Mobile phone tariffs may go up in the future if TRAI (Telecom Regulatory Authority of India) has its way.
In a long list of recommendations, the telecom regulator has reiterated its earlier demand that existing telecom players must pay four times the current price of the 2G spectrum that they hold when they apply for renewal of their license. Notably, most of the older players will be up for renewal in next 3-4 years.
Since most of the incumbent operators will have to renew their licences in the next 3-5 years, they might have to shell out more than Rs 10,000 crore for acquiring start-up 2G spectrum compared to just Rs1,658 crore paid earlier.
Just months ago, Bharti Airtel had hiked its tariffs citing losses. Though other operators denied such a move then, but a hike in spectrum charges undoubtedly force them to do the same.
However, TRAI has also asked for a uniform license fee of 6 percent of revenue, whereas government had recommended that different services should pay different with mobile services attracting 10 percent. If accepted, this may help keep the prices stable if not reduce it, in the short term till the impact of new spectrum pricing is felt.
TRAI also wants to give licenses to be given at district level so that even local cable TV service providers can offer services like internet. These recommendations if accepted are going to be incorporated in the new Telecom Policy.
The telcom regulator wants to improve connectivity in the rural areas as well. TRAI wants more than 90 percent area in each village with more than 2000 people to be covered in four years of a service provider getting spectrum. With service providers meeting the obligations getting as much as 4 percent total discount of license fee.
It has also asked that the merger be allowed if the combined market share of the merged entities be less than 60 per cent. And to encourage merger and acquisition, which is badly needed in the hyper competitive market, the regulator wants to allow them to retain spectrum with riders and fees.
However, it has stuck to its demand for charging four times the current price of the for the excess spectrum that currently players hold and similar amount be charged when they apply for renewal of their license (most of the older players will be up for renewal in next 3-4 years.
Some of the other recommendations which is likely to be incorporated in the new Telecom policy, and are likely to have far reaching consequences are technology neutral license, which means that an entity with a unified license, which by the way will be given to all (so no more multiple type of licenses) can offer communication services using any of the technology, like GSM, CDMA, wireline etc.