The telecom sector in India has witnessed tremendous growth. The rapid pace of technology, the globalisation of commerce and the issues of convergence make it necessary for Indian regulators and policy-makers to develop a comprehensive and forward-looking framework to ensure India’s competitiveness in the global marketplace.
In this context, CII organised a seminar on “Regulatory Issues in the Age of Convergence”, to discuss the key regulatory issues that may arise and how India can adapt itself successfully in this new regime. We bring you excerpts from the seminar…
Challenges of convergence
Adapting regulatory frameworks to convergence is not an easy task. Traditional frameworks were designed for an era when clear functional differences existed between services and infrastructure. Today, the boundaries that had separated the broadcasting, ICT and telecommunications sector are disappearing as all forms of content become undifferentiated bits of data. Policy-makers and regulators around the world have begun responding to the challenges posed by convergence.
India too has begun to address the various issues by simplifying licensing and modifying its regulatory framework albeit in a small way. According to Mindel de la Torre, president, Telecommunications Management Group, “India needs to update its regulatory framework as the benefits from convergence and advanced technologies are constrained by existing regulatory frameworks. Moreover, the addition of new technologies and the accompanying proliferation of delivery mechanisms create a growing administrative burden for regulators and underscore the need to separate regulation into two main categories: content and delivery.”
Rural connectivity
Recently, new technologies have begun to provide underserved areas with faster service. As of 2004, mobile phone users exceeded the number of fixed lines in operation in 152 countries including India. Mobile technologies are being increasingly used to provide rural connectivity with fixed wireless and mobile payphones.
Rural connectivity is one of the most important goals faced by the Indian telecom sector today. “About 100,000 villages in India have no telephone access, 300,000-400,000 villages have one or two phones with unreliable service and less than 10,000 villages have internet access,” noted Peter Cowhey, dean, Graduate School of International Relations, University of San Diego, California. According to Cowhey, some of the ways to increase rural teledensity include:
- The Universal Service Obligation Fund (USOF) can be used to fund rural connections. In India the purpose of the USOF needs to be clearly defined to guarantee equal participation of all telecom service providers as well as encourage the incorporation of new technologies.
- Introduce new kinds of operators (including “co-ops”).
- Rural service provider licences are a good innovation. “Micro-tels”, for instance, have increased Colombia’s rural connectivity from 7 per cent to 12 per cent.
- Strong interconnection rights to national networks should be provided, which will result in incremental revenue for national carriers.
- Spectrum on a technology-neutral basis for new networks should be released.
- Initially, appropriate forms of “network neutrality” for wireless operators should be adopted as wireless bandwidth is limited.
- The government has proposed to ensure improved connectivity in all villages and to fund 25,000 kiosks in order to make rural internet connectivity cost effective. However, the kiosks should only serve as one revenue stream.
- Alternative streams of revenue for network operators who have the freedom to mix and match technologies and spectrum should be created.
- A two-year moratorium on paying auction fees conditional on meeting network build-out rules should be permitted.
- Companies should be allowed to evolve the best strategy for paying for spectrum and bidding for government revenues.
- Lastly, service tax should be waived for a period of 10 years.
Licensing regime
As telecommunications markets have liberalised, countries have moved away from restrictive licensing regimes and towards a unified licensing regime. Unified licences widen the scope of technologies and services that can be offered by one operator, thereby increasing the participation of new market entrants, and the introduction and use of new technologies. Countries like India, Australia, Japan, Kenya and Malaysia have all introduced some form of converged licensing regime based on the characteristics and needs of their markets.
Spectrum management
Spectrum management is of critical importance in an era where technology advances are fostering convergence. It is being continuously driven by new technologies. Managing the valuable spectrum resource is now more crucial and daunting than ever before.
At its root, spectrum management is about addressing the problems of potential interference among different spectrum users. It encompasses all activities associated with regulating the use of radio spectrum, including the structure and process for allocating, allotting, assigning and licensing spectrum in the most economically efficient way. It also involves coordination with the neighbouring countries and the world as a whole.
Spectrum management is currently undergoing a paradigm shift. “The goal is a framework that is service and technology neutral,” said Torre. The trend now is for regulators to modify the traditional allocation and licensing process to permit more flexible allocations by minimising constraints on services that licensees may offer. “There should be a bridge between the existing regulatory licences and the new policy changes,” said Vijay Madan, executive director, C-DOT.
The commercial use of spectrum has grown considerably over the last several years and this trend is expected to continue. In India, commercial spectrum users face internal pressure to gain access to additional spectrum and to use spectrum more efficiently. There has been a lot of debate over the subscriber criteria for cellular spectrum in India. “It leads to unequal spectrum blocs that over time will result in a regulatoryinduced distortion of the marketplace,” said Charles Rush, chief technology officer, Telecommunications Management Group. “The approach is not technology neutral and spectrum allocation to both CDMA and GSM operators is not equal. The criterion of “twice” the number of subscribers for the same amount of spectrum ?? the new amended policy of DoT for spectrum allocation ?? is unbalanced and biased towards GSM services.
According to Rush, there are five avenues that can be deployed for efficient spectrum deployment:
- Increased sharing ?? Most users do not use all the spectrum at all times. They may also operate only in one geographic sector or region at a given time. Hence, these operational characteristics can be exploited to permit sharing among users by relying on coordinated schedules
- Increased efficiency ?? Users can also gain more spectrum for new or expanded services by using their existing spectrum more efficiently. This can be achieved by increasing the amount of information that can be transmitted in a given amount of spectrum and exploiting frequency reuse by using smaller cells to limit the distance a signal needs to travel. However, deployment of more efficient infrastructure has associated costs.
- Extending useful frequency range ?? As microwave component technology has improved, the upper limit of the useful frequency range has expanded. Technologies are being developed to take advantage of the increasing frequencies resulting in more spectrum being available to users.
- Band clearing/relocation ?? Drawing less on technology and more heavily on negotiation to make spectrum available is the concept of band clearing or relocation, in which spectrum may be reallocated for other purposes.
- Market-based spectrum pricing ?? Economic principles can also be employed to ensure efficient spectrum usage. As the demand for spectrum has grown, it has become increasingly important to employ market forces to determine spectrum values. This is achieved primarily through auctions and administrative pricing. The general concept of all auctions is that potential users indicate the value they place on a particular spectrum resource. Administrative pricing, on the other hand, involves a designated entity, such as a regulator, setting a spectrum fee based on what it considers fair market value.
Going forward
Thus, in order to adapt to the new regime successfully, the regulators and policy-makers should observe the key principles of service and technology neutrality. There is a need to move towards a unified licensing regime. A clear roadmap for access to spectrum needed to support current and nextgeneration services should be developed. To sum it up, as Prime Minister Manmohan Singh, said: “Convergence has its own logic and government policy must be mindful of ground realities. No policy can be effective if it is not in step with market and technological realities.”
