The Telecom Regulatory Authority of India (TRAI) has released recommendations (pdf) on the amendment in the ISP License agreement to incorporate the terms and conditions mentioned in the Notice Inviting Applications (NIA) (pdf) for the use of Broadband Wireless Access (BWA) spectrum issued on February 25, 2010.
The Department of Telecommunication (DoT) had previously sought TRAI’s recommendations to incorporate terms and conditions mentioned in Notice Inviting Applications (NIA) to the ISP License agreement via an amendment in December 2011. Following this, TRAI had released a consultation paper on this topic on March 15, 2012, wherein it had proposed that all the terms and conditions can be incorporated in the licence agreements of the ISPs, who had received BWA spectrum through the auction.
TRAI stated that it had received comments from five stakeholders which expressed a similar opinion, although some stakeholders had called for a level playing field between UAS/CMTS licensees and ISP licensees and stated that ISPs should not receive any additional benefit because of the amendment.
– Validity Period for BWA Spectrum: Through the current recommendations, TRAI has recommended that a validity period clause for use of BWA Spectrum should be added. It stated that ISPs should be authorized to use the BWA Spectrum for 20 years from the date on which BWA spectrum was awarded for commercial use, provided that the operator continues to have an ISP Category ‘A’ license and the BWA license was not revoked or surrendered earlier.
It noted that if the category ‘A’ license of the operator was cancelled or terminated for a specific reason, the operator will automatically forfeit the spectrum usage rights. However, if the license expires before the expiry of the BWA Spectrum rights, the license validity can be extended for five years at a time, up to 20 years from the effective date. Although, the extension of other spectrum rights (if any) will be specified at the appropriate time.
TRAI has also recommended to modify the existing clause in the UAS and CMTS license agreements to allow them to commercially use the BWA spectrum till the validity of the UAS Licence agreement or for a period of 20 years from the date on which the BWA Spectrum was awarded, whichever is earlier.
– License Fee Charges: TRAI has also recommended the removal of the annual license fee clause from the license agreement, which had mandated UAS and CMTS operators to pay an additional annual license fee of about 1% of its Adjusted Gross Revenue (AGR) generated the services using BWA spectrum. TRAI stated that it believes NIA doesn’t encourage double license fees and a separate clause for license fee based on the revenues generated from services using BWA Spectrum is unnecessary.
– No Double Spectrum Fee: TRAI has recommended that the existing radio spectrum charges clause in UAS and CMTS license agreements should be modified to prevent double spectrum usage charges. TRAI has proposed that BWA Spectrum assigned to the licensee should not be taken into account while determining the applicable spectrum to collect spectrum usage charges. Further, the revenue generated from services using BWA spectrum should not be taken into account, while calculating the adjusted gross revenue (AGR) for collecting spectrum charges based on revenue share.
However, TRAI recommended that all licensees (UAS, CMTS and ISP) should pay an additional 1% of AGR generated from the services using BWA spectrum as an annual BWA spectrum usage charge, quarterly in advance. It stated that this usage charge will apply from the effective date i.e. date on which the license was awarded, although there will be no annual BWA spectrum usage for the first year.
– BWA Spectrum Revenue Within Gross Revenue: TRAI also recommended that the revenue generated from the services using the BWA spectrum should be included within the gross revenue definition in UAS, CMTS and ISP license agreements.
– Compliance of Roll-out Obligations: TRAI has recommended that ISPs will be mandated to provide street level coverage using the BWA spectrum in at least 90% of the metro service areas within five years of the effective date and at least 50% of the rural short distance changing areas (SDCAs), failing which the BWA spectrum provided will be withdrawn.
– TRAI has recommended the extension of the breach, revocation and the surrender clause mentioned in the NIA to ISPs, according to which the TRAI can impose fines or revoke BWA spectrum if there is any breach of the conditions laid down while providing the license. ISPs can also surrender its BWA spectrum by providing a 60 day notice to the regulator and 30 days notice to all its customers.
– TRAI has also recommended the addition of the spectrum merger clause mentioned in the NIA to the ISP agreement, according to which, if two or more licensees having BWA spectrum blocks merge, they will be allowed to retain only one BWA Spectrum block and surrender the remaining blocks in that service area, unless TRAI decides otherwise in the future. Further, TRAI has also recommended the addition of a clause which mandates the ISP licensees to abide by all the terms and conditions mentioned in the NIA for the auction of 3G and BWA Spectrum issued on February 2010.