TRAI to review licensing norms

Mumbai, June 13 (UNI) Market analysts tracking the telecom sector, today said that the Telecom Regulatory Authority of India (TRAI) has floated a consulting paper, seeking the industry's views on review of key license conditions, capping the number of access providers in each circle, Mergers&Acquisitions (M&A) norms and rollout obligations.

They explained that the initiative is aimed at updating the licensing and regulatory framework in line with the technological changes and ongoing consolidation in the industry.

The exercise also seeks aims to consider whether to permit operators to offer services under the same license using a combination of technology. It may be recollected here that three CDMA service providers, including Reliance Communications, plan to offer GSM services as well and have already applied for spectrum.

Other main issues raised in the paper relate to defining markets, criteria for determining dominance or market power, maximum spectrum holdings for a merged entity, cross-technology mergers, etc.

They said that TRAI has asked all stakeholders to send their comments to this consultation process by June 27. Currently, there are 23 telecom circles in the country. 157 licences have already been given while 74 are still in the pipeline.

The telecom regulatory body TRAI says that a review of the current norms is necessary as competition and steady subscriber growth by itself may not be sufficient to sustain the phenomenal growth that this sector is currently witnessing.

''It is imperative that policy framework is periodically reviewed to provide required catalyst for sustained growth," the telecom regulator said and added that, "There is an urgent need to ensure a clear, fair, predictable, transparent and stable policy and regulatory framework, especially with regard to spectrum policy, investment norms, competition policy, and the licensing regime.'' In the existing regime, M&As as well as transfer of license are permitted subject to certain conditions. There is no cap on the number of operators who can provide services in a telecom circle, except that every circle must have a minimum of three telecom players. Under existing norms, an operator cannot hold more than 10 per cent stake in a competing service provider in the same circle, analysts pointed out.

In case of a M&A, the current law stipulates that the combined entity cannot hold more than 15 Mhz of spectrum in any circle.

Besides, M&A cannot take place if the process reduces the number of operators in any circle to less than three or if the combined entity has 67 per cent market share in any telecom circle.

TRAI also seeks to review the 15 Mhz spectrum cap in the case of M&As. It will also determine the spectrum cap in the case of cross technology merger. With regard to roll-out obligations, the regulator has sought the industry's comments if these should be removed completely and allow market forces to operate, analysts added.

UNI