Telecom Reforms:Achieving Higher Growth

ASSOCHAM Interaction with TRAI on New Policy Initiatives 18 Oct 2004: New Delhi

S C KhannaSecretary GeneralAssociation of Unified Telecom Service Providers of India

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What are the targets?

Dec 2007 MobileFixedBroadband & Internet

150 mn 50 mn

9 mn / 18 mn

Sep 2004 MobileFixed

43 mn44 mn

Additions by 2007

113 mn

Monthly additions required

3 mn

Today’s level 2 mnGovt. & Industry efforts need to be

stepped-upGovt. & Industry efforts need to be

stepped-up

Mobile

&

Fixed

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What are the policy initiatives necessary to fuel this growth?

Early resolution of the following:

Interconnection issues.

Unified Licensing Regime.

Spectrum issues.

ADC review.

High incidence of taxes & duties.

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1. Interconnection Issues

Concept of seeker and provider: all operators to be

treated equally

Adequate and timely provisioning of POIs

Handover of calls

Active / Passive links

Billing reconciliation

Interconnection is a win-win solution for all operators

Interconnection is a win-win solution for all operators

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2. Unified Licensing Regime

Policy guidelines to address industry concerns on the following:

Framework & Registration Charges: Group companies to be treated as Integrated operator: no

separate charges for migration of group companies to ULR as they are to be treated as a single entity jointly. Two group companies will not be individual unified licensees.

Non-integrated operators not wanting NLD / ILD rights: Company wanting single circle(s) unified license without NLD / ILD should not be asked to pay ULR fee of Rs 107 cr + respective circle(s) fee. Only respective circle(s) fee is payable.

Request Govt. to accept TRAI’s DRAFT Recommendations on:

Definition of AGR. Reduction in license fee to cover administrative costs only.

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3. Spectrum Issues

Allocation of appropriate and adequate frequency for growth of wireless services.

For mobile services as per international standards. Pricing:

Entry Fee: Existing CMSPs & UASLs not to pay any additional entry fee for spectrum.

Usage Charges: Cost based recovery on actual costs incurred by regulatory authority for management of radio spectrum. Present structure is very expensive.

Release / refarming of spectrum from non-telecom users. Funding to be done by government’s resources.

Cell-site installation: Uniform policy essential - Local bodies charge arbitrarily high fee (e.g. Rs 2 lakhs / site), no cell sites in residential areas (reason: health hazards), etc.

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4. ADC Review

ADC is not required since there is forbearance on

tariffs. Incumbent has regulatory freedom for

charging higher tariffs in all areas except rural.

USO funds to be effectively utilised for rural access

& non-remunerative connections which cause

access deficit.

Private sector is funding the incumbent which is

their biggest competitor.

Unanimous view that ADC should be discontinued

Unanimous view that ADC should be discontinued

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5. High incidence of taxes & duties

Approx. 30% higher costs on account of the following:

License fee @ 6-10% of AGR. 2-6% of AGR towards spectrum usage charges. CVD @ 16% on infrastructure equipment. Net effective duty on most telecom equipment at

27.6% or higher. Excise duty @ 16%. Service Tax – increased to 10.2%. Telecom

services is the highest contributor. Sales tax ??

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Conclusion

INDUSTRYRapid expansion of

networks to reach out to all areas – aggressive

rollouts by all operators.

GOVERNMENT

Immediate regulatory action needed to bring about path-

breaking changes.

2007

200 mn