Big telecom policy overhaul planned

The Telecom Commission, the highest decision-making body of the communications ministry, has approved a slew of major policy changes, including a uniform revenue share for mobile phone companies at 8.5% of their annual sales, limiting the maximum amount of airwaves a company can hold, and delinking spectrum from licences in the future where the renewed licence will be valid only for 10 years instead of 20 years now. The commission has also approved stricter rollout norms mandating mobile phone companies to offer services in all regions that have more than 500 residents, a move that will significantly increase their capital and operating expenditure. The new rules will be the first step towards redrawing the Indian telecom landscape. Last week, Telecom Minister Kapil Sibal said that all new rules for the sector would be cleared before October 2011. The apex body has rejected Trai’s proposals that the revenue share be reduced gradually over the next four years to 6%, allowing the industry to save about . 6,500 crore in levies by 2014. At present, telcos share 6-10% of annual revenues towards licence fee depending on the area of operation — licence fee is highest at 10% for metros and category A regions, which include lucrative states like Tamil Nadu, Andhra Pradesh & Maharashtra. However, it has cleared Trai’s plan that mobile phone companies be given the contracted amount of airwaves (6.2 MHz for GSM and 5 MHz for CDMA) at a price fixed by the regulator equivalent to the market value of spectrum at that time. This implies companies such as Bharti Airtel, Vodafone Essar and Idea Cellular, among others, which currently hold up to 10 MHz of 2G airwaves in many regions, will be given only 6.2 MHz when they renew their permits at market rates.