TRAI: Submission on Consultation Paper on Entry Fee and Bank Guarantees

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TRAI: Submission on Consultation Paper on Entry Fee and Bank Guarantees

Sudipto

@Sudipto

September 7, 2022

Public Policy

181

The Telecom Regulatory Authority of India (TRAI) on July 26, 2022 had released a consultation paper (Paper) on the “Rationalization of Entry Fee and Bank Guarantees”. This was pursuant to the request from the Department of Telecommunications to TRAI to provide recommendations on the possibility of rationalisation of entry fees and bank guarantees as part of the telecom reforms.

The DOT has, in recent years, rationalised entry fees and bank guarantee requirements across the board. However, as part of the larger reform of shifting away from licensing by default, we recommended that licenses or other requirements applicable to individual entities (e.g., authorisation or registration requirements) should not contain entry fee or bank guarantee conditions across the board.

Our specific recommendations are listed below:

Entry Fees

The Paper had cited the usage of public resources as a rationale behind the entry fees. We recommended that since Unified License (UL) holders already pay a substantial price for buying spectrum, along with annual license fees and spectrum usage charges (SUC), entry fees are not justified and should be removed. Regarding the holders of the Unified License (Virtual Network Operators) (UL-VNO), we highlighted that while they do not directly buy spectrum or build their own networks and instead rely on the networks of telecom service providers also, for some reason pay license fees and SUC. Hence, there is no valid justification for imposing entry fees on them.

Bank guarantees

We recommended that bank guarantees force market participants to block valuable capital and acts as an unnecessary barrier to market entry on startups. These also act as a unique barrier to market entry in different segments – such as when imposed on holders of UL-VNO licenses, who do not operate their own networks and cannot themselves assure the performance of such services or networks. Thus, imposing bank guarantee requirements on UL-VNO licensees does not achieve any specific purpose.

We further, submitted that the DOT should rationalise the dues owed under the licenses themselves, such as entry fee, which would, therefore, reduce the burden of ensuring dues are paid up itself and thereby negate the need for bank guarantees. On the contrary, the DOT should have an efficient mechanism to enforce penalties for violations of license conditions.

We hope you find this update useful. Our submission is attached below. For more information, kindly write to sudipto@nasscom.in and varun@nasscom.in.

trai entry fees bank guarantees

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Sudipto