savramesh 37 Report post Posted June 2, 2009 Economic Times 2 Jun 2009, 0307 hrs IST Even as the new government has said that it would seek telecom regulator Trai’s views on allocation of additional airwaves, delinking spectrum allocation from subscribers base is a vital route to develop the telecom sector and move operators away from the restricted focus of a volumes-alone thrust. India is the only country that still follows the outdated practice of allocating spectrum based on subscriber base, instead of the internationally-accepted practice of auction system. Apart from raising revenue, the competitive bidding process helps assign licenses to firms smoothly and also works toward avoiding monopoly in the highly competitive market. The most important argument in favour of the auction process is that it would allow the government to know how licenses are valued by participating companies. In fact, a recent report by the specially-constituted spectrum panel advocated the auction route for issuing additional airwaves to telcos. The panel, comprising government representatives and telecom technology experts, said only the start-up spectrum — the minimum amount of radio frequencies required to launch mobile services — be given for free to existing telcos, while a competitive bidding process be opted for all subsequent allocations.“Delinking of spectrum allocation from subscribers could lead to sanity in the market place and get the operators away from volume growth to value growth,” says AT Kearney senior principal Mohit Rana. Among the other stalled initiatives that need to be taken up by the new government is the clearance for mobile virtual network operator (MVNO) that will allow companies with strong retail networks and brands of customer segment ownership to enter the telecom space. Such operators typically don’t own their spectrum and neither do they have their own network infrastructure. Having such a concept, which has so far been popular in Europe and the US, will lead to a significant impact on the business plans of new operators which need much longer time to market.Mobile number portability is yet another move that could likely to see some action soon. While globally it has received a mixed reaction, in India, it may help provide opportunities to late entrants to take away high value customers from established players. Also, in conjunction with 3G, mobile number portability offers an opportunity for players with 3G license to add customers. Work on infrastructure creation for 3G may be started once policy guidelines are clear. The auction of 3G spectrum will be closely watched as though being one of the fastest growing telecom markets in the world, the auction has been delayed since 2007. Consensus on the base price for airwaves is needed here as it would not only clarify the situation for the sector and its players, but also project a unified approach from all ministries concerned, including the finance and communications. In all, there is a long list of things to be done by the new government if the larger target of 700 million subscribers by 2012 is to be achieved. Share this post Link to post Share on other sites
