tele.net?s conference on ?The Impact of The National Telecom Policy: Spectrum, M&A, Licensing and Broadband” at The Oberoi, New Delhi was held today.

The conference was attended by about 50 delegates from different factions of the telecom industry.

Key sessions of the conference included Spectrum Pricing and Allocation; One Nation, One Licence; Mergers, Acquisitions and Consolidation; and Broadband Services and Infrastructure.

Presenting or participating in panel discussions at the conference were speakers Kunal Bajaj, Partner and Director, Analysys Mason; Abhishek Chauhan, Senior Consultant, ICT Practice, Frost & Sullivan, South Asia & Middle East; Jaideep Ghosh, Executive Director, KPMG Advisory Services; Akshay Grover, Vice President, Transaction Advisory Services, Ernst & Young, and Dr Mahesh Uppal, Director, ComFirst.

In the session on Spectrum Pricing and Allocation, Kunal Bajaj, Partner and Director, Analysys Mason, in his presentation, said that the recently launched policy and regulatory initiatives are expected to have long-term implications for the industry. In the case of spectrum, he discussed four main tenets: spectrum limit and pricing; spectrum refarming; spectrum sharing, pooling and trading and a likely future spectrum roadmap.

The draft National Telecom Policy (NTP) 2011 has suggested increasing the maximum spectrum holding limit for a post merger entity to 25 per cent of the spectrum assigned in the particular circle. Bajaj said that limiting the spectrum at a certain percentage level would enable the absolute number to be raised with additional spectrum allocated in that circle. He added that the 25 per cent cap ensures that there will be at least four operators in a particular service area and will also discourage spectrum hoarding or blocking. This, he said, was necessary to make networks more efficient and is expected to facilitate consolidation and mergers and acquisitions in the industry.

However, Bajaj said that the NTP?s proposal to impose a one-time charge for spectrum beyond 6.2 MHz will have a negative financial implication for incumbents. ?In this case, GSM operators like Bharti Airtel, Idea Cellular, Vodafone Essar, etc, will have to pay a significant premium, as they hold 900 MHz spectrum across multiple circles,? he pointed out.

On the issue of spectrum refarming, Bajaj said that the Telecom Regulatory Authority of India?s (TRAI) recommendation of migrating operators holding 800-900 MHz to 1800-1900 MHz during 2G licence renewal will have an adverse impact on incumbents. He cited various examples from Ireland, the UK and Sweden, where, the practice is to reassign 2G spectrum upon licence expiry. This process includes both upgrading the technology to be used on the spectrum with same operator as well as reassigning only a part of the spectrum.

On the issue of spectrum sharing, pooling and trading, Bajaj said that this is expected to enable operators to reduce network costs and improve profitability. He said, ?According to analysis, operators can generate up to 52 per cent savings in capex in a two-operator sharing scenario. Also, the release of additional 500MHz of spectrum by 2020 will help operators in augmenting network capacity.?

On the flip side, Bajaj said that this practice could lead to spectrum hoarding and speculative purchase by non-telecom players.

Coming to the likely spectrum roadmap, Bajaj said that this is required every five years and will enable players to be more flexible and plan their networks better.

He concluded that spectrum sharing will benefit all operators, while refarming and pricing excess spectrum will negatively impact incumbents.

Abhishek Chauhan, Senior Consultant, ICT Practice, Frost & Sullivan made a presentation in the session on One Nation, One Licence.

He said that the NTP 2011?s attempt to create a single licence across the nation was aimed at enabling convergence across all communication platforms.

He said, ?The concept of One Nation, One Licence includes enhancing the scope of mobile number portability and eliminating roaming charges; repositioning the mobile handset from a communication device to an instrument of empowerment; delivering seamless information and communication technology, multimedia and broadcasting services on converged networks and ensuring a common platform for interconnecting various networks.?

Discussing the pros and cons of enhancing the scope of MNP and eliminating roaming charges, Chauhan said, ?This move would prevent users from switching their operator, even if they switch their circles. This would help reduce churn.? As a con, he said that this factor benefits less than 10 per cent of the country?s population, while the remaining 90 per cent would end up paying higher tariffs.

On the separation of content and carriage, he said that the NTP 2011 suggests governing the two separately, through two separate licences (the Network Service Operator and the Service Delivery Operator licences). This separation would lead to the entry of MVNOs in the country and service providers would become mere conduits and access mediums to the content. Content providers would be able to provide services to consumers directly and the control exercised by operators would be lost.

Similarly, digitisation of local cable networks would require an investment of Rs 500 billion and 90 million set top boxes would be required to digitise the industry by 2015.

Akshay Grover, Vice President, Transaction Advisory Services, Ernst & Young made a presentation in the session on Mergers, Acquisitions and Consolidation.

He said that three strategies may be adopted by multi-network operators to merge with or acquire other entities in the sector. In the first scenario, a GSM incumbent may acquire another GSM incumbent, to strengthen its hold on the market and for greater access to 2G spectrum. In this case, the key enabler is that the consolidated share may be as high as 60 per cent and the spectrum share may touch 25 per cent.

In the second scenario, a GSM incumbent acquires a new player. This would imply greater access to 2G spectrum and spectrum share of the combined entity may touch 25 per cent. Or, a new entrant may acquire another new entrant. In the third case, a new entrant can acquire a GSM incumbent which may help scale up or further expand in the market. In this case, spectrum share may be as high as 25 per cent per circle.

In the session on Broadband Services and Infrastructure, Jaideep Ghosh, executive director, KPMG Advisory Services provided a snapshot of the broadband penetration levels in different countries. For example, broadband penetration in China stood at 9.42 per cent; in the US at 26.34 per cent; in Japan at 26.91 per cent and in India at 0.9 per cent.

He then provided a snapshot of the country?s fixed line internet market today. India has 12 million broadband users in March 2011, of which, 6 million are residential accounts and 11 million are DSL connections.

Ghosh said that the number of internet connections in the country will increase, with the introduction of the NTP 2011, which facilitates BWA spectrum auction and the introduction of cheaper devices. Also, the broadband segment is set to nearly triple by 2014.

?The main drivers of internet growth in India?, said Ghosh, ?are low entry tariff; low consumer premise equipment cost; availability of localised content; accessibility to relevant applications and a technology-neutral approach.?

Moreover, several applications are set to take centrestage in the next five years. These include security and monitoring-centric solutions; transportation; location-based services; videos and music; games; education and mobile commerce.

To sum up, the NTP 2011 recognises broadband connectivity as a basic necessity and strives towards providing broadband on demand by 2015. This implies that rural India will be connected to the rest of the country through broadband; value added services will get a boost and new revenue streams for operators and VAS players will open up.