Financial Daily from THE HINDU group of publications
Friday, Nov 11, 2005
Government - Policy
Info-Tech - Telecommunications
Entry norms eased, licence fee cut for NLD, ILD players Long distance phone tariffs set to drop
HAPPY CALLING: The Minister for Communications and IT, Mr Dayanidhi Maran, addressing a press conference in the Capital on Thursday. Ramesh Sharma
New Delhi , Nov 10
LONG distance telephone tariffs could drop by over 9 per cent, with the Government today announcing a reduction in entry fee for national (NLD) and international long distance (ILD) players to a uniform Rs 2.5 crore from the existing Rs 100 crore and Rs 25 crore respectively, even as it cut the revenue share to 6 per cent.
These and other major policy decisions like permitting Internet telephony announced by the Minister for Communications and IT, Mr Dayanidhi Maran, today are aimed at intensifying competition in the telecom sector and allowing smaller players to enter the market.
"I expect at least a nine per cent drop in long distance calls tariffs. We have removed all the barriers... There will be a lot more competition in both segments and major beneficiary will only be the consumer," Mr Maran said, adding that this was in line with the proposed `IndiaOne' regime.
As per the new norms, the entry fee in the NLD segment has been reduced from Rs 100 crore to Rs 2.5 crore. Similarly, the revenue share is down to 6 per cent from 15 per cent of Adjusted Gross Revenues with effect from January 1, 2006.
Currently, the networth requirement for NLD licences is Rs 2,500 crore while the paid-up capital of Rs 250 crore is mandated. The Government has now decided to reduce the networth and paid-up capital requirement to Rs 2.5 crore.
In a move that would benefit the Business Process Outsourcing and Knowledge Process Outsourcing industry, the Government has decided to allow NLD and ILD players to directly access corporate subscribers for providing leased circuits or closed user group networks.
Earlier, the long distance players were required to go through the last-mile access providers.
However, Mr Maran clarified that carrier selection would not be permitted to subscribers yet. "We want more operators to come in. If the consumers need more choice, we have to make sure that the market is ready," he pointed out.
Similarly, the entry fee in ILD segment has been reduced to Rs 2.5 crore from Rs 25 crore, while the revenue share has been lowered to 6 per cent from 15 per cent earlier.
There is no need to have mandatory roll-out obligation for ILD service licensees except for having one switch in India.
The networth and paid-up capital of the applicant company for the ILD service licence would be Rs 2.5 crore. The cut in annual licence fee (revenue share) would be applicable to all new as well as existing players including Bharti, Reliance Infocomm and VSNL.
Today's move is expected to benefit non-integrated telecom players such as Hutchison-Essar and Idea Cellular.
The Government has also done away with the pre-requisite of having prior experience in the telecom sector for granting service licences. In another far-reaching decision, it has decided to permit Internet telephony. Access Service Providers such as Bharti, Tata, Reliance, BSNL and MTNL would now be allowed to provide telephony through the Internet to their subscribers and also use the network of NLD and ILD service licensees for offering Broadband and Internet services, besides Internet telephony.
Currently, domestic users have limited choice as Internet telephony is restricted to PC-to-PC calls and within closed user groups. Now the Internet telephony calls would be allowed to terminate on a landline though the subscriber would require a different IP-enabled handset at his end.
It has also been decided to do away with IP II (infrastructure and fibre providers) and IP VPN licences, and these players would have to migrate to NLD/ILD service licences. Companies that do not migrate would not be allowed to provide bandwidth services to corporates as per their current licence guidelines. This would impact players such as Railtel, Gailtel and Sify amongst others.
ISPs offering restricted Internet Telephony services and VSAT service providers would have to pay 6 per cent annual revenue share to the Government.
On the loss to the exchequer on lowering of entry fee and revenue share, Mr Maran said, "I am expecting higher traffic and lower cost which will more than compensate the loss due to lowering of fees."
Stories in this Section
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |
Copyright © 2005, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line