Cabinet approves new telecom policy, proposes number portability across circles
The Cabinet on Thursday cleared a proposal to allow free roaming across the country as part of the new telecom policy. It also endorsed full number portability, under which a subscriber could use the same mobile phone number in any part of the country, even after changing operators. At present, MNP (mobile number portability) is applicable within a circle. Roaming charges at present are roughly double the call charges.
Department of Telecom (DoT) officials clarified there was no timeline for implementation and the final call would be taken by the government, depending on “market forces” in the sector.
Despite stiff opposition from incumbent operators, the Cabinet also pushed through a proposal to permit refarming of spectrum. But, Communications Minister Kapil Sibal said the modalities for it would be decided on by the EGoM (empowered group of ministers) under Finance Minister Pranab Mukherjee. The draft policy had not included refarming in its ambit.
The Cabinet decision has already led to battle lines being drawn. GSM operators are up in arms, saying the policy would have a major impact on their bottom lines and force them to increase tariffs at a time they were confronted with cut-throat competition and margin erosion.
According to the Cellular Operators’ Association of India (COAI) executives, operators may have to fork out Rs 8,000 crore to implement MNP across the country if the policy is implemented. Rajan Matthews, COAI director general, said, “The industry has spent over Rs 500 crore for MNP within a circle and only 20 million subscribers have used this facility. Implementation of all-India MNP is complex and it should be undertaken cautiously.”
GSM operators say 6-12 per cent revenues come from roaming, though only 5-10 per cent subscribers use the facility. According to the sector regulator Trai’s estimates, it accounts for seven per cent of total revenues. However, the Ebitda margin on national roaming revenue is a healthy 50 per cent, according to telcos. “Roaming revenues help many operators cross-subsidise voice calls. Once this cushion is not available, we might see tariffs of voice calls go up,” said Matthew.
The COAI has also ruled out the possibility of an increase in usage of mobile calls while roaming due to the fall in tariffs to compensate for revenue loss. The impact of roaming, say GSM operators, will be more severe on telcos that operate in metro circles. The four metros and Bangalore and Hyderabad constitute over 50 per cent of roaming revenues, according to estimates by operators.
The policy cleared on Thursday has, according to DoT officials, made some key changes from the draft.
A top official said, “Apart from refarming, the proposed Spectrum Act to manage spectrum has been scrapped and the focus of the draft has been shifted from maximisation of revenues to affordability of services.” The draft policy proposal to give punitive powers to the regulator has also been given the go by.
To boost domestic manufacturing, the draft policy had endorsed preferential market access to them. However, this had come under scrutiny from other ministries, which argued it was against WTO rules. DoT officials said that part of the policy was accepted but the modaltities would be worked out in the manufacturing policy to come out in July.
The new policy which will replace the earlier NTP (new telecom policy), in operation for 13 years. The policy has endorsed the Trai recommendation for liberalisation of spectrum, apart from that for delinking licences from spectrum. It means 1,800-MHz spectrum can be used not only for 2G but also LTE-4G services, depending on the operator's choice. It has also accepted the idea of a unified licensing regime.
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Jaitley, however, cautioned things may go from bad to worse if the country gave a fractured mandate in the ensuing general elections