The Telecom Regulatory Authority of India (TRAI) has recently released the guidelines for Unified Licensing Regime for consultations with all stakeholders.

According to TRAI, there will be three levels of unified licence: National level, Service area level and District level. An applicant can apply for any of them. In the case of a service area level unified licence or district level unified licence, a company can apply in more than one service area or district.

To be eligible for the new permits, all the existing rules under the current regime, including a foreign holding cap of 74 per cent, resident Indians holding top positions and other security guidelines will apply for obtaining the new permits as well. Moreover, the combined net-worth requirement of the company will be Rs 250 million for National level Unified Licence, Rs 25 million for each Service area level Unified Licence and Rs 25 lakh for each District level Unified Licence.

If eligible, licences will be issued on non exclusive basis, without any restriction on the number of entrants in a licence area. Licences will be given on the basis of date of application subject to fulfilment of relevant eligibility conditions. In addition to a Unified Licence, the Licensor also will reserve the right to allocate licences to offer specific services like Mobile Number Portability (MNP) services and such other services as may be recommended by TRAI.

Before signing the license agreement, TRAI has proposed that the applicant company will have to pay one time non-refundable entry fee.  The entry fee for the different types of unified licence will be Rs 200 million for national level, Rs 20 million for each Metro and ‘A' category, Rs 10 million for each B category, Rs 50 lakh for each C category service areas levels and Rs.15 lakh for each district level unified licence.

Most significantly, the draft maintains the governments’ position that unified licences will be given without any spectrum. The licensee will have to apply/bid separately for obtaining spectrum as per the prevailing policy.

The new regime proposes only four types of licences as against the current practice, where multiple licences are issued.  The framework proposed by TRAI is as follows:

Unified License

All public networks including switched networks irrespective of media and technology capable of offering voice and/or non-voice (data services) including Internet Telephony, Cable Television (TV), Direct-To-Home (DTH), TV & Radio Broadcasting will be covered under this category. Unified License implies that a customer can get all types of telecom services, from a Unified License Operator. The operator can use wireline or wireless media.

Class License

All services including satellite services, which do not have both way connectivity with public network will be covered under Class license. This category excludes Radio Paging and Public Mobile Radio Trunking Systems (PMRTS) Services and  includes Niche Operators.

Licensing through Authorisation

This category will cover the services for provision of passive infrastructure and bandwidth services to service provider(s), Radio Paging, PMRTS, Voice Mail, Audiotex, Video Conferencing, Videotex, E-mail service, Unified messaging services, Tele-banking, Tele-medicine, Tele-education, Tele-trading e-commerce and Internet Services  including existing restricted  Internet Telephony ,  but not Internet Telephony in  general.

Standalone Broadcasting and Cable TV licence

This category will cover those service providers who wish to offer only broadcasting or cable services.

Broadly, TRAI’s draft guidelines follows recommendations on ‘Spectrum Management and Licensing Framework', issued in May, 2010, in which the regulator had recommended that the future licences would not be bundled with spectrum. It had also recommended that a unified licence would cover various access services while a class licence would cover VSAT services. There would also be licensing through authorisation and broadcasting licences.

According to analysts, while it is unclear whether standalone operators like internet service providers, NLD and ILD providers will have to obtain a UL to remain in business. If that is the case, they these stand alone operators will have to pay huge additional entry fee for the UL even if they do not wish to expand their area of service. The draft guidelines advocating spectrum-neutral permits on the other hand are expected to benefit broadband wireless access (BWA) auction in 2010.

TRAI has invited comments on these guidelines before the end of January 31, 2012,  based on which the terms and conditions of the final recommendations will be  given.