Bangalore: India's new Unified Telecom Licence will not produce the groundbreaking effects markets are hoping for, if the regulator does not remove the bias and advantages it has introduced for certain kinds of carriers, according to research and advisory firm Gartner.

Although the new regime is certainly forward-looking, Gartner believes it will not, as it stands, produce the level playing field for competitors in the Indian telecom market.

"An already price-sensitive cellular services market will become ferociously competitive as wireless local loop carriers enter what has been their domain," said Kobita Desai, principal analyst at Gartner's offices in Mumbai. "With predominantly low-margin prepaid users, the wireless industry could see a price war that will eat into its profit and hurt its prospects as a result," she said in a statement.

The wireless industry needs to focus on business users, in order to address falls in average revenue per user (ADRU) that will inevitably result from such a price war, she added. Wireless operators should tap into India's abundant resources for application development, in order to create services that would attract business users.

The need for Telecom Regulatory Authority of India (TRAI) to broaden the licence to include long- distance and Internet services, as quickly as possible is crucial, according to Gartner. It also needs to address the vital question of how to build an obligation for all licensees towards universal services beyond metropolitan areas. Failing this, fixed services, particularly broadband access services could suffer, leaving India as a laggard in broadband deployment. This will be a particularly decisive issue for users outside of urban areas.

"We also believe consolidation will be a natural consequence of the unified access regime," said Bhawani Shankar, principal analyst for Gartner, UK. "To ensure that it does not jeopardise the success of the regime, TRAI must take special care to ensure both intra-circle and inter-circle consolidation – where it satisfies business norms and law – is unhindered."

Given its experience of working with regulators in other countries, Gartner expects that each region will not be able to support any more than three or four operators. This could mean that close to 50 per cent of current service providers could be eliminated from the competitive landscape.

Judged on the whole, the unified licence is a welcome first step, but much more needs to be done, according to Gartner.

PTI