The Hindu Business Line : TRAI must cut out anomalies

THE DRAFT UNIFIED Licensing Policy of the Telecom Regulatory Authority of India focusses on cutting the costs of operators significantly, but does little to encourage competitive forces in the telecom arena. No doubt, mobile operators stand to gain from the proposed across-the-board reduction in the annual licence fee to 6 per cent and the flexibility offered in terms of bundling of handsets with different tariff plans. And, if implemented, the consumers will also get the benefit of lower tariffs enhancing the affordability of mobile services.

But barring these two moves and the creation of a niche operator category to offer fixed/fixed wireless services to the rural/backward areas, TRAI has stuck to the status quo in drafting the Unified Licensing Policy. This is principally because of TRAI's fetish for creating a "level playing field" among different telecom segments and leaving no operator category in a "worse off" situation than before. For instance, take the national long distance services. TRAI's contention is that if a new unified licensee is permitted to carry inter-service area long-distance traffic (say, calls from Chennai to Mumbai) without going through a long distance operator, it will affect the business case of the service provider. On this premise, TRAI has created unified licence proposals that seek to maintain the level field in long-distance services. In doing so, it has failed to explore boldly the option of opening up `direct inter-circle connectivity', bypassing the long distance operator. This has been sought by practically all mobile players, with the exception of BSNL/MTNL, Reliance and Bharti, which are trying to consolidate their investments in the long distance segment.

If the artificial regulatory barriers to direct inter-circle connectivity are removed, mobile operators will be able to use leased lines from infrastructure providers (such as Gail or RailTel) to carry all long-distance calls. Or at least, mobile operators whose footprint already spans several circles should be allowed to carry calls between adjacent circles (typically, between two States) using their own infrastructure. Given these commercially viable options, which are being curbed artificially, is TRAI right in setting an entry fee of Rs 107 crore for unified licence operators to offer national long-distance services? Then, the clinching argument is that consumers stand to gain in terms of lower tariffs and wider choice if direct inter-circle connectivity without an entry fee is allowed. If the existing long distance operators are aggrieved by this, they need to work out concessions with the regulator/government on this issue.

Similarly, TRAI's recommendation that unrestricted Internet telephony will be allowed to Internet Service Providers only if they pay up Rs 107 crore as entry fee seems unjustified. At a time when standalone ISPs are struggling to stay in business, this condition seems too onerous and appears to favour the integrated operators which have or are establishing a foothold in the Internet business. If TRAI believes that the key objective of the draft unified licensing recommendations is to encourage free growth of new applications and services using technology options, it will have to remedy these anomalies immediately.

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