The Telecom Regulatory Authority of India (TRAI) Monday set in motion the process of convergence of broadcasting and telecommunications sectors in the country by proposing that single operators be allowed to provide all services under a common licence.

In its consultation paper on issues relating to 'Convergence and competition in broadcasting and telecommunications', the regulator has said that the way forward is to bring licensing, registration powers, regulatory mechanism for the telecom, IT and the broadcast sectors under a common framework.

According to TRAI, with convergence in technology, there was no option except regulation to converge, specifically with respect to spectrum allocation, interconnection and foreign direct investment.

The regulator has therefore proposed that the cable industry be allowed parity with telecom on the FDI limits in view of future convergence of broadband and telephony business.

At present, DTH services has a FDI cap of 20 per cent, and the same product when delivered through cables attracts a cap of 49 per cent, while no cap has been specified for IPTV, which can be delivered through telecom networks.

However, the FDI cap for telecom companies that offer IPTV is 74 per cent, in line with the ceiling for the telecom sector, while 100 per cent foreign investment is permitted for Internet Service Providers.

It has called for the rationalisation of differential custom duty regime and said that duty structures be made identical for equipment used by the telecom and broadcast players to promote effective competition between operators across these sectors.

On licence fee, it has called for a separate class to be created in the unified licensing regime to cover small operators wanting to provide basic fixed telephony over a small area at a reasonable level of entry fee, similar to a niche operator concept for rural service providers.

Spectrum allocation must no longer be application-based, but must be flexible for allowing operators to take advantage of new services and technologies, TRAI said.

The regulator has warned that without a converged regulatory framework, attempts to regulate the communications and broadcasting sectors in the future would result in bottlenecks, which would severely impact the growth of the industry.

"Different regulations for different sectors lead to imperfect competition and give rise to level playing field issues. Similarly, different FDI limits in different industries also give unfair advantage to certain service providers over others, even though the end product may be the same. Divergent regulations also give the opportunity to some market players to exploit this divergence and engage in arbitrage by zeroing in on high profile niche market that have been created by regulation," the consultation paper said.

More importantly, convergence would lead to increased competition and help in the growth of telecom services in the country, the paper added.

The regulator has justified the need for convergence by citing international practices and the shift in rules and procedures in many countries towards an equal treatment of different information and communication infrastructures.

While this marks the first consultation paper on convergence, it is also the third attempt to integrate all technologies -- the first move being the Communications Convergence Bill, 2001, which was not passed by Parliament and the next being the TRAI recommended Unified Licensing (in January 2005), which too has not been adopted by the government.

All stakeholders have been asked to submit written comments on the issue by the month-end, following which, the recommendations would be formally notified, the regulator added.

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