Early reactions from mobile service operators and investors in telecom stocks suggest that there is much to welcome in the focus of the draft telecom policy that Union Telecom Minister Kapil Sibal announced this week. Certainly the policy was long overdue. In a country that now has 900 million subscribers, it is absurd that the industry should operate on a policy that was framed 12 years ago when there were less than 100 million subscribers. The dynamics of the industry have changed drastically since then and the declining relevance of the 1999 policy is probably well illustrated by the current controversies over the last round of 2G licensing. Overall, the pro-consumer and largely pro-industry intentions augur well for the final policy that is due out in December. But, as always, the proof of the policy’s efficacy lies in its implementation and the nitty-gritty of the guidelines that sector regulator issues. The government has put up the draft on its website and has invited comments from all stakeholders ahead of framing the final policy. It may, however, be served better if it also held some across-the-table consultations with consumer forums, industry lobbies and the telecom regulator.
The piece de resistance of Monday’s announcement was the intention to make roaming free of cost and offer nationwide mobile number portability. Consumers will certainly welcome this. Industry’s reaction, not unexpectedly, has been less unequivocal, since this will mean a diminution of revenues, given that service operators will continue to pay inter-connection charges. Some analysts suggest that this is unlikely to be a big deal since revenues from roaming typically account for about eight per cent of total revenues. Even so, it is possible that consumers face what some in the industry euphemistically call “tariff rebalancing”. This could either take the form of reworked tariff packages, straight increases, or, perhaps, a revenue-neutral option in the reduction in the imposts on telecom. According to industry sources, customs, excise, service tax and so on account for 35 per cent of the tariff a consumer pays — among the highest in the world. A reduction on any of these imposts could take the burden off the operators and, therefore, consumers, industry argues.
If prospects of free roaming make consumers happy, telecom companies are delighted with the proposal to allow spectrum to be shared, pooled or traded between operators. This proposal takes a realistic view of a problem operators have long complained of — the chronic shortage of this vital resource. The dangers of spectrum speculation, however, are all too possible, though separating spectrum allocations from licensing may go some way towards addressing the issue. It is just as well that the draft policy has chosen not to mention the current favourite panacea to the spectrum pricing problem — auctioning. Instead, it has chosen to mention that revenue generation would play a secondary role, a clear signal to zealous institutions like the Comptroller and Auditor General. The biggest challenge, however, is to ensure that telecom licensing does not become the focus of a telecom minister’s personal revenue-generating agenda, as it appears to have done ever since telecom was opened to private investment.
