The unification of all possible mobile communication tools within a singular and simplified license is inching closer to fructification. The apex Central Government body that formulates policy decisions pertaining to the Telecommunications sector; The Department of Telecommunications (DoT) has unveiled the final draft of the rules regarding the Unified License for operating telecom service within the country. The ‘Permit Rules’ essentially highlight the basic Dos & Don’ts about Voice, SMS, Data & other services usually associated with mobile service providers and their network.
The Unified License, at its core, delinks the spectrum allocation with operational permits.This simply means that companies will no longer be spectrum-locked. They will be able to offer services that rely on any spectrum bandwidth & associated technology, whether it is high speed 700 MHz, all the way up to the 1900 MHz, used in the golden old days of mobile communications. Telecom companies usually are well equipped to offer a huge basket of products that use the airwaves to be transmitted to subscribers. Some of these ancillary services include Internet TV, Radio Streaming, High Quality Video Conferencing & many other similar services that go well beyond the traditional Voice, SMS & Data.
Is the new license beneficial to the companies?
All telecom companies will have to mandatorily migrate to the new licensing regime upon expiry of their current permits. The new license will have a validity of 20 Years, with a possibility of further extension of 10 more years! Coincidentally, two of the largest telecom players in India, i.e. Vodafone India & Bharti Airtel have their renewals due next year. Fortunately for Reliance, the company has been preparing for this exact scenario & strategically appears to gain the most from this regime change.
To make the transition less painful financially, telecom companies will have to pay a license fee of mere 8% of Annual Revenues from telecom services. Though the figure derived out of this percentage will still be in Crores, it won’t be as high as the auctions. Apart from this, the other dampener is the sub-rule that prevents the companies from acquiring subscribers in areas where they don’t own a direct license.
The Telecom segment is benefiting from the progressive march of technology. While 3G is being offered, 4G is being readied. Hence it would be beneficial for the companies to migrate to a standard that effectively allows them to operate on any preferred spectrum band & offer a complete & holistic communications package. What do you think?