DoT mulls cap on number of telecom players

In a move that could trigger a new controversy, the Department of Telccom (DoT) has asked the Telecom Regulatory Authority of India (TRAI) to review its no-cap policy for new telecom licenses.

According to informed sources DoT has asked TRAI to review its policy that does not allow cap on issuance of telecom licenses. Dot has said in a letter to TRAI that unlimited licensing in the telecom sector will push spectrum demand at a time when there is sufficient competition in the sector.

The department has also said that existing players need the spectrum, a scarce resource, to expand services and maintain quality.

The DoT had earlier called for applications for new licenses and had given time till 1 October, 2007 but the deadline was advanced to 25 September without explanation or reasons and prospective players who applied between 26 September to 1 October had to forgo the licenses.

One of the aggrieved players then approached the Delhi High Court, which faulted the arbitrary manner in which the department had moved and struck down the order as arbitrary and unjustified.

According to small players, in an attempt to stall a rush for applications, DoT seems to be leading TRAI to raise concerns about scarce spectrum and thereby stymie the entry of new players to the benefit of existing operators. This, they point would jack up the value of the spectrum and work to the disadvantage of new players who intend to enter the market.

According to market watchers, the move could be a stratagem to get around the court decision and since DoT's 25 September deadline has been quashed, a policy change could be activated to keep around 24 companies out of the ring.

If a cap is now imposed it will pull the plug on about 24 companies whose applications for new licences are pending with the government. The companies include AT&T, Moser Baer, Sterlite Technologies and the Hinduja Group which had submitted applications in 2007 but denied the licences after DoT changed the cut-off date from 1 October, 2007 to 25 September 2007.