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HomeTelecomRecent Developments: Industry witnesses key policy moves

Recent Developments: Industry witnesses key policy moves

Industry witnesses key policy moves

August 2016

The past year was a significant one for the Indian telecom industry. The sector achieved the 1 billion subscriber mark and 4G services gained traction. On the policy front, several key moves such as finalising of spectrum sharing and trading guidelines, granting of payment banks licences, and giving the go ahead to the entry of mobile virtual network operators (MVNOs) were undertaken by the government to improve industry dynamics and usher in growth. In addition, the government continued its efforts under the Make in India and Digital India initiatives, inviting foreign participation and encouraging the setting up of domestic manufacturing facilities for handsets and other telecom equipment, as well as public Wi-Fi hotspots in a bid to improve broadband access.

Quality of service took centre stage as the call drop menace reached alarming levels with no signs of improvement. Further, the government’s attempts at establishing a framework for defining the role of over-the-top players and reaching a middle path with industry in the  areas of net neutrality and differential pricing are yet to see any results.

A look at the policy and regulatory moves over the past year…

  • Approval of spectrum sharing and trading guidelines: The cabinet approved the Telecom Regulatory Authority of India’s (TRAI) spectrum sharing and trading guidelines during August-September 2015. Under these guidelines, the entire spectrum holding of operators has been made eligible for spectrum sharing, provided that both licensees have airwaves in the same band. Similarly, spectrum trading has been permitted in all frequency bands, including the spectrum allocated under the administrative route after a market-determined price is paid for the airwaves. The spectrum ownership right will remain with the government and only the right to use it would be traded. In the past year, several deals have been witnessed in this space. The country’s leading operator Bharti Airtel has signed such pacts with Videocon and recently with Aircel. Meanwhile, Reliance Jio Infocomm Limited too has entered into a trading/sharing pact with Reliance Communications. Interestingly, most of the sharing/trading deals signed so far have largely been around spectrum considered suitable for data-centric services.
  • Service quality as a priority: The issue of call drops was one of the most discussed topics in the industry. As the problem reached a serious level, the Department of Telecommunications (DoT) asked TRAI to recommend an incentive mechanism to resolve the issue. TRAI issued the ninth amendment to the Telecom Consumer Protection Regulations, 2012, mandating operators to compensate consumers for call drops with effect from January 1, 2016. Under this mechanism, service providers were required to credit Re 1 in the account of the calling consumer for every dropped call, with a limit of three dropped calls in a day. However, this received widespread criticism as various industry bodies approached the Delhi High Court and later the Supreme Court for overturning TRAI’s order. A major respite to operators came in May 2016 when the Supreme Court struck down TRAI’s regulation putting an end to the battle between the regulator and operators. However, the country still lacks a clear roadmap for resolving the issue.
  • Entry of MVNOs: The Telecom Commission gave the go ahead to a unified licensing regime, which allows the entry of MVNOs in the Indian telecom space. This will open up a potential revenue stream for incumbents who have been trying to make a viable business case of the mammoth investments made by them in infrastructure, spectrum and fibre, over the years. They can now lease these assets to  virtual network operators, who in turn will ensure a wider service reach, particularly in rural areas. For relatively smaller telecom operators, partnering with MVNOs can be a key strategy to survive the competition prevailing in the market.
  • Regulations on differential pricing: During 2015, TRAI and DoT also deliberated on the level of regulatory intervention required on differential pricing. In early 2016, TRAI issued the Prohibition of Discriminatory Tariffs for Data Services Regulations, 2016. The regulations disallow operators and service providers from charging for data services in a discriminatory fashion based on the content accessed by the user. An exemption has been made for accessing emergency services or during a public emergency.
  • Draft RoW policy: Over the years, tedious right-of-way (RoW) approval processes and exor-bitant charges have discouraged operators from undertaking significant network roll-outs, which in turn has prevented the expansion of telecom infrastructure. In a bid to resolve these issues and facilitate the deployment of infrastructure by telecom companies, the Department of Telecommunications (DoT) released the draft Indian Telegraph Right of Way Rules, 2016. The draft rules highlight the urgency to simplify the process of granting RoW permissions and providing these through a single-window clearance system in a transparent and time-bound manner. W
  • differential pricing
  • call drop
  • public Wi-Fi
  • Spectrum sharing
  • spectrum trading
  • payment banks
  • MVNO
  • Digital India
  • RoW

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