The Hindu : TRAI begins process of unified licensing

Online edition of India's National Newspaper
Thursday, Jul 17, 2003

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National

TRAI begins process of unified licensing

By Our Special Correspondent

NEW DELHI JULY 16. The Telecom Regulatory Authority of India today began the process for unified licensing for fixed and mobile services. At present, basic and cellular services are licensed separately.

The concept is prevalent in some countries and several others are migrating to a unified licence system for wire line and wireless services. The idea is to provide greater efficiency in terms of sharing of infrastructure and resources leading in turn to lower cost of services. It could also curtail the tendency of phone companies of one sector devoting considerable energy to blocking the rise of their counterparts in the other sector by means other than fair competition.

As is the case with all TRAI policy initiatives, a consultation paper to gather the views of stakeholders has been issued. The paper seeks counsel on several issues that may arise from the move to issues a unified licence. These include the need for special rules to curb oligopoly, extent of mobility permitted, fate of pending roll out obligation and the spectrum allocation procedure.

Horizontal and vertical differences exist in the industry on most of these issues. For instance, some corporate houses may not agree with other phone companies on rules to check domination. Though acquisitions are common in the telecom services industry, horizontal mergers (between basic and cellular companies in the same circle) are bound to take place for the first time in the era of unified licences.

Companies with deep pockets would opt for this route leading to substantial lessening of competition. Battle lines could be drawn on this issue among corporates as also consumer organisations and political parties.

Two more issues could see a lively exchange of views among these players. The entry fees paid by cellular companies at the time of migration is higher than that paid by basic phone companies. This situation has been complicated with the introduction of new players in both segments. In this case too, new cellular companies paid more by way of entry fees than new basic phone companies.

Another issue that has to be settled before unified licences are granted is the fate of pending social obligations. Basic phone companies, including most top players in the telecom sector, have reneged on providing phones in villages. If cellular companies had paid licence fees to the Government, basic phone companies were to pay their dues to society in kind. The TRAI would have to work out some modality of persuading basic phone companies to meet their pending obligations.

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