Trai opposes cap on telecom firms

The Telecom Regulatory Autho-rity of India (Trai) on Wednesday refused to put a cap on the number of access service providers in any service area as demanded by some operators.Trai took this decision after a review of licensing conditions for the telecom sector. According to Trai, this step will maintain competition among the telecom operators and will compel them to keep tariff on competitive levels helping the consumer to get inexpensive services.
On merger and acquisitions, Trai said that no inorganic expansion will be allowed if the number of wireless access service providers (mobile companies) reduces below four. Trai said that the merged entity in the relevant market must not exceed 40 per cent either in terms of subscriber base or in terms of revenue. It has been done so that M&As do not create monopoly in the market. Companies like Airtel and Vodafone will not be permitted to merge in future. But either of these companies or Idea can acquire small companies like Spice or Aircel. Trai said that the existing cap of 2x15 MHz per service area for a post merged entity will be removed for the purpose of regulating M&A activity. The regulator said the merged entities should be charged spectrum fee based on the total radio wave acquired by them. It has increased operator cross holding to 20 per cent from 10 per cent.
There is also some good news for Mr Anil Ambani, as Trai said that an existing licensee may be permitted to use alternative technology to provide wireless access services in a particular area after payment of an upfront fee. The Anil Ambani-run Reliance Communications, which is major CDMA player in the country, has app-lied for the GSM licence. Trai said the fee should be equal to the entry fee for the unified access license in that area. The operator proposing to use both the technologies will have to pay fee for both the spectra. Trai has recommended a one-time spectrum charge from operators for allocation of spectrum beyond 10 Mhz in 2G bands.
Currently, the telecom firms pay one per cent of their revenue to the government for additional spectrum. The suggested charge for allocation of 2x5 Mhz of spectrum in category A circles and Mumbai and Delhi is Rs 80 crores, while for category B circles and Chennai and Kolkata, it is Rs 40 crores. For the allotment of one MHz spectrum in Mumbai and Delhi, the service provider will have to pay Rs 16 crores as one time spectrum acquisition charge.