Launch in 3 years or lose licence: Raja to new telcos

New telecom operators may have to face licence termination and subsequent surrender of spectrum if they fail to start services within the stipulated three-year time, Union Communications and IT Minister A Raja has said.

In an interview, Raja said his ministry would keep a vigil on these players and on their plans regarding starting of operations (50 per cent in the first year of the spectrum allotment). “The law regarding the start of operations after getting the start-up spectrum is already in place... Rollout period is three years. I want to tighten it. Any departure from the law will amount to cancellation of licences. I am not going to alter the three-year time frame. But we will be more vigilant,” the minister said.

Elaborating further, he said, “We are going to check if within three years, the rollout has started or not... otherwise the licence will be terminated and spectrum cancelled, something that has not happened in the past. It will be implemented strictly. Explicit conditions will be inserted in the licence,” he said.

Raja’s assertion has come at a time when he is faced with criticism following the high-value stake sale by two new telcos — Unitech Wireless and Swan Telecom — who are yet to start services. This had led to accusations that new telcos have only profit in mind as after getting spectrum, none have started placing orders for equipment to start services.

According to the terms and conditions specified in the licence, in the first year, the telcos are required to cover at least 10 per cent of each district headquarters in a circle. With just three months to go for the deadline, barring Shyam Telelink none of the new players is close to achieving the rollout obligation.

The companies which received licences early this year include Unitech, Swan, Datacom, Loop Telecom, Shyam Telelink and S Tel. While Shyam Telelink has launched its services only in Rajasthan, other operators are still working out their partnerships, network vendor and overall business model.

According to industry estimates, the operators will take at least six months to cover 10 per cent of each district headquarters after launching the service. This means that the new companies may be able to meet the target only by the end of next year, instead of February 2009.

Meanwhile, the Department of Telecommunications is slated to begin allocation of 2G spectrum to new licencees for the remaining circles. Companies including Datacom Solutions, Unitech, Loop Telecom and Swan Telecom would be the beneficiaries, according to sources close to the development.