Trade Articles

Giving the festival boom to the telecom industry, the UPA government has make out all its plans of giving a bonanza to the sector by slashing down the license fee for the telcom industry with an aim of boosting the operators towards escalating the tele-density. The new rates will all be set to applicable from the next financial year i.e, April 2009. This reduction in the license fees, which have completed over the 95 per cent network roll-out in the service area, will not be applicable in the metros- New Delhi, Mumbi, Kolkata and Chennai. In the present scenario, applicable license fees given by the telecom operators is different across the various licenses and services.

The Department of Telecommunications of India has stated that if the whole percentage which is covered by the total number of development blocks in the service area comes under the license scheme is more than the 95 per cent, then in such cases the universal service obligation would be 3 per cent instead of what it was earlier i.e, 5 per cent. This in turns will make a reduction in the license fees chargeable under category A, B and C, which will become 8 per cent, 6 per cent and 4 per cent respectively. The Indian company with net worth more than Rs. 10 crore has been put under the Category A/Metro, company with Rs 5 crore comes under Category B and with Rs 3 crore in Category C service area. However the said benefit is not extended to metros coverage.

The Dot has candidly said that the move has been taken for boosting the operators for looking various avenues beyond the metros and thus fulfilling various license conditions for network roll-out which will help in increasing tele-density. Esteemed telecom companies- Bharti Airtel, Reliance Communications and BSNL, with their nation wide existence, can execute out the profitable deals as they will be benefit from the government's decision. The United Service Obligation Fund (USOF) has been come down to flat 3 per cent in case of those players who have their services in more than 95 per cent of the residential areas. The USOF provides fund to the telephony sector in the rural area. Throwing the light on the crux of the decision, the DoT has cleared out the fact that the telcom company is required to have 'identifiable physical infrastructure' in the particular vicinity for considering to have its presence over there. Further in making a communication to the telcos, he added that the "Verification of coverage of each development block shall be based on verification of installation of identifiable physical infrastructure of the licensee for providing telecom access services."

With more than 110.01 million connections, Indian Telecom industry has been characterized as the 5th largest sector in the world marketplace. From the 40% growth rate of subscriber base in 2005, it has triggered to 250 million and has also crossed the mark of it. In recent years, telecom industry has entered into the new era of growth where from the production level of Rs 17,833 crore of 2005-06, it has crossed the mark of 26.253 crore in this year financial year. An escalation in the demand of telecom equipments, especially in the area of mobile telecommunications has welcomed the entrants of many foreign companies for taking part in the manufacturing sector. In last 3 years many telcom companies have set up their manufacturing units in various parts of the India.