Walking a tightrope between cutting telecom costs on the one hand and ensuring healthy competition on the other, the government on Tuesday allowed telecom service providers to actively share infrastructure facilities, but ruled out their sharing spectrum.
What the means is that one company cannot rent out wireless spectrum – a scarce resource in which the government wants to discourage hoarding – but things like antennae and feeders can be set for common use, in addition to towers in which efforts are already afoot to create separate companies. New entrants will gain from the step because they can lower start-up investments and capital expenditure and hasten profitability.
The guidelines announced by the Department of Telecommunications are not expected to affect foreign labels like Virgin Mobile, because its local partner Tata Indicom is only using a brandname while providing the services itself and paying a royalty linked to the subscriber base. So far, telecom service providers and infrastructure providers were allowed to share only passive infrastructure like towers, shelters, and generators. From now they will also be sharing key electronic components such as antennae, feeder cables, nodes, radio access networks and transmission systems.
Sharing of active infrastructure is set to significantly lower the cost of operations for telecom service providers, which, most likely will be passed on to their customers in the form of lowered tariffs. “The guidelines are aimed on reducing the input costs on telecom access providers which the telecom ministry hopes would facilitate reduced tariffs and increased tele-density in rural areas,” DoT said in a statement.
TV Ramachandran, Director General of the Cellular Operators Association of India, said the guidelines will help in delivering “cost effective services in both urban as well as rural areas”.