One Nation, One Licence: TRAI recommendations on a unified licensing regimeAfter several rounds of consultation, the Telecom Regulatory Authority of India (TRAI) has published its recommendations on the Terms and Conditions of Unified License (Access Services). These guidelines are important for players whose licences were cancelled by the Supreme Court in February 2012. In a letter to TRAI, the Department of Telecommunications (DoT) had stated that new licences had to be issued to successful bidders in the recently concluded spectrum auction in November 2012. It had also suggested that as an interim measure, a service area-level unified licence (access services) may be granted only to the new players. Meanwhile, the regulator has sent the guidelines to DoT for its consideration. Once approved, players with cancelled licences can apply for new permits without owning spectrum. TRAI has now recommended that substantial equity or cross-holding requirements should be linked to the amount of spectrum held by the companies. The regulator has said that since spectrum is no longer linked to the licence, cross-holding norms in the unified licence were not required and that this condition should be included in the wireless operating licence (WOL) agreement. As per the existing cross-holding norms, a single company or person cannot have more than 10 per cent equity in more than one licensee in the same service area. A unified license, as stipulated in the National Telecom Policy, 2012, will allow operators to provide all telecom services under a single licence. Currently, operators require different licences for providing services such as voice, internet and long distance. TRAI has also suggested reducing the maximum penalty for violating licence norms from Rs 500 million to Rs 100 million. The regulator has recommended the cancellation of licences following the fourth violation. Further, TRAI has differentiated between major and minor violations and recommended a separate set of penalties for each category. It has said that the tripartite agreement between the government, company and lenders should include spectrum, as it can be used as collateral, and this should be included in the WOL agreement. TRAI has recommended two separate licences – a national or service area unified licence and a separate "Wireless Operating Licence" – which will eliminate the need for licence amendment every time an operator receives spectrum in different bands.
TRAI’s key recommendations include:
However, the licensee should be allowed to carry intra-circle long distance traffic without applying for an additional licence. Subscribers availing of this service shall be given two options. They may use another operator’s network in the same circle (subject to the licensor’s or TRAI’s regulations/directions/orders) or sign 14 mutual agreements with the national long distance operators for carrying intra-circle long distance traffic. The format of the tripartite agreement involving the licensor, the licensee and the lenders should be modified to include the “spectrum” clause and prescribed in the WOL agreement. The licensee should be responsible for and is authorized to own, install, test and commission all the systems applicable for providing services under their licence agreement. However, before commercially launching any service allowed under this agreement, the licensee needs to inform TRAI and the licensor at least 35 days in advance along with the details of adequate monitoring facilities for the service available with the licensee. The licensee ought to inform TRAI and the licensor at least 15 days prior to launching any new value-added service. The licensor or TRAI may impose a financial penalty for any violation of the terms and conditions of the licence agreement. In the case of a major violation, operators will be fined four times, after which their licence will be cancelled. For minor violations, the penalty will be Rs 100,000-Rs 2.5 million, and for a major violation, it will be between Rs 5 million and Rs 100 million. The statutory provisions and the rules framed under the Indian Telegraph Act, 1885 or the Indian Wireless Telegraphy Act, 1933, the TRAI Act, 1997 (as amended) or the Information Technology Act, 2000 will govern the licence agreement. Any order passed under these statutes shall be binding on the licensee. Revenues generated from intra-circle roaming services should not be excluded from an operator’s gross revenues, while calculating the adjusted gross revenue (AGR). An operator’s performance bank guarantee (PBG) can be excluded from the unified licence (access services) but can and ought to be retained as part of the WOL. The licensee is allowed to partner with other operators for interconnection agreements that conform to TRAI’s regulations and directives. This includes the provisioning and installation of any equipment for this purpose. The licensee shall follow the guidelines or directions prescribed for disaster management/emergency response services or any other instructions issued by the licensor or TRAI. To ensure compliance with roll-out obligations, the licensee needs to meet the following conditions in each phase of service roll-out:
For all telecom circles except Delhi, Mumbai and Kolkata, the licensee is required to submit PBGs for Rs 140 million per circle in the prescribed format, valid for a minimum of six years before signing the licence agreement. The validity period for the PBG can be further extended by the licensor, depending on the requirement for a period not exceeding two years from the expiry of the previous PBG. In the Delhi, Mumbai and Kolkata circles, the PBG of Rs 70 million per circle is to be submitted by the licensor in the prescribed format, valid for a minimum of two years before signing the licence agreement. The validity period of the PBG can be further extended by the licensor, depending on the requirement for a period not exceeding two years from the date of expiry of the previous PBG. For the purpose of levying spectrum charges, only revenues from wireless services shall be valid while calculating the AGR. Further, the revised definition of “spectrum usage charge” should be applicable not only to new licensees, but also to all existing UASL/CMTS licensees so as to provide a level playing field. TRAI may undertake regular spectrum audits to ensure efficient spectrum management. For conducting such audits, the licensees should provide all the data, reports, test equipment, etc. to and allow the inspection of their installations and network sites by TRAI. Operators whose entire spectrum in a particular band (900 MHz/1800 MHz and 800 MHz) is or has been liberalised would be permitted to share spectrum without any additional one-time spectrum charge. These companies will be governed by guidelines issued by the licensor from time to time. Also, detailed guidelines for spectrum sharing and a one-time charge for liberalising currently held spectrum would be issued. Spectrum trading is not allowed at present. |