A way out of Telecom mess

THE TELECOM REGULATORY Authority of India's proposals for sorting out the mess in mobile and wireless telephony have few surprises, but the recommendations for a movement to a unified licence regime have some rough edges that the Government needs to smoothen out before introducing the new system. A single licence regime will end the dubious distinction between cellular and `limited' mobility services, a demarcation that has caused all the litigation and uncertainty about what service providers may and may not offer. It will therefore facilitate a more orderly growth of the industry. A unified licence does, of course, legitimise the backdoor roaming services now being offered by basic service operators through wireless in local loop (WiLL) technology. But given the four-million strong subscriber base WiLL operators now have, TRAI had no choice but to suggest a single licence subject to the WiLL operators paying a certain fee. The movement to a unified licence will not also end litigation. Since one or the other group will feel aggrieved — the first indications are that the TRAI package is more congenial to the basic service operators than to the cellular service providers — recourse to the courts cannot be ruled out. However, the merit of the TRAI recommendations is that it offers the Government a clear course of action for the future.

The new regime will be "unified" in a very limited sense. The licence will not cover long distance or internet services. The unification is in the ending of the distinction between the licence for basic and mobile services. The main challenge before TRAI here was to arrive at an appropriate fee that basic service operators would have to pay to be able to offer full-fledged mobile services. The regulator has recommended the only practicable approach — the difference between the licence fee paid during the last bidding process for cellular services and the fees paid for basic services will be the cost of the single licence for basic service operators. This may have been the only possible methodology but the previous bidding process had its own peculiarities, so much so that a unified licence for Andhra Pradesh will now cost just one-third of the fee in Punjab and half of the amount in Karnataka. It is also odd that under the new system, one operator, Bharti Tele-Ventures, which has licences for both basic and cellular services in five circles is being asked to pay Rs.487 crores for converting the basic licences to a second (unified) set of cellular service licences!

TRAI has recommended that a penalty of Rs.485 crores should be imposed on Reliance Infocomm for offering backdoor roaming services. This company, which is at the centre of the imbroglio, has been offered the opportunity of becoming a full-fledged cellular service operator on the payment of Rs.1,581 crores. This is not a small amount considering that the company paid just Rs.410 crores for its basic licences covering almost the entire country. In addition, there will be entrance fees payable by all basic service operators. This was recommended by the courts for bringing about a level playing field between the cellular and WiLL providers, although these fees may be waived if the latter opt for a unified licence. TRAI has turned down the demand by cellular service operators for "compensation" on the ground that these licensees were given concessions first in 1999, during the `migration' process, and then in 2001 when `limited' mobility was allowed. The logic of this decision may be correct, but TRAI has not established that the monetary value of past benefits neutralises the adverse effects of the introduction of limited mobility.

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