Gartner: Unified license regime to hit growth in wireless sector

Ahmedabad: Has India done the right thing by moving to a unified license regime? Renowned research firm Gartner India answers in the negative. According to a report released by Gartner, a new single-license regime for cellular and basic phone firms in India, one of the fastest-growing telecom markets, will hit growth in the loss-making wireless sector.

"With predominantly low-margin prepaid users, the wireless industry could see a price war that will eat into its profits and hurt its prospects as a result," Kobita Desai, principal analyst at Gartner India, has stated in the report.

The Union Cabinet scrapped the requirement for separate licenses for each service last month in an attempt to end the bitter round of legal battles that have hobbled India's mobile services industry. India has more than 27 million GSM and CDMA users and its customer base has nearly doubled in the past seven months as operators lure users with rock-bottom tariffs.

GSM operators like Bharti Tele-Ventures and Hutch are against allowing basic service operators like Reliance Infocomm and the Tata group to offer full-fledged mobile services. Established cellular companies contend that the new system is stacked against them because it allows basic operators to become full mobile carriers and enter a booming market which was created by the former at a considerable expense.

The cellular operators have already invested more than $5 billion in the nine-year-old wireless sector and lost almost $2 billion, and are expected to be worst hit by the new system. Not surprisingly, they want the earlier system of specific licenses for different services to continue. Accordingly, they have approached the Supreme Court to delay the implementation of the decision to bring basic and mobile services on a single license.