Convergence Plus
Policy & Regulation
Wednesday, October 18, 2017
Telecom industry body COAI calls for six fold increase in international call termination charges

Telecom industry body COAI Cellular operators association COAI has favoured a steep hike in international termination charges to Rs 3.50 a minute against 53 paise per minute at present. The Telecom Regulatory Authority of India (TRAI) is currently in the midst of reviewing these rates, paid by foreign carriers for terminating international calls in India. "Today, there is a 20:1 imbalance between incoming and outgoing international calls. In order to adjust the imbalance, you need to go to Rs 3.50 on a weighted average basis, to correct the arbitrage," COAI Director General Rajan Mathews told PTI.

COAI has argued there is a need to bridge the gap between blended termination rate paid by Indian operators for outgoing international calls and the termination rates received by them on international incoming calls.

Mathews sought to draw a distinction between termination charge complexities that come into play for domestic and international calls. "International interconnect rates are not as simple as domestic because there are multiple countries with their own regulatory processes and they set their own rates...also there are currency fluctuations to deal with," Mathews added.

The blended termination rate paid by Indian operators is around Rs 3.50 a minute for outgoing international calls compared to 53 paise per minute termination rate received by them on incoming international calls, COAI has contended. "Therefore, we are saying that our operators are at a disadvantage because we end up paying precious foreign exchange out...the problem with international is that (Indian) regulator has no control on the other side (for outgoing call termination charges) so other side is free to charge whatever they want," he said.

TRAI will come out with a separate regulation on the international termination charges. The issue had formed a part of the consultation paper on Interconnection Usage Charges or IUC but was carved out for separate deliberations by the regulator. (Source: FirstPost)

Trai to meet telcos on international termination rates

Trai to meet telcos on international termination ratesTrai will come out with a separate regulation on the international termination charges, currently pegged at 53 paise per minute, the official said.
After fixing the contentious domestic mobile call termination rates, the telecom regulator is all set to meet the operators this month to review international termination charge, a senior Trai official said.The meeting with international long distance operators and the access providers is likely on October 16. The Telecom Regulatory Authority of India (Trai) will ask the operators to give a presentation on the global practices, factors affecting such rates and suggest suitable methods for deriving the international termination charges..

Trai will come out with a separate regulation on the international termination charges, currently pegged at 53 paise per minute, the official said. The issue had formed a part of the consultation paper on Interconnection Usage Charges or IUC but was carved out for separate deliberations by the regulator.

Last month, Trai decided to slash the charge paid by an operator for terminating a domestic mobile call on a rival network -- also called mobile termination charge -- to 6 paise a minute, from 14 paise.

It had further said no such charge would apply from January 1, 2020. The new IUC regulation - which caused a furore in the industry - came into effect from October 1. The consultation paper on IUC, of which international settlement rates and termination charge overhaul is a part, had sought stakeholder views on approach that should be taken for prescribing such charges in the country, and whether they should be kept uniform for all terminating networks.

Another issue it raised was on sustainability of standalone ILDOs (international long distance operators), given the presence of integrated service providers (having both international long distance and access service licenses), and remedy for the same.

The international settlement rates or international termination charge to be paid to the Indian access provider is decided domestically.

"During discussions, operators have submitted that the termination charge for international calls fixed by the authority, puts the Indian access providers in a hugely disadvantageous situation vis-a-vis foreign service operators, as termination charges in some other countries are 8 to 10 times higher than international termination charges in India," the Trai paper had said.

On the other hand, some operators are of the view that there is no extra cost involved in terminating the international call, and, therefore, termination charges for domestic and international calls should be same, it had pointed out. (Source: ETTelecom)

Department of Telecom makes IMEI tampering a punishable offence that can attract a 3 year jail term

Department of Telecom makes IMEI tampering a punishable offence that can attract a 3 year jail termThe government has made tampering of IMEI number — a unique 15-digit serial number of mobile devices — a punishable offence that can attract jail term of up to 3 years as it seeks to curb incidence of mobile theft. The move will help curb issues pertaining to fake IMEI numbers and also ease tracking of lost mobile phones. "It shall be unlawful, if a person, except the manufacturer - intentionally removes, obliterates, changes, or alters unique Mobile Device Equipment Identification Number," the Department of Telecom said in a notification dated 25 August.

The new rules called "the prevention of tampering of the Mobile Device Equipment Identification Number, Rules, 2017" bar a person from knowingly using mobile device whose IMEI number has been changed unlawfully or software that can change or tamper the unique number. IMEI is a unique ID of a mobile handset. Whenever a user makes a call, the call record shows phone number of the caller and IMEI number of the handset from which the call has been made. The mobile number in a handset may be changed by changing SIM but IMEI number can be changed by a technical person using special equipment.

The unique number of mobile devices is allocated by global industry body GSMA and bodies authorised by it. When a mobile phone is lost, people are required to mention the IMEI number of the handset for tracking. The DoT had started consultation in June to frame strict laws around tampering of IMEI numbers which makes it difficult for police or any other security agency in tracking mobile phones.

The DoT barred telecom operators in 2009 from providing service to any mobile phone with fake IMEI number but the operators face problem in identifying handsets with duplicate IMEI number. In one of the tracking cases of mobile phone, the Telecom Enforcement Resource and Monitoring (TERM) cell of the DoT found that there were around 18,000 handsets using same IMEI number.

The rules have been framed in combination of section 7 and section 25 of the Indian Telegraph Act. The section 7 gives DoT power to make rules for conduct of telecom or telegraph services and section 25 deals with damaging of telegraph line, machines and related equipment with provision of punishments of up to 3 years of imprisonment or fine or both. Besides, the Department of Telecom is putting in place a new system that will block all services on stolen or lost mobile phones on any network even if the SIM card is removed or IMEI number of the handset is changed. (Source: First Post)

Smartwatches, CCTV cameras come under government scanner over quality standards

Smartwatches, CCTV cameras come under government scanner over quality standardsThe ministry of electronics has placed smart watches and CCTV cameras under its scanner in a bid to stem the flow of sub-standard and unsafe electronic goods into India. The ministry of electronics and information technology (Meity) has placed smart watches and CCTV cameras under its scanner in a bid to stem the flow of sub-standard and unsafe electronic goods into India.

On 17 August, Meity added 13 electronic items, including smart watches and CCTV cameras, to the Electronics and Information Technology Goods (Requirement for Compulsory Registration) Order, 2012, which means these will now have to meet standards as notified by the government and companies will not be allowed to import or sell any non-compliant product in the country.

The other products—LED flood lights, LED lighting chains, Plasma/LCD/LED television of screen size up to 32 inches, CCTV recorders, USB driven barcode readers, barcode scanners, iris scanners, and optical fingerprint scanners—have been brought under the ambit of Compulsory Registration Order (CRO), a government official confirmed.

The provisions of the 17 August order will be applicable to these devices after February 2018.In August, the ministry had asked 35 smartphone makers, mostly Chinese, and Alibaba-owned UC Browser to furnish details on data security. On 31 August, Mint reported that Meity is working to tighten quality standards to prevent the sale of spurious electronic goods and block data breaches in India.

The industry, however, sees flaws in this decision. An expert believes that the CRO should focus on safety of products that pose the greatest risk to consumers. This in turn would impact the ease of doing business in India.

“Companies are still struggling with delays in the CRO approval process resulting from bottlenecks at test labs. The addition of visual display units and video monitors with a screen size up to 32 inches alone would include over 200 separate models with multiple SKUs (stock keeping units). With India’s labs lacking the capacity to perform testing of this magnitude in a timely manner, there will be further delays in getting these essential products approved and into the hands of consumers,” said Joshua Rosenberg, director, global policy, Information Technology Industry Council (ITI), an advocacy and policy organization, in an emailed response.

CRO is the first regulation in India in the electronics sector. It was notified in 2012 under the Bureau of Indian Standards (BIS) Act. Fifteen electronic items were notified on 3 October 2012, and another 15 were notified on 13 November, 2014. Some products that are already under the ambit of CRO include mobile phones, laptops, notebooks, tablets, printers, electronic clocks, telephone answering machines, video games, wireless keyboards, set top box, and microwave ovens.

However, adding these products to the CRO is likely to result in delays in bringing both existing and future products to the market, said Rosenberg, adding that “meeting product launch timelines, as with all aspects of doing business, depends on having predictable and certain regulatory processes in the markets in which you sell.” There are three nodal authorities for implementation of CRO—Meity for registration and monitoring of compliance; BIS for action on non-compliant goods; and customs for ensuring compliance of imported goods to CRO. (Source: Mint)

Delhi govt asks all depts to adopt digital mode of payments

Delhi govt asks all depts to adopt digital mode of paymentsThe Delhi government finance department has also issued a circular asking all its departments to adopt digital mode of payments at the earliest.
The Delhi government has directed all its departments and autonomous bodies to adopt digital mode of transactions and make payments to contractors and suppliers electronically. Besides, it has also asked all department heads to promote e-payments and give wide publicity to make people aware about it. The Delhi government finance department has also issued a circular asking all its departments to adopt digital mode of payments at the earliest.

The move is intended to attain the goal of complete digitalization of government payment.

"Heads of departments and autonomous bodies have been asked that payment should be made to contractors, suppliers and institutions through digital mode," a senior government official.

He also said that the payments could be made through Real-Time Gross Settlement (RTGS), National Electronic Funds Transfer (NEFT) and Electronic Clearing Service (ECS).

According to an official, secretaries, principal secretaries and heads of other autonomous institutions have been asked to give wide publicity to promote digital mode of transaction.

In November last year, the central government had also decided to promote digitisation of payments following the announcement of demonetisation of Rs 500 and Rs 1,000 notes.

It had also lowered the threshold for making such payments. (Source: ETTelecom)

Telecom body alleges misinformation on IUC

Trai may begin consultations on next round of spectrum auctions in SeptemberTrai is reportedly aiming to conclude the IUC review soon and will come out with a new framework
The Cellular Operators Association of India (COAI) has said entities seeking implementation of the ‘bill and keep’ (BAK) method for interconnections between operator systems are “distorting facts”. They’ve cited an affidavit given by the Telecom Regulatory Authority of India (Trai) to the Supreme Court (SC) in 2011. That affidavit, it has said, listed symmetry of traffic as a pre-condition to implement a BAK regime. The Mukesh Ambani-owned Reliance Jio had alleged the top three operators had benefited by at least Rs 1 lakh crore due to non-implementation of BAK.

During an open house discussion on the interconnection usage charge (IUC) on July 20, many participants had claimed that in 2011, Trai had said it would implement the BAK regime in two years from 2011. IUC is a regulation made by Trai in which phone companies pay one another for using each other’s network to complete calls.

“Treating this affidavit that has been filed in an ongoing litigation as equivalent to a regulation, these participants have been demanding implementation of BAK,” COAI said in a letter to Trai.

The regulator, it said, had notified IUC regulations in March 2009, fixing the mobile termination charge (MTC) at 20p a minute. The regulations were challenged by telecom companies at the Telecom Disputes Settlement and Appellate Tribunal (TDSAT). The latter in September 2010 asked Trai to reconsider the matter afresh and to complete the consultation process in a time-bound manner, so that new IUC charges could be implemented by January 1, 2011.

However, Trai filed an appeal in the SC against the TDSAT order in September 2010. The SC in July 2011 directed Trai to calculate and resubmit the MTC, with and without inclusion of capex/capital cost. Subsequently, the COAI letter said, Trai gave an affidavit in October 2011, with calculations on MTC using different methodologies.

Later, Trai sought the SC’s permission to notify the regulations with the rates contained in the affidavit. However, the SC dismissed the application and the said petition was still pending with the SC, said COAI. Their letter says Trai initiated a consultation in 2014 to review IUC and in February 2015, the MTC was fixed at 14p per minute. “During formation of IUC regulations in 2015, Trai deliberated on feasibility of implementation of the BAK regime at length and consequently rejected the implementation due to the reason that the level of imbalance/asymmetry did not fulfill the basic requirement of symmetry before adopting a BAK regime,” it said.

Trai is reportedly aiming to conclude the IUC review soon and will come out with a new framework. The issue has been a bone of contention between incumbents and newcomer Jio. The existing telcos want fully allocated cost-based IUC; Jio and Reliance Communications (a separate group) propose the BAK model, which means zero charges. (Source: Business Standard)

Trai may begin consultations on next round of spectrum auctions in September

Trai may begin consultations on next round of spectrum auctions in SeptemberThe Telecom Regulatory Authority of India may begin consultations on next round of spectrum auctions in September, although it's unlikely the government will sell airwaves in this financial year, given high level of debt and competition in the industry. Consultations could stretch out to late this year or early next, rendering any sale in FY18 a remote possibility, going by the time taken for previous auctions. "By September, the consultation paper on auctions should be out," a Trai official said, asking not to be identified. "When the auctions can be held is for the telecom department to decide."

Trai chairman RS Sharma told ET in May that he planned to submit recommendations to the Department of Telecom by December and although there was financial stress in the sector, the consultation process would be carried out and completed. Trai officials said its suggestions could include the schedule for the next spectrum sale.

The previous spectrum auction took place about 10 months after Trai gave its first set of recommendations on base prices in January 2016. Final recommendations were in April and approved by the Telecom Commission in the same month. The notice inviting applications, the formal document that lays down the auction timeline, came out in August and the sale started in October that year.

DoT had asked Trai in April to recommend reserve prices in a range of 4G bands and for spectrum for 5G services, which could be making their debut.

However, the telecom industry wants the auction only in late 2018. Analysts said there is no appetite for fresh spectrum as telecom companies, burdened with debt estimated by banks at Rs 7.29 lakh crore, are in the midst of a rate war and are in no financial position to bid for expensive airwaves.

Banks also fear defaults by telcos. Reliance Communications has already been forced into debt restructuring. The government has set up an inter-ministerial group to look at ways of easing the financial stress in the sector and the panel's report is expected this month.

DoT, too, has told the finance ministry that it does not expect telcos to bid for airwaves this year and has asked it to lower its revenue expectations from the sector by 37% to about Rs 29,500 crore for this financial year.

All major telcos, including market leader Bharti AirtelBSE 0.76 %, Reliance Jio Infocomm, Vodafone India and Idea CellularBSE 0.28 %, bought up the airwaves they needed at the October sale.

The response to the 2016 auction was muted because of high spectrum costs. (Source: Economic Times)

Trai seeks reduction in GST on telecom to 5%

Trai seeks reduction in GST on telecom to 5%Telecom Regulatory Authority of India (Trai) has batted in favour of telecom operators by suggesting a lower licence fee, spectrum usage charge and a goods and service tax (GST) rate of 5%. “DoT may take up with Ministry of Finance the issue of reduction in GST rate from 18% to flat 5% by declaring telecom sector as core infrastructure industry and economy enabler in India,” Trai said in a letter to Department of Telecommunications (DoT) secretary Aruna Sundarajan.Such an effort would make telecom services affordable and facilitate fast digitisation of the economy as well as the proliferation of telecom services in rural and remote areas to achieve the ‘Digital India’ mission.

“Digital India is largely dependent on affordability and ubiquitous availability of the telecom services. It certainly is not a luxury. Telecom sector is backbone of the economy and capable of contributing through multiplier effect,” Trai said in the letter seen by DNA Money.
An inter-ministerial group has been formed to look into the financial stresses faced by the operators and suggest a solution.
As per industry estimates, total debt for the sector is at around Rs 4.5 lakh crore. IMG already had a round of discussion with all the operators and will come out with its decision soon.

Trai also recommended that spectrum usage charge (SUC) for all auctioned airwave should be at a flat rate of 3% of adjusted gross revenue (AGR) of wireless services and for Broadband Wireless Access (BWA).

The letter has come after the meeting of all telecom CEOs with Trai on June 15.

On the relaxation in pay-out on spectrum auctioned price, Trai recommended that 10% of the bid amount can be made as initial payment from the forthcoming auction onward and the balance can be made in 18 years (18 equal annual installments with interest).
The regulator had, in January 2016, also recommended that the balance payment period for instalments of auctioned radio waves be increased to 18 years.

“On several other issues like levies of licence fee, Universal Service Obligation (USO) Fund, spectrum charges, promotion of wireline infrastructure, etc, the Authority in the past has already given its recommendations to the government,” Trai said in the letter. (Source: DNA)

Telecom sector woes on AGR: Govt awaits 'favourable' SC verdict

Telecom sector woes on AGR: Govt awaits 'favourable' SC verdictTelecom companies with a licence need to pay about 8 per cent of their total revenue to government
To get the telecom sector a stable financial base, the government is waiting for a favourable verdict from the Supreme Court on the longest dispute in the sector, instead of tweaking interconnect charges or setting tariff rules, according to a top bureaucrat. As telecom minister Manoj Sinha is set to meet telecom company chiefs this week, the officials in the know said none of the options on the table, including changes in interconnect charges and tweaking of the tariff regime, would work without settling the adjusted gross revenue (AGR) controversy.

They are optimistic it can happen as the Telecom Regulatory Authority of India (Trai) and the department of telecommunications (DoT) are now working together to resolve this knot.

While AGR is administered by DoT, spectrum and tariffs are set by Trai and each blames the other for the impasse the sector finds itself in. Settling AGR is also convenient while setting tariff rules that Trai has proposed or demanding a softer reserve price for airwaves are politically difficult calls. Trai incidentally has made a presentation to the government on changing the tariff rules for the sector.

It has also helped that the Prime Minister’s Office has asked the two to ensure a viable and long term solution to the sector’s financial distress is hammered out. For the PMO this is urgent as the Digital India framework would depend on how the telecom companies perform. It is also linked to the proposed auction of 5G airwaves.

The DoT is now headed by Aruna Sundararajan, who is holding it as an additional charge. Interestingly, the inter-secretary panel, the telecom commission which takes the final call on most policy issues includes, Tapan Ray, who has joined as secretary in the department of economic affairs, recently. The one holding the longest tenure at the policy making levels now is Trai Chairman R S Sharma.

The AGR problem has a long history. It is about what constitutes gross revenue for a telecom company. In 11 years it has travelled through all courts in the country, including the Supreme Court, several high courts — the latest one being distant Tripura — to the telecom appellate body, the Telecom Disputes Settlement and Appellate Tribunal. It is again pending in the Supreme Court, expected to come up after the vacations.

Telecom companies with a licence need to pay about 8 per cent of their total revenue to the government and that includes all the lines of business they may be involved in. It is in addition to the price they pay to buy spectrum, their usage and others but they have no ability to partner with any content player to earn additional revenue. A company offering the same bouquet of services but as a non-licensee freely replicates the same services. This means the latter can offer his consumers both voice and data services at a far less cost. The former regime, companies say, militates against fair play.

DoT has long held that the simplicity of the AGR regime has ensured no disputes about revenue payable from the sector, something which has been the bane for several sectors. Also, it has argued that the current stress in the sector has little to do with AGR per se and more with the high reserve price set for spectrum. The government has so far collected over Rs 3.6 lakh crore from the successive rounds of auctions which has been close to 25 per cent of its total non-tax revenue in the past seven years, a report by rating agency Icra notes. To make life easier for the telecom companies, DoT has suggested Trai could consider a softer reserve price in the ensuing auctions.

Sharma has suggested that AGR rules should be eased to carve out non-telecom revenues from the calculation. The regulator in a consultation paper said receipts from USO Fund, meant to finance expansion of rural telephony, capital gains from sale of fixed assets and securities, bad debts and dividend and interest income, should also be out of the revenue base. It had argued these will still not make the calculation of AGR difficult, something that DoT has repeatedly argued against.

Telecom sector analyst Mahesh Uppal says linkage of the fees payable by the telecom companies with realistic calculation of yearly revenues will reduce dependence on high reserve prices. “This will help design better spectrum auctions,” he adds. (Source: Business Standard)

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