DoT favours curbs on market clout

Draft policy to be implemented from early '06.

Telecom operators that acquire "significant market power" and cross a prescribed market share can face restrictions on pricing and may have to disclose more information than other players.

This has been proposed in the draft telecom policy prepared by the department of telecommunications (DoT). The draft will be discussed by the Telecom Commission before it is sent to the Cabinet. The DoT intends to implement the new policy from early 2006.

Officials said the new norms would be applicable to an operator which had more subscribers, carried more traffic or generated more revenue than the prescribed limit.

"Restrictions on pricing will mean that an operator which reaches the threshold market share cannot cut tariffs further to ramp up its subscriber base," said an official.

Officials said the move was essential as different segments in the sector were at different stages of maturity.

The draft paper has also proposed to lay down a competition policy and empower the DoT to encourage smaller players and newcomers "even at the expense of discriminating against larger players".

"It is essential to ensure smaller players and newcomers are not at a disadvantage vis-à-vis existing players. This will ensure that consumers have increased choice, higher affordability and better quality of service," a DoT official said.

Additionally, the DoT wants to have a larger say in mergers and acquisitions across all segments of the sector "" landline, cellular, Internet services, broadband, VSAT and long-distance telephony.

The draft has proposed a system of special approval by the Telecom Regulatory Authority of India and the government, "if the process reduces customer choice in defined market segments to less than three

operators, or increase the combined entity's market share to over 50 per cent in a specific segment".

Further, the government can review a merger or an acquisition 12 months after its completion to check if spectrum is being used efficiently.

Unutilised spectrum is proposed to be withdrawn an operator in case of its inefficient use.

At present, mergers and acquisitions are allowed only if there are three players in a telecom circle. The DoT has also prescribed a promoter should not hold more than 10 per cent equity in two service providers in the same circle.

Fresh call

Draft policy to be implemented from early '06

New norms to apply to operators with more subscribers and revenue than the prescribed limit

DoT to get powers to encourage smaller players and newcomers