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Summary: TRAI recommends differential licensing for access network providers

Amid problems ailing the Indian telecom market, TRAI proposed steps to unbundle the current licensing regime but industry associations had mixed reactions to these recommendations.  

The Telecom Regulatory Authority of India on Thursday announced recommendations to the Department of Telecommunications to “unbundle” licensing by creating a new class of telecom entities called “access network providers”. These recommendations were created to provide a broad framework for Virtual Network Operators (telecom operators who use leased infrastructure) seeking and entering into an agreement with the network providers. “Implementation of these recommendations are likely to result in increased sharing of network resources, reduction of cost, attract investment, strengthen the service delivery segment, and could also prove to be catalyst in proliferation of 5G services for Industry 4.0, enterprise segment and various other use cases, in a localized manner,” TRAI said in its press release.

These recommendations are more relevant in a competitive telecom market with several players, with different players having access to specific geographies. However, telecom in India is a far cry from this pre-2016 world now — there are just three telecom operators (one of whom is struggling to survive), and they have a significant amount of control over their networks end to end — outside of few specific contexts, VNOs are practically non-entities. While in theory, these rules seem to allow for more interoperability and an unbundled market in the middle mile of telecom networks, the fruits of such changes in the telecom license framework can only happen if the market looks drastically different than it does today.

Summary of recommendations

The regulator recommended that:

  1. Access Network Provider (network layer): TRAI recommended that a regime be created for ANPs, and that these entities should not sell services directly to end users, but rather work with telcos. This provider class will be able to buy and trade spectrum, use it for backhaul, and provide wireline connectivity as well, and sell usage of these resources to VNOs. It can share its infrastructure, and be subject to the same license fee as access providers. If a provider under the extant Access Service Authorisation wants to move to this kind of service profile, it can do so.
  2. Licensing and rules: ANPs “shall be permitted to take a separate license under UL (VNO) framework for provision of services to the end subscribers,” TRAI recommended, meaning they can branch out into serving customers directly if they so desire. A framework should be provided for the application process and “ensure that the terms and conditions offered to different VNOs are fair, transparent, and non-discriminatory” by publishing terms and prices on ANPs’ websites, the regulator said.
  3. Facilitating ANPs: VNOs should be required to facilitate ANPs by having a process to approve proposals online, the regulator recommended. “The Licensee shall share the feasibility status clearly stating acceptance/rejection (with reasons thereof, in case of rejection) of the proposal, through the online portal, with the Applicant party within 30 days,” the regulator recommended. “Physical exchange of application, documents confirmations etc. should not be allowed,” TRAI recommended.
  4. Determining fees, requirements: “The Minimum Equity, Minimum Net worth, Entry Fee, and FBG/PBG requirements for the proposed Access Network provider authorization may be arrived at by deducting the amounts prescribed for UL (VNO–Access Service) from the amount prescribed for UL-Access Service authorization,” TRAI said. Basically, this means that ANPs are full telecom operators minus VNOs (in terms of size and operations) and the requirements can be arrived at by simply subtracting the latter’s from the former’s.

What operators said

  • The Cellular Operators Association of India did not respond to a request for comment, but during the consultation process, they said that the proposed steps were not required. “We believe that there is no requirement of unbundling various layers of the license as the current licensing regime supports the layered approach w.r.t Infrastructure, Service and Applications,” COAI said.
  • The VNO Association of India said that unbundling would be good for consumers and competition, especially as calls and data have just become “applications” over a telco’s network, as opposed to the earlier situation where most networks were built around voice. Interestingly, the VNOAI said that there was a conflict in telecom operators offering their own over-the-top applications competing with the open market, in spite of Net Neutrality rules. “Despite TRAI’s Net-Neutrality regulations laying the foundation for creating competition in the services domain by mandating provisioning of access services on a non-discriminatory basis, there is no credible presence of MVNOs and Telco agnostic digital service providers in the Indian market,” VNOAI argued.

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