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Policy & Regulation
Wednesday, September 26, 2018
Airtel, Jio say fined by Trai for slipping on quality norms

Airtel, Jio say fined by Trai for slipping on quality normsBharti AirtelNSE 1.83 % and Reliance JioInfocomm said they have received demand notices from the telecom regulator for slipping on multiple quality of service (QoS) norms during the March quarter.

“Bharti Airtel has received demand notices, totalling Rs 11 lakh towards penalties in respect of six circles -- Maharashtra, Assam, West Bengal, Tamil Nadu, Kolkata and Gujarat -- for the quarter ending March 2018,” the Sunil Mittal-led telco said late Tuesday evening in response to a BSE query on media reports about the Telecom Regulatory Authority of India (Trai) slapping penalties on big telcos, including Airtel, Reliance Jio, and erstwhile Vodafone India/Idea Cellular -- which have recently merged – for alleged violation of QoS parameters.

Airtel said the “penalties are towards routine parameters such as accessibility of call center, percentage of calls answered by operators and metering and billing credibility,” adding that it “would deal appropriately” with the demand notices.

In a similar response to BSE, MukeshAmbani-controlled Reliance Industries, said its subsidiary, “Jio has received a communication from Trai regarding payment of aRs 34 lakh financial disincentive for not meeting certain call centre service parameters”.

“Jio will take necessary action for obtaining requisite clarification from Trai,” RIL said in its late nigh response to the BSE query.

RIL, further said, the company “would make necessary disclosures in compliance with its obligations under Securities & Exchange Board of India (Listing Obligations & Disclosure Requirements) Regulations 2015,” and its agreements with stock exchanges.

At press time, Vodafone-Idea had not replied to BSE’s queries on the reported imposition of penalties.

According to media reports, Jio, Vodafone India and Idea have been fined about Rs 34 lakh, Rs 4 lakh, 12..5 lakh respectively.

Trai had made the QoS norms more stringent and has asked all carriers to abide by the new benchmarks from October, 2017.

Trai chairman R S Sharma had had reportedly said recently that the sector regulator was in the advanced stages of slapping penalties on mobile operators that have flouted service quality norms. (Source: Economic Times)

Department of Telecom examines 5G pricing model

Department of Telecom examines 5G pricing modelThe telecom regulator recently suggested base price of Rs 492 crore per unit of 3,500 MHz 5G spectrum. The department of telecom (DoT) is examining industry inputs as well as global 5G spectrum prices, wherever it has been auctioned, vis-à-vis the telecom and regulatory authority of India (Trai) proposals to see if the recommended price points are higher by any measure and if the telcos would bid for them as and when auction takes place or these prices would need revision.

Though it is too early to take a call but whenever the auction takes place, spectrum should be sold, a senior DoT official said and added, we have to see what the global pric-ing model of such (5G) bands are.

An operator would need to pay Rs 9,840 crore for 5G spectrum on the pan-India basis as the telecom regulator has suggested that the auction should be “in the block size of 20 mega hertz (MHz).” The recommended base price is 30 per cent of the price of 1,800 MHz band and the regulator has proposed a limit of 100 units of spectrum per bidder to avoid monopoly.According to industry experts, Trai’s suggested base price of Rs 492 crore per unit of 3,500 MHz 5G spectrum is much higher than Rs 65 crore per unit achieved at a recent 5G auction in South Korea. “Trai’s 5G spectrum base price is 7.5 times the market-discovered price in South Korea,” says a telecom operator.

The UK’s biggest mobile operators spent about £1.4 billion to acquire 5G spectrum earlier this year, with Vodafone winning 50 MHz in the 3.4 GHz frequency band by paying £378 million and BT-owned EE getting 40 MHz paying £303 million. BT-owned EE acquires 40 MHz by paying £303 million (Rs 2,673 crore) giving a per mhz price of Rs 67 crore.

The government raised only Rs 65,789 crore in 2016 of the estimated Rs 5 lakh crore as 700 Mhz remained unsold on which the auction value was riding and also there was lukewarm response to the auction . This time the government has 8,500 Mhz of spectrum to sell. A senior executive of a telecom operator said 5G is not for consumers. It is for businesses and allied applications like healthcare, smart cities, education and agriculture. So making money from 5G spectrum is not easy and quick.

The financial position due to high competition is at peak , how can we block money in 5G when we know 4G capex also needs to be taken up and also the payment of spectrum dues payment, the official said. No fresh investment is being seen by any telco at this stage for any new area, the official added. DoT is also concerned about the Rs 5 lakh crore debt of telcos, 85 per cent of which is due to loans taken by them for paying spectrum dues to the government in 2016. Indian radio waves are considered most expensive in the world.

Sources said DoT is aware of the poor financial situation of telecom operators. Telcos have told the department that they could be ready for spectrum auction only by the second half of 2019 – September onwards. DoT has a fair idea of that timeline, also even if the auction takes place around November 2019, the country would not miss the 2020 5G rollout deadline, set by itself. In certain countries, 5G bands are priced around 43 per cent less compared with the 700 Mhz band, which can also be used for 5G services.

Another official said DoT has started looking at proposals internally and also the telcos’ analysis of prices. It’s too early to say if 5G spectrum pricing at all needs revision and be referred back to Trai for a relook, the official added. All across the world, telecom service providers and countries are gearing up for 5G rollout. Italy is targeting a September auction of spectrum that could be used for 5G. The UK sold bandwidth in April that included some earmarked for these services. The Hong Kong government is even considering giving away airwaves free, said one operator. (Source: Deccan Chronicle)

Central government in process to frame net neutrality rules, amend telecom licence: Manoj Sinha

Central government in process to frame net neutrality rules, amend telecom licence: Manoj SinhaTelecom minister Manoj Sinha has informed the Rajya Sabha that net neutrality rules are being set up across service providers, as it also aims to improve the licensing process.

Government is in the process of framing rules to implement net neutrality in the country, which bars service providers from discriminating against internet content and services by blocking, throttling or granting them higher speed access. “Government is in the process of establishing the regulatory framework for net neutrality which, inter alia, includes amendment in the terms of various licence agreements governing the provision of internet services in India to incorporate the principles of non-discriminatory treatment of content,” Telecom Minister Manoj Sinha on Friday told Rajya Sabha in a written statement.

The apex decision making body at the Department of Telecom, the Telecom Commission, had approved implementation of net neutrality as suggested by the sector regulator TRAI with slight modification on July 11. Some mission critical applications or services like remote surgery and autonomous cars will, however, be kept out of the purview of net neutrality framework. The Telecom Regulatory Authority of India (TRAI) had recommended restrictions on service providers from entering into agreements which lead to discriminatory treatment of content on the internet.

TRAI had favoured tweaking of licensing norms for players to ensure “explicit restrictions” on discrimination in internet access, based on content. The Department of Telecom has to set up a multi-stakeholder body for monitoring and enforcement of net neutrality comprising government representatives, IoT providers, telecom operators, civil society members and consumer organisations. DoT will seek recommendations from TRAI on traffic management for critical services. Government is committed to the fundamental principles and concept of net neutrality and strives for non-discriminatory access to internet for all citizens of the country,” Sinha said.(Source: Indian Express)

Trai recommends no auction for walky-talky service spectrum allocation

Trai recommends no auction for walky-talky service spectrum allocationUnlike cellular services, PMRTS are operated for two-way communication within small distance of around 30 kilometre-range by police, security agencies, construction companies etc. Keeping aside observation of the Supreme Court order in 2G spectrum case that spectrum should be allocated through auction, Trai has recommended allotment of radio waves without bidding route for PMRTS.

"The authority recommends that taking into consideration factors viz PMRTS market conditions; low spectrum demand and high spectrum availability; the assignment of spectrum for PMRTS should be made administratively on the basis of demand," Trai said on late Friday evening. Unlike cellular services, PMRTS are operated for two-way communication within small distance of around 30 kilometre-range by police, security agencies, construction companies etc.

The recommendations have been made after the telecom department requested the Telecom Regulatory Authority of India to suggest appropriate method of spectrum allocation for Public Mobile Radio Trunking Service (PMRTS). "DoT through letter dated 6th February 2018, informed the authority that - 'regarding the methodology of spectrum allocation (and its legality) - auction or otherwise - a policy decision will be taken by DoT, as advised by Trai. Notwithstanding that, Trai may provide it’s considered recommendations as requested by DoT," the regulator said.

The Supreme Court order in 2012, which cancelled 122 telecom permits that were assigned spectrum administratively for 2G service, said that the spectrum should be assigned transparently through auction. The DoT in July 2017 has sought regulator's views on method that should be used for spectrum allocation for PMRTS."Upon examining the reference, the authority realised that other methods of allocation of spectrum such as administrative allocations etc apart from the auction mechanism were also open for consideration," Trai said.

Following this observation, Trai approached DoT for clarity as to whether it is legally tenable to allocate spectrum by any mechanism other than auction and received go ahead from the department. DoT assigned spectrum for PMRTS at administrative price as an interim measure up to March 31, 2014, but discontinued provisional assignment of spectrum to PMRTS providers from June 2015, as per the Trai paper.

However, it continued interim assignment of the spectrum to the government, public sector firms and private users etc for captive usages for a period of next six months. PMRTS is a niche service used only by limited institutional clients in certain pockets with a total subscriber base of approximately 56 thousand radio users nationally and the spectrum requirement is relatively low for these services.

"In the financial year 2017-18, the revenue generated by the PMRTS providers was only about Rs 35 crore and the Royalty and Spectrum Fee charges paid by the PMRTS providers was less than Rs 1 crore," the Trai paper said. Under the new telecom policy in works, government has proposed to rationalise spectrum price as the industry under debt burden of Rs 7.8 lakh crore has expressed that the price are too high for them and expensive airwaves do not make business case for them.

As part of the recommendations, Trai has suggested levying of spectrum usage charges at rate of 1 per cent on adjusted gross revenue (AGR) for the spectrum allocated to PMRTS. For determining the AGR for the purpose of levy of license fee and SUC, Trai recommended that the revenue from sale of handsets (the cost of which is separately identifiable) will be allowed as deduction from the gross revenue of PMRTS.

The regulator, however, did not make any specific recommendation on license fee of PMRT Service. Trai also suggested that the existing provision of duration of 20 years for PMRTS license should continue. Firms operating in the segment said that PMRTS infrastructure is very expensive and life of the PMRTS infrastructure is 15-20 years and hence licence should be at least for 20 years period. The regulator has recommended that in order to promote efficient use of spectrum, the cap on the number of PMRTS handsets per channel that can be imported, should be removed.

"However, while applying for import license, the PMRTS provider shall provide a justification for demand/ requirement of spares etc of PMRTS handsets required to be imported," Trai said. (Source:ETTelecom)

Huawei says does not expect US sanctions Press

Huawei says does not expect US sanctions PressHuawei, also the world's third-largest smartphone maker, is a private company but has found itself battling perceptions of ties to the Chinese government, which it has repeatedly denied.

China's Huawei, the world's largest maker of telecommunication network equipment, does not see itself becoming the target of U.S. sanctions and will keep buying U.S. chips this year, one of its three rotating chairmen told a French newspaper. Huawei, also the world's third-largest smartphone maker, is a private company but has found itself battling perceptions of ties to the Chinese government, which it has repeatedly denied.

Several U.S. lawmakers last month claimed its research funding to American universities posed a "significant threat" to national security, the latest difficulty Huawei has faced operating in the United States. Another major Chinese telecommunications equipment maker, ZTE Corp, was hit last month by a $1.4 billion settlement deal after the U.S. government said the firm broke an agreement to discipline executives who conspired to evade U.S. sanctions on Iran and North Korea.

Asked if he feared his company could also be hit by sanctions, Ken Hu, one of Huawei's rotating chairmen, told Le Journal du Dimanche:

"It would be hard to imagine. Ten years ago we put in place a system to control our exports, which has become very efficient. Our policy is to closely implement all laws and regulations introduced by Europe, the United Nations and the United States."
Asked if Huawei could do without U.S. components, Hu said the company's logistical chain was international. "We must be open and choose the best technologies, the best products. We will therefore keep buying American chips this year."

Earlier this year, U.S. lawmakers asked Alphabet Inc's Google to reconsider working with Huawei, which they described as a security threat. And a deal with U.S. telecom firm AT&T Inc T.N to sell its smartphones in the United States collapsed at the 11th hour due to security concerns. (Source: ETTelecom)

Govt mulls bailout package for sick telecom PSUs

Govt mulls bailout package for sick telecom PSUsThe prime minister’s office and the department of telecom have discussed a survival mechanism for telecom PSUs BSNL and MTNL whose revenue, market share and subscriber base continue to erode.
According to sources, under the plan 4G spectrum worth Rs 13,000 crore could be allotted to them shortly and the more vulnerable MTNL can hope to get about Rs 1,100 crore from the Centre for a fresh VRS package.
Official sources said the situation is more serious for MTNL as the listed entity is almost on the verge of breaking down, completely surviving on bank working capital loans for operations expenditure.

A few decisions are expected shortly and things could be expedited now onwards, sources said, adding that the prime minister’s office (PMO) has shown interest and concern over telecom PSUs, may be after the failure of Air India disinvestment. Competition from private telcos, especially Jio, is breathing down their necks. As per an estimate, BSNL and MTNL need about Rs 18,000 crore immediate fund infusion for their continued operations, which includes 4G spectrum if government issues fresh equity in them. Both the PSUs have sought 4G spectrum partly through equity routes which make the cost of spectrum for MTNL at Rs 6,500 crore for 10 Mhz in Delhi in 1800 band and 5Mhz in Mumbai in 2100 band.

BSNL needs 5 Mhz in 2,100 band for rest of India operations which too comes to about Rs 6,500 crore as 50 per cent of the cost of spectrum and the rest of the spectrum cost is expected to be covered through government equity. While BSNL meets its opex and capex through borrowings and service revenues, MTNL needs government support for meeting working capital needs. It also needs Rs 2,800 crore interest amount reimbursement on an old loan taken for spectrum and Rs 1,100 crore for financing a VRS for 5,000 employees.
MTNL has a bloating staff strength of 30,000, while BSNL has over 2 lakh employees. The financials of MTNL is so bad that it is carrying on with working capital loans on a government guarantee.

MTNL had told DoT that it is operating under three main constraints -- a high manpower numbering 25,000, a Rs 17,500-crore loan burden and lack of investment in the last seven years. To tackle the manpower problem, MTNL had suggested the government to fund its VRS programme as and when it takes place since the majority of this 25,000 staff is from the DoT. The PSU has worked out that for offering voluntary retirement to 5,000 employees, it will need at least Rs 1,100 crore,

The PSU is saddled with a debt of Rs 17,500 crore, out of which the interest component is Rs 1,450 crore. MTNL had earlier written to the DoT to allow it to carve out the land &and buildings and the debt so that the MTNL balance sheet becomes debt-free, without putting any burden on the exchequer.

Air India, MTNL and BSNL are among the top five loss making PSUs in the DPE list.

MTNL’s debt stands at a staggering Rs 17,000 crore and its annual interest burden is close to Rs 1,450 crore. Bruised by competition from private sector players, MTNL’s losses stood at Rs 2,893 crore in 2014-15, Rs 2,005 crore in 2015-16, and Rs 2,970 crore in 2016-17.

Telecom minister Manoj Sinha, in a written reply to the Lok Sabha in February had pointed out that both BSNL and MTNL have been incurring losses for a number of years, and therefore have been declared as incipient sick according to the Department of Public Enterprises (DPE) guidelines.

BSNL’s revenues in FY17 declined to Rs 31,533 crore against Rs 32,411 crore. The PSU was hoping to turn the corner by being profitable in 2018- 19, which is now shifted to 2019-20, if it starts 4G services and the competition eases. Its net loss marginally narrowed to Rs 4,793 crore against Rs 4,859 crore in the previous fiscal...

The accumulated loss of BSNL has now swelled to over Rs 36,000 crore ($6 billion), with the company making losses since 2009-10.
While MTNL has a negative market share with subscribers declining every quarter, BSNL’s market share in mobile market is 10 per cent. (Source: Financial Chronicle)

Telecom firm asked to compensate Customer for disconnecting service

Telecom firm asked to compensate Customer for disconnecting serviceReliance Communication has been directed to pay ₹15,000 as compensation and ₹10,000 towards legal costs
The Dakshina Kannada District Consumer Disputes Redressal Forum has directed Reliance Communication to pay a compensation of ₹15,000 to a consumer for disconnecting his cellphone service without prior intimation.
In the complaint to the Forum, Ramachandra B, a resident of Kuriaya from Puttur and owner of a small scale industrial unit, said that he purchased a CDMA cellphone of Reliance Communication by paying ₹1,800.

He could only operate the cellphone till January 9, 2016, after which the service was disconnected. When he contacted the telecom company’s office in Gorigudde in Mangaluru, Mr. Ramachandra was asked to submit a fresh set of mandatory documents.
Though he submitted documents, the telecom company failed to restore connection and Mr. Ramachandra filed a complaint with the forum seeking compensation.

The company said that Regulatory Term Cell Team of the Department of Telecommunication regularly does random verification of documents submitted by consumers for issuance of cellphone connection. The company said documents regarding Mr. Ramachandra was among the few picked up for verification in January 2016.

The team found mismatch of “Mandatory fields - No/Improper POS name/address/code details and customer signature mismatch in CAF and driving licence”. The company said it sent three messages to Mr. Ramachandra on his cellphone on January 7, 8 and 9 of 2016 intimating about the mismatch. As Mr. Ramachandra failed to respond, the connection was disconnected, it said.

In the judgement on May 26, forum president Vishweshwara Bhat D. and Lavanya M. Rai said that the telecom company has failed to submit proof that the disconnection of service was on the behest of Regulatory Term Cell Team. The company also failed to submit proof of sending three messages to Mr. Ramachandra.

The forum directed Reliance Communication to pay a compensation of ₹15,000 and a legal cost of ₹10,000 to Mr. Ramachandra, within 30 days. If the company failed to make the payment, it will be liable to pay ₹15,000 with interest of 7 % from the date of complaint till the date of payment, the forum noted. (Source: The Hindu)

CCI may suggest changes to Walmart-Flipkart deal

CCI may suggest changes to Walmart-Flipkart dealThe Competition Commission of India (CCI) might recommend structural changes to the proposed $16-billion Walmart-Flipkart deal to address possible competition concerns, according to officials. It might also take cues from a ruling in South Africa with respect to the Walmart-Massmart deal, which was announced in 2010.

Last month, Walmart Inc announced the acquisition of a 77 per cent stake in Flipkart for about $16 billion (₹1.05 lakh crore) in the largest-ever e-commerce deal. The retail giant has approached the CCI for approval, saying the deal does not raise any competition concerns.

However, various trade organisations have opposed the deal. While the CCI is yet to take a call on the Walmart-Flipkart deal, officials said the regulator might order certain structural changes in the proposed transaction to address possible competition concerns. Walmart declined to reply to queries on this.

Officials said the CCI might take a cue from the South African example and might even recommend the setting up of a long-term fund to modernise kiranas going forward besides supporting local manufacturing by SMEs. The fund could work under the aegis of the Department of Industrial Policy and Promotion along with Walmart representatives to build a robust kiranas development programme wherein the US retailer provides knowledge and resources, they added.

The Competition Commission of South Africa had approved the deal between Walmart and Massmart, but it was challenged later. Subsequently, that country’s Competition Tribunal gave its approval in 2011 for the merger subject to conditions proposed by the two companies.(Source: The Hindu BusinessLine)

TRAI won't regulate in-flight tariff over Indian airspace

TRAI won't regulate in-flight tariff over Indian airspaceRajan Mathews added that the business would be very marginal at best, since the scope of offering the service would be limited to Indian air space.
The Telecom Regulatory Authority of India (TRAI) will not regulate the tariff air passengers pay for making calls and browsing the Internet while flying in Indian airspace, a top official said. However, mobile phone operators, sector watchers and aviation experts said there was little business case for local carriers as it required dependence on intermediaries and the revenue would not be enough compared with the investments required as the travel time on domestic routes are usually short.

Multinational telcos are supposed to act as intermediaries between airlines and Indian telcos while offering in-flight connectivity (IFC) services, as per rules.

"Tariffs are under forbearance in entire telecom sector and it (in-flight connectivity) will not be an exception. We will not govern it, but will keep it under forbearance," Trai Chairman RS Sharma told ET. He didn't elaborate on what the pricing levels could be.
He added that the architecture for offering in-flight connectivity (IFC) services would be a business decision between Indian telcos and international telecom carriers with the latter acting as "intermediaries" between the aircraft company and a local telco.

"Telecom operators managing a local earth station will have to get arrangements with international service providers and not with airplane companies directly so that flights while entering into Indian aerospace will start getting signals," the top official said.
Earlier this month, a high-level inter-ministerial Telecom Commission, headed by Telecom Secretary Aruna Sundararajan, approved the move to allow air travellers to access Internet over smartphones and make calls once the aircraft achieves a height of 3,000 metres.
The IFC initiative would broadly allow aircraft companies such as Airbus and Boeing to forge alliances with multinational telecom carriers to deploy equipment and enable them to enter into pacts with local broadband service providers.

Based on a custom tariff plan, the process would permit air passengers to connect onto an 'on air network' or inflight Wi-Fi service and receive one-time password (OTP) to activate 'secured' data services."There will be a Wi-Fi protocol which is being currently used in the sector and there will also be a traceability of user accessing the Internet services," Sharma said.

VSAT (Very Small Aperture Terminal) CUG (Closed User Group) license holders that include Reliance Jio Infocomm, Bharti Airtel, Tata Services and Hughes Communications can operate IFC with satellite links, and alternatively, those with Unified License (UL) with National Long Distance (NLD) service authorisations can also offer similar services.

Indian telecom firms, however, were not enthused. "It's the owners of the aircraft that make the most money because pricing power resides with them, and they will market the service and make profit on it, so, it's not much of a lucrative area for Indian carriers," said Rajan Mathews, director general of Cellular Operators Association of India (COAI), which represents all service providers including Bharti Airtel, Vodafone India, Idea Cellular and Reliance Jio.

He added that the business would be very marginal at best, since the scope of offering the service would be limited to Indian air space.
The aggressive data tariffs, with voice effectively free, adopted by Indian carriers in the local market would also be a deciding factor in offering tariffs for voice and data on board airlines, Mathews added.

None of the four telcos responded to ET's queries. DoT is working with aviation authorities to formalise the process for seeking IFC license. Officials said consumers would be able to get voice and data services during flights within three to four months.
"The revenue that telcos may get from IFC services may not be significant in the initial stages. So, I'm not sure whether it's the best investment case for a telecom company," said Kapil Kaul, chief executive officer of Indian Subcontinent & Middle East regions at aviation consultancy CAPA India.

Kaul estimated a per-minute call to range from Rs 125 to Rs 150 for domestic flights since airlines will have to invest millions of dollars to provide the services, depending on commercial factors. For example, the one-time investments for setting up the system for domestic narrow-body fleet will be close to $200 million, he said.

He added that offering the service for the average domestic flight within India, which is about 1.5 hours, would also not make business sense."Airlines may not want to create an additional capex line given that costs of fuel are going up and airline capacities increasing," he said. (Source: ETtelecom)

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