Telecom Regulator Recommends Introduction of Virtual Network Operators in the Telecom Space & DoT extends full MNP deadline

Telecom Regulator Recommends Introduction of Virtual Network Operators in the Telecom Space

Recently, the Telecom Regulatory Authority of India (“TRAI”) has issued recommendation for introducing Virtual Network Operators (“VNOs”) in the telecom sector vide press release no. 30/2015 dated May 1, 2015. Last year, the DoT, while exploring the possibility to permit entry to the VNOs, had sought the views of the TRAI. Our previous post on the subject can be accessed here.

The TRAI in the recently issued recommendations has proposed introduction of a licensing regime for the VNOs, allowing them to offer all segments of telecom services, including voice, data and video. The VNOs are service delivery operators that provide telecom services without owning spectrum or network infrastructure, but rely on the network and support of infrastructure providers. The VNOs buy bulk quantum of talk-time and bandwidth and then sell the same to end users under their own brand name and tariff packages.

As per the recommendations issued by the TRAI, VNOs are to be introduced on the basis of the mutually accepted terms between a Network Service Operator and a VNO. TRAI also proposes that VNOs can be permitted to set up their own network equipment, in cases where there is no requirement of interconnection with other Network Service Operators. TRAI has taken the view that the terms and conditions of sharing infrastructure between network operators (such as Airtel, Vodafone and BSNL) and a VNO should be left to the market forces. Nevertheless, the TRAI or the DoT shall have right to intervene to protect the interests of consumers and the telecom sector.

With regard to the licensing regime, the TRAI has proposed a separate service authorisation under the Unified License, which is the single license for all telecom services in India. The term of the license for the provision of VNOs is proposed as 10 years, extendable by further periods of 10 years.

In India, Tata Teleservices had partnered with Virgin Mobile for MVNO type venture. The UK based partner later pulled out from the partnership and the brand Virgin Mobile was been merged into Tata Docomo.

DoT extends full MNP deadline

As readers may be aware from our earlier posts, the Department of Telecommunications (“DoT”) had fixed May 3, 2015 as the deadline for implementation of full / inter telecom circle Mobile Number Portability (“MNP”) in India. The said deadline for the implementation has been extended by two months. The DoT has directed the implementation of full MNP across the country by July 3, 2015.

The Cellular Operators Association of India (COAI) had sought extension on the basis that the telecom operators are required to make technical modifications to their networks due to changes in National Numbering Plan for the implementation of full MNP, which would take time of about eight weeks.

One Nation – Full Mobile Number Portability: Inter Circle Portability from May 2015

The Telecom Regulatory Authority of India (“TRAI”) has issued the Telecommunication Mobile Number Portability (Sixth Amendment) Regulations, 2015 vide its Press Release No. 15 of 2015,  for full Mobile Number Portability (“MNP”) initiating the implementation of the ‘One Nation – Full Mobile Number Portability’ from May 3, 2015 onwards.

The TRAI had earlier made recommendations with regard to implementation of full MNP, subsequent to which the Department of Telecommunications (“DoT”) had amended the MNP License Agreement facilitating the same. The DoT had given 6 months time to the telecom service providers to implement full MNP from the date of issuance of the instructions in November 2014. Please refer our previous post in this regard here. However, in order to ensure effective implementation, certain changes were required to be made in the existing MNP Regulations. The TRAI has, after due consultation process, issued the required amendments.

Implementation of full MNP would imply an inter telecom circle portability of mobile numbers, which presently is permitted only within the telecom circle of such user. Once the same have been implemented, the users would be able to retain their mobile numbers even if such user is changing cities / telecom circles being able to avail themselves of full MNP in any part of the country.

The TRAI has also amended the MNP Regulations with respect to certain procedural requirements for the effective implementation of full MNP, such as treatment in case of default in payment to the donor operator (the one from whose network the subscriber is opting out).

As per media reports, about 15-20% of the 940 million users who use roaming services will be benefited, enabling them to keep their mobile numbers. However, the Cellular Operators Association of India says only 2% of the users will be impacted.

The Telecom Commission, which is the highest decision making body of the DoT had given its nod to the implementation of full MNP in June last year. Our previous post relating to the in-principle approval by the Telecom Commission can be accessed here. 

Telecom Operators Demand Allocation of Pending 2G Spectrum

The telecom operators and the Cellular Operators Association of India (“COAI”), the association representing GSM operators, including Bharti Airtel, Vodafone and Idea Cellular among others are lobbying with the Government for allocation of the pending 2G spectrum. The Department of Telecommunications (“DoT”) had earlier this year, in February 2014, held the auction for the 2G spectrum airwaves. Please refer our earlier post on 2G Spectrum Auction 2014.

The telecoms have decided to approach the Government with this demand so as avoid any sort of disruptions in the mobile network coverage in various Indian cities, where the permits of the operators expire next month.

It is understood from various media reports that Airtel’s permit in the 900 MHz band expires in Delhi and Kolkata next month and Vodafone’s permit lapses in the cities of Delhi, Mumbai and Kolkata. Idea Cellular had also won spectrum in 8 telecom circles and also awaits the allocations.

The 900 MHz airwaves won by these telecom operators would be handed over only upon the expiry of the current permit, whereas they are yet to receive the 1800 MHz back-up bandwidth, which was won in the February 2014 spectrum auctions. The COAI is considering approaching the Prime Minister’s Office and seeking intervention in the matter, in case the pending spectrum allocation is not concluded in two weeks time.

The COAI is also demanding for more time beyond the expiry date to ensure that the telecom operators are able to reconfigure their networks to the airwaves, the allocations of which have been delayed.

This issue acquires importance in light of the fact that there might be interruptions in the mobile network coverage of the leading Indian telecom operators in case of non-allocation of the spectrum won and the expiry of the existing bandwidth, resulting in disruption in seamless connectivity for the subscribers.

The Lobby Groups for CDMA operators and GSM Urge the Department of Telecom to Notify the Graded Penalty Regime

The Cellular Operators Association of India (“COAI”) and Association of Unified Service Providers of India (“AUSPI”), the associations for telecom operators, have requested the Department of Telecommunications (“DoT”) to notify the regulatory regime providing for the graded penalty system for violations of the provision of the telecom regulatory regime.

The COAI represents lobby of the GSM companies / operators such as Vodafone, Airtel and Idea Cellular. The AUSPI represents lobby of both the CDMA operators and the dual technology operators, such as Reliance Communications and Tata Teleservices. However, generally observed to be of differentiating opinions, both the COAI and the AUSPI were of the unanimous opinion that more rational penalties must be introduced.

The DoT has attracted criticism by the industry for imposition of the maximum penalty of INR 50 crore, even for minor violations. However, a modification of the regime was proposed, which sets INR 10 crore as the maximum penalty, as recommended by the Telecom Regulatory Authority of India. A committee appointed by the DoT had recommended a rationalised approach for non-substantive violations, like late submission of self-assessment reports and the absence of certification documents etc.

The demand has been made for implementation of the new regime with a retrospective effect, for the reason that the lobby groups feel the industry should not be made to suffer for a delay in the implementation of a policy change, after the notification of the same.

In the graded penalty regime, the penalty amount would be determined by evaluation of the impact on the environment, subscribers, national security and government exchequer of the violations of the operators.

The said system was notified by the previous UPA Government at the Centre, however it has till date not been implemented. The implementation of the new regime was also a part of the 100-day agenda of the present Government, issued soon after it took charge. Please refer our previous post on Department of Telecom’s 100-day Agenda.

India looses over INR 41 billion by not auctioning EVDO spectrum

The Comptroller and Auditor General of India (“CAG”) has attached a losses of INR 4,187 crores (INR 41.87 billions) to the Indian government on account of the Government not auctioning the EVDO (Evolution Data Optimized). The Government did not auction 800 MHz of spectrum for use in the CDMA2000 / EVDO services. The CAG has questioned the said decision of the Government.

As per media reports, this resulted in non- realization of upfront charges and undue favour to CDMA licenses by allowing them to provide 3G EVDO services with the 2G spectrum in 800 MHz band without payment of the charges.

Earlier in 2011, the Cellular Operators Association of India (“COAI”) had raised concerns regarding the CDMA operators offering high-speed internet access, without paying an auction fee. The COAI estimated that this caused a revenue loss of over INR 14,800 crore to the Government. The COAI was of the view that the allotment of EVDO spectrum to CDMA players violated the spectrum guidelines of August 2008.

The CAG has asked the Department of Telecommunications to clarify the said issue of allotment of EVDO spectrum without auction.