Indian to open up long distance telephony

Telecom Regulatory Authority of India (TRAI ) in its "Recommendations on Introduction of Competition in National Long Distance Communications" has come up with a proposal for the opening up of the long distance telephony within the national boundaries. As in any other sector, the government agency which now enjoys monopoly in the area is opposing the entry of private sector.

TARI says allow anybody willing to take up a national license, and pay part of the revenue to the government to operate in the sector. Recommended license fee is Rs 500 crore and the revenue sharing is five percent per annum. Another condition stipulated by the regulatory authority is that the entity should have a combined net worth of more than Rs 2,500 crore and experience in the business.

DoT (department of telecommunication) which directly or indirectly enjoys the benefits of a monopoly says the time had not yet come for the kind of opening up recommended by TRAI. DoT sources say that open entry in long distance telephony is unwarranted in a market where telecom penetration was less than three per cent. On the financial side the DoT says the revenue-sharing of less than five per cent is too low, it should be around 16 per cent.

The regulatory authority has recommended initial license period of 20 years, with the provision of extension for an additional period of 10 years. It has also said that in case of an open competition, the licenses cannot be awarded through the tender route. Trai has suggested that the operators should submit a blueprint including details of the construction of network, technology used, products and financial details. The selection criteria should be on the basis of the rollout plan, proposal for coverage of uneconomic and isolated areas, and experience of the applicant in the telecom sector.

A three tire structure suggested by TRAI includes Category I and Category II infrastructure providers and the NLD Operators (NLDOs). Resellers will be kept out of the market for three to four years. There will be no formal license for Category I infrastructure providers, which will include companies providing dark fiber, right of way, duct space, towers and buildings. Category II infrastructure providers, who will sell bandwidth to the NLDOs, will be licensed. They will not be required to pay any entry fee but a revenue share not exceeding five per cent of revenues from the business.

The sharp difference in opinion between the regulatory authority and the department is going to make functioning difficult for all involved in this sector. This is so since DoT has to formulate the guidelines for opening up the national long distance service sector on the basis of Trai's recommendations. The way things are now it seems DoT will miss the January 1 deadline, as set by the new telecom policy, for opening up the sector.

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