New Delhi: India unveiled on Monday the draft of a new telecom policy that is futuristic, business- and consumer-friendly, and transparent, although it wasn’t immediately clear when and how it will be implemented.
Telecom minister Kapil Sibal said at a press briefing to release the draft National Telecom Policy 2011 that there would be a separate spectrum Act and clear policies on “spectrum sharing, pooling, even trading”. He added that allocation of spectrum, or radio waves, would be delinked from telecom licences and be done through market mechanisms—a move aimed at avoiding the repeat of the so-called 2G (second-generation) scam, where a former telecom minister, several bureaucrats and executives of large companies are being investigated in a case dealing with the allotment of spectrum on favourable terms to some telcos in 2008.
Experts and analysts say the draft indicates that the Indian telecom market has matured enough to move into the next level.
“The earlier policy spoke of affordability and availability and led to the (telecom) sector becoming the fastest growing (in the world) with some of the lowest tariffs in the world,” said Prashant Singhal, who leads the telecom practice at audit and consulting firm Ernst and Young.
Telecom minister Kapil Sibal. (File photo)
Singhal described the draft of policy as “a commercial policy guideline”. He added that the policy, which is “comparable with that in any country that has a mature market”, would allow market forces to drive the business.
The draft of the new policy seeks to cover all issues and looks at the growth of broadband, local manufacturing of telecom equipment, and investments in R&D.
The problem with the draft, according to Singhal, is that “there are no details on how these policies will be implemented and how some of these objectives will be achieved”.
And, the timelines for some of the elements are “too long and it is possible that momentum will be lost and investors may feel the government is not serious”, said Kasturi Bhattacharjee, who leads the telecom practice at audit firm PricewaterhouseCoopers.
These issues, and the lack of fine print on the treatment of mergers and taxes on telecom equipment (currently among the highest in the world) apart, the draft was welcomed by telecom companies and analysts for acknowledging the status of the sector.
“The shift shows that it has become an industry now, and is no more perceived as a service,” added Bhattacharjee.
Bharti Airtel Ltd, India’s largest telco, said in a statement that the proposal to allow “infrastructure” status to telecom, and rationalize levies and taxes would provide “much-needed relief”. Companies in a sector assigned the “infrastructure” status are eligible for fiscal and other incentives.
The telecom sector, India’s showpiece between 2002 and 2009, has since run into rough weather in the wake of intense competition, a price war and regulatory uncertainty.
The draft policy seeks to strengthen the regulatory mechanism in the country.
“We will review the Trai (Telecom Regulatory Authority of India) Act, the Indian Telegraph Act and other allied legislation in order to make them more consistent and address regulatory inadequacies and impediments and in furtherance of the above policy objectives,” Sibal said.
The government’s focus on creating more capacity was appreciated, but “capacities already created in the public and private sector (should) be gainfully utilized first”, said S.C. Khanna, secretary general of the Association of Unified Telecom Service Providers of India, a lobby group of telcos that operate on the CDMA technology platform.
Planning for the future
Other key areas the draft policy deals with are the convergence of networks, services and technologies across voice, video, data as well as broadcasting; the promotion of local manufacturing, and the creation of a corporation to fund telecom projects.
The draft policy has been posted on the website of the department of telecommunications for feedback, which will be taken into account by an internal committee of the department that will prepare an updated version.
This will likely go to the regulator, Trai, for discussion and comments from telcos and other stakeholders.
It is unclear whether the policy will go to the telecom commission for approval after Trai as many of the individual policies have been prima facie cleared by it already.
Sibal has also evinced interest in sending the policy to the empowered group of ministers before sending it to the cabinet committee on economic affairs for clearance.
The minister said he expects the policy to come into effect by the end of the year