Indian government announced a uniform telecom license-fee under the New Telecom Policy (NTP).
In an attempt to weed out the scam tainted image of the Telecom sector, Communications and IT Minister Kapil Sibal provided access to higher Spectrum of up to 10 MHz to all service providers. The spectrum allocation works in a reverse way. Hence, now the operators will be able to offer service in the lower & efficient 8 MHz Spectrum too. Sadly, Delhi & Mumbai still have the 10 MHz limit.
Furthermore, healthy competition is encouraged through open auctions to acquire additional frequency beyond the prescribed limit in the open market. The Govt. though has set an upper limit of 25% of the bandwidth available in the region. This restriction seems aimed at promoting competition by preventing the monopolization of the market through heavy fund allocation. So, how did the Govt. tackle the tricky service agreements that they were accusing Airtel & Vodafone earlier? Telecom Companies operating in the same region will now be allowed to share 2G spectrum, and all future allocation of airwaves would only be through auctions & not service agreements signed behind-closed-doors.
The Government is certainly attempting to wipe the slate clean as it had recently canceled about 122 2G Licenses which were issued in 2008. The ministry now mandates that, “All companies must migrate to the Unified License, whose details will be unveiled by TRAI soon.”
What are the modified fees? The Govt will earn significant moolah. For migration to the unified license regime, the companies will have to shell out Rs. 2 Crores for Metros & Rs. 1 Crore & Rs. 50 Lakhs for Tier II & Tier III towns & cities respectively. This is just migration fee. The initial allocation still stands, though the spectrum assigned by the government to the licensee in excess of the earlier prescribed limit shall be withdrawn. Hence, companies will have to buy additional spectrum which it earlier took through service agreements!
We think the Govt. has taken correct initiatives to curb shady deals. Lets hope this brings down connectivity woes of subscribers.
