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Project on Telecom Policy of India and its impact

PRESENTED BY :
AMOL SHELAR-62 ROHNEET ARORA-64 KANCHAN KOSAL-66 SANTU MANDAL-68 ZEENIA PATEL-70

INDEX

NO.

TOPIC

PAGE NO.

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 12 13.

INTRODUCTION NTP 1994 TELECOM REGULATOR NTP OF 1999 OBJECTIVES & TARGETS OF NTP NEW POLICY FRAMEWORK ROLE OF REGULATOR NATIONAL LONG DISTANCE AND GUIDELINES BROADBAND POLICY 2004 FDI IN TELECOM SECTOR GOVERNMENT TARGETS BY 2012 NTP 2012 FUTURE PROJECTIONS BIBLIOGRAPHY

3 9 10 11 11 12 14 18 20 22 28 31 34 36

INTRODUCTION:Indian telecom sector is more than 165 years old. Telecommunications was first introduced in India in 1851 when the first operational land lines were laid by the government near Kolkata (then Calcutta), although telephone services were formally introduced in India much later in 1881. Further, in 1883, telephone services were merged with the postal system. In 1947, after India attained independence, all foreign telecommunication companies were nationalised to form the Posts, Telephone and Telegraph (PTT), a body that was governed by the Ministry of Communication. The Indian telecom sector was entirely under government ownership until 1984, when the private sector was allowed in telecommunication equipment manufacturing only. The government concretised its earlier efforts towards developing R&D in the sector by setting up an autonomous body Centre for Development of Telematics (C-DOT) in 1984 to develop state-of-the-art telecommunication technology to meet the growing needs of the Indian telecommunication network. The actual evolution of the industry started after the Government separated the Department of Post and Telegraph in 1985 by setting up the Department of Posts and the Department of Telecommunications (DoT). With over 900 million telephone connections, India remained the world's second-largest telecommunications market in 2013, recovering from the bumpy ride the year before, but made little progress to jump to the next generation of services. The year under review had already equipped the government with a roadmap, following the release of the National Telecom Policy of 2012. But legal issues, like the ongoing battle over allotment of airwaves, or spectrum, in 2008, kept decision-making in check. Nevertheless, the government did announce some significant initiatives - like the much-awaited policy on mergers and acquisitions and permitted 100 per cent foreign investment in the sector - which will drive Indian telecom in the years to come, analysts feel. "The onset of 2013 was accompanied with the introduction of NTP 2012 that brought forth promise of policy stability for the sector," Rajan S Mathews, director general, Cellular Operators' Association of India (COAI), told IANS. "The implementation of the National Telecom Policy of 2012 is a positive step. But its immediate impact will be limited," said Mahesh Uppal, director of a

telecom consultancy firm, Com First. "The current controversies of 2G (second generation) and 3G (third generation) telecom services have less to do with policy and more with the process. Those disputes cannot be resolved by changes in policy," Uppal told IANS. HIGHLIGHTS OF 2013 National Telecom Policy of 2012 introduced Foreign equity of 100 per cent allowed in telecom Vodafone evinces interest in buying entire stake of Indian partner Mergers and acquisition policy approved Dominant player can hold up to 50 per cent telecom market share Telecom tower business given infrastructure status Clearance for unified telecom licences in respect of technology Total telecom connections at 904.56 million end - October.

STRUCTURE OF THE TELECOM INDUSTRY


INDIAN TELECOM INDUSTRY

PUBLIC

PRIVATE

MTNL

BSNL

INDIAN COMPANIES

FOREIGN INVESTED COMPANIES

The telecom Industry has been divided into basically two parts i.e Public Sector and the Private Sector.

PUBLIC SECTOR:1.) MAHANAGAR TELEPHONE NIGAM LIMITED (MTNL):- MTNL was set up on 1st April, 1986 by the Government of India to upgrade the quality of telecom services, expand the telecom network, and introduce new services and to raise revenue for telecom development needs of Indias key metros Delhi, the political capital and Mumbai, the financial capital of India. MTNL is the largest Broadband service provider in Mumbai. MTNL Triband is the most sought after broadband service in Mumbai with more than 500,000 customers. I am thankful to all the esteemed customers who have helped us in achieving this mark. MTNL will shortly introduce its Data Centre in technical collaboration of IIT Mumbai with best possible latency. We are also introducing next generation converged network providing 1GE/10GE links to the customers on Fiber. We are providing calls to USA, Canada, China, Singapore, Hong Kong and Thailand at Rs 2/- per minute across all services. The ecology of telecom industry has changed significantly and MTNL has positioned to meet your growing needs in the vibrant progressive Indian economy. 2.) BHARAT SANCHAR NIGAM LIMITED (BSNL):- Bharat Sanchar Nigam Ltd. was incorporated on 15th September 2000. It took over the business of providing of telecom services and network management from the

erstwhile Central Government Departments of Telecom Services (DTS) and Telecom Operations (DTO), with effect from 1st October2000 on going concern basis. It is one of the largest & leading public sector units providing comprehensive range of telecom services in India. BSNL has installed Quality Telecom Network in the country & now focusing on improving it, expanding the network, introducing new telecom services with ICT applications in villages & winning customer's confidence. Today, it has about 43.74 million line basic telephone capacity, 8.83 million WLL capacity, 72.60 million GSM capacity, 37,885 fixed exchanges, 68,162 GSM BTSs, 12,071 CDMA Towers, 197 Satellite Stations, 6,86,644 RKm. of OFC, 50,430 RKm. of microwave network connecting 623 districts, 7330 cities/towns & 5.8 lakhs villages . BSNL is the only service provider, making focused efforts & planned initiatives to bridge the rural-urban digital divide in ICT sector. In fact there is no telecom operator in the country to beat its reach with its wide network giving services in every nook & corner of the country & operates across India except New Delhi & Mumbai. Whether it is inaccessible areas of Siachen glacier or North-Eastern regions of the country, BSNL serves its customers with a wide bouquet of telecom services namely Wire line, CDMA mobile, GSM mobile, Internet, Broadband, Carrier service, MPLS-VPN, VSAT, VoIP, IN Services, FTTH, etc. BSNL is numero uno of India in all services in its license area. The company offers wide ranging & most transparent tariff schemes designed to suit every customer. BSNL has 90.09 million cellular & 5.06 million WLL customers as on 31.07.2011. 3G Facility has been given to all 2G connections of BSNL. In basic services, BSNL is miles ahead of its rivals, with 24.58 million wire line phone subscribers i.e. 71.93% share of the wire line subscriber base. BSNL has set up a world class multigigabit, multi-protocol convergent IP infrastructure that provides convergent services like voice, data & video through the same Backbone & Broadband Access Network. At present there are 8.09 million broadband customers. The company has vast experience in planning, installation, network integration & maintenance of switching & transmission networks & also has a world class ISO 9000 certified Telecom Training Institute. During the 2010-11, turnover of BSNL is around Rs. 29,700 Crores.

PRIVATE SECTORS:1.) INDIAN COMPANIES: - Below mentioned are the few Indian private companies that are listed by the telecom industry. Company Name Bharti Airtel Reliance Communications Idea Cellular Tata Communications Tata Teleservices Spice Communications MTNL GTL GTL Infrastructure On Mobile Global HFCL Infotel ITI Him.Fut.Comm Astra Microwave Gemini Communications Avaya Global Shyam Telecom Nelco XL Telecom & Energy Limited Goldstone Infratech Ltd Nu Tek Kavveri Telecom Krone Communications Mobile Telecommunications Ltd Valiant Communications Pun.Communi. Nettlinx Aishwarya Telecom Ltd Interg.Digitial Vital Communications Market Cap in Crores 108066.23 32683.44 14368.92 13181.25 4393.06 4136.13 4044.6 2475.12 2210.49 1403.52 457.73 413.28 386.99 241.88 125.71 118.54 64.58 63.55 55.96 52.6 48.16 26.51 24.52 17.37 16.58 16.19 12.68 9.86 3.15 2.81

2.) FOREIGN INVESTED COMPANIES: TOTAL SUBSCRIBERS IN INDIA (AS OF 2013)

The telecommunication industry is the fastest growing industry in every country. Over the last decade and particularly over the last five years, India has registered an impressive growth in the telecommunications sector; 1India now has a total of 846.32 Million Telecom subscribers, comprising of of 811.59 Mobile subscribers & 34.73 wireline subscribers. The Indian Tele-density now stands at 70.89%. India today has the worlds second largest network which is growing at a rate which is unmatched by any other country in the world. With the connections now growing at a faster pace in rural areas as compared to urban, it is expected that as India crosses the 1 billion mark, the rural teledensity will grow from the current value of 32.95% to 40%. The sector is growing at 45%per year which has been made possible through continuous effort of the government during the recent years. The telecom sector of India has thus contributed to a great extent towards the socioeconomic development of India.

SUB-DIVISIONS OF THE TELECOM INDUSTRY


INDIAN TELECOMMUNICATION SECTOR

WIRE LINE

WIRELESS

GSM

CDMA

NATIONAL TELECOM POLICY 1994 AND ITS IMPLEMENTATION Giving effect to this realization and liberalizing successfully required heavy doses of investment and structural changes in the telecom monolith. This was perhaps the genesis of a new policy initiative resulting in the enunciation of the National Telecom Policy 1994. This policy document represented the first attempt to codify policy objectives and provide a roadmap for telecom development in India. The policy document laid down specific targets, such as making telephone service available on demand by 1997, coverage of all villages by 1997, provision of PCOs in urban areas for every 500 persons by 1997 and introducing all value added services available internationally, preferably by 1996. The resource gap estimated for realization of these targets was well over Rs. 230 billion and therefore the policy emphasized the involvement of the private sector and the need for private investment to bridge the resource gap. Hence, the policy for the first time allowed private companies registered in India to participate in the provision of basic telephone services subject to stipulated conditions. It established a duopoly regime providing for two operators each in the four metros and eighteen telecom circles. Another important dimension of this policy document was its emphasis on protecting and promoting consumer interests and ensuring fair competition. The policy reflected an ambitious approach in setting the targets, but adopted a cautious approach in dealing with the issues of liberalization in the telecom sector. The duopoly regime that it established implied continued dominance of the market by the incumbent government operator, which inhibited growth of a competitive environment. Even though the NTP94 did not go far enough on the liberalization route, it did cut the umbilical cord tying the Indian telecom sector to its monopoly supplier, nursed by the more-than-a-century old Indian Telegraph Act. The new paradigm in the telecom sector created interest worldwide and investors, both Indian and foreign, evinced keen interest in being partners in telecom development. However, the implementation of the policy did not match the euphoria it created and delivered mixed results. Physical targets were unrealized, particularly for rural telephony. Only about half of over 600,000 villages stood covered by March 1999. And many of these telephones in rural areas failed to work properly for technology reasons. However, with regard to provision of PCOs, the progress was comparatively better and the number rose from 80,000 in March 1994 to 277,000 in March 1999. There was significant growth in the number of STD/ISD PCOs, which went up from 57,119 in March 1994 to 272,989 in March 1999. The STD/ISD PCOs were franchised, and provided opportunity for self-employment to unemployed youth, ex-servicemen and economically disadvantaged segments of the society. In the introduction of private players in the mobile and the basic segments of the service, the main criterion was the bid price for a 10-year license, with the proposed annual payments converted to a net present value using a discount rate of 16 percent. In both service segments, the rollout of private operators suffered considerable delay, particularly so in the case of basic service, largely due to controversies surrounding the bidding and selection processes for award of a license. As a result, by 1999 the private operators could introduce service in only two of the six circles for which basic service licenses were awarded. The picture was somewhat better for mobile services, as private mobile operators started operations in 1997. From a policy perspective, the noticeable delays and hiccups pointed to the need for greater transparency and clarity in the licensing process and the terms of licenses, as well as for an independent regulator.

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TELECOM REGULATOR The NTP94 placed considerable emphasis on protecting consumer interests and ensuring fair competition. The obvious implication of this emphasis was to establish the institution of regulator for the telecom sector at the earliest. But, action on this account also encountered delays. Only in 1997 did the GOI enact a law -- the Telecom Regulatory Authority of India Act 1997 (TRAI Act 1997) -- leading to the establishment of an independent statutory Regulatory Authority for the telecom sector, with clearly defined functions, powers and responsibilities to encourage competition, ensure a level playing field, and promote and protect consumer interests. The Telecom Regulatory Authority of India (TRAI) enjoyed wide-ranging functions and powers in the areas of its responsibility. These relate to and include ensuring technical compatibility and effective interconnection between operators and service providers; regulating revenue-sharing agreements among service providers; monitoring quality-of-service standards; ensuring compliance with license conditions; approving tariffs for telecom services; and protecting consumer interests. The TRAI is not entrusted with functions relating to licensing, standard setting and allocating spectrum, which are in the domain of the GOI. This Act initially had vested dispute settlement functions with the TRAI, but an amendment to the TRAI Act in 2000 divested TRAI of these functions. Impact of telecom policy of 1994 Entry of private players in the telecom sector Std/isd pcos were franchised, and provided opportunity for self-employment Total demand rose by 50% from 7.03 million on 1.4.1992 to 10.5 million on 1.4.1994 over a three year period and touched about 15.8 million by 1.4.1997. Telephone density in india in 1994 was about 0.8 per hundred persons & world average of 10 per hundred persons which reached to 1.6 in 1997 and 4.3 in 2002

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Need for a new telecom policy of 1999 In addition to some of the objectives of NTP 1994 not being fulfilled, there have also been far reaching developments in the recent past in the telecom, IT, consumer electronics and media industries world-wide. Convergence of both markets and technologies is a reality that is forcing realignment of the industry. At one level, telephone and broadcasting industries are entering each other's markets, while at another level, technology is blurring the difference between different conduit systems such as wireline and wireless. As in the case of most countries, separate licences have been issued in our country for basic, cellular, ISP, satellite and cable TV operators each with separate industry structure, terms of entry and varying requirement to create infrastructure. However, this convergence now allows operators to use their facilities to deliver some services reserved for other operators, necessitating a relook into the existing policy framework. The new telecom policy framework is also required to facilitate India's vision of becoming an IT superpower and develop a world class telecom infrastructure in the country. Objectives and targets of the New Telecom Policy 1999 The objectives of the NTP 1999 are as under: Access to telecommunications is of utmost importance for achievement of the country's social and economic goals. Availability of affordable and effective communications for the citizens is at the core of the vision and goal of the telecom policy. Strive to provide a balance between the provision of universal service to all uncovered areas, including the rural areas, and the provision of high-level services capable of meeting the needs of the country's economy; Encourage development of telecommunication facilities in remote, hilly and tribal areas of the country; Create a modern and efficient telecommunications infrastructure taking into account the convergence of IT, media, telecom and consumer electronics and thereby propel India into becoming an IT superpower; Convert PCO's, wherever justified, into Public Teleinfo centres having multimedia capability like ISDN services, remote database access, government and community information systems etc. Transform in a time bound manner, the telecommunications sector to a greater competitive environment in both urban and rural areas providing equal opportunities and level playing field for all players; Strengthen research and development efforts in the country and provide an impetus to build world-class manufacturing capabilities. Achieve efficiency and transparency in spectrum management. Protect defence and security interests of the country.

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Enable Indian Telecom Companies to become truly global players.

In line with the above objectives, the specific targets that the NTP 1999 seeks to achieve would be : Make available telephone on demand by the year 2002 and sustain it thereafter so as to achieve a teledensity of 7 by the year 2005 and 15 by the year 2010 Encourage development of telecom in rural areas making it more affordable by suitable tariff structure and making rural communication mandatory for all fixed service providers. Increase rural teledensity from the current level of 0.4 to 4 by the year 2010 and provide reliable transmission media in all rural areas. Achieve telecom coverage of all villages in the country and provide reliable media to all exchanges by the year 2002. Provide Internet access to all district head quarters by the year 2000 Provide high speed data and multimedia capability using technologies including ISDN to all towns with a population greater than 2 lakh by the year 2002.

New Policy Framework The New Policy framework must focus on creating an environment, which enables continued attraction of investment in the sector and allows creation of communication infrastructure by leveraging on technological development. Towards this end, the New Policy Framework would look at the telecom service sector as follows :

Cellular Mobile Service Providers, Fixed Service Providers and Cable Service Providers, collectively referred to as Access Providers Radio Paging Service Providers Public Mobile Radio Trunking Service Providers National Long Distance Operators International long Distance Operators Other Service Providers Global Mobile Personal Communication by Satellite (GMPCS) Service Providers V-SAT based Service Providers.

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Restructuring of DoT World-wide, the incumbent, usually the Government owned operator plays a major role in the development of the telecom sector. In India, DoT is responsible for the impressive growth in number of lines from 58.1 lakhs on April 1, 1992 to 191 lakhs in December 1998, showing CAGR of' 20%. DoT is expected to continue to play in importnat, and indeed, dominant role in the development of the sector. Currently, the licensing, policy making and the service provision functions are under a single authority. The Government has decided to separate the policy and licensing functions of DoT from the service provision functions as a precursor to corporatisation. The corporatisation of DoT shall be done keeping in mind the interests of all stakeholders by the year 2001.

All the future relationship (competition, resource raising etc.) of MTNL / VSNL with the corporatised DoT would be based on best commercial principles. The synergy of MTNL, VSNL and the corporatised DoT would be utilised to open up new vistas for operations in other countries.

5.0 Spectrum Management With the proliferation of new technologies and the growing demand for telecommunication services, the demand on spectrum has increased manifold. It is therefore, essential that spectrum be utilised efficiently, economically, rationally and optimally. There is a need for a transparent process of allocation of frequency spectrum for use by a service and making it available to various users under specific conditions. The National Frequency Allocation Plan (NFAP) was last established in 1981, and has been modified from time to time since. With the proliferation of new technologies it is essential to revise the NFAP in its entirety so that it could become the basis for development, manufacturing and spectrum utilization activities in the country amongst all users. The NFAP is presently under review and the revised NFAP-2000 would be made public by the end of 1999, detailing information regarding allocation of frequency bands for various services, without including security information. NFAP shall be reviewed no later than every two years and shall be in line with radio regulations of International Telecommunication Union. Relocation of existing Spectrum and Compensation: Considering the growing need of spectrum for communication services, there is a need to make adequate spectrum available. Appropriate frequency bands have historically been assigned to defence & others and efforts would be made towards relocating them so as to have optimal utilisation of spectrum. Compensation for relocation may be provided out of spectrum fee and revenue share levied by Government. There is a need to review the spectrum allocations in a planned manner so that required frequency bands available to the service providers.

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There is a need to have a transparent process of allocation of frequency spectrum which is effective and efficient. This would be examined further in the light of ITU guidelines. For the present, the following course of action shall be adopted. Spectrum usage fee shall be charged. Setting up an empowered Inter-Ministerial Group to be called as Wireless Planning Coordination Committee (WPCC) as part of the Ministry of Communications for periodical review of spectrum availability and broad allocation policy. Massive computerisation in the WPC Wing will be started during the next three months time so as to achieve the objective of making all operations completely computerised by the end of year 2000.

6.0 Universal service obligation The Government is committed to provide access to all people for basic telecom services at affordable and reasonable prices. The Government seeks to achieve the following universal service objectives:

Provide voice and low speed data service to the balance 2.9 lakh uncovered villages in the country by the year 2002 Achieve Internet access to all district head quarters by the year 2000 Achieve telephone on demand in urban and rural areas by 2002

The resources for meeting the USO would be raised through a 'universal access levy' which would be a percentage of the revenue earned by all the operators under various licences. The percentage of revenue share towards universal access levy would be decided by the Government in consultation with TRAI. The implementation of the USO obligation for rural / remote areas would be undertaken by all fixed service providers who shall be reimbursed from the funds from the universal' access levy. Other service providers shall also be encouraged to participate in USO provision subject to technical feasibility and shall be reimbursed from the funds from the universal access levy. 7.0 Role of Regulator The Telecom Regulatory Authority of India (TRAI) was formed in January 1997 with a view to provide an effective regulatory framework and adequate safeguards to ensure fair competition and protection of consumer interests. The Government is committed to a strong and independent regulator with comprehensive powers and clear authority to effectively perform its functions.

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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 Commission (ITC) meeting held on October 10, 2007. Approved by the then Minister-in-charge on October 17, 2007.

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 DoTs response on the applications on January 10, 2008 at 3:30 PM and submit compliance of LoI within 15 days. 121 LoIs were issued on January 10, 2008; 78 complied with on the same day; 42 complied on the next day. In all, 16 applicants were issued 120 UAS licenses between February and

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March, 2008. 2 more licenses were issued in July 2008 to another applicant company, who made application prior to September 25, 2007 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). 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).

Observations on Presumptive loss based on 3G prices: UAS licenses issued in January 2008 and 3G payments made in May, 2010., therefore, 3G prices have to be discounted to reflect time value of money. Economic value of spectrum a function of subscriber base and ARPU. While subscriber base increased 3 times, ARPU reduced by 66%. 2G spectrum was subject to availability. On average, allottees of 2008 (and even earlier) have received spectrum after a gap of a year, therefore 2G spectrum is available on an average for 19 years instead of 20 years..

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There is difference in spectral efficiency of 2G and 3G spectrum: 5 MHz of 2G and 3G spectrum have spectral efficiencies of 40.61 Erlangs and 149.1 Erlangs respectively, i.e., in the ratio of 1:3/4.

While computing the pro-rata value for 4.4 MHz spectrum vis--vis 6.2 MHz, the non-linear advantage due to consolidation of holding 6.2 MHz over 4.4 MHz needs consideration. Telecom sector policy has evolved continuously since 1999 and is predicated on the following pillars: increase in teledensity and affordability to the consumer; creation of a competitive environment, with level playing field between existing and new incumbents; and, revenue accrual to Government both through one time fee and annual recurring charges. The policy evolved through NTP, 1999; 1999 migration package for existing operators; development policies followed between 1999 and 2004; and, the overarching vision articulated through the X FYP. The policy created a historical legacy, once it was decided to allow induction of new operators in the UAS regime on the basis of 2001 entry fee. TRAI, the sector regulator, has recommended for induction of more players at low entry charges, in its successive recommendations of October/November, 2003; January/May, 2005; August, 2007; and, May, 2010. The policy has met with spectacular success, in terms of increase in teledensity and subscriber base; reduction in call rates; and, boosting economic growth. Development policies pursued between 1999 and 2004 had significany financial implications. o However duopoly regime was ended and additional operators were introduced. o This resulted in direct benefit to the consumers over ` 1,00,000 crore per annum, as a result of ARPU drop between September, 2007 and May, 2010). 3G auction has a different context. There were no historical legacy issues, hence no issues of level playing field arose. Moreover, auction of 3G spectrum was a consistent recommendation of TRAI, in its successive reports of September, 2006; August, 2007; and May, 2010. If the TRAI recommendation of May, 2010 (on the basis of which the presumptive loss has been estimated) is seen in totality and spectrum upto 6.2 MHz is kept out of the ambit of pricing, the value of presumptive loss reduces to NIL.

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The offer was conditional and untenable, since it pertained to 6.2 MHz spectrum in the 900 MHz band, in all 22 service areas which was not available. The company also asked for permission for active infrastructure sharing whereas sharing of spectrum is not permitted under the current UAS regime. The offer was subsequently withdrawn by the company and this was stated in its affidavit before the Supreme Court of India. The amount offered (` 13,752 crore) was spread over 10 years, with the first year offer being only ` 250 crore. The company could have reneged on its commitment after being allotted spectrum at 1/5th of its extant price. There is no provision in the licensing regime to offer spectrum on the basis of conditional offers. Valuation of company is a function of many factors, and not just the quantum of spectrum held. The cases are of dilution, not sale of equity. Government has been encouraging induction of Foreign Direct Investment in all sectors, including telecom.
National Long Distance National Long Distance opened for private participation. The Government announced on 13.08.2000 the guidelines for entry of private sector in National Long Distance Services without any restriction on the number of operators. The DOT guidelines of license for the National Long Distance operations were also issued.

Highlights - NLD Guidelines Unlimited entry for carrying both inter-circle and intra-circle calls. Total foreign equity (including equity of NRIs and international funding agencies) must not exceed 74%. Promoters must have a combined net worth of Rs.25 million.

Private operators will have to enter into an arrangement with fixed-service providers within a circle for traffic between long-distance and short-distance charging centres. Seven years time frame set for rollout of network, spread over four phases. Any shortfall in network coverage would result in encashment and forfeiture of bank guarantee of that phase. Private operators to pay one-time entry fee of Rs.25 million plus a Financial Bank Guarantee (FBG) of Rs.200 million. The revenue sharing agreement would be to the extent of 6%. Private operators allowed to set up landing facilities that access submarine cables and use excess bandwidth available. Licence period would be for 20 years and extendable by 10 years.

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International Long Distance

In the field of international telephony, India had agreed under the GATS to review its opening up in 2004. However, open competition in this sector was allowed with effect from April 2002 itself. There is now no limit on the number of service providers in this sector. The licence for ILD service is issued initially for a period of 20 years, with automatic extension of the licence by a period of 5 years. The applicant company pays one-time non-refundable entry fee of Rs.25 million plus a bank guarantee of Rs.250 million, which will be released on fulfillment of the roll out obligations. The annual licence fee including USO contribution is @ 6% of the Adjusted Gross Revenue and the fee/royalty for the use of spectrum and possession of wireless telegraphy equipment are payable separately. At present 24 ILD service providers (22 Private and 2 Public Sector Undertaking) are there. As per current roll out obligations under ILD license, the licensee undertakes to fulfill the minimum network roll out obligations for installing at least one Gateway Switch having appropriate interconnections with at least one National Long Distance service licensee. There is no bar in setting up of Point of Presence (PoP) or Gateway switches in remaining location of Level I Tax's. Preferably, these PoPs should conform to Open Network Architecture (ONA) i.e. should be based on internationally accepted standards to ensure seamless working with other Carrier's Network.

Universal Service Obligation Fund Another major step was to set up the Universal Service Obligation Fund with effect from April 1, 2002. An administrator was appointed for this purpose. Subsequently, the Indian Telegraph (Amendment) Act, 2003 giving statutory status to the Universal Service Obligation Fund (USOF) was passed by both Houses of Parliament in December 2003. The Fund is to be utilized exclusively for meeting the Universal Service Obligation and the balance to the credit of the Fund will not lapse at the end of the financial year. Credits to the Fund shall be through Parliamentary approvals. The Rules for administration of the Fund known as Indian Telegraph (Amendment) Rules, 2004 were notified on 26.03.2004.

The resources for implementation of USO are raised through a Universal Service Levy (USL) which has presently been fixed at 5% of the Adjusted Gross Revenue (AGR) of all Telecom Service Providers except the pure value added service providers like Internet, Voice Mail, E-Mail service providers etc. In addition, the Central Govt. may also give grants and loans. An Ordinance was promulgated on 30.10.2006 as the Indian Telegraph (Amendment) Ordinance 2006 to amend the Indian Telegraph Act, 1885 in order to enable support for mobile services, broadband connectivity, general infrastructure and pilot project for new technological developments in rural and remote areas of the country. Subsequently, an Act has been passed on 29.12.2006 as the Indian Telegraph (Amendment) Act 2006 to amend the Indian Telegraph Act, 1885.

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USFO has initiated action to bring mobile services within the ambit of Universal Service Obligation Fund (USOF) activities. Under this initiative, 7387 mobile infrastructure sites are being rolled out, in the first phase, across 500 districts and 27 states of India. This scheme will provide mobile services to approximately 0.2 million villages which where hitherto deprived of the same. As on 30th June 2010, 7183 shared towers have been set up under the First Phase of the scheme. The USOFof DOT has proposed to set up about 10,128 additional towers in order to extend the mobile coverage in other uncovered areas under the Second Phase of the Scheme.

Unified Access Services Unified access license regime was introduced in November 2003. Unified Access Services operators are free to provide, within their area of operation, services, which cover collection, carriage, transmission and delivery of voice and/or non-voice messages over Licensee's network by deploying circuit, and/or packet switched equipment. Further, the Licensee can also provide Voice Mail, Audiotex services, Video Conferencing, Videotex, E-Mail, Closed User Group (CUG) as Value Added Services over its network to the subscribers falling within its service area on non-discriminatory basis. The country is divided into 23 Service Areas consisting of 19 Telecom Circle and 4 Metro Service Areas for providing Unified Access Services (UAS). The licence for Unified Access Services is issued on non-exclusive basis, for a period of 20 years, extendable by 10 years at one time within the territorial jurisdiction of a licensed Service Area. The licence Fee is 10%, 8% & 6% of Adjusted Gross Revenue (AGR) for Metro and Category 'A', Category 'B' and Category 'C' Service Areas, respectively. Revenue and the fee/royalty for the use of spectrum and possession of wireless telegraphy equipment are payable separately. The frequencies are assigned by WPC wing of the Department of Telecommunications from the frequency bands earmarked in the applicable National Frequency Allocation Plan and in coordination with various users subject to availability of scarce spectrum.

Internet Service Providers (ISPs) Internet service was opened for private participation in 1998 with a view to encourage growth of Internet and increase its penetration. The sector has seen tremendous technological advancement for a period of time and has necessitated taking steps to facilitate technological ingenuity and provision of various services. The Government in the public interest in general, and consumer interest in particular, and for proper conduct of telegraph and telecom services has decided to issue the new guidelines(Details) for grant of licence of Internet services on nonexclusive basis. Any Indian company with a maximum foreign equity of 74% is eligible for grant of licence.

Broadband Policy 2004 Recognizing the potential of ubiquitous Broadband service in growth of GDP and enhancement in quality of life through societal applications including tele-education, tele-medicine, egovernance, entertainment as well as employment generation by way of high-speed access to information and web based communication; Government has announced Broadband Policy in October 2004. The main emphasis is on the creation of infrastructure through various

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technologies that can contribute to the growth of broadband services. These technologies include optical fibre, Asymmetric Digital Subscriber Lines (ADSL), cable TV network; DTH etc. Broadband connectivity has been defined as Always On with the minimum speed of 256 kbps. It is estimated that the number of broadband subscribers would be 20 million by 2010. With a view to encourage Broadband Connectivity, both outdoor and indoor usage of low power Wi-Fi and Wi-Max systems in 2.4 GHz-2.4835 GHz band has been delicensed. The use of low power indoor systems in 5.15-5.35 GHz and 5.725-5.875 GHz bands has also been delicensed in January 05. The SACFA/WPC clearance has been simplified. The setting up of National Internet Exchange of India (NIXI) would enable bringing down the international bandwidth cost substantially, thus making the broadband connectivity more affordable.

The prime consideration guiding the Policy includes affordability and reliability of Broadband services, incentives for creation of additional infrastructure, employment opportunities, induction of latest technologies, national security and brings in competitive environment so as to reduce regulatory interventions.

By this new policy, the Government intends to make available transponder capacity for VSAT services at competitive rates after taking into consideration the security requirements. The service providers permitted to enter into franchisee agreement with cable TV network operators. However, the Licensee shall be responsible for compliance of the terms and conditions of the licence. Further in the case of DTH services, the service providers permitted to provide ReceiveOnly-Internet Service. The role of other facilitators such as electricity authorities, Departments of ITs of various State Governments, Departments of Local Self Governments, Panchayats, Departments of Health and Family Welfare, Departments of Education is very important to carry the advantage of broadband services to the users particularly in rural areas.

Target has been set for 20 million broadband connections by 2010 and providing Broadband connectivity to all secondary and higher secondary schools, public health institutions and panchayats by 2010.

In rural areas, connectivity of 512 KBPS with ADSL 2 plus technology (on wire) will be provided from about 20,000 existing exchanges in rural areas having optical fibre connectivity. Community Service Centres, secondary schools, banks, health centres, Panchayats, police stations etc. can be provided with this connectivity in the vicinity of above-mentioned 20,000 exchanges in rural areas. DOT will be subsidizing the infrastructure cost of Broadband network through support from USO Fund to ensure that Broadband services are available to users at affordable tariffs.

Tariff Changes The Indian Telecom Sector has witnessed major changes in the tariff structure. The Telecommunication Tariff Order (TTO) 1999, issued by regulator (TRAI), had begun the process of tariff balancing with a view to bring them closer to the costs. This supplemented by Calling

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Party Pay (CPP), reduction in ADC and the increased competition, has resulted in a dramatic fall in the tariffs. ADC has been abolished for all calls w.e.f. 1st October 2008.

The peak National Long Distance tariff for above 1000 Kms. in 2000 has come down from US$ 0.67 per minute to US$ 0.02 per minute in 2009. The International Long Distance tariff from US$ 1.36 per minute in 2000 to US$ 0.16 per minute in 2009 for USA, Canada & UK. The mobile tariff for local calls has reduced from US$0.36 per minute in 1999 to US$ 0.009 US$ 0.04 per minute in 2009. The Average Revenue Per User of mobile is between US$ 5.06 - US$ 7.82 per month

Foreign Direct Investment (FDI) In Basic, Cellular Mobile, Paging and Value Added Service, and Global Mobile Personal Communications by Satellite, Composite FDI permitted is 74% (49% under automatic route) subject to grant of license from Department of Telecommunications subject to security and license conditions. (para 5.38.1 to 5.38.4 of consolidate FDI Policy circular 1/2010 of DIPP) FDI upto 74% (49% under automatic route) is also permitted of the Following:

Radio Paging Service Internet Service Providers (ISP's) FDI upto 100% permitted in respect of the following telecom services:

Infrastructure Providers providing dark fibre (IP Category I); Electronic Mail; and Voice

Mail

Subject to the conditions that such companies would divest 26% of their equity in favor of Indian public in 5 years, if these companies were listed in other parts of the world.

In telecom manufacturing sector 100% FDI is permitted under automatic route. The Government has modified method of calculation of Direct and Indirect Foreign Investment in sector with caps (para 4.1 of consolidate FDI Policy circular 1/2010 of DIPP) and have also issued guidelines on downstream investment by Indian Companies. (para 4.6 of consolidate FDI Policy circular 1/2010 of DIPP) Guidelines for transfer of ownership or control of Indian companies in sectors with caps from resident Indian citizens to non-resident entities have been issued (para 4.2.3 of consolidate FDI Policy circular 1/2010 of DIPP)

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Investment Opportunities and Incentives An attractive trade and investment policy and lucrative incentives for foreign collaborations have made India one of the world's most attractive markets for the telecom equipment suppliers and service providers.

No industrial license required for setting up manufacturing units for telecom equipment. 100% Foreign Direct Investment (FDI) is allowed through automatic route for manufacturing of telecom equipments. Payments for royalty, lumpsum fee for transfer of technology and payments for use of trademark/brand name on the automatic route. Foreign equity of 74% (49 % under automatic route) permitted for telecom services - basic, cellular mobile, paging, value added services, NLD, ILD, ISPs - and global mobile personal communications by satellite. Full repatriability of dividend income and capital invested in the telecom sector. Network Expansion The telecom sector has shown robust growth during the past few years. It has also undergone a substantial change in terms of mobile versus fixed phones and public versus private participation. The following table shows the growth trend of telecom sector from last five years: The number of telephones has increased from 54.63 million as on 31.03.2003 to 621.28 million as on 31.03.2010. Wireless subscribers increased from 13.3 million as on 31.03.2003 to 584.32 million as on 31.03.2010. Whereas, the fixed line subscribers decreased from 41.33 million in 31.03.2003 to 36.95 million in 31.03.2010. The broadband subscribers grew from a meager 0.18 million to 8.76 million as on 31.03.2010.

Trend in Tele-density Tele-density in the country increased from 5.11% in 2003 to 52.74 % in March 2010. In the rural area teledensity increased from 1.49% in Mar 2003 to 24.31% in March 2010 and in the urban areas it is increased from 14.32% in Mar 2003 to119.45% in March 2010.This indicates a rising trend of Indian telecom subscribers.

Rural Telephony Apart from the 200.77million fixed and WLL connections on March 2010 provided in the rural areas, 570000 uncovered VPTs have been provided as on March 2010. Thus, 96% of the villages in India have been covered by the VPTs. More than 3 lakh PCOs are also providing community access in the rural areas. Further, Mobile Gramin Sanchar Sewak Scheme (GSS) a mobile Public Call Office (PCO) service is provided at the doorstep of villagers. At present, 2772 GSSs are covering 12043 villages. Also, to provide Internet service, Sanchar Dhabas (Internet Kiosks) have been provided in more than 3500 Block Headquarters out of the total 6337 Blocks in the country. The target of 80 million rural connections by 2010 have already met during year 2008 itself. USOF subsidy support scheme is also being utilized for sharing wireless infrastructure in rural areas with about 19,000 towers by 2010.

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Performance of telecom equipment manufacturing sector As a result of Government policy, progress has been achieved in the manufacturing of telecom equipment in the country. There is a significant telecom equipment-manufacturing base in the country and there has been steady growth of the manufacturing sector during the past few years. The figures for production and export of telecom equipment are shown in table given below: (Rs. in crore)

Figures for production and export

Year

Production

Export

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

14400 14000 16090 17833 23656 41270 488800 50000 (Projected @ 18%)

402 250 400 1500 1898 8131 11000 13500 (Projected @ 25%)

Rising demand for a wide range of telecom equipment, particularly in the area of mobile telecommunication, has provided excellent opportunities to domestic and foreign investors in the manufacturing sector. The last two years saw many renowned telecom companies setting up their manufacturing base in India. Ericsson set up GSM Radio Base Station Manufacturing facility in Jaipur. Elcoteq set up handset manufacturing facilities in Bangalore. Nokia and Nokia Siemens Networks have set up their manufacturing plant in Chennai. LG Electronics set up plant of manufacturing GSM mobile phones near Pune. Ericsson launched their R&D Centre in Chennai. Flextronics set up an SEZ in Chennai. Other major companies like Foxconn, Aspcom, Solectron etc have decided to set up their manufacturing bases in India.

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The Government has already set up Telecom Equipment and Services Export Promotion Council and Telecom Testing and Security Certification Centre (TETC). A large number of companies like Alcatel, Cisco have also shown interest in setting up their R&D centers in India. With above initiatives India is expected to be a manufacturing hub for the telecom equipment. Opportunities India offers an unprecedented opportunity for telecom service operators, infrastructure vendors, manufacturers and associated services companies. A host of factors are contributing to enlarged opportunities for growth and investment in telecom sector:

An expanding Indian economy with increased focus on the services sector Population mix moving favorably towards a younger age profile Urbanization with increasing incomes Investors can look to capture the gains of the Indian telecom boom and diversify their operations outside developed economies that are marked by saturated telecom markets and lower GDP growth rates. Inflow of FDI into India's telecom sector during April 2000 to Feb. 2010 was about Rs 405,460 million. Also, more than 8 per cent of the approved FDI in the country is related to the telecom sector.

Research & Development India has proven its dominance as a technology solution provider. Efforts are being continuously made to develop affordable technology for masses, as also comprehensive security infrastructure for telecom network. Research is on for the preparation of tested infrastructure for enabling interoperability in Next Generation Network. It is expected that the telecom equipment R & D shall be doubled by 2010 from present level of 15%. Modern technologies inductions are being promoted. Pilot projects on the existing and emerging technologies have been undertaken including WiMax, 3G etc. Emphasis is being given to technologies having potential to improve rural connectivity. Also to beef up R&D infrastructure in the telecom sector and bridge the digital divide, cellular operators, top academic institutes and the Government of India together set up the Telecom Centres of Excellence (COEs). The main objectives of the COEs are as follows:

Achieve Telecom Vision 2010 that stipulates a definite growth model and take it beyond. Secure Information Infrastructure that is vital for country's security. Capacity Building through Knowledge for a sustained growth. Support Planned Predictive Growth for stability. Reduce Rural Urban Digital Divide to reach out to masses. Utilize available talent pool and create environment for innovation. Management of National Information Infrastructure (NII) during Disaster Cater the requirement of South East Asia as Regional Telecom Leader To achieve these objectives seven Centre of Excellences in various field of Telecom have been set up with the support of Government and the participation of private/public telecom operators

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as sponsors, at the selected academic institutions of India. The details of COEs are enumerated below: -

TCOEs Centres

Sr. No.

Associate Institute

Sponsor

Work Assigned

IIT Kharagpur

Vodafone Essar & Texas Instruments

Next Generation Network (NGN) & Network Technology Telecom technology and management of Infrastructure

IIT Delhi

Bharti Airtel

IISC (Indian Institute of Science), Bangalore,

Aircel & Texas instrument

Information Security & Disaster Management of Infrastructure

IIT Kanpur

BSNL & Alphion

Technology Integration, Multimedia & Computational Mathematics

5 IIT Chennai BSNL & Alphion

Telecom Infrastructure & Energy

6 IIT Mumbai

TTeleservices

Rural Applications Policy, Regulation, Governance, Customer care & Marketing

IIM Ahmedabad

Idea Cellular

3G & Broadband Wireless Services (BWA) The government has in a pioneering decision, decided to auction 3G & BWA spectrum. The broad policy guidelines for 3G & BWA have already been issued on 1stAugust 2008 and allotment of spectrum has been planned through simultaneously ascending e-auction process by a specialized agency. New players would also be able to bid thus leading to technology innovation, more competition, faster roll out and ultimately greater choice for customers at competitive tariffs. The 3G will allow telecom companies to offer additional value added services such as high resolution video and multi media services in addition to voice, fax and conventional data services with high data rate transmission capabilities. BWA will become a predominant platform for broadband roll out services. It is also an effective tool for undertaking social

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initiatives of the Government such as e-education, telemedicine, e-health and e-Governance. Providing affordable broadband, especially to the suburban and rural communities is the next focus area of the Department. BSNL & MTNL have already been allotted 3G & BWA spectrum with a view to ensuring early roll out of 3G & WiMax services in the country. They will pay the same price for the spectrum as discovered through the auction. While, Honble Prime Minister launched the MTNL's 3G mobile services on the inaugural function of India Telecom 2008 held on 11th December 2008, BSNL launched its countrywide 3G services from Chennai, in the southern Tamil Nadu state on 22nd February 2009.

Mobile Number Portability (MNP) Mobile Number Portability (MNP) allows subscribers to retain their existing telephone number when they switch from one access service provider to another irrespective of mobile technology or from one technology to another of the same or any other access service provider. The Government has announced the guidelines for Mobile Number Portability (MNP) Service Licence in the country on 1st August 2008 and has issued a separate Licence for MNP service w.e.f. 20.03.2009. The Department of Telecommunication (DoT) has already issued licences to two global companies (M/s Syniverse Technologies Pvt. Ltd. and M/s MNP Interconnection Telecom Solutions India Pvt. Ltd.) for implementing the service. MNP is to be implemented in whole country in one go by 31.10.2010

Targets Set By the Government 1. Network expansion

800 million connections by the year 2012. 2. Rural telephony

200 million rural subscribers by 2012 Reduce urban-rural digital divide from present 25:1 to 5:1 by 2010. 3. Broadband 20 million Broadband connections by 2010

Broadband with minimum speed of 1 mbps. Broadband coverage for all secondary & higher secondary schools and public health care centres by the end of year 2010. Broadband coverage for all Grampanchayats by the year 2010 Broadband on demand is every village by 2012 4. Manufacturing

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Making India a hub for telecom manufacturing by facilitating more and more telecom specific

SEZs. Quadrupling production in 2010. Achieving exports of 10 billion during 11th Five year plan. 5. Research & Development 6. International Bandwidth Indian Telecommunications at a glance

Rank in world in network size Tele density (per hundred populations) Telephone connection (In million) Fixed Mobile Total Village Public Telephones inhabited (Out of 5,93,601 uncovered villages) Foreign Direct Investment (in million) (from April 2000 till March 2010) Licenses issued Basic CMTS UAS Infrastructure Provider I ISP (Internet) National Long distance International Long distance

3rd 52.74

36.95 548.32 621.28 5,69,385 4070

2 38 241 219 371 29 24

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Pre-eminence of India as a technology solution provider. Comprehensive security infrastructure for telecom network. Tested infrastructure for enabling interoperability in Next Generation Network. Facilitating availability of adequate international bandwidth at competitive prices to drive ITES sector at faster growth.

2011

National Telecom Policy 2011 makes one key recommendation that could revolutionize the digital space from a content and services perspective, without directly making any specific content references. Its not about spectrum and network sharing , or mergers and acquisition, but a key change in the licensing regime. The Draft NTP-2011 suggests the creation of technology neutral Unified Licenses (under the One Nation-One License) policy, that is envisaged in two separate categories the Network Service Operator / Communication Network Service Operator (CNSO), which is licensed to maintain converged networks for delivering various types of services e.g. Voice, Data, Video, broadcast, IPTV, VAS etc., very importantly, in a non-exclusive and non-discriminatory manner. The second would be a Service Delivery Operator (SDO) / Communication Service Delivery Operator (CSDO). The Service Delivery Operator (SDO) would be licensed to deliver any/ all services e.g. tele-services (voice, data, video), internet/broadband, broadcast services, IPTV, Value Added Service and content delivery services etc.
What this means

This is a clear separation of content and carriage: This is clearly a separation of content and services from their carriage. While the devil will be in the details, this could mean that network service operators will become what they were always intended to be modes of access to content and services for consumers, and content providers will be able to provision their services to customers independently of network service providers. You can say that that is already possible, and this is what the mobile VAS industry has been doing, but the way things have panned out, especially with the revenue share regime, what is being provided to customers is not in the hands of the content and service provider, but the telecom operator. The telecom operator apart from the case of the mobile Internet controls what is on the pipe, and that control is also used to push the revenue share regime, which rarely favors the content owner.

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Key Targets 1. Create knowledge based society through proliferation of broadband provide 'broadband on demand' by 2015. Achieve target of 175 million broadband users by 2017 and 600 million by 2020.2. To promote R&D & product development in telecom3. To make India a global hub for telecom equipment manufacturing4. Increase rural tele-density from 35% to 60% by 2017 and to 100% by 2020.5. 80% of telecom networks to be domestically manufactured by 2020 Consumer initiatives 1. Abolish roaming charges 2. Mobile Number Portability, which is currently restricted to a circle-level basis, to be enhanced to allow consumers to retain their mobile numbers when they move to a new city or any location in the country without having to pay 'roaming charges'. 3. Strengthen grievance redressal mechanisms 4. Broadband speeds to be revised to 512 kbps & further to 2 Mbps by 2015 & 100 Mbps by 2025. Regulator to enhance consumer awareness on tariffs, services 6. Strengthen consumer protection act Spectrum 1. Free up 300 MHz of airwaves for commercial telephony by 2017 & another 200 MHz of spectrum by 20202. All future spectrum allocations will be priced at market rates3. Allow spectrum pooling, sharing & trading4. Prepare a roadmap for spectrum availability for next 5 years 5. Reserve small amounts of spectrum in certain frequencies for indigenous development of products & technologies 6. Enact 'Spectrum Act', to deal with all issues connected with mobile permits, including re-farming, pricing of this resource, withdrawal of allotted spectrum and norms for sharing and trading. 7. To promote use of white space with low power devices For mobile permits 1. To frame an exit policy for new entrants to surrender their mobile permits & airwaves 2. Delink licence from spectrum. Make mobile permits technology neutral and divide them into 2 categories Network Service Operator & Service Delivery Operator 3. Allow sharing of networks 4. Regulate value added services, especially the carriage charge 5. To provide clear rules for renewal of all mobile permits 6. To put in place legal, regulatory and licensing framework for convergence of services, networks and devices 7. Move towards an unified licensing regime that will allow operators to offer any service 8. Address the Right of Way issues in setting up of telecom infrastructure 9. Relaxed M&A norms to allow consolidation

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NTP 2012 & Future Projections


The National Telecom Policy was adopted by the cabinet on May 31, 2012. It was released in public domain later in June. Among other things, the policy aims to provide a single licence framework, un-bundle spectrum from licences, and liberalise spectrum. The new policy is in line with the government decisions and TRAI recommendations discussed above. The policy also aims to achieve higher connectivity and quality of telecommunication services. Its key features are detailed below. Licensing: Presently, as per the 2003 Amendment to the 1999 Telecom Policy, there are two forms of licences Unified Service Licence (to provide any telegraph service in various geographical areas) and Unified Access Service Licence (to provide basic and cellular services in defined service areas). The new policy targets simplification of licensing

framework by establishing a unified license for all telecom services and conversion to a single-license system for the entire country. It also seeks to remove roaming charges.

Spectrum: As of now spectrum bands are reserved on the basis of technology that may be used to exploit them. For instance, the 900 and 1800 bands are reserved for GSM technology and 800 for use of CDMA technology. The new policy seeks to liberalise spectrum. Further,

spectrum would be de-linked from all future licenses. Spectrum would be reframed so that it is available to be used for new technology. The policy aims to move to a system where spectrum can be pooled, shared and traded. Periodic audits of spectrum usage would be conducted to ensure efficient utilization of spectrum. The policy aims at making 300 MHz of additional spectrum available for mobile telecom services by the year 2017 and another 200 MHz by 2020.

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Connectivity: The policy aims to increase rural tele-density from the current level of approximately 39% to 70% by 2017, and 100% by 2020. It seeks to provide 175 million broadband connections by the year 2017 and 600 million by 2020 at a minimum 2 Mbps download speed. Higher download speeds of 100 Mbps would be made available on demand. Broadband access to all village panchayats would be made available by 2014 and to all villages by 2020. The policy aims to recognise telecom, including broadband connectivity, as a basic necessity like education and health, and work towards the Right to Broadband.

Promotion of domestic industry: The policy seeks to incentivise and give preference to domestic telecom products in procurements that (i) have security implications for India; or (ii) are for the governments own use. It also seeks to establish a Telecom Finance Corporation to mobilise and channelize finances for telecom projects.

Legislations: The policy seeks to review the TRAI Act to remove impediments to effective functioning of TRAI. It also seeks to review the Indian Telegraph Act, 1885. The need to review the Indian Telegraph Act, 1885 was also recognised in the 1999 Telecom Policy.

One Nation One License At present, the country has been divided into 23 services areas or 'circles' and licenses are awarded to telecom companies in a specific circle. The NTP 2012 has proposed the removal of circle based licensing and the introduction of the concept of 'One Nation-One License'. This will result in the abolition of the concept of 'national roaming'.

Resale of Telecom Services The extant regulations contain a prohibition on resale of telecom services, except in certain specified circumstances and only by a stipulated category of licensees. The NTP 2012 seeks to do away with this prohibition and facilitate resale, both at the wholesale as well as retail level, in order to

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encourage robust competition at the consumer end while ensuring security and other license related obligations.

Spectrum Sharing The NTP 2012 seeks to move at the earliest so that the Government will allow spectrum pooling, trading and sharing". This is a significant departure from the present regulations that expressly prohibit the sharing of spectrum.

Telecom Infrastructure Another change sought to be brought out under the NTP 2012 is in relation to streamlining the use and rollout of the infrastructure for telecom services. The NTP 2012 proposes policies that will simplify regulations relating to rights of way and tower installation to facilitate coordination between the operators and the State Governments. This would include measures such as the provision of common service ducts for orderly growth of telecom infrastructure, mapping of infrastructure assets on an inter-operable GIS platform by all telecom infrastructure and service providers, improvement of the SACFA clearance process to speed up site clearances, the use of alternate sources of energy to power the telecom infrastructure coupled with the use of low powered active radio devic

Exit Policy The present licensing regime does not adequately deal with the exit of a telecom service provider from its obligations under the license. The NTP 2012 proposes the formulation of a sound exit policy to pave the way for rationalization of the number of cellular licensees in the country to a number that is closer to the global norm. Recognizing, also that many

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licenses are due to expire in the relatively short term, it will looks to establish clear guidelines for extension or migration of the existing licenses.

FUTURE PROJECTIONS: The new policy has omitted a controversial clause in the draft version which said revenue generation will 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, which will replace the over-a-decade-old NTP-99. Doing away with the roaming charges will enormously help the subscribers as they don't have to pay higher charges, apart from offering them the flexibility to have the same number anywhere in the country and will have more focused retention schemes from operators. For the operators this will have a negative impact on revenues and may have higher churn, but on the positive side the volume of minutes should go up significantly. However, the new policy does not speak about conditions of refarming, issues on spectrum pricing, participation by operators in the auction, etc. There is very little in the policy that will help end the impasse faced by the telecom sector. Spectrum pricing, reserve price for the upcoming 2G auctions, historical pricing of spectrum for operators who have received spectrum beyond 6.2 MHz and the more recent contentious issues of refarming, etc, will have to be dealt with through executive decisions, most of which fall outside the purview of the NTP 2012 announcement. The policy clearly specifies the urgent requirement of technological solutions that can reach out to larger population of the country. It becomes imperative for mobile phone manufacturers as well as services providers to tap that opportunity, especially when the government, RBI, regulatory body, industrial associations and various other concerned stakeholders are talking about the urgent requirement to emphasis on mobile banking technology.

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Announcement of much awaited policy on mergers and acquisitions and permitted 100 foreign investment in the telecom sector which will drive Indian telecom sector in the coming years. It will help mid sized firms, while bigger players will have more flexibility. Vodafone wants its stake beyond 64.38 percent. Once the market stabilises, it will play its role. We can expect some more foreign players to come in.

The infrastructure status will make tower providers eligible for viability gap funding, higher limit on external commercial borrowing, lower import duties and exemptions on excise duty on telecom infrastructure equipment. Companies like Bharti Infratel, Indus Towers and Reliance Infratel will get accelerated depreciation, which will encourage more investments in the sector, he said. Tower providers will also get softer lending rates at 3-4% on loan terms of 10-15 years compared to the market borrowing rates of 12-13% over 5-7 years. Companies will be given a tax holiday under section 80-IA of the Income Tax Act. However, it needs to be pointed out that it would have made more sense had infrastructure status been given to the sector earlier. Giving infrastructure status to an industry that is already matured and has already incurred most of the setting up cost across the country makes little sense. Though Bharti Infratel mentions that it needs funds to set up more towers, most of the towers are already operational. Further, the assets are already well-depreciated as they are generally charged at a rate between 5-9.5 per cent per year, depending on the useful life classified by each company. Telecom attracted more than 7.7 per cent of Indias total FDI during 2 010-11, which came down to 5.4 per cent in 2011-12, 1.35 per cent in 2012-13 and to just 0.26 per cent during April-October 2013. The first steep drop was in 2012-13 when it declined by more than 81 per cent from the previous year, and this further dropped by about 88 per cent during April-October 2013 when compared with the full fiscal year data of the previous year. Singapore-based SingTel received the nod to increase stake in the long-distance phone business in India. British telecom giant Vodafone has also received approval to have 100 per cent equity holding in Vodafone India, which would have investments of Rs 10,141 crore. Meanwhile, the Government has, in August 2013, decided to increase FDI limit in telecom to 100 per cent.

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Traditional PBX system will be replaced by IP PBX, which will bring cost advantages and it reduces opex, capex, and communication costs. After actual deployment of the system, revenues are likely to increase at a CAGR of at least 30-40%.

As a telecom enterprise, an operator now does not require 22 licenses in 22 different circles. They can buy a single license as well as spectrum to deploy their services in a technology of the operators choice. Also at the service level, an operator can resell its license to a third party operator which will further provide service to its consumers. It transforms into a positive advantage for the operators. As for any other enterprise, the increase in the minimum broadband speed from 512 kbps to 2 Mbps by 2015 will eventually result in faster access to data and increase in productivity. Increase the rural teledensity from the existing level of 39% to 70% by 2017 and 100% by 2020. Increasing choice and one of the lowest tariffs in the world have made the cellular services in India an attractive proposition for the average consumer. The penetration levels in urban areas have already crossed 100%. Therefore the main driver for future growth would be the rural areas where teledensity is around 39.22%.

Enable citizens to participate in and contribute to e-governance in key sectors like health, education, skill development, employment, governance, banking etc. to ensure equitable and inclusive growth and ensure adequate availability of spectrum and its allocation in a transparent manner through market related processes. Make available additional 300 MHz spectrum for IMT services by the year 2017 and another 200 MHz by 2020.

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WEBLIOGRAPHY www.trai.gov.in www.dot.gov.in www.business-standard.com