From a tussle with the Department of Telecommunications (DoT) on the appropriateness of cancelling licences over non-fulfilment of norms to laying down the law for telemarketers, the Telecom Regulatory Authority of India (TRAI) had a busy 2011.

The regulator undertook many new initiatives during the year. These included its recommendations to curb unsolicited calls and text messages, guidelines on the use of clean technologies in the telecom space and encouraging indigenous manufacturing of telecom equipment. The regulator also drew up a road map for several upcoming technologies and services, such as advanced mobile broadband services, 4G and mobile-based financial transactions.

In the process, however, the regulator managed to ruffle a few feathers as well. For instance, its recommendations on the procedure for value-added service (VAS) companies to provide services to consumers met stiff opposition from VAS providers. As per the regulator’s proposal, VAS providers are required to obtain a confirmation from the consumer through SMS or email within 24 hours of activating a particular service. The service provider should bill the consumer only if such a confirmation is received, failing which the service should be discontinued. The VAS providers protested that the proposal would restrict the growth of these services, apart from causing substantial revenue losses. A look at the significant regulatory developments of 2011…

Mobile number portability

TRAI facilitated the launch of nationwide mobile number portability (MNP) starting January 2011. In November 2009, it fixed the ceiling charge for porting (paid by the subscriber to the operator) at Rs 19, which is the lowest in the world.

Over the year, TRAI kept a close watch on the implementation of MNP by various operators. At present, it is closely examining Bharti Airtel and Vodafone Essar for allegedly violating MNP norms, and has issued show-cause notices to the operators.

Telemarketing calls

In December 2010, the regulator issued the Telecom Commercial Communications Customer Preference Regulations, 2010 to provide an effective mechanism for curbing unsolicited calls and text messages. The regulations were implemented officially in September 2011. As per the recommendations, no operator can permit a customer from sending more than 100 SMSs per day per SIM. Further, TRAI recommended imposing a maximum fine of Rs 0.25 million on telemarketing companies for making unsolicited calls or sending text messages to subscribers registered in the National Consumer Preference Registry, a modified version of TRAI’s Do Not Call Registry.

Thereafter, industry bodies such as the Cellular Operators Association of India asked TRAI to reconsider limiting the number of text messages a user can send per day. The industry body said that this regulation may pose a potential challenge to the fundamental rights of the subscriber.

In response, the regulator exempted various service providers, including e-ticketing agencies and social networking sites, from the new limit. It also increased the message limit to 200 SMSs per day per SIM for a subscriber.

Mergers and acquisitions

Spectrum allocation, and mergers and acquisitions (M&As) were high on TRAI’s agenda in 2011. At the behest of DoT, the regulator made several recommendations pertaining to these subjects while framing the National Telecom Policy (NTP).

Under the Spectrum Management and Licensing Framework, the regulator said that 2G spectrum should be priced at par with 3G spectrum. Besides this, it maintained that operators whose licences are up for renewal should be charged at rates based on 3G prices.

The regulator also proposed that the licence fee paid by the operators, which is currently 6-10 per cent of the adjusted gross revenue, should be made a uniform 6 per cent.

With regard to excess spectrum, TRAI said that each unit of excess spectrum held by an operator beyond the 6.2 MHz limit should have a one-time price of Rs 45.71 billion (pan-India).

TRAI’s proposal to charge a hefty amount for excess spectrum elicited strong protests from the industry on the grounds that the suggestion was discriminatory in nature and would have an adverse impact on the sector. Thereafter, several operators approached the Telecom Disputes Settlement and Appellate Tribunal against TRAI.

Meanwhile, in a departure from TRAI’s recommendation to reduce the licence fee, the Telecom Commission favoured imposing an 8.5 per cent uniform licence fee on  all operators. The commission is yet to take a call on whether a one-time fee on excess spectrum should be imposed.

Further, to promote M&As in the sector, TRAI suggested that, post-consolidation, the resultant entity could have a maximum revenue per subscriber market share of 60 per cent. Companies with a revenue market share of up to 35 per cent would be automatically approved, while those between 35 per cent and 60 per cent would have to be referred to TRAI for approval.

The limit on spectrum holding for the combined entity would be 25 per cent of the total spectrum held in that service area. Spectrum sharing would also be permitted within this 25 per cent limit. The Telecom Commission approved the regulator’s recommendations in this regard.

Green telecom

To promote the use of innovative clean solutions in the telecom industry, TRAI released a consultation paper on “Green Telecommunications” in February 2011. After receiving comments from the stakeholders, the final recommendations on this subject were issued in April 2011.

These guidelines discussed various strategies to reduce carbon emissions, promote energy efficient technologies, evolve a framework for a carbon credit policy and manage e-waste in the sector.

In general, the regulator recommended that measures to promote the use of green technologies should be an integral part of the NTP. Also, at least 50 per cent of the rural towers and 33 per cent of the urban towers are to be powered with hybrid power by 2015, and all rural towers and 50 per cent of the urban towers are to be hybrid powered by 2020.

Telecommunication Infrastructure Policy

In the wake of the growing importance of telecom infrastructure in the country’s development, TRAI released its recommendations on the Telecommunication Infrastructure Policy. It recommended that DoT should bring infrastructure providers (IP-1) under the unified access service (UAS) licence regime.

Further, TRAI has also suggested allowing infrastructure providers to install and share the active network, subject to the condition that they are brought under the proposed unified licensing regime. Existing laws permit the sharing of passive infrastructure only, while TRAI recommends the sharing of active infrastructure as well.

One of the key suggestions made by TRAI is the inclusion of mobile virtual network operators in the proposed unified service licence regime.

IMT-Advanced mobile broadband services

In order to facilitate the growth of systems like International Mobile Telecommunications-Advanced (IMT-A) in the country, TRAI brought out a consultation paper on IMT-A mobile broadband services. The key issues raised in the paper were the identification of suitable spectrum bands, the block size of spectrum to be auctioned, the maximum spectrum to be permitted to a bidder, the eligibility criteria for bidding, rollout obligations, spectrum usage charges, quality of service parameters, security and other related concerns.

Rollout obligations

The issue of cancelling telecom licences owing to non-compliance of rollout obligations has been a long-standing issue with TRAI. In 2010, the regulator sent DoT its suggestions pertaining to the licences given to companies (from December 2006 onwards), which failed to comply with the rollout obligations. However, DoT rejected most of the regulator’s suggestions.

Thereafter, in July 2011, TRAI revised its recommendations. DoT and TRAI divided the 145 licensees under scrutiny into four groups and TRAI made individual recommendations for each.

•   Group I: This comprises 43 licensees, of which nine companies have already been issued a show-cause notice by DoT. It is in the process of issuing a show-cause notice to three more companies. For the remaining 31 companies, TRAI has recommended that keeping in mind the provisions of the UAS licence regime, the licences of these companies should be cancelled and liquidated damages be levied.

•  Group II: This comprises 31 companies categorised as A2 and B2 licensees. TRAI has recommended that DoT seek legal opinion on the issue of cancellation of these licences.

•   Group III: This group comprised five companies, which TRAI had categorised as D1 licensees. TRAI recommended that Videocon’s licences in four circles be cancelled as per licence conditions and liquidated damages be imposed. TRAI considers the case of the fifth licensee, S Tel, to be sub judice.

•   Group IV: This comprises the remaining 66 licensees. Of these, the regulator agreed with DoT that a show-cause notice for the cancellation of licences be issued in three cases. Further, the regulator has asked DoT to calculate the amount of liquidated damages to be imposed on the operators.

•   For dual-technology spectrum holders, the regulator recommended that the cellular mobile telephone service/UAS licence be amended to incorporate contingent rollout obligations.

Telecom equipment manufacturing

Aiming at enhancing the share of domestically manufactured telecom products, TRAI made recommendations under the Telecommunications Equipment Manufacturing Policy. The key measures proposed by TRAI include:

•   All government licensees are required to give preference to infrastructure providers, before accessing low value-added products or imported products.

•   Setting up a telecom research and development corporation at an investment of Rs 150 billion. Of this, Rs 100 billion would be a corpus, the interest from which would be used to fund research activities by way of soft loans, grants, reimbursement of R&D expenses and intellectual property rights fees.

Conclusion

The year 2012 has already begun on a busy note for TRAI. The regulator has issued the Telecom Consumers Complaint Redressal Regulations, 2012 and the Telecom Consumers Protection Regulations, 2012.

The regulator has chalked out a tentative action plan for 2012 as well. It has, for instance, already asked industry stakeholders for their comments on drafting a policy for companies that want to exit the telecom space. The regulator has issued a pre-consultation paper in this regard.

TRAI is also considering introducing a system to compensate users for substandard quality in telecom services, which would tackle issues such as call drops and the inability to connect to an operator’s network. The regulator is currently holding discussions with various service providers in this regard.

Net, net, the year 2012 is expected to put the regulator through its paces more vigorously.