The much awaited exit policy in Telecom service sector is now being thought about by DoT.
To remove hurdles and loss of value of assets while exiting the market and to make the sector more investor friendly, the DoT is reviewing regulatory framework and the difficulties of transferring business.
Telecom Regulatory Expert, Mahesh Uppal says that the real exit policy would be one to allow companies to freely trade / surrender spectrum as thats the only thing that creates any value in a telecom license.
While commenting on the Spectrum pricing of the 2010 auction, several questions were raised by us due to lack of clarity in policy implimentation process, risk mitigation and / or exit options.
The Questions back in 2010 are still relevant.
For instance –
There are several questions that need to be answered in this respect:
– Will BSNL/MTNL be accountable for not achieving 100% rural coverage in a given time frame?
– Will TRAI be accountable for the impact on cost and growth if the end result of the rollout obligations does not reveal a light at the end of the tunnel?
As per the recommendations of the regulator, operators with spectrum in 900 MHz band should be shifted during license renewal to the 1800 MHz band so that it may be used for 3G services.
A TRAI official admits: “It is a difficult proposition and, of course, it involves costs as they have to shift to a new band, requiring new equipment, and they have to be compensated, on which there will be consultations.”
So, more questions crop up then:
– Is TRAI quantifying the burden to the industry and consequently the rescuer / consumer, in terms of costs and service? Does it have a back-up plan? How about exit options?
– Is it announcing any recommendations to regulate the outcome of the pricing?
Talking about Caps –
Does TRAI have any verifiable basis / logic for recommended caps?
Doesn’t this amount to penalizing market winners / pioneer operators who serve 70% of the market?
If these questions aren’t properly addressed, we can start writing the obituaries that are likely to surface in six months.
“ Separate the sheep from the goats”
Echoing Jesus’ prophecy that the sheep ( PSUs ) will sit on god’s right hand and will be rewarded and the goats ( private operators ) will sit on god’s left hand and will be consigned to eternal fire.Read complete matter here - https://competitionindia.wordpress.com/2010/03/29/spectrum-competition-war-on-error/
Spectrum Competition – War on Error?
Spectrum price tweaking and Regulatory impact
There are times the telecom regulator (TRAI) is reactive or inactive and other times proactive.
Proactivity was on display when spectrum auctioning took centre stage and TRAI came up with its thundering pricing of spectrum last week on 11th May,2010.
In related recommendations, TRAI stated that existing firms will be charged market rates for the spectrum they have beyond 6.2 Mhz and that the price charged for 2G spectrum will be same as it is for 3G spectrum.
This made the minister’s position very awkward for a few days since it seemed like spectrum had been hopelessly underpriced until this point.
However, after the conclusion of the auction on 19th May, the government proudly announced that they had filled their coffers with five times more than the reserve price of Rs. 16 odd crores.
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