DoT notifies unified licencing norms

Last Updated: Sat, Aug 03, 2013 05:14 hrs

The wait is over. The department of telecommunications (DoT) finally notified the much-talked unified licencing (UL) norms on Friday.

Part of the government's 'One nation, One licence' strategy, the new rules would delink spectrum allocation from operational permits and the spectrum would be technology-neutral. Under the existing Unified Service Access Licence (USAL) rule, spectrum was linked to the licence. Now, telecom companies opting for a UL will have to pay a maximum of Rs 15 crore for the licence, and a maximum performance bank guarantee of Rs 220 crore. Also, in a major move that would have direct impact on existing operators, DoT has abolished cross-holding of equity among operators having spectrum in the same service area.

"In the event of holding/obtaining access spectrum, no licensee or its promoter(s), directly or indirectly, shall have any beneficial interest in another licensee company holding 'access spectrum' in the same service area," according to the UL document. Further, DoT has defined 'promoter' as "legal entity other than the central government, financial institutions and scheduled banks, which hold 10 per cent or more equity in the licensee company". Beneficial interest shall mean holding of any equity directly or indirectly, including through the chain of companies in the licensee company, added the UL document.

The existing UASL norms allow promoters of a telecom company to have up to 10 per cent equity stake in another firm in the same circle.

Currently, many companies have tie-ups and stake in other licensees. Such telcos have a year to comply with the new norms. According to an analyst with a management consulting firm, a year is enough time for telcos to get out of the existing arrangements. The new UL allows operators to offer multiple services, including access, internet, national long distance, international long distance, global mobile personal communication by satellite, public mobile radio trunking, VSAT closed-user group and INSAT, under one licence. Companies can offer as many services as they want to, after acquiring the required spectrum for each service. With the new UL, the Government also allows companies to offer services under intra-circle and inter-circle roaming pacts. However, telcos will not be able to acquire subscribers in a service area if they do not have the required spectrum in that circle. According to the new UL norms, all telcos will have to migrate to the new licencing regime once their existing permits expire. The UL will be valid for 20 years and would be renewable for another 10 years.

In the new norms, the government has said all telecom service providers will have to pay an annual licence fee of eight per cent of the adjusted gross revenue earned from telecom services. Earlier, it was different for each service.

"UL is something that the industry actually needed. This is also a globally followed practice. This brings a lot of clarity for telcos. However, it may have some handicaps for a few telcos which have cross-holding in in competing licence holders," said Mohammad Chowdhury, telecom analyst with PwC.

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