Breaking the circles

Uniform national licences in telecom are overdue

Most of the current controversies in the telecom sector emanate from the fact that India has been divided into 22 telecom circles. Telecommunications companies, or telcos, can buy licences for any number of circles and then bid for spectrum in each circle. There is no pan-India licence at the moment, though by acquiring all 22 licences one can have a nationwide footprint. This has led to contentious issues such as inter-circle roaming agreements between telcos, spectrum sharing, etc. The government, mauled badly by the spectrum allocation scandal, feels companies are manipulating regulatory loopholes to their advantage; service operators, faced with dwindling profits, feel the government has become meddlesome and is indulging in micromanagement.

What is certain is that a lot of time and effort of the government are being taken up in trying to resolve these issues. Service operators too spend a great deal of time and money on seeking answers from the government and the regulator instead of focusing on operations. Clearly, an all-India telecom licence with all-India spectrum is long overdue. That will, in one stroke, eliminate all such controversies and the national effort they consume. There will be no need for interconnectivity agreements, carriage charges, roaming agreements and sharing of spectrum. No country sells licences in parcels. Even countries such as the United States and China, which are bigger than India, have a single national licence.

Several benefits would accrue to service operators. For instance, they would be able to use their equipment optimally because economies of scale will kick in. They would be able to put their spectrum to more efficient use. This, in turn, would make their businesses more bankable. A single national licence would also drastically cut the paperwork for their legal and regulatory compliance teams - instead of 22 telecom circles, they will need to do it only for one. In fact, large service operators such as Bharti Airtel, Vodafone and Reliance Communications already have a national footprint. The issue will be: what is to be done with operators that do not offer services in all the 22 circles? 

There are other glitches too that need to be ironed out. One, what will happen to the national long-distance licences that the government had handed out? Companies had invested large sums of money to set up the infrastructure for long-distance telephony. In case of a national licence, there is no need for this service. State-owned BSNL, which earns a lot of money by providing last-mile connectivity to its fixed-line network, stands to lose that business. Two, there will be objections from security agencies. Intercepts are done at state level. Under a national licence, the state government will hook on to the national network of telcos, thereby causing various security- and privacy-related issues. But these issues can be resolved and should not by themselves delay the roll-out of national licences.