New Telecom Policy -

The new telecom Policy was announced by the Communication and Information Ministry last Wednesday. The policy will be effective from April this year. This is the third time that India has announced a telecom Policy.

The first and second policies were announced in 1994 and 1999 respectively. The new telecom policy seems to have simplified licensing rules so as to bring transparency and to enhance consolidation.

An important requirement of the new policy is that Spectrum will have to be obtained separately. Communications Minister Kapil Sibal told that the new policy prescribes a single license for the entire country and also separates licenses from bandwidth.

With an intention to encourage consideration, the policy allows quick mergers with the resultant entities which have a market share within 35 percent. The earlier limit was 30 percent.

However, the merged entity cannot have more than 25 per cent of the assigned spectrum in a circle. Mr. Sibal also informed that the government is considering upon allowing mergers where the combined entities can hold up to 60% of market share.

The prescribed limit of spectrum has also increased from the current 6.2 MHz to 8 MHz across the country. For only Delhi and Mumbai, it has been further hiked to 10 MHz.

The spectrum pricing has not been finalized as the Telecom Regulatory Authority of India (Trai) is yet to find a base price for the auction of 2G spectrum.