Trai sticks to stand on telecom licences

Trai sticks to stand on telecom licences

New Delhi: The Telecom Regulatory Authority of India (Trai) has reiterated its earlier suggestion that all future telecom licences be unified and that spectrum be delinked from this, while presenting recommendations regarding the issue of new licences and the migration of existing ones.

The recommendations are the logical follow-up to a similar suggestion by Trai on 11 May 2010 in its submission to the department of telecommunications (DoT) on the spectrum management and licensing framework. The spectrum management recommendations will form the basis for the National Telecom Policy, 2012, that DoT is working on.

“In the new licensing regime, as the spectrum has been delinked from the licence, it has been recommended that Trai should be entrusted with the function of granting all types of unified licences," the regulator has suggested in its latest recommendations.

“At about 38%, rural teledensity remains just about one-fifth of the urban teledensity of 169%. The rural-urban gap in terms of last-mile connectivity is in some ways akin to the dearth of roads, power, water, sanitation systems and health management," Trai said.

For the licence fee, Trai has suggested a one-time, non-refundable entry fee of 15 crore for a national-level unified licence; 1 crore for a service-area-level licence, except for Jammu and Kashmir and the North-East, where it will be 50 lakh each; and 10 lakh for each district-level unified licence.

With regard to what has to be done when the licences come close to expiry, Trai has suggested that the word “extension" be replaced by “renewal", signifying that an operator will need to qualify according to the prescribed criteria to continue to operate after the expiry date. Many of the older telcos, including Bharti Airtel Ltd and Vodafone India Ltd, will see some of their oldest licences expire in 2013-14.

On the issue of penalties, the regulator has suggested reducing the maximum fine to 10 crore from the current 50 crore. Trai has also suggested that the quantum of penalty be based on a number of factors, including the nature of violation, the number of occurrences of the violation by a service provider, and according to broad categories of major and minor violations laid down by the regulator.

As to licence fees and spectrum charges for new licences, Trai has suggested that while the spectrum usage charge only be applied to mobile operators using spectrum based on the revenue from mobile services, licence fees should be charged as they are now—a percentage of the total revenue directly accruing to the operator. Operators currently pay a certain percentage of adjusted gross revenue (AGR) as licence fee and spectrum usage charge, irrespective of whether revenue comes from a specific service or not. The Telecom Commission has cleared the recommended 8% of AGR as licence fee.

Trai has suggested that since spectrum should be delinked from the licence, it should be responsible for granting the unified licences.

The latest recommendations come after DoT had written, on 10 October, to Trai asking for specific guidelines to the suggestions made in the spectrum management recommendations. Trai had earlier, on 10 February, placed an initial set of guidelines for unified licences and migration on its website, asking for comments from stakeholders. “Based on comments received in the consultation process and its own analysis, the authority has finalized its recommendations in this regard," Trai said in a statement on the recommendations.

On the issue of telecom tower companies coming under the unified regime, Trai recommended that companies not engaged in commercial telecom-related activities not be mandated to take unified licences, and those that want to provide telecom services themselves or are selling, leasing or renting their infrastructure to telecom licensees be brought under the licensing regime.

“There are positives and negatives. We see no problems with delinking of spectrum and licences, fees being brought down, and the rationalization of penalties that we had asked for," said Rajan Mathews, director general of Cellular Operators Association of India.

“There are negatives though. Internet telephony being opened up is a problem especially for operators who have paid a lot of money for spectrum. Bringing the tower companies under the licensing regime is also a surprise, despite the minister saying that the issue would be looked into," he said.

Based on an earlier recommendation from Trai, DoT has already opened up Internet telephony under its new telecom policy.

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