Salient Features: National Telecom Policy (NTP) 2012

In the first week of June 2012, the Union Cabinet has approved the National Telecom Policy (NTP) 2012. The policy has been released after a delay of one year as it was earlier conceived as NTP 2011.

Background:

The Government had prepared a draft NTP and released it for public comments in October 2011. Several issues forced it to be rechristened and re-relased as NTP 2012.

Salient features & Analysis:

The most important feature of the NTP 2012 is that it promises broadband for all with a minimum download speed of 2 megabits. However, the actual implementation of this feature might be challenging. This is because still India does not have a good broadband penetration. In fact, broadband penetration has been a policy failure in India so far.

The NTP 2012 vows to make India a global hub of domestic manufacturing. This is a mammoth objective and the policy is yet not clear, how this is to be achieved. We here note that in the draft policy it was mentioned that there would be a preferential market access for Indian Vendors, to help telecom manufacturing boost in India. But, the idea was rebutted by the Ministry of Commerce, because the preferential market access for Indian Vendors would violate India’s commitments at the WTO and GATT. This has been followed by an explicit commitment from the Department of Telecommunication that WTO and GATT’s concerns would be kept in view while issuing guidelines implementation and operationalization.

The NTP 2012 has targeted to take the Rural teledensity to be taken from 39 to 70% in next 5 years. It also sets a target that every single Indian has a phone by 2020.

The NTP 2012 has a scope for the formal approval of the new unified licensing regime which allows companies to provide ISP, fixed line, international long distance, national long distance, and a few other services through a single licence. The department has proposed a cost for the unified license to be Rs. 10 Crore. So far, this unified license has not attracted many companies as the companies may be concerned regarding various aspects of migration to the unified license.

The NTP 2012 has envisaged the delinking of licenses from spectrum. It’s worth note that the February 2012 Judgement of Supreme Court had mandated the spectrum auctions, so separation of spectrum and license is already a reality.

The NTP 2012 seeks liberalization of the spectrum.

The new policy envisages Full Mobile Number Portability and work towards One Nation – Free Roaming. The consumers who use national roaming can expect to pay local call charges. But it is still unclear when the ‘free roaming’ will be initiated. There are no visible timelines for full mobile number portability also.

The NTP 2012 mentions cloud computing, next generation networks, IPV6 and Voice over Internet Protocol (VoIP) as thrust areas. All of these are forward-looking aspects of the policy. Its worth note that for last few years, the cellular mobile operators have opposed the VoIP for average users. So, we have to wait and watch whether average Internet users will be allowed to use VoIP.

The NTP has not touches several issues such as spectrum pricing, reserve price for the upcoming 2G auctions, historical pricing of spectrum for operators who have received spectrum beyond 6.2 MHz and the more recent contentious issues of refarming, etc. All of them will have to be dealt via execttive decisions.

Conclusion:

National Telecom Policy 2012 has not promised a time-bound implementation on some key issues and is not a magic wand that can immediately spark investor confidence. It cannot sweep away the anxieties of the sector, which have accumulated since A. Raja’s tenure. If we read it carefully, we find that it has actually supported the controversial policy of refarming the 800 MHz band and redistributing spectrum to fresh applicants. However, for a consumer’s point of view, the NTP 2012 is the beginning of a new golden age in communications. For a consumer, the numbers will be portable and there will be a roaming free communication across all circles of country. This will be helpful for a rapidly increasing migrating population.

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