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New Telecom Policy

The New Telecom Policy (NTP) was announced on 26 March, 1999. The policy comes into effect from April 1, 1999.

 

Background

National Telecom Policy 1994 recognized the importance of private investment for bridging the resource gap in the telecom sector. The Government invited private sector participation in a phased manner from the early nineties, initially for value added services such as Paging Services and Cellular Mobile Telephone Services (CMTS) and thereafter for Fixed Telephone Services (FTS). Subsequently, in 1998, the Government announced the policy for Internet Service Provision (ISP) by private operators and has commenced licensing of the same. The Government has also announced opening up of Global Mobile Personal Communications by Satellite (GMPCS) and has issued one provisional licence. However, the results of the privatization efforts have not been entirely satisfactory so far.

 

Objectives and Targets

The objectives of the NTP 1999 are:

l Availability of affordable and effective communications for the citizens is at the core of the vision and goal of the telecom policy.

l Strive to provide a balance between the provision of universal service to all uncovered areas, including the rural areas, and the provision of high-level services capable of meeting the needs of the country's economy.

l Create a modern and efficient telecommunications infrastruc-ture taking into account the convergence of Information Technology (IT), media, telecom and consumer electronics and thereby propel India into becoming an IT superpower.

l Transform in a time bound manner, the telecommunications sector to a greater competitive environment in both urban and rural areas providing equal opportunities and level playing field for all players.

l Enable Indian Telecom Companies to become truly global players.

In line with the above objectives, the specific targets that the NTP 1999 seeks to achieve are:

– Make available telephone on demand by the year 2002 and sustain it thereafter so as to achieve a teledensity of 7 by the year 2005 and 15 by the year 2010.

– Encourage development of telecom in rural areas making it more affordable by suitable tariff structure and making rural communication mandatory for all fixed service providers.

– Provide Internet access to all district headquarters by the year 2000.

 

New Policy Framework

Cellular Mobile Service Providers

The Cellular Mobile Service Providers (CMSP) shall be permitted to provide mobile telephone services including permission to carry its own long distance traffic within their service area without seeking an additional licence. Direct interconnectivity between licensed CMSP's and any other type of service provider (including another CMSP) in their area of operation including sharing of infrastructure with any other type of service provider shall be permitted. The CMSP shall be allowed to directly inter-connect with the VSNL after opening of national long distance from January 1,2000. CMSP would be granted separate licence for each service area. Licences would be awarded for an initial period of twenty years and would be extendable by additional periods of ten years thereafter. CMSP would be eligible to obtain licences for any number of service areas. Based on the immediately available frequency spectrum band, apart from the two private operators already licensed, Department of Telecommunications (DoT)/Mahanagar Telephone Nigam Limited (MTNL) would be licensed to be the third operator in each service area in case they want to enter. The entry of more operators in a service area shall be based on the recommendation of the Telecom Regulatory Authority of India (TRAI) who will review this as required and no later than every two years.

 

Fixed Service Providers

The Fixed Service Providers (FSP) shall be freely permitted to establish 'last mile' linkages to provide fixed services and carry long distance traffic within their service area without seeking an additional license. Direct interconnectivity between FSP's and any other type of service provider (including another FSP) in their area of operation and sharing of infrastructure with any other type of service provider shall be permitted. The FSP shall be allowed to directly interconnect with the VSNL after the opening up of national long distance from January 1,2000. The FSP shall be granted separate license, on a non-exclusive basis, for each service area of operation. Licenses would be awarded for an initial period of twenty years which shall be extended by additional periods of ten years thereafter. The FSPs shall be eligible to obtain licenses for any number of service areas. The number of players in a service area and their mode of selection will be recommended by TRAI in a time-bound manner.

 

National Long Distance Operator (NLDO)

National long distance service beyond service area of the private operators will be opened for competition with effect from January 1,2000. To promote setting up of long distance bandwidth capacity in the country, provide a choice to consumers and promote competition, all NLDOs should be able to access subscribers. With a view to achieving the above, all access providers (CMSP, FSP and Cable Service Providers) shall be required to provide interconnetion to the NLDOs. For this purpose, the terms and conditions and other modalities would be worked out in consultation with TRAI and the same will be announced by August 15, 1999. The terms and conditions would also specify the number of operators, licence conditions and other related issues. The subject of opening up of international telephony service to competition will be reviewed by the year 2004.

 

Resolution of Problems of Existing Operators

The New Policy Framework, which seeks to signifiantly redefine the competitive nature of industry, would be applicable to new licensees. There are, however, multiple licenses that have been issued by the Government for cellular mobile services, basic services, radio paging services, internet services, etc. It is the Government's intention to satisfactorily resolve the problems being faced by existing operators in a manner which is consistent with their contractual obligations and is legally tenable.

 

Role of Regulator

The Telecom Regulatory Authority of India (TRAI) was formed in January 1997 with a view to providing an effective regulatory framework and adequate safe-guards to ensure fair competition and protection of consumer interests. The Government is committed to a strong and independent regulator with comprehensive powers and clear authority to effectively perform its functions. Towards this objective the following approach will be adopted:

l Section 13 of the TRAI Act gives adequate powers to TRAI to issue directions to service providers. Further, under Section 14 of the Act, the TRAI has full adjudicatory powers to resolve disputes between service providers. To ensure a level playing field, it will be clarified that the TRAI has the powers to issue directions under Section 13 to Government (in its role as service provider) and further to adjudicate under Section 14 of the Act, all disputes arising between Government (in its role as service provider) and any other service provider.

l TRAI will be assigned the arbitration function for resolution of disputes between Government (in its role as licensor) and any licensee.

l The Government will seek TRAI's recommendations on the number and timing of new licenses before taking decision on issue of new licenses in future.

l The functions of licensor and policy maker would continue to be discharged by Government in its sovereign capacity. In respect of functions where TRAI has been assigned a recommendatory role, it would not be statutorily mandatory for Government to seek TRAI's recommendations.

l The appropriate level of entry fee and percentage of revenue share arrangement for different service areas for CMSPs and FSPs would be recommended by TRAI in a time-bound manner, keeping in view the objectives of the New Telecom Policy.

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