TRAI starts review of telecom regulatory framework

Mumbai: The Telecom Regulatory Authority of India (TRAI) has embarked on a review of the existing licensing and regulatory framework that could lead to many key policy changes in the sector ahead of the roll-out of 3G services.

TRAI set the ball rolling for the second phase of telecom reforms with the issue of a consultation paper seeking the industry''s views on review of key license conditions and capping the number of access providers.

TRAI has sought industry''s views on the crucial question of permitting service providers to offer access services under the same license using a combination of technology, and limiting the number of access providers in each service area, besides views on M&As and rollout obligations.

Under the present regime, M&As as well as transfer of license are permitted subject to conditions.

Three CDMA players, including the Reliance Communications, want to offer GSM services as well and have applied for spectrum.

Other main issues raised by TRAI in the paper relate to defining markets, criteria for determining dominance or market power, maximum spectrum holdings for a merged entity, cross- technology mergers, minimum number of access providers in a service area as a result of mergers and acquisitions.

At present, no single company or legal person can, directly or indirectly have substantial equity holding of 10 per cent or more in more than one licensee in the same service area for the access services. The paper discusses issues related to the need and form of substantial equity clause.

Considering the technological changes in the booming sector, updating framework is a major initiative on issues such as determining the number of access providers in each service area and review of the licence norms, including substantial equity holding and transfer of licences.

The exercise could decide on the fate of Reliance Communications'' application with the government seeking permission to offer both GSM and CDMA-based mobile services under a single licence.

The Anil Ambani group company currently offers both the services in different circles under two different licenses - Reliance Telecom (GSM) and Reliance Communications (CDMA).

Initially, cellular licences were technology-specific allowing only GSM services, but later the licences were made technology neutral.
At present, the spectrum allocation is based on technology chosen by the licensee. The watchdog has sought industry''s view on whether a licence of one technology could be allowed to get spectrum for other technology under the same licence and if so how and at what price.

It also has sought views on criteria for spectrum allocation and if there is any need for additional roll-out obligations for this.

The regulator has sought the stakeholders'' views on mergers and acquisitions on key points like definition of market, market share and monopoly market power. It also seeks to know how many players should be allowed to exist in each circle after the merger and what should be the spectrum cap for this entity.