LF and Spectrum

Section 4 of the Indian Telegraph Act 1885, gives the Central Government of India, exclusive privilege of establishing, maintaining and working of Telegraph (Now Telecommunications) operations in India. Under the proviso to the said Section, the Government also had right to transfer to any person, this privilege, by way of granting License on such terms and conditions as deemed fit. Accordingly, until the year 1994, providing of Telecom Services in India was solely held by the Department of Telecommunications, under the Ministry of Communications, Government of India.

Nevertheless, due to considerable demand for telephones, the resources of DoT were engaged only in providing basic telephony on priority basis and the demand could not be met. In order to meet the growing demand for telecommunications, which could not be met by the DoT in an acceptable manner, in the year 1994, the Government announced the National Telecom Policy (NTP'94). NTP 1994 also recognized that the required resources for achieving these targets would not be available only out of Government sources and concluded that private investment and involvement of the private sector was required to bridge the resource gap. The Government invited private sector participation in provisioning of services in a phased manner from the early nineties and thus the Indian Telecom Sector was compulsorily opened to private participation by granting Licenses to the Telecom Companies registered under the Indian Companies Act 1956. CMTS was introduced in India on a commercial basis in the four metro cities in the year 1994 and later to other Telecom Circles.

Telecom operators are required to obtain a license from DoT under Section 4 of the Indian Telegraph Act, 1885. The licenses / registrations issued by the Department can be broadly classified into three categories:

1. Commercial licenses
Are licenses under which telecom services are provided by the licensees to third parties. The commercial licenses include-BASIC, CMTS, UASL, NLD, ILD, IP-II, ISP & VSAT. The License fees are recovered as revenue share at a prescribed percentage, based on the service Area, of the Adjusted Gross Revenues (AGR).
2. Captive licenses
Are licenses under which services are provided within the Closed User Group and the network is not connected to the Public Switched Telephone Network. These include-VSAT, OFC links and, Microwave Links. The license fee is normally fixed per installation.
3. Other service Providers (OSPs) & IP-I.
As per New Telecom Policy (NTP) 1999, OSPs such as Tele-banking, Tele-medicine, etc will be allowed to operate by using infrastructure provided by various access providers for non-telecom services. These require only a Registration. No License fee is payable by the OSPs/IP-I.