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New Telecom Policy Rings In Nationwide Roaming

Communications Minister Kapil Sibal unveiled the draft National Telecoms Policy 2011 on October 10, 2011.Government has set revenue generation as its secondary goal and providing affordable, reliable and secure telecommunication and broadband services across the entire country as the main objective in the draft telecom policy that was unveiled on Monday.

Among the various proposals, the following proposals can have a strong impact on the Indian telecom operators.

  • Allowing nationwide free roaming
  • Exit policy for operators who own licences
  • Allow sharing of networks among operators
  • Permitting spectrum pooling, sharing and, later, trading for optimal and efficient utilisation of spectrum.
  • Repositioning of the mobile phone to an instrument that combines communication with proof of identity, fully secure financial and other transaction capability.
  • Facilitating resale at service level – both wholesale and retail – especially keeping in mind the need for robust competition at the consumer end.

Amid controversy with regards to 2G spectrum allocation, various challenges exist for the industry. One of the most important being falling profits and severe pressure on profit margins.

Important indicators like average revenue per user and minutes of usage show a decline. This is resulting in low realisation for telecom operators in India. While a few companies raised tariffs in the past two months, usage of high revenue-generating value added services remains low because Indian consumers are extremely price-sensitive.

Given limited availability of spectrum for operators, the proposal of pooling and sharing spectrum can benefit operators that have spent large sums on purchase of licences. Operators shell out 19-28% of total costs as fees to the regulator. The amount paid as fees is substantial when compared with other countries.

Uncertainty after the 2G scam is also one the factors that resulted in contraction in capital expenditure in the Indian telecom industry. Foreign direct investment in the sector fell 37% to $1.7 billion in FY11. This calls for strong policy measures and its timely implementation.

Categories: Telecom
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