India's Telecom Reform - Indian Institute of Public Administration

India’s Telecom Reform: A Chronological Account
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Epilogue
Between December 2003 and December 2005, several further
developments have taken place in the field of telecom
reforms, of which the important ones are dealt with below.
Unified Access Service Licenses
On 13 th January 2005 TRAI came out with recommendations
on a unified licensing system in the country in line
with the convergence of markets and technologies becoming
a reality and forcing a realignment of the industry. According
to the recommendations, a service provider may
provide the service that was earlier provided by another
type of service provider. A single service provider can
now offer telecommunication, cable and broadcasting services.
The Unified Licensing Regime (ULR) is designed to
encourage the free growth of new applications and services
leveraging on the technological developments in Information
and Communication Technology (ICT). Under
ULR, operators would pay six percent of their adjusted
gross revenue (contribution to USOF at five percent
plus administrative cost of one percent) as license fee.
The recommendations also include the proposal to allow
niche operators to serve rural areas with a phone density
of less than one percent. Niche operators would pay no
entry fees. The recommendations envisage the migration
of existing service providers to the ULR to be optional
for current operators. However, after a period of five years
it shall be mandatory for all telecom operators to migrate to
the ULR. It is important to mention that these recommendations
are pending with the government and yet to be accepted.
Universal Service Obligation Fund
The USO Fund was constituted in 2002 and an administrator
was appointed. The Fund envisages auctions of
subsidies to operators who will serve rural areas. The
guidelines issued by the USOF envisage subsidies to successful
bidders for providing a variety of rural lines e.g.,
village public phones, second phone lines, high speed
internet centres as well as replacement of VPTs based on
Mobile Access Rural Radios (MARR) technology. USOF
subsidies have been awarded for providing a second VPT,
termed rural community phone, in 46,253 villages of
population exceeding 2,000 and for private household
phones in 1,685 SDCAs (roughly equivalent to a revenue
taluka) that were identified by the administration as ‘unremunerative’
in terms of telephone usage and revenues.
However, TRAI has recently argued that the USOF approach,
were it to be completely successful, would result
in a rural tele-density of only four percent. A comprehensive
rethink is required, especially to ensure that wireless technologies
and infrastructure can be adequately supported, to
replicate the huge success of mobiles in urban areas.
Access Deficit Charge
The ADC regime came into effect from 1 st May 2003 for
compensating the Fixed Service Providers (FSPs), but predominantly
BSNL, the incumbent and main provider of
fixed lines in India, for meeting the revenue deficit arising
out of providing services below costs, i.e.,
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