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TRAI moots convergence of FDI policy regime

Special Correspondent

Issues consultation paper on telecommunication and broadcasting


  • Regulation should be technology neutral
  • Shift in manner of spectrum allocation
  • Stakeholders should deliberate on flexibility

    NEW DELHI: Now that convergence of telecommunications and broadcasting has become a reality, the Telecom Regulatory Authority of India (TRAI) has made out a case for a more convergent regulatory and foreign direct investment (FDI) regime for the different sectors of the two industries to create a level playing field.

    This is the thrust of its consultation paper on Convergence and Competition released on Monday. The paper — on which responses have been sought by the month-end before TRAI formulates a policy document for the Government's perusal — focuses on the need to bring about convergence in all aspects of regulation of the telecommunications and broadcasting industries.

    According to TRAI, there is a broad convergence of opinion that the best way to ensure that regulation does not become a hindrance is to make regulation technology-neutral. The other theme is for regulation to converge across applications, services, technologies, transmission media, and alternative consumer appliances, that is, make licensing service-neutral.

    On FDI, the authority notes that the rules are highly divergent across sectors, applications and technologies. The FDI cap in direct-to-home television is 20 per cent but when the same signals are delivered through cables it attracts an FDI cap of 49 per cent.

    No cap has been specified for IPTV which can be delivered on telecom infrastructure. However, the FDI cap for telecom companies offering IPTV is 74 per cent.

    After detailing these facts and conceding that the broadcasting sector world over is much more regulated than telecommunications, TRAI said: "While there could be a case for restricting FDI on certain technologies, it is not clear if the full implications of these variations have been understood and acknowledged. Here again unintended distortions could take place in the market unless there is a well thought out scheme which requires such divergence on account of other factors.''

    Besides, TRAI has called for a complete shift in the manner of allocating spectrum. Conscious of the fact that the Government is in the process of formulating a new spectrum policy, the authority is of the view that the stakeholders should deliberate on the issue of flexibility of spectrum management in a convergence-driven market. Conceding that it was difficult to define the ideal regulatory model, TRAI has stated that "wherever possible regulation must converge to allow the new convergent technologies the full freedom to exploit market opportunities.''

    Keeping in view the range of convergence-related issues, TRAI has sought views on whether there is a need for having a comprehensive legal framework to deal with various issues arising out of convergence of technologies and services.

    And, if a comprehensive legal framework is required, whether it should be developed around the Communication Convergence Bill, 2001.

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