The Department of Telecommunications (DoT) has issued the much-awaited guidelines for unified licences, which will replace the existing unified access service licence (UASL) regime. Unlike the UASL regime, which required operators to buy a separate licence for each service, the revised norms will allow them to offer a number of services (including internet TV) under one licence.  Further, the new norms mandate delinking spectrum from operational permits and allows companies to offer services using any technology.

Under the new guidelines, operators will have to pay an entry fee of Rs 150 million to acquire a unified licence while spectrum will be auctioned. Applicants opting for unified licences will have to provide a maximum performance bank guarantee of Rs 2.2 billion. The licence will be valid for 20 years with an option for renewal for a further 10 years.

Moreover, on the expiry of their current permits, telecom service providers will have to migrate to the new licensing regime. All operators will be required to pay a yearly licence fee of 8 per cent of the adjusted gross revenue (AGR) from telecom services.

The new norms have allowed companies to offer inter- and intra-circle roaming in the same or another service area irrespective of the spectrum band held or technology used by the operators. However, it has barred operators from acquiring subscribers in circles where they do not have a licence, as that would lead to spectrum sharing, which is not allowed. These guidelines are aimed at bringing more clarity on the intra-circle roaming agreements that were signed in 2011 by various operators for providing 3G services. DoT had termed such pacts illegal and the issue is pending with the Telecom Disputes Settlement and Appellate Tribunal.

The new regime has also barred cross-holding between service providers. According to DoT, no licensee or its promoters can directly or indirectly hold a stake in another licensee company that holds spectrum in the same service area. Earlier, under the UASL norms, mobile phone companies were allowed to hold up to 10 per cent equity in another operator in the same circle. Companies having arrangements contrary to these guidelines have been given a year to comply.

This move is likely to have a negative impact on companies like Reliance Communications (RCOM) and Vodafone, which, under the previous licensing regime, have a permissible stake of less than 9.9 per cent in other telecom firms.

RCOM holds stake in Reliance Telecom, which has a permit for providing GSM services in eight telecom circles, of which six service areas – Bihar, Odisha, Madhya Pradesh, West Bengal, Himachal Pradesh and Kolkata – are common with RCOM. Meanwhile, Vodafone will have to sell its 4.4 per cent stake in Bharti Airtel as both operators have a service interest in all 22 circles.

Unified licensing is a part of the government’s plan to adopt a “one-nation, one-licence” strategy. According to DoT officials, introducing these norms is the first step in the efforts to prepare the industry for the next round of growth. Meanwhile, other initiatives like finalising the guidelines for mergers and acquisitions as well as spectrum trading will provide clarity on the regulatory scenario for the telecom industry. DoT’s efforts in this direction will pave the way for reducing policy uncertainty and help bring in more transparency in the sector.