The long awaited announcement on delinking telecom licenses with spectrum has been made and welcomed too by some industry players and bodies. It has the potential to become a rare move towards bringing in some healthy competition in the industry without causing disruption to the existing market conditions. How?

The move, viewed in isolation, looks somewhat ordinary and arguably as favouring a few market players. As has been feared by some telcos, the delinking could lead to disadvantage of those who hold spectrum in the lower frequency bands in 900 MHz range. It is being assumed that when the existing licenses expire in 2014 then the spectrum held by telcos, including those blocks in the 900 MHz bands, would come in the auction pool for auctioning and/or redistribution.

However, when viewed in conjunction with the Telecom Regulatory Authority of India’s (TRAI) recommendations for a three-tiered unified licensing mechanism done in May 2012, the delinking of spectrum could assume far reaching significance. (See also

TRAI had recommended one-time non-refundable entry fees for national level, service area level and district level licenses, at Rs 15 crore, Rs 1 crore and Rs 10 lakh, respectively, excepting service areas of J&K and Northeast.

In particular, the district level licenses can be greatly leveraged to expand telecom services growth at the district level, particularly in the rural areas of a given district. Regulation would, however, need to take care that district level operators don’t focus on the urban centres only that are anyways well covered in many cases.

Since TRAI has not recommended provisioning of spectrum for district level licenses, a question earlier would have been: how would these operators become operational?

Since the new telecom policy is also to provision for resale of spectrum as well as introduction of virtual [mobile network] operators, the district levels licenses can have real teeth.

And indeed, if the intent is to bridge the urban-rural telecom divide, the delinking is a step well taken.

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