Divergent policy

The Telecommunications Regulatory Authority of India's latest recommendations for a unified telecom licence are to be welcomed since they include a dramatic slashing of licence fees for long-distance calls and also move towards providing a single convergence licence encompassing all services.

Since there are a host of legacy issues, and since different aspects of convergence like broadcasting are subject to different rules at the moment, TRAI proposes a standstill period of two years during which licences will continue to be issued exactly as they are at the moment and the role of the information and broadcasting ministry will remain undiluted as far as broadcasting is concerned.

It is a happy coincidence that this move comes at a time when the two telecom PSUs, MTNL and BSNL, have launched a massive broadband internet initiative aimed at covering 1.5 million new subscribers by the end of the year Given that good-quality nationwide internet connectivity has been associated with sharp productivity hikes the world over, the move can only be a good thing.

But it is difficult to understand why fees on long-distance carriage have been cut at the same time that over Rs 5,500 crore is to be raised from such carriage each year in the form of an access deficit charge.

And since licences like those for providing national and long-distance telephony or internet services are available freely anyway (no one's queuing up to get them), and nothing stops service providers from sharing networks to provide converging technologies even today, it is unclear as to what advantage a single licence will provide, other than a psychological one.

While mobile licences are still in demand, and the entry fees for this get slashed if you buy a unified licence instead of the conventional one (called the universal access service licence), this is of little use unless you're allotted scarce spectrum, and the price at which this will be available (if at all) is still unclear.

Apart from the huge bonanza for the two private sector national long- distance operators (Reliance and Bharti) whose roll-out obligations have been slashed and so are in no danger of each forfeiting Rs 400 crore bank guarantees any more, the recommendations will confer a period of protection on some operators when the avowed aim of all policy is to increase competition.

Take the international long-distance licence, which is currently available off the shelf for a payment of Rs 25 crore.

While a new player can still get it at this price for the next two years, this will be available only in the form of a unified licence after that.

Such a licence will cost Rs 107 crore in Year 1, Rs 102 crore in Year 2, Rs 92 crore in Year 3, Rs 72 crore in Year 4, Rs 32 crore in year five, and Rs 30 lakh after that.

To increase tele-density in rural areas where it is below 1 per cent, the policy has come up with the concept of "niche operators" who will not have to pay an entry fee.

But the blow to spurring competition is the decision to continue to prohibit reselling bandwidth/infrastructure""the world over, this has driven down prices.