Trai wants licence fee cut to 6%

Rs 107 cr registration fee proposed.

The Telecom Regulatory Authority of India (Trai) on Friday recommended a sharp cut in the licence fee for telecom companies from 15 per cent to 6 per cent of the adjusted gross revenue.

It also proposed to exempt infrastructure providers, radio paging and Internet telephony companies as well as operators in rural areas with less than 1 per cent teledensity from paying the licence fee, registration charges and obtaining bank guarantees.

In its draft recommendations on unified licensing, the regulator has proposed a Rs 107 crore registration charge for telecom service providers in addition to a charge based on the entry fee paid by basic telecom service providers that received licences for various circles from 2001.

TV Ramachandran, director-general, Cellular Operators Association of India, said the entry fee imposed was too high. "It will create an entry barrier," he said.

Further, the draft does not propose inter-circle connectivity. "The consumer would have benefited had the regulator allowed it," he added.

Ramachandran, however, said Trai's proposal to reduce the licence fee for unified licence holders would enable companies to lower tariffs in long-distance services.

"This has been one of our long-standing demands. This may lead to tariff reductions on long-distance calls," he said.

RP Singh, chairman and managing director, PowerGrid, said telecom infrastructure providers' operating expenditure would come down if the government implemented the proposed zero-licence fee regime. "Market forces will decide whether bandwidth prices will decrease," he added.

The fixed component of the registration charges is proposed to be reduced gradually from Rs 107 crore to Rs 30 lakh after five years. The fixed Rs 107 crore component represents the discounted value of national long- distance and international long- distance entry fees.

Trai has proposed three categories: licensing through authorisation, class licence and unified licence. The unified licence will include basic and cellular services, long-distance, Internet telephony, broadcasting services and all services in the other two categories.

Class licenses will include V-SAT, niche operators in rural areas where the teledensity is below 1 per cent and all services under the licensing-through-authorisation category, which covers infrastructure providers, radio paging and Internet services, including Internet telephony.

The companies acquiring a unified licence will have to obtain performance bank guarantees. The regulator has made it mandatory for the licensee offering national long-distance services to pick up the traffic of its subscribers in all service areas.

For international long-distance services, the existing roll-out obligations will continue. There will be no roll-out obligations for the class licence and the licensing-through-authorisation categories.

What it means

• Local call tariff unlikely to change, long-distance calls to become cheaper
• Operating expenses for telecom companies to come down
• Bharti, Reliance, Tata Teleservices can offer PC-phone calling facility
• Companies can route voice calls through the Net to save costs
• Bandwidth prices may drop