Indian telecom watchdog, TRAI, wants to revolutionize the telecommunication space and eliminate the digital divide. But, operators are up in arms against many of the recommendations submitted on August 29 on issues such as entry regulations, merger and acquisition norms, use of technologies, and rollout obligations, while TRAI does not want to give up.

The Telecom Ministry is yet to whet the recommendations. There is enough room for further debate and hence all operators are in the process of queuing up to knock at telecom minister, A Raja's doorthe. COAI wants to take TRAI to court, while AUSPI may opt for further discussion.

In line with the TRAI recommendation on keeping zero-cap on the number of operators in any service area, DoT has received some 160 applications from companies such as Maxis, Spice, Idea Cellular, Swan, HFCL, Parsvnath Developers, and the Essar group, who want to line up their investment plans. Though existing leading players might not be happy to see the list.

This list of companies is growing with more multinationals, which did not recognize the potential earlier, determined to join the race. The recommendation to keep no cap on the number will have wider implications as more overseas telecom majors keep an eye on the Indian market, resulting in enhanced FDI in the telecom sector. the good thing is that more competition will mean assured quality of services to customers at cost effective rates.

The other recommendation unnoticed and not applauded by the industry was TRAI's move to set up an eminent scientist-headed multi-disciplinary committee consisting of representatives from DoT/TEC, TRAI, WPC, COAI, and AUSPI to frame new spectrum allocation criteria. The proposed committee should look into issues such as spectrum shortage, if any, efficiency and management of spectrum usage, hoarding of spectrum, etc.

Operator's Shock
The recommendation that attracted severe criticism from operators was on spectrum allocation criteria. Since this was not expected or discussed in the open house sessions organized by TRAI, suggestions for increasing the present subscriber norms have shocked all. With TRAI almost doubling the number of subscribers required by existing players, for demanding additional spectrum, none of the present companies would qualify for extra spectrum for a while as they are yet to reach that subscriber-base.

TRAI's recommendations on M&A norms may put a spanner on the growth of existing operators through acquisitions. According to new recommendations, market share of the merged entity should not exceed 40%, either in terms of subscriber-base or revenues. This is a drastic change from the present cap of 67% in terms of market share. The proposed cap may be good for consumers, as it disallows monopoly of one operator.

No M&A activity will be allowed if the number of wireless operators reduces below four consequent to an M&A activity. This also ensures that consumers get enough options to choose the best operator. And, that the country continues to show faster growth in coming years.

Allowing operators to acquire 10% stake in a target operator through an automatic route has eased the earlier stringent 10% cap in cases of M&As; and another up to 20% of the equity would be approved on a case-by-case basis.

Regarding usage of a combination of technologies that would assist operators like Reliance Communications, which wants to kick off GSM services as well in its CDMA circles, TRAI said an existing operator should be permitted to alternate technology subject to certain conditions.

VOICE&DATA has recently suggested that the government should permit the usage of dual technologies if the exchequer is getting the extra benefit. According to TRAI, alteration of technology will be allowed on payment of an upfront fee, which should be at least equal to the entry fee for UAS license, and operator should maintain separate details of user-base data for spectrum allocation.

Baburajan K
baburajank@cybermedia.co.in

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