Telecom rates may go up on licence tenure cut

New Delhi: In a move that may make telecom services expensive, the Government is likely to give fresh licences and renew the old ones for 10 years instead of 20 years now after the new telecom policy 2011 comes into effect.

This coupled with higher price for spectrum may force the operators to charge more for almost all services especially mobile and broadband to realise cost-based tariffs.

Till now the operators were getting the licences for 20 years bundled with start-up 2G spectrum of 4.4 Mhz and now the service providers would have to give market-based price for spectrum as the same has been delinked from the licence.

"The telecom companies under the (proposed) NTP-2011 will have to file an application 30 months prior for the renewal of the telecom licenses and it (the licence) will be renewed for 10 years unlike 20 years as of now," Telecom Minister Kapil Sibal said.

The service providers were, however, divided on the issue of reducing the periodicity of licences to 10 years with new operators welcoming the proposal and some of old operators opposing it.

The minister also indicated that merger and acquisition rules may be liberalised further but said that at least six operators would have to be there in every circle to ensure sufficient competition in the sector.

"The Department of Telecom (DoT) has initiated the process for formulating comprehensive NTP-2011 for which an internal committee has been constituted to look at variety of issues ranging from licencing to spectrum pricing and M&As, broadband to restructuring of DoT, among others," he said at a press conference on DoT's 100-day action points and achievements.

Asked whether operators would be allowed to share spectrum, the minister said that the proposal was under consideration and the DoT may allow it under certain conditions.

Sibal also said that all these proposals, once finalised, would be sent to the Telecom Commission for final clearance.

On the issue of pricing of spectrum, as suggested by telecom regulator TRAI recently, Sibal said a final decision is yet to be taken.

TRAI had in February this year proposed over six times hike in 2G spectrum and also one-time price for additional spectrum beyond 6.2 Mhz held by some of the operators.

The NTP-2011 is likely to be finalised by this year end.