India overhauls telecoms policy - Mobile World Live

India overhauls telecoms policy

11 OCT 2011

India’s long-awaited overhaul of its telecoms regulatory framework was finally unveiled by the government yesterday, outlining proposed new rules around spectrum licensing, local equipment sourcing and roaming – and including a commitment to encouraging consolidation in the country’s crowded mobile sector.

The government is hoping the new proposals – which are expected to be signed-off by the end of the year – will draw a line under India's recent spectrum licensing scandal, which is thought to have cost the country around US$39 billion in lost revenue and led to the resignations of government Ministers and a full criminal investigation.

The proposal document includes a commitment to “delink the licensing of networks from the delivery of service to the end users to facilitate faster rollout of services,” creating a Network Service Operator (NSO) that will handle the network and a Service Delivery Operator to deliver services to the end user. Spectrum will also be “delinked” from licenses in the future, allowing it to be priced at a market rate.

The government also said it will make available an additional 300MHz spectrum by 2017 and another 200MHz by 2020, a move that was welcomed by local operators struggling with capacity constraints in the world’s fastest-growing (and second-largest) mobile market.

"The proposal to provide more spectrum, allow sharing of spectrum and allocation of spectrum through transparent market-based processes are progressive policy decisions, which will provide much needed capacity augmentation to this vital sector," said market-leader Bharti in a statement.

Operators are also likely to welcome moves to ease competitive pressures by encouraging market consolidation. The government outlined its aim to “facilitate consolidation in the converged telecom service sector while ensuring sufficient competition.” One solution is to provide a formal “Exit Policy” for licensees, allowing them to merge or be acquired by rivals.

Other measures – likely to be less beneficial to operators – include a proposal to phase out roaming charges between national circles, and to roll-out mobile number portability on a nationwide basis (allowing users to retain their mobile number while shifting from one service area to another, irrespective of the service provider).

There was also a commitment to promoting India’s "domestic production of telecommunication equipment," with a goal of local vendors accounting for 80 percent of the sector by 2020, increasing their revenue by 65 percent from today.