Trai moots no cap on number of telcos in circle

Telecom Regulatory Authority of India has suggested that there should be no cap on the number of operators in any service area and asked the Department of Telecom to form a multi-disciplinary committee to frame a spectrum allocation criteria.

The committee should have members from DoT, Trai, Wireless Planning and Coordination wing of Communications Ministry and operator associations, the regulator said in its recommendations on reforms in the licensing policy released today.

GSM operators wanted a cap on the number of telcos in a circle saying unlimited players are putting strain on the scarce spectrum, leading to poor services.

The regulator has suggested a one-time fee from operators for allocation of spectrum beyond 10 Mhz. At present, a company pays 1% of its revenue to the government for additional spectrum, being allocated based on the subscriber base.

The suggested charge for allocation of 2x5 Mhz of spectrum in category A circles and Mumbai and Delhi is Rs80 crore, while for category B circles and Chennai and Kolkata, it is Rs40 crore. For category C circles, the one-time fee is Rs15 crore.
For allotment of 1 Mhz spectrum, Trai has suggested a one-time fee of Rs16 crore should be charged.

In the recommendations, which are subject to DoT’s approval, the regulator has also sought auction for future allocation of spectrum except in case of allotment to mobile operator on 800, 900 and 1800 Mhz band.

Trai chairman Nripendra Misra said the one-time fee for additional spectrum is the most neutral criteria to create a level playing field.

On mergers and acquisitions, Trai says the combined market share of merged entities should not exceed 40% in terms of both subscribers and revenue. The current cap is 67%.

Misra said Trai has proposed to use adjusted gross revenue as the basis for
computing revenue-based market share of the merged entities. Besides, other checks and balances have also been put in place to ensure that such M&As do not create a monopoly in the market, he added.

The regulator said the merged entities should be charged spectrum fee based on the total radio wave acquired by them.

Trai also proposed that an operator should be allowed to acquire up to 20% equity in a telco in the same circle. At present, the cap is 10%.

On allowing use of GSM and CDMA technology by the same operator, Trai said an existing licensee may be permitted to use alternate technology to provide wireless access services in a particular area after payment of an upfront fee. This fee should be equal to the entry fee for the unified access license in that area.
The operator wanting to use both the technologies will have to pay fee for both spectrums.

Once approved, this proposal will help CDMA operator Reliance Communications in providing GSM services. The company has applied for GSM license and is awaiting guidelines on the use of both technologies.

Trai said the dual license shall be allotted based on combined adjusted gross revenue to ensure it does not attain an advantageous position against others.
Misra said: “These proposals are far reaching. We are guided by the fact that Indian telecom sector has reached a stage where artificial barrier to competition should be removed to achieve the target of 500 million subscriber base.”