NEW DELHI: The Union Cabinet on Thursday approved the National Telecom Policy 2012 that aims to do away with roaming charges, introduce a pan-India mobile permit that will enable mobile phone firms to offer all communication services, allow operators to share and trade spectrum and facilitate consolidation in the sector.
Telecom Minister Kapil Sibal said the Cabinet had made five changes to the new rules he had unveiled in October last year before clearing it.
The key change is that the new policy states that spectrum will refarmed, a move that has been strongly opposed by incumbent GSM operators. But the policy does not spell out details on refarming, which involves redistribution of spectrum in the 900 MHz band largely held by incumbents, and substituting it with frequencies in the 1,800 MHz.
“Conditions of refarming, issues on spectrum pricing, participation by operators in the auction and other issues will be decided by the Empowered Group of Ministers,” a top telecom ministry official said.
Other changes include scrapping the proposal to give more powers to the telecom regulator and dropping plans to introduce a Spectrum Act, the legislation to govern management, pricing and allocation of airwaves in the country.
“Spectrum Act, suggested by the one-man committee, has been scrapped because it would be difficult to determine spectrum prices with an Act and let market forces decide the actual price,” the official quoted above said.
The new policy has deleted a controversial clause in the draft version that said that revenue generation would continue to be a secondary objective of the government, and instead states that affordability and availability of effective communication will be core objectives of the policy, Sibal said.
The new framework will replace over the decade-old framework NTP-99. A slew of corruption scandals that had scarred the telecom sector over the last couple of years had led to Sibal announcing that a new set of rules would be unveiled for the sector when he took charge in 2010.
Incumbent GSM operators have opposed the Cabinet’s move to make refarming a part of the new policy without consulting mobile phone companies on it, but declined to formally comment on it. The 900 MHz band that is largely being used by Bharti, Vodafone, Idea and BSNL is considered the most efficient band for offering 2G mobile services. Trai had recently proposed that these frequencies be redistributed among all operators through auctions when mobile permits of incumbents come up for renewal beginning 2014. GSM telcos have warned that refarming of the 900 MHz band would lead to investments of over Rs 1,50,000 crore being made redundant.
All mobile phone companies declined to comment on the new policy.
“If the policy is properly implemented it would not only benefit telecom operators and consumers but would also benefit telecom manufacturing sector as telecom equipment manufacturing has been given special importance in the policy. The approval has come at the right time as country’s GDP growth rate is falling (it is at 9-year low),” said Hemant Joshi, Partner, Deloitte Haskins & Sells.
NTP-2012 does not provide any timeline for implementation of key proposals, including that of doing away with roaming charges, which generates about Rs 14,000 crore annually to the industry and accounts for 10% of total revenues of operators. It also proposes to free up 500 MHz of airwaves for commercial telephony by 2020, to give infrastructure status for telecom and calls for rationalisation of taxes and levies without divulging details.
Sibal said that the new policy envisages 70% tele-density by 2017 and 100% by 2020 and added that all future licences will be delinked from spectrum under unified licensing regime. He also added that policy-making functions would continue to remain with the government.
“We will also review the Trai Act, but policy-making function will continue to remain with the government. The regulator will not make policy, but give recommendations, and we will seek Cabinet approval for all major policy changes,” he added.
The new rules aim to promote indigenous manufacturing and suggest that telcos source majority of their networks from domestic manufacturers by 2020. “The Cabinet will decide manufacturing policy within a month,” Sibal said.
NTP-2012 has also laid special emphasis on boosting the availability of broadband and improving rural telecom access in addition to proposing to give customers the right to have broadband just like the right to education.
The new policy had a mixed impact on the companies’ shares with Bharti Airtel closing at 302.10, up 0.1%, while RCOM finished 1.1% up at 64.6, Tata Tele (Maharashtra) up 3.78% to close at 12.89 while Idea was down 2.93% closing at 76.25.
Telcos currently hold 22 separate mobile permits as the country is split into these many zones. They are also mandated to take independent permits for separate services such as mobile, internet, long-distance telephony and 3G services, among others. But the new policy seeks do away with geographic restriction as well as limitations on the type of service that can be offered creating One Nation-One Licence across all services and regions.