August has been a busy month for the Telecom Regulatory Authority of India (Trai) and its chairman, the redoubtable Nripendra Misra, a dyed-in-wool bureaucrat who has in his regulatory avatar done arguably more than any of his predecessors on the job. He has plenty of support and equally bitter critics who wish he would give up on forbearance, cut rentals, mandate cheaper roaming and ensure per second billing instead of per minute.
On August 20, the authority allowed India’s estimated 295 million telecom subscribers the freedom to use different long distance service providers without changing their service provider. Two days earlier, it had unshackled internet telephony (voice transmitted over internet protocol networks). Two weeks before that, it had opened the doors for virtual mobile networks, virgin territory in India till then.
The three recommendations to the telecom department came days after the latter had finally accepted Trai’s long- pending suggestions on third-generation mobile services and broadband wireless access. Of course, the final policy caused some disquiet at Trai, which felt its original framework had been recast out of shape.
Perhaps the Trai suggestions may become policy soon or perhaps not. Perhaps the core will be retained and some minor changes may be made to accommodate the interests of powerful lobbies, of which there are many in Indian telecom. However, it is clear that Misra and Trai have suggested far reaching changes that may impact the sector’s fundamentals.
Of the August suggestions, the one on internet telephony reaches the farthest in terms of the possible impact on consumers and service providers.
In a way, it is the culmination of a near 14-year process that began in 1995, the year internet came to India. Three years later, several internet service provider licences were given out, but internet telephony was not allowed. In 1999, telecom policy changed, but internet telephony continued to be off limits. It was only in early 2002 that a restricted form of using the internet to make overseas calls was allowed and a fresh licence category of internet telephony service provider created. Crucially, they were not allowed to connect to either fixed line or mobile networks.
For four years after that, internet telephony did not progress much, even as from 2006 the service providers were asked to pay 6 per cent of their annual gross revenues as licence fee. By the middle of that year, mobile service providers were also allowed to offer internet telephony. However, the restrictions on not being able to connect with domestic networks and on use of some equipment remained for the internet service providers. It was only a year later in May 2007 that the equipment related one was lifted.
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In effect, what the latest recommendation really does is to recognise the sheer pace of technological advancement and allow internet telephony service providers to connect with domestic networks.
That the decision will impact call rates is beyond doubt. That it may arrest the decline in the growth of fixed line services, currently stagnating at less than 40 million subscribers is not clear, though Trai has argued as much. That it will disturb the status quo is evident, if from nothing else but the fact that internet telephony service providers will not pay the licence fee that others have paid. Predictably, the cellular operators have cried foul.
It will be interesting to see what else Misra has on his agenda as he heads into the remaining part of his three-year tenure that ends early next year.