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TRAI asks if hotels offering Internet or voice access should buy a telecom VNO license

Direct in Dialing (DID) facility allows companies or residents to purchase a block of telephone numbers from telecom operators, and deploy it in a closed manner within a company/residential plot, using a private branch exchange system (PBX). An example of DID is when, in a hotel, users in different rooms can make and receive calls within the premises for free.

In its latest consultation paper(pdf), the telecom regulator TRAI is asking whether these franchisees operating DID services could be migrated to a new Unified Licensing (UL) based Virtual network Operator (VNO) licensing regime, in order to allow them to provide voice and Internet services. A VNO is a licensed telecom entity which leases access infrastructure from a telecom operator or multiple telecom operators, to offer access services under its own brand; An example of a franchise operation is something like Virgin Mobile in India, which was operating on the infrastructure of with Tata Teleservices.

Nikhil adds: Effectively, the TRAI is asking whether each hotel or place which offers such facilities should buy a government license to offer Internet access. Note that many of such places offer Internet access without having to buy a license, so this would lead to a regulatory overhead.

Issues related migration of DIDs to VNOs

TRAI pointed out that as of now DID franchisees are allowed to offer voice services only within a wireline network and in order to allow them to offer cellular-based services, it earlier issued guidelines allowing migration to the cheaper Category B VNO license.

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However, some issues pertain if this is allowed: Currently, VNO licenses are given out on the basis of Licensed Services Areas (LSAs) or telecom circles that a VNO operator is looking to operate in. In some cases, subscribers of a Cat-B VNO operator might roam outside their home network and the VNO operator might not have roaming arrangements outside the home circle. TRAI says this inconveniences the customer and is inviting comments from telcos and stakeholders to fix the issue.

TRAI also provides a workaround for the above issue. It is considering whether to create a new category of VNO Cat-B license under the Unified Licensing (UL) regime allowing companies to re-sell wireline (voice and broadband) services only with the exclusion of cellular services. Currently, VNO licenses are being given under an independent VNO framework, and not under the UL regime. TRAI also asks if such UL-based VNO operators could be allowed to enter into agreements with more than one telco for reselling services. It also asks if such operators could be subject to the same obligations, requirements, orders, etc. that its underlying telecom operator is subjected to.

QoS, compliance, penalties for Cat-B VNOs

DID franchisees are small and medium level entrepreneurs who are “guided under the operational framework” of the telecom operator they are partnering with. They remain as resellers of data and voice and TRAI is looking at equating a number of requirements in order ensure service compliance. The TRAI is looking at setting minimum net worth requirement, bank guarantee amount, entry fee, Quality of Service (QoS) requirements, and a penalty structure for Cat-B VNO operators violating license conditions or service quality.

Questions for consultation

Stakeholders, telcos and the public can forward comments to advmn@trai.gov.in by 24th April. Following are the questions:

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Q1. Is there any need to introduce Cat –B VNOs in the sector?

  1. i) If yes, should the existing DID franchisees be mandated to migrate to UL (VNO) Cat-B based licensing regime? Do you foresee any challenges in the migration from franchisee regime to licensing regime?
  2. ii) If no, how DID franchisee can be accommodated in the existing licensing regime in the country?

Q2. Based on the complexities discussed in Para 13-15 above, should the scope of UL (VNO) Cat-B licensee be limited to provide landline (voice) and internet services or should these be allowed to provide mobile service also? In case mobile services for such licensees are allowed, how the issues enlisted in Para 13-15 will be addressed? Please explain in detail.

Q3. Can the license duration for UL (VNO) Cat-B be kept 10 years which is at par with other licenses issued under UL (VNO) policy? If no, justify your answer.

Q4. What should be Networth, Equity, Entry Fee, PBG, FBG etc. for District level UL (VNO) Cat.-B licensee in case these are allowed for Wireline and Internet services only? Answer with justification.

Q5. What should be Networth, Equity, Entry Fee, PBG, FBG etc. in case Cat.–B VNOs are allowed to provide mobile access service also? Please quantify the same with justification.

Q6. Keeping in view the volume of business done by DID franchisees, what penalty structure be prescribed for UL (VNO) Cat ‘B’ licensee for violation of UL (VNO) Cat.-‘B’ license terms and conditions?

Q7. Should the UL (VNO) Cat.-B licensees be treated equivalent to the existing TSPs/VNOs for meeting obligations arising from Tariff orders/regulations /directions etc. issued by TRAI from time to time?

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Q8. What QoS parameters shall be prescribed for UL (VNO) Cat.‘B’ licensees?

Q9. Based on the business and operational requirements as discussed in Para. 21 above, should UL (VNO) Cat. ‘B’ licensees be permitted to enter into agreement to hire telecom resources from more than one TSP in its area of operation for providing voice and internet services through wireline network?

Q10. Do you foresee any challenge in allowing such arrangement as discussed in Q9 above?

Q11. Please give your comments on any related matter not covered in this Consultation paper.

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