Who stole my cheese?

Telecom sector in India was hoping for announcement of reduction in license fees and rationalizing of levies on the sector during Union Budget 2007 – 2008. Instead, the Budget has included development and supply of content for use in telecom and advertising, allocation of work contracts and commercial rentals, in the service tax net. This has not only disappointed the Telecom sector but will in, all probability, lead to increase in cost of telecom services to common man. 

Current business model of sharing revenue between telco, content aggregator and content owner/creator is heavily skewed in favour of telcos. With the announcement of Service Tax on development and supply of content for use in telecom, only future will tell how this additional cost will be shared between the players. Considering that it is telcos who are calling the shots at this time, likely fall out of budgetary move will be that content owners/aggregators will see further shrinking of their share of revenue. 

Service Tax on all work contracts and commercial rent will lead to higher costs to telcos. 

4, 5, 6, 7, ….

According to Trai press release and their directive…
 
… all access providers have to comply with the DOT’s guidelines issued for allocation of short codes. It was observed that some of these short codes were not in accordance with the National Numbering Plan-2003 and DOT’s earlier orders on this issue. As per the guidelines, five digit code starting with level 5 is to be used by access providers for allocation of short codes to their content providers including SMS based services within their network and accordingly all existing four digit short codes are to be prefixed by five to convert the same to five digit codes. Further the existing five and six digit short codes are to be migrated to five digit codes by replacing the first digit or first two digits respectively by five….
 
TRAI has sought compliance of the DoT guidelines from all the access providers as and when the same is implemented but not later than 31st May 2007.
 
Many companies in the industry are protesting against this directive as they feel that it would disrupt their business and might lead to closure of the SMS based services which run between six and eight digit short codes. (Report in ET)
 
Vijay Shekhar Sharma, MD of One97, was quoted as saying in Economic Times “Rather than using suffixes people can use prefixes like Bank-name loan 5-XXXX. Apart from two companies (which built their business around suffixes) and their clients, no one will be affected drastically,”
 
Trai seems firm in its desire to streamline the short code numbering system. What is your uptake on it? Should companies, who have spent on brand building based on short codes, be forced to rework the whole marketing plan or should we continue with the current codes and issue the new ones based on the numbering structure?

New proposal of spectrum distribution by COAI

Cellular Operators’ Association of India (COAI) proposed a hierarchy of preference while allocating additional 2G spectrum in anticipation of release of 45 Mhz by defence services, of which 20 Mhz is marked for 2G services. 

In the proposed hierarchy, the first tier comprised of pan-India GSM operators like Bharti Airtel, Bharat Sanchar Nigam Ltd (BSNL), Hutch-Essar while operators like Idea Cellular and Aircel, who are operating from limited circles, made up the second tier. CDMA operators keen on deploying GSM technology comprised the third category and the new licensee the fourth. This is likely to extend the debate regarding distribution of the spectrum, especially by the CDMA operators and new licensees. (Read here) 

Government defends 74% FDI share in telecom

Government reassured Rajya Sabha regarding their concern for security of the country while allowing 74% FDI in telecom sector. Communications and IT Minister Dayanidhi Maran affirmed that all checks would be practiced to not to jeopardize the security but it will also be ensured that no ‘overdoing’ of it occurs. (Main Story)

Resale of IPLC Bandwidth

The Central government has indicated that it will amend International Long Distance (ILD) license to allow the resale of International Public Leasedline Circuits (IPLC) bandwidth by the carriers in the country. This will lead to substantial drop in prices. (More here…)

Seamless access to IN services

Telecom Regulatory Authority of India (Trai) has passed a regulation making it mandatory for all telecom operators (basic operator, cellular mobile service provider and unified access service provider) to provide their subscribers access to Intelligent Network (IN) services of all service providers. Free phone or toll free number, virtual calling card (VCC) for long distance calls, are some popular examples of such services. Technical and revenue sharing agreements has to be drawn between all service providers within three months, to provide this interconnection. 

  

As reported in Economic Times