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Policy News & Views

Volume 1, Issue 2, January 2009

TELECOM

TRAI Moots Steps to Push Rural Telephony
Pointing out the widening gap between rural and urban teledensity, TRAI has called for several measures to improve rural telephony. It has proposed that all operators offering communication services in Rural India and sharing their infrastructure with other players be given financial support from the Telecom Development Fund. At present, all telcos pay 5% of their annual revenues towards this fund—Universal Service Obligation Fund (USOF)

Our view is that in order to increase rural teledensity the universal service policy should be minimalist. The current universal service levy of 5 percent is distortionary especially as large amount of the money collected is unspent. The flaw in the design and execution of the Universal service policy has made it ineffectual.
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Mobile VAS Companies May Stay Unlicensed
TRAI has proposed that Companies providing value-added services (VAS) such as music and videos on the mobile phones will not be brought under a licensing regime. In addition to this the regulator has also decided not to interfere in the commercial agreements between VAS operators and telcos. TRAI is also likely to put guidelines to enable content producer and creators to protect their copyrights. The regulator is also looking at the possibility of issuing norms that will allow VAS companies to sell their products and services directly to the consumers without having to go through the operators

Our view is that this is a welcome step since the current regulatory environment is not very conducive for the content providers. By allowing VAS companies to sell their products and services directly to the consumers without having to go through the operators will address the current unequal bargaining position between the operators and the content providers.
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CLIMATE CHANGE

Global Attention on Carbon Emissions Reduction
The 14th Conference of parties (Cop) to the United Nations Framework Convention on Climate Change (UNFCC) was held in Poznan during December 1 – 12 2008. While India does not have a legal or binding obligation to reduce carbon emission, United States, the biggest carbon emitter continue to state that emerging economies like China, India, Brazil and South African must also take action on reducing carbon emission. India has been pushing for equitable sharing of carbon space.

Our view is that the only discernable framework or logic for India’s stance vis-a-vis the rest of the world is the normative standard that national emissions entitlements should be determined by the principle of “per capita emission entitlements” (PPCEE). However, the nation might be better served by a somewhat more critical examination of India’s naïve stance. PPCEE is problematic because its normative and positive moorings are unclear or do not exist.
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ENERGY

Government to Consider Opening of Nuclear Sector to Private Players
With India’s civil nuclear cooperation with different countries gathering pace, the Government is considering opening up the sector for private players. After a decision in September by the Nuclear Suppliers Group to waive its ban on the trading of atomic technology with India, India has signed agreements with US, France and Russia.

Our view is that the opportunity and risk costs associated with the business of nuclear electricity generation are very high making it unattractive to the investors. Investors are also wary of nuclear plants because of the construction delays and cost over-runs that have historically plagued the industry. Till the Government gives iron clad guarantees to the investors, private capital will shy away from this sector.
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Edited by: Payal Malik
29th December 2008

MORE NEWS
NHAI pulled up for delays in PPP highway projects According to a recent report by Comptroller and Auditor General of India on roads, majority of the 17 road works awarded under the public private partnership (PPP) as part of Phase-I of National Highways Development Programme (NHDP) were delayed.	Cabinet approves Integrated Energy Policy The Union Cabinet has approved an Integrated Energy Policy for the country. A monitoring committee, to be chaired by the Cabinet Secretary, will be set up to review the progress of the policy’s implementation
NHDP's road stretches likely to be built on annuity model The government may switch over from build-operate-transfer (BoT) model to annuity model for the stretches of the National Highways Development Programme (NHDP) that have not received a good investor response. These are mostly in Bihar, Orissa, Jharkhand, Chhattisgarh and Kerala. It is hoped this would make these segments of the projects more attractive to potential bidders	Regulators may be barred from core PPP projects Government agencies that also act as regulators may soon stop partnering with private companies for new ports, power and railways projects. The move will prevent a clash of interest between the government and the private sector in public-private partnership (PPP) projects
Providing Affordable Broadband to Rural Areas Next Priority At a conference on '3G: The Next Wave' Telecom Secretary, Siddhartha Behura said that providing affordable broadband, especially to the suburban and rural communities is the next focus area in telecom. Provision of broadband in rural and remote areas will also help in bridging the so called 'digital divide', he said	Coal Pilferages on the Rise as Shortages Haunt Power Units At a time when a coal crisis is walloping the country’s power sector, with over 50 of the 77 thermal stations in the country facing “critical” fuel stocks, coal is increasingly being siphoned out of mines. Coal India Ltd (CIL) estimates that during the first five months of the current fiscal, over 11,500 tonnes of pilfered coal have been recovered by it in raids conducted across the country.
Government readies blueprint for world's first energy savings market India will have the world’s first market for trading in energy savings. Under the National Action Plan on Climate Change, the power ministry has prepared the blueprint for trading in energy by industrial plants that save energy beyond the target set for them.	No competitive bidding for coal blocks: ministry The coal ministry has ruled out allocation of coal blocks to power, steel and cement industries by way of competitive bidding in the near future and blamed the mines ministry for delaying the bill which would amend the Act under which mining blocks are allotted
Nelp-VIII likely to offer 100 blocks The petroleum ministry is planning to auction over 100 prospective areas for oil and gas exploration by March 2009 under the eighth round of New Exploration Licensing policy (Nelp VIII).	Government pushes through IT Bill; wins digital snooping right The Lok Sabha passed the Information & Technology (Amendment), Bill 2006. The Bill has provisions that will let the authorities intercept messages from mobile phones, computers and other communication devices and block websites in the interest of national security.
Government takes steps to encourage private power players The Government would enact new Electricity Act, 2003, de-license thermal power generation, form Central and State Regulatory Commissions and introduce mega power policy and Ultra Mega Power Projects (UMPP) initiatives among others..	Government announces interest subsidy scheme for the urban poor Aiming at bolstering the sagging economy and providing housing for all, the government has decided to give five per cent interest subsidy for home loans up to Rs one lakh for the urban poor.