Recent Developments: A year of critical policy and regulatory interventions

A year of critical policy and regulatory interventions

The past year was an eventful one for the Indian telecom sector on a number of fronts. The industry witnessed several key policy moves including the issuance of right-of- way (RoW) rules, the introduction of spectrum reforms and the grant of approvals to virtual network operators (VNOs). On the regulatory front, ensuring quality of service (QoS) and safeguarding consumer interests were two key focus areas. The entry of Reliance Jio Infocomm Limited (RJIL) in September 2016 and its aggressive pricing strategy unleashed a price war and disrupted sector dynamics in a big way. As incumbents and the new entrant were at loggerheads on several issues such as interconnection, service pricing, etc., serious regulatory intervention was critical. Meanwhile, the Telecom Regulatory Authority of India (TRAI) also conducted several other important consultations on matters such as cloud computing, framework for voice over internet protocol networks, data speed under wireless broadband plans, testing of mobile services by new operators prior to commercial launch, deployment of public Wi-Fi networks and sector sustainability.

A look at how the telecom policy and regulatory landscape evolved during the past year…

  • Focus on QoS: In a bid to offer a better network experience to customers, the regulator took a sharp view on QoS-related matters. It decided to impose a penalty on operators that failed the call drop test. Further, TRAI conducted several operator-assisted drive tests to monitor voice quality and the frequency of call drops across multiple cities. It also took steps to bring in greater transparency in regulatory matters through its online portal, TRAI Analytics, which presents real-time information on data speeds offered by various operators, drive test results and call drop rates of all operators. Meanwhile, TRAI also brought out a consultation paper on whether the existing QoS norms need to be revisited.
  • Spectrum reforms: After years of industry complaints regarding spectrum scarcity and its impact on QoS, the government finally took concrete steps last year to address the issue. In the auction held in October 2016, the government put on sale the largest quantum of spectrum ever offered, including airwaves in the premium 700 MHz band. However, the auction received a tepid response, in part due to high reserve prices in certain bands.
  • Infrastructure-focused policies: The government also took major policy measures in the telecom infrastructure space to facilitate the installation of mobile towers, optic fibre and copper cables in a time-bound and non-discretionary manner. In a key move, the Department of Telecommunications (DoT) issued RoW rules to ease the process of obtaining approvals for rolling out towers and optic fibre cables. The new rules allow online filing of applications to expedite the process of obtaining approvals. The government also finalised the active infrastructure sharing policy during 2016, giving a much-needed breather to the industry suffering from high operational costs. Further, DoT allowed operators to deploy their switching equipment anywhere in the country instead of restricting them to their licensed circles, through an amendment in the unified licence agreement. In addition, a number of state governments too came out with their respective infrastructure policies. While Jharkhand released its new telecom infrastructure policy, Rajasthan issued a draft for the same.
  • Approval to VNOs: In another key policy move in 2016, DoT paved the way for the entry of VNOs, thus allowing operators to monetise their unused airwaves and infrastructure. VNOs are allowed to create their own service delivery platforms for customer service, billing and value-added services. So far, DoT has issued letters of intent to 60 firms for VNO licences and granted the first unified licence for VNOs to the Plintron Group.
  • Prohibition of differential pricing: In a bid to prevent differential pricing, TRAI directed operators to not offer discriminatory tariffs to the same class of subscribers and report all plans within seven days of their launch. The regulator also released a consultation paper on the “Regulatory Principles of Tariff Assessment” to review potential anti-competitive practices, set clearly defined standards of competitive conduct and explore appropriate regulatory tools to address such concerns.
  • Resolution of interconnection issues: With RJIL’s free service offer, there was a major spike in the number of calls terminating on incumbent operators’ networks. The decision by incumbents to make only a limited number of points of interconnection (PoIs) available to RJIL impacted the latter’s QoS. However, TRAI intervened in the matter and asked incumbents to increase the number of PoIs made available to RJIL. The regulator also recommended the imposition of a penalty of Rs 30.5 billion on the operators, stating that not making sufficient PoIs available was a breach of their licence agreements. The final decision on the penalty is still awaited.

Going forward

While TRAI is currently actively involved in conducting consultations on issues that are still unaddressed, DoT has announced the launch of a new telecom policy which is expected to be finalised by 2018. The policy will be application-driven and DoT will involve a large pool of experts as well as citizens for its formulation.