India on Tuesday allowed telecoms operators to share transmission systems, radio access networks and antennae and simplified the approval process for building mobile towers.But radio spectrum, or air waves used for wireless networks, cannot be shared. Telecoms operators in India were earlier permitted to share only passive infrastructure such as mobile towers, buildings and power backup facilities. Sharing infrastructure reduces the operating costs and capital expenditure of wireless telecoms operators, allowing them to maintain margins in a competitive market that has call rates as low as 1 U.S.
The Indian government held least cost subsidy auction (lowest bid for subsidy is the winner) in two parts to disburse the world’s second largest Universal Service Obligation Fund (USOF) for rolling out mobile services in rural areas across the country. For the purposes of the auction, India has been divided into 81 clusters. Part A of the auction disbursed funds for passive infrastructure like towers and Part B dealt with the actual deployment of mobile services. The bidding has been intense for deployment of mobile services (Part B) and most of the bids were for zero subsidy fund and in some cases negative bids were made! This strongly indicates that mobile operators in India perceive deploying mobile services in India’s rural areas to be commercially viable.
The Study of India’s Universal Service Instruments by LIRNEasia researchers Payal Malik & Harsha De Silva, critiqued the Indian government’s policy that made only fixed line operators eligible for USO funds: As of today, the government is giving USO fund support to only the fixed line operators offering services in the rural areas. The over defining terms in the law is a bad idea in a rapidly evolving technology environment, though this correction has been suggested it is quite possible that the previous auctions have left huge amounts of rents that have been appropriated by the incumbent. In an industry that manifests the potential for rapid technological change and innovation, such as telecom, an economic analysis of a problem should not focus too narrowly or exclusively on the best use of society’s resources from the standpoint of today’s technology and resource availability i.e. static economic efficiency but should be viewed from a dynamic perspective.
NEW DELHI, APRIL 13: The government is in the process of amending the Indian Telegraph Act to extend the Universal Service Obligation (USO) fund support to cellular mobile services (both GSM and CDMA). As of today, the government is giving USO fund support to only the fixed line operators offering services in the rural areas. “We are looking at amending the Telegraph Act to accommodate the cellular services and CDMA-based services to reach the rural areas. We are looking at sharing of the passive infrastructure with the cellular service providers,” communications and information technology (C&IT) minister Dayanidhi Maran told reporters. Besides covering the villages, the minister is of the opinion that the wireless services should also provide connectivity to the Railways and highways especially in rural areas.