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Policy Perspectives
Status Report
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Scheme of Presentation
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Scheme of Presentation
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Initial developments and National
Telecom Policy (NTP), 1999
NTP 1994 (approved on May 13, 1994) opened the telecom
sector for private participation :
2 cellular mobile telecom service (CMTS) licenses each granted
in the 4 metros in 1994. Fixed license fee prescribed (over 10
years) with spectrum usage charges payable separately.
34 CMTS licenses issued in 18 telecom circles in 1995 based on
bidding for license fee (over 10 years) with spectrum usage
charges payable separately.
6 basic (wireline) licenses issued in 1997-98 based on bidding
for licence fee over 15 year license period.
Inadequate revenue generation and inability of telecom
operators to honor revenue commitments :
Constitution of Group on Telecom [GoT] under Shri Jaswant Singh
(then Minister of External Affairs and Minister of Electronics).
NTP, 1999 formulated to take a ‘fresh look at the policy
framework for the sector’ and, ‘to resolve the problems of the
4 existing operators’.
Initial developments and National
Telecom Policy (NTP), 1999…..<II>
II
Salient features of NTP, 1999 :
Objectives: (revenue maximization not an objective)
o To introduce greater competition in the
telecommunications sector.
o To provide equal opportunities and level playing field for
all players.
oTo make available affordable and effective
communications for the citizens.
Importance assigned to Telecom Regulatory Authority of
India (TRAI).
NTP, 1999 continues to be the policy matrix guiding telecom
sector to date.
‘Migration package’ offered to existing licensees (42 CMTS, 6
Basic):
Revenue sharing arrangement (15% of Adjusted gross revenue
[AGR]) instead of fixed license fee, with effect from August 01,
5 1999.
Scheme of Presentation
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Development policies followed in the
period 1999 to 2004
First come first serve (FCFS) principle used for the first time, in
2001, in allotting spectrum for basic services with wireless in local
loop (WLL).
Licenses for the 4th cellular operator were issued on the basis of a
bidding process, for entry fee in 2001, in 4 metros and 13 telecom
circles.
The ‘pan India’ entry fee aggregated to ` 1,658 crore.
This was half of what had been charged to the 1st and 2nd CMTS
operators in 1999, while offering them the ‘migration package’.
The annual license fee was progressively reduced:
From 15% to 12/10/8 % [Category ‘A’, ‘B’ and ‘C’ circles] in
January, 2001, with significant financial implication.
By additional 2% to 10/8/6 % (8/6/5% for 1st and 2nd CMTS
operators for 4 years, except in Metros) in April, 2004, with
significant financial implication.
Spectrum entitlements were progressively enhanced.
7 Additional spectrum beyond 6.2 MHz upto 15 MHz, on
Development policies followed in the
period 1999 to 2004…..<II>
II
Policy underpinnings of telecom sector outlined in detail in the X
Plan document:
The telecom sector needs to be treated as an infrastructure
sector for the next decade.
Government’s broad policy of taxes and regulation for the
telecom sector has to be promotional in nature.
Revenue generation should not be a major determinant of
macro policy governing the sector.
License fee needs to be aligned to the cost of regulation and
administration of Universal Service Obligation (USO).
Specific planning would be required to prepare the grounds
for a multi-operator system to develop and the subscriber
base to expand without impediments.
Spectrum policy needs to be promotional in nature; with
revenue considerations playing a secondary role.
The X Plan document was formally released on December 21,
8 2002 covering the period April 01, 2002 to March 31, 2007.
Development policies followed in the
period 1999 to 2004…..<III>
III
Decision of the Union Cabinet, dated October 31, 2003, on
introduction of unified access service (UAS) licensing regime
(based on TRAI recommendations of October 27, 2003 and
recommendations of a GoM dated October 30, 2003):
The recommendations of TRAI with regard to implementation
of the UAS Licensing Regime for basic and cellular services
was accepted.
Minister of Communications & IT was authorised to finalise
the details of implementation including the calculation of the
entry fee based on the principle given by TRAI in its
recommendations.
Decisions taken by the then Minister-in-charge of
Telecommunications: (in regard to migration to UAS licensing
regime)
Entry fee of 4th CMTS licensee (discovered in 2001) adopted
as the entry fee for new operators into the UAS licensing
9 regime.
Scheme of Presentation
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Award of 2G licenses in 2007-08 and
subsequent developments
25 new UAS licenses were awarded between June, 2004 and
March, 2007 on FCFS basis and as per the existing license
conditions.
Reference was made to TRAI in April, 2007 to furnish
recommendations on limiting the number of access providers in
each service area and other license conditions. Salient
recommendations of TRAI dated August 28, 2007 are:
No cap be placed on the number of access service providers
in any area.
Spectrum in 2G bands (800, 900 and 1800 MHz) should
continue to be priced as before for new entrants.
In future, all spectrum, excluding the spectrum in the 2G
bands should be auctioned.
“Dual” spectrum may be allocated to existing licensees on
same entry fee charged from existing/ new licenses.
TRAI recommendations accepted in the Internal Telecom
11Commission (ITC) meeting held on October 10, 2007.
Award of 2G licenses in 2007-08 and
subsequent developments ….<II>
II
Process followed for award of 2G licenses:
Press release issued by DoT on September 24, 2007 (appeared
in news papers on September 25, 2007) specifying October 01,
2007 as the ‘cut off’ date for accepting new applications. 343
new applications were received in this period.
Reference made to Ministry of Law and Justice (ML&J) on the
options to deal with the large number of applications. Advice of
ML&J to refer the matter to a Empowered GoM (EGoM) not
accepted.
Applications received upto September 25, 2007 taken up for
processing under an FCFS methodology notified via a press
release issued on January 10, 2008, wherein, fulfillment of the
Letter of Intent (LoI) conditions was stipulated for earmarking
seniority for allotment of UAS license.
Applicants were asked to collect DoT’s response on the
applications on January 10, 2008 at 3:30 PM and submit
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compliance of LoI within 15 days.
121 LoIs were issued on January 10, 2008; 78 complied with on
Award of 2G licenses in 2007-08 and
subsequent developments ….<III>
III
Salient recommendations of TRAI report dated May 11, 2010:
Auction should not be resorted to for spectrum in 2G bands
(800, 900 and 1,800 MHz bands).
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Scheme of Presentation
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“Presumptive loss” on award of
licenses
` Crore
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Scheme of Presentation
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Conclusion…..
The policy matrix which led to the issue of UAS licenses in 2008
evolved over a period of time, through NTP, 1999; decision of
the Union Cabinet, dated October 31, 2003; practice adopted by
successive Ministers for grant of UAS licenses; and, successive
TRAI recommendations of 2003, 2005 and 2007.
The policy has met with unqualified success and has propelled
India into the fastest growth telecom market worldwide.
The issue of deficiencies, if any, in translating policy into
procedure and procedure into actions, are being looked in to by
the One Man Committee set up by DoT and Investigating
Agencies. Appropriate action will be taken based on the
findings.
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OVERALL IMPACT…NATION TO DECIDE..
SUMMARY OF TRADEOFFS
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Growth of the Telecom Sector since 2000
Source : TRAI
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