The long-awaited National Telecom Policy (NTP), 2012 was approved by the cabinet in June last year. The NTP, 2012 is expected to lend transparency to and revive growth in the sector as well as pave the way for a more predictable and stable policy regime. Moreover, the cabinet has approved the unified licensing regime, which is in the process of being finalised by the Department of Telecommunications (DoT).

In 2011, a revision of the decade-old telecom policy was announced in the aftermath of the 2G spectrum scam that rocked the sector. The draft NTP was announced in October 2011. It broadly included policy directives to achieve 100 per cent teledensity by 2020; ensure broadband for all; as well as implement a one nation, one licence regime.

Barring a few changes, the cabinet has accepted most of the draft NTP guidelines. The core objective of the policy is affordability and availability of effective communication. Further, the government has done away with the spectrum act proposed in the draft NTP.

With regard to allocating more responsibilities to the Telecom Regulatory Authority of India (TRAI), the cabinet wanted the policymaking function to remain with the government rather than entrust it to the regulator.

The highlights of the NTP, 2012 are:

Improving rural teledensity from the current level of 39 per cent to 70 per cent by 2017 and to 100 per cent by 2020.

Offering broadband for all at a minimum download speed of 2 Mbps. To meet the connectivity requirements associated with sectors like education and health, the policy proposes the Right to Broadband Plan, under which access to broadband services will be considered a basic right of every citizen. It aims at providing 175 million broadband connections by 2017 and 600 million by 2020.

Providing high speed and high quality broadband access to all village panchayats through a combination of technologies by the year 2014 and progressively to all villages and habitations by 2020.

Encouraging indigenous manufacturing of equipment to make India a global hub. The policy aims to meet 80 per cent of the sector's demand from domestic manufacturers by 2020.

Facilitating convergence of network, services and devices.

Liberalising spectrum usage to allow provision of any service through any technology.

Simplifying the licensing regime through unified licensing, with spectrum being delinked from the licence. It also proposes to make available additional 300 MHz of spectrum for international mobile telecom services by 2017 and another 200 MHz by 2020.

Promoting the efficient use of spectrum through regular audits of spectrum usage.

Achieving one-nation full mobile number portability and working towards one-nation free roaming. This will do away with the need for companies to apply for separate licences for every circle/service area.

Promoting the adoption of new technologies and addressing issues related to encryption, security, taxation and interconnection. The policy highlights measures to reduce the cost of service delivery and encourages the transition from IPv4 to IPv6 networks.

Formulating a policy on cloud services is an important objective.

Developing and deploying systems for lawful assistance, which involves building capacity for interception and monitoring of telecom equipment.

Promoting resale of services.

The government hopes that the new policy will accelerate inclusive socio-economic development and bring about the much-needed consolidation.

The time frame for implementing the policy changes will depend on DoT’s ability to work out the modalities. Barring a few grey areas like spectrum refarming (which the operators are vehemently opposed to), the NTP, 2012 is a welcome step for the telecom industry. Sector experts believe that the policy, with its emphasis on abolishing roaming charges, will benefit consumers, though it may have a negative impact on operators in the short term.

The industry is also satisfied that the NTP, 2012 will encourage the resale of mobile services, which could help operators improve profitability from voice services. For instance, operators can now appoint resellers who can buy bulk minutes from the company at wholesale prices and resell them under their own brand or a joint brand to the end-user.

However, telecom operators are concerned about the cabinet’s decision to approve spectrum refarming as it will have negative financial implications for the incumbents. They have sent petitions to the government stating that this would render their investments worth over Rs 1,500 billion redundant. At present, Bharti Airtel, Vodafone India, Idea Cellular and Bharat Sanchar Nigam Limited use the 900 MHz band, which is considered to be most efficient for offering 2G mobile services. TRAI had proposed the redistribution of spectrum in this frequency among all operators through auctions before the mobile permits of the incumbents are renewed in 2014.

Meanwhile, according to equipment manufacturers, the NTP, 2012 dilutes the focus on indigenous manufacturing of telecom equipment.

However, despite these issues, most industry players agree that the policy projects a bold vision for the telecom sector with its emphasis on spectrum management, broadband-on-demand, indigenous manufacturing, rural coverage and infrastructure status, which is expected to spur further growth.