India’s telecom minister proposes radical new policies for regulatory bill

India’s telecoms regulatory system has come under fire following the 2G licensing scandal that shocked the sector. Many observers have dismissed the framework as antiquated, but this looks set to change, with Telecoms Minister Kapil Sibal revealing several new policies which he aims to enshrine in the country’s new regulatory bill.

The bill, which will be enacted later on in the year, will likely address the sector’s merger and acquisition laws – widely criticised as an obstacle to consolidation in the increasingly overpopulated market. The current stringent rules prohibit any one firm from holding over 10% of two competitors in any one telecom circle.

Another potentially radical move proposed by Sibal was disassociating spectrum from licences, and reducing the validity period of licences from twenty years to ten. Licences would also be sold at “uniform” prices.

While India’s sector reform is largely linked to 2008’s 2G licensing scandal, two operators are to have their licences cancelled for entirely different reasons. Both Idea Cellular and Spice have missed deadlines for network rollouts, prompting Indian regulator TRAI to call for the Department of Telecom to revoke their licences.

The DoT has stated: "As per Trai's recommendation, as on date (December 22, 2010) these licensees are in violation of terms and conditions pertaining to rollout obligations.” Idea stands to lose its licences for the Punjab and Karnataka, while Spice will lose its Maharashtra, Andhra Pradesh and Haryana licences. Idea technically owns Spice, having bought it in 2008, but the two firms remain separate as a merger has not yet been approved by the DoT.

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