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New policy likely to make telecom cheaper

The government is preparing a new telecom policy, which is likely to grant infrastructure status to the telecom industry, leading to lower taxes and similarly reduced tariffs.

In an effort to infuse greater transparency into the scam tainted telecom sector, India’s government is working on a new telecom policy.

Telecommunications Minister Kapil Sibal announced the formulation of the National Telecom Policy 2011 while releasing the 100 day agenda for the telecom sector. The current policy has been in force since 1999, and has given rise to a lot of controversies.

The Department of Telecom (DoT) will hold consultations with stakeholders on areas covering licencing, spectrum allocation, tariffs and pricing, linkages with roll-out performance, spectrum sharing, trading, and mergers and acquisitions.

The Minister said that the new policy will focus on generating reasonable revenue for the government, providing affordable services to users and on promoting the robust growth of this sector.

The telecom industry is also likely to get the status of an infrastructure industry, which will entitle tax rebates that could reduce tariffs.

Interconnection charges have been another topic of debate and the government is likely to bring some clarity to the issue. The interconnection charge is paid to the operator on whose network the calls terminate in (the receiving party). If the government decides to lower these charges, it will aid in lowering tariffs further.

Flexibility with regard to technology has been another demand of the industry and if it is met we will be able to see better technology coming our way sooner than we have been a accustomed to.

The Minister also said that it will be talking to other ministries such as defence, information and broadcasting, and space to get additional spectrum, which is essential for network capacity expansion for supporting hungry applications and providing basic telephony to the citizens of the country.

Spectrum sharing is another area that will be key to reducing the cost of telecom networks. The new policy is likely to bring more clarity on the issue.

Merger and acquisition norms might also be relaxed. If that happens, consolidation is likely and will strengthen an industry that is otherwise struggling due to too much competition.

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