fee and spectrum usage charges payable by each such licensee will be on actual AGR, subject to a minimum presumptive AGR. This minimum figure would be reviewed by the Telecom Regulatory Authority of India every year. “In future, all operators having spectrum would have to pay certain fee and charges whether he uses spectrum or not,” he added.
Mr. Sibal also said the prescribed limit on spectrum assigned to a service provider will be 2x8 MHz (paired spectrum) for GSM technology for all service areas other than Delhi and Mumbai where it will be 2x10 MHz (paired spectrum). The current prescribed limit is 2x6.2 MHz of GSM spectrum as per licence norms.
“All the operators holding extra spectrum will have to surrender it within one year. We have also decided to renew licences for just 10 years that may be extended for another 10 years,” he added. Existing licences are given for 20 years, while the licenses of old operators like Bharti and Vodafone will expire in 2014.
On extension, the UAS licensee will be required to pay a fee which will be Rs.2 crore for Metro and ‘A' circles, Rs.1 crore for ‘B' circles and Rs.50-lakh for ‘C' circles. However, the fee does not cover the value of spectrum, which will have to be paid for separately. Notably, spectrum assigned to the licensee in excess of the prescribed limit will be withdrawn.
Referring to merger and acquisitions, Mr. Sibal said the new regime would allow up to 35 per cent market share for the merged entity, while the government would the TRAI recommendation to consider market share up to 60 per cent. The new policy will allow spectrum sharing between operators in the same circle, while spectrum will not be permitted among licensees having 3G spectrum. Mr. Sibal also clarified that spectrum trading would not be allowed in India.