Government Policy and Guidelines

• National Telecom Policy, 1994
• New Telecom Policy, 1999
• Broadband Policy, 2004
• National Telecom Policy, 2012

The above were the four main telecom policies formulated by the government.

One of the main functions of DoT is to issue guidelines with respect to issuing of licence, allocation of spectrum, interconnection, etc. These guidelines operate as additional conditions, laid down by DoT with respect to conduct and functioning of telecom operators. For example, the DoT issued guideline for radiation standards in respect of electromagnetic radiations (EMR) for mobile towers, which came into effect on September 1, 2012.

The DoT has issued numerous guidelines across the years. However, it is important to discuss the DoT guidelines with respect to issuance of telecom service licences.

• Basic Telephone Services Licences (BTS)
• Cellular Mobile Telephone Service Licence (CMTS)
• Unified Access Service Licence (UASL)
• National Long Distance (NLD) and
• International Long Distance Licence (ILD)

Guidelines on issuing of Basic Telephone Services

DoT issued guideline for issuing of BTS licences in January, 2001. The key features of the guidelines are:

• The applicant must be an Indian company. There was no restriction on the number of BTS licensees in a circle. The applicants were also required to have a minimum amount of paid up equity capital. This varied from circle to circle. There was a cap of 49 per cent foreign equity on companies applying for the BTS licence
• BTS licences were issued for a period of 20 years on a non-exclusive basis
• The licences had to pay an entry fee before the grant of the licence. Consequently, the basic telecom service operators had to pay an annual licence fee based on their annual gross revenue
• The basic telecom service operators also had to submit two bank guarantee as an assurance to meet the contractual and roll out obligation under the BTS licence
• The Guideline also laid down that the license holders can also provide limited mobility services, by using the spectrum allocated to them for last mile delivery. However, service operators provided limited mobility services had to pay additional 2 per cent fee.
• The Guidelines declared that a CMTS licensee can also provide fixed services using GSM networks within their service area. *This was done to satisfy cellular operators who were protesting against permission given to the basic telephone operators to provide limited mobility services.
• The basic operators could carry intra-circle long distance traffic. However, the operators had to provide the subscribers, the option to choose their own long distance carriers. For this purpose, BTS licensee could enter into an arrangement with the national long distance licensee.
• Basic operators were required to make their own arrangements for the installation of infrastructure, network equipment and, right of way. They were also allowed to enter into agreements related to interconnection with other licensee in other service areas. The terms and conditions of such interconnectivity agreement were subject to TRAI regulations and directions.

Guidelines on issuing of Cellular Mobile Telephone Service Licences

The DoT issued Guidelines for CMTS licences along with guidelines for the issuing of the basic telecom licences. These two sets of guidelines are generally similar to each other but they vary in certain issues.

• In the light of the criticism of the previous licensing policy, the DoT guidelines on issuing CMTS licence proposed “informed ascending bidding process”[1] for auctioning of CMTS licence.
• The CMTS licence was issued for a period of 20 years on a non-exclusive basis, extendable by 10 years.
• The licensee can transfer; assign the licence only with the permission of the DoT, the licensor.
• The prospective cellular operator had to submit roll-out plans and financial arrangements with the application.
• The licence period was set at 20 years, extendable by another 10 years.
• The winning bidder had to pay an entry fee. They also had to pay an annual fee which is a percentage of the annual gross revenue.
• The cellular operator also had to pay an additional sum for spectrum.
• The cellular operator, were given freedom to use any kind of network equipment as long as they satisfied certain international and domestic standards.
• The cellular operators were allowed to enter into any interconnection arrangements subject to TRAI regulations.
• The guideline also laid down that cellular operators will fully co-operate with law enforcement and government agencies in providing access to their infrastructure.
• The licensees have to make their own arrangement for installing infrastructure and equipment and for right of way.

Guidelines for issuing Unified Access Service Licences

The UASL Guidelines were issued in November, 2003. They were consistent with the TRAI recommendations. Option was given to the existing licensees to continue under their basic telecom and cellular mobile telecom licences or migrate to the new unified access service licence regime. The main highlights of the Guidelines on issuing of UASL were:

• Cellular licensees can offer limited mobility service within their short distance coverage areas.
• Basic telecom service operators had to pay an entry fee for the UASL which was equal to the entry fee paid by the fourth cellular operator for the specific service area or the entry fee paid by the basic telecom provider in that circle, whichever is higher.
• No additional entry fee had to be paid by the cellular mobile service providers.
• The basic telecom service operator, who choose not to completely migrate to full mobility regime may pay additional licence fee for providing services in wireless in local loop (WLL). However, such service will be restricted to the short distance charging areas.
• There was no additional spectrum allotted to the licensee for migrating to the UASL regime.
• The unified access service providers can use any technology without any restrictions.

Additional Entry fee to be paid by the existing Basic Service Operators for migration to Unified Access Service License[2]

Guidelines on issuing of National Long Distance (NLD) Services Licence

The DoT issued guidelines for NLD operations along with the licences. The main aspects of the Guidelines are:

• Unlimited entry for carrying inter-circle and intra-circle calls
• Total foreign equity of the operator should not exceed 74 per cent.
• Private operators had to enter into an agreement with fixed service providers with in a circle for traffic between long distance and short distance charging centres
• A timeframe of seven years was set for rolling out services. This timeframe was divided into four phases. If in any of the phases the operator failed to achieve its network coverage target then it would result in encashment and forfeiture of the bank guarantee of that phase
• Private operators had to pay an entry fee of 25 million and a financial bank guarantee of Rs. 200 million.
• Under the revenue sharing agreement, the DoT would charge maximum 6 per cent revenue generated by the private operator.
• Private operators were allowed to set up landing facilities for accessing submarine cables and make use of available excess bandwidth.

Guidelines on issuing of International Long Distance (ILD) Services licences

The DoT issued new guidelines for ILD licences in December, 2005. This was done to implement licence simplification measures and also to allow higher foreign investment. The key features of the Guidelines were:

• The ILD service, under the Guidelines was defined as network carriage or bearer service which allows NLD licensees international connectivity to foreign networks
• The ILD service provider was allowed to provide all kinds of bearer services from an integrated platform. However, a separate licence was required for satellite and global mobile personal communication services.
• The terms for the license: (i) the applicant must be an Indian company; (ii) the company must have net-worth and paid up capital of 2.5 crores; (ii) the total foreign equity should not exceed 74 per cent
• The ILD licence was issued for a period of 20 year on a non-exclusive basis, and it would be automatically renewed for another term of five year subject to satisfactory performance.
• The entry fee for the ILD licence was Rs. 2.5 crores and an unconditional bank guarantee of the same amount has to be submitted, which could be forfeited subject to failure in fulfilling the roll out obligations. The licensee had to also submit an additional financial bank guarantee of Rs. 20 crores. The ILD operators also had to pay a 6 per cent of the annual adjusted gross revenue as annual licence fee. The Guideline also laid down that an additional fee will be charged for the universal service obligation and use of spectrum
• The ILD operator has to submit to the DoT detailed plan of the rollout obligation and also commission at least one gateway switch in order to interconnect with NLD licensees. Such networks must be in conformity with the international and national standards.
• For provide ILD services, the operator may obtain leased lines from other access providers.
• The ILD operators can provide lower-than-toll quality service, provided that there is no degradation in the quality of services.
• The gateway and landing stations may be established. However, this will be subject to security and monitoring requirements.
• The ILD operator had to furnish detailed accounts periodically and furnish any such information requested by TRAI.
• An ILD operator, must co-operate provide facilities to law enforcement and government agencies for monitoring and surveillance. However, the licensee must also ensure protection of privacy of communication.

[1]. The auction process consisted of three rounds of bidding. A minimum bid price was prescribed for each round. The highest bid in the first round was declared the minimum reserve price in the second round. Subsequently the highest bid in the second round was set as the reserve price in the third round. The lowest bidders in each round were rejected to participate in the next round of bidding.

[2]. Annexure 1, Guidelines for Unified Access (Basic and Cellular) Service Licence, November 11, 2003 available at www.dot.gov.in/uas/Guidelines-Unified_License111103.doc