The Telecom Regulatory Authority of India (TRAI) plans to suggest complete delicensing of telecom services in India and push for a revenue-sharing structure in place of the licence-fee regime prevailing in the industry, top functionaries with the regulator said.
TRAI is also likely to call for scrapping the duopoly structure in cellular and basic telecom services. It intends to suggest a `cool-off' period to let the current private operators consolidate their presence against the monopoly, incumbent operator, the department of telecom (DoT), after which a `free-market' structure is to be ushered in.
Sources said the regulator had already hinted about these path-breaking proposals in discussions with the Prime Minister's task force. It is likely to give the suggestions a more formal touch when it replies to a DoT query on whether the licence period for cellular operators should be extended from 10 years to 15 and if a two-year moratorium on payment of licence fees should be acceded to.
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The proposals could affect over Rs 50,000 crore committed to the government in licence fees by cellular and basic telecom operators. Said a source: "The whole concept of licence fees as in India is counter-productive. Ideally, the fee should only cover the administration and transaction costs. Other fees like port charges and the spectrum (frequency) charges should also be covered. There should be nothing more."
"The current licence fee structure works out to as much as Rs 4 per minute in the case of certain cellular service operators. This is too high for a service that is an input for so many other services. If the government wants to corner Rs 4 a minute from users, what is the benefit for the subscriber from deregulation; how will tariffs come down? Revenue sharing (even with its complicated accounting procedures) is a better approach ," he said.
Another top functionary at TRAI, in an interview with Business Standard some weeks back, said, "The biggest challenge before us is how to delicense the sector; how to correct the mistakes of the last few years." He was referring to the government policy of opting for a duopoly market structure in cellular and basic telecom services.
In cellular services, there are two private operators licensed in each circle (mostly analogous to a state), while in basic telecom each circle is to have a private operator competing with the incumbent, DoT. In paging, the number of players in cities are limited to four _ in some cases, five. There is, however, no cap on the number of players in Internet services.
Explained the source: "The European telecom market took nine years to adopt full competition in 1998. We don't have that much time." He indicated that five-six years may be the option before India, to introduce more players into the market. "In telecom, the market cannot be opened up all of a sudden. The first set of private operators have to be allowed to settle in and provide a good alternative to the incumbent. Once that is complete, the market can be opened up to competition," he added.
The TRAI's plans are likely to be welcomed by the cellular and basic telecom services industry, even though is proposes to limit the duopoly-structure. The Association of Basic Telecom Operators, for instance, has agreed that the duopoly status of its members be restricted to ten years if the government extends the licence period from 15 to 25 years.