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Policy & Regulation
Sunday, April 30, 2017
Airtel, Jio spar over time taken to comply with Trai order

Airtel, Jio spar over time taken to comply with Trai orderThe conflict between Bharti AirtelBSE -0.15 % and Reliance Jio Infocomm heated up as the country’s no. 1 telco accused its rival of violating the Telecom Regulatory Authority of India (Trai) order to stop the Summer Surprise offer and urged the watchdog to take “suitable action.”

Newcomer Jio in turn pointed to its April 6 statement that said the telco would comply with the regulator’s directive and is in the process of withdrawing the Summer Surprise offer as soon as it is “operationally feasible.”

Bharti AirtelBSE -0.15 % said the new entrant should have stopped the offer immediately. “We are surprised that Reliance Jio is openly continuing with its Summer Special offer despite the same being declared ab initio void by the Trai,” a Bharti Airtel spokesperson told ET in an email on Sunday. “In addition, Reliance Jio is running an aggressive campaign via social media and on ground as well as digital flyers encouraging customers and channel partners to subscribe and recharge under the scheme.”

The company, which kicked off commercial services in September, was in breach of the regulator’s instruction, Bharti said. “This is a flagrant violation of Trai’s unambiguous directive and it is clear the extension is invalid for all customers who have recharged after the regulatory order came into effect,” Bharti said. “We are sure the honorable regulator will take suitable action against this violation.”

Jio, while agreeing to comply with the order, has maintained that it’s broken no laws. “All the customers who have subscribed to Jio Summer Surprise offer prior to its discontinuation will remain eligible for the offer,” Jio reiterated on Sunday.

“There is no reason, even technical, why Jio’s Summer Surprise could not have been stopped immediately, post the Trai order,” said a top executive at one of India’s largest telcos.

Several retailers in Mumbai and Delhi told ET that Sunday may be the last day for availing of the offer but were unsure if it wouldn’t be available Monday. At stake are significant numbers of people Jio wants to add to its 72 million user base. Incumbents meanwhile want Jio to start charging for services as soon as possible to allow them to draw up pricing strategies to protect their user base.

Jio’s rivals haven’t decided on making an official complaint to Trai, which said Summer Surprise offer did not fit into “regulatory framework.” It had also said Jio’s explanations hadn’t been satisfactory.

Vodafone India and Idea CellularBSE 0.40 % didn’t respond to emailed queries. Trai had said on April 7 that Jio will stop the offer but since it’s a “large network, it takes some time. We are saying to stop it in a shortest possible time and it can be few hours, a day or a day and half but it can’t be April 15.”

Rajan Mathews, director general of the Cellular Operations Association of India (COAI), declined to comment specifically on the issue.

“If there are loopholes (in Trai’s order), then it is for Trai, as a vigilant regulator, to be aware of these and identify them and close the loopholes immediately,” said Mathews. “Those who become aware of these loopholes, should in turn, inform the regulatory authority, with the hope that it will then act to close these loopholes.”

Even if the offer is withdrawn a few days before April 15, Jio may still emerge the winner, analysts said. Assuming that Jio takes three-four days to alert its distributors, channels, partners and the public on the stoppage, that would still give it 10 days out of the 15 that were planned for the offer.

Early closure will probably lead to a rush of people wanting to sign up before the end.

Jio’s two successive free offers that ended March 31have damaged incumbents, which have been forced to cut voice and data rates sharply while needing to invest in capital expenditure, hurting revenue and profitability. Industry debt has ballooned to nearly Rs 4.90 lakh crore. The financial stress, the government has said, has eroded revenue from licence fees and spectrum usage charges.

The legality of Jio’s offers and Trai’s decision to clear them are being challenged in the high court and the telecom tribunal, which has asked the regulator to revisit its decision. Jio has maintained all its plans are in line with the rules. (Source: Economic Times)

Telecom Coordination Committee to Redress Mobile Tower Grievances in Gurugram

Telecom Coordination Committee to Redress Mobile Tower Grievances in GurugramA city-level 'Telecom Coordination Committee' would be set up soon to redress grievances related to mobile phone towers in Gurugram, a senior civic official said today. The committee would be constituted to get levels of EMF (Electromagnetic Field) radiation from such towers checked by Telecom Enforcement, Resource and Monitoring (TERM) cells within one week of receipt of complaint.

"A City-level Telecom Coordination Committee will be constituted to get levels of EMF radiation from such towers checked..," said Commissioner, Gurugram Municipal Corporation, V Umashankar.

This was divulged by the official during an awareness programme organised by Department of Telecommunications, Central Government in Gurugram, a press release said. (Source: NDTV)

Mobile Users, New And Old, Will Soon Require Aadhaar For Verification

Mobile Users, New And Old, Will Soon Require Aadhaar For VerificationAfter drivers' license, Aadhaar-based re-verification has been made mandatory for all existing subscribers of mobile phone services, with the government instructing telecom operators to initiate the process. Members of the Cellular Operators Association of India may meet later this week to discuss the modalities or rolling out the verification process for over a billion users, which - they say - is expected to cost them nearly Rs. 1,000 crore. "All licensees shall re-verify all exiting mobile subscribers (prepaid and postpaid) through Aadhaar-based eKYC process," said a telecom department notification.

Last month, the Supreme Court had observed, "an effective process has been evolved to ensure the identity verification" for new users. It added that "in the near future, and more particularly within one year from today, a similar verification will be completed, in case of existing subscribers." Licensees, or the cellular operators, will have to inform existing users about the Supreme Court order for the re-verification process. They have also been directed to upload the execution details on their respective websites.

For the re-verification through Aadhaar, the operator will have to send a verification code to the subscriber's number. The operator will, then, have to verify this code from the subscriber so as to confirm whether the SIM card of the connection is physically available with the subscriber.

"After the completion of the eKYC process, before updating or overwriting the old subscriber detail in database with the data received through eKYC process, the licensee will seek confirmation from the subscriber about the re-verification of his/her mobile number after 24 hours through SMS," the notification said.

The operator can re-verify more than one mobile connection in one service area through a single eKYC but not bulk connections. For issuing additional mobile connections to re-verified subscriber, the operator would have to follow a separate eKYC process.

However, verification of a subscriber would not be required in case of conversions - that is prepaid to postpaid connections or vice versa, the notification clarified.

The government has, in the recent past, said that Aadhaar cards will be made mandatory for filing tax returns and applying for driving licences. (Source:NDTV)

E-commerce firms to pay up to 1% TCS under GST

E-commerce firms to pay up to 1% TCS under GST E-commerce firms like Snapdeal and Amazon will have to mandatorily deduct up to 1 per cent TCSBSE -0.31 % (Tax Collected at Source) while making payments to their suppliers under the GST regime which is expected to kick in from July 1. The model Goods and Services Tax (GST) law, finalised by the GST Council, provides for 1 per cent TCS to be deducted by the e-commerce operators. The model law provides that every electronic commerce operator, not being an agent, shall collect up to one per cent TCS, as may be notified on the recommendations of the Council, of the net value of taxable supplies made through it by other suppliers where the consideration with respect to such supplies is to be collected by the operator.

Experts had raised concerns saying this would mean that a similar amount will have to be levied on inter-state movement of goods, taking the total TCS deduction to 2 per cent. "We have included the word 'up to' in the final model GST law. This would mean that TCS would not exceed 1 per cent of the sale proceeds," an official said.

Industry has been expressing concern over the TCS provisions saying it would mean a lock-in of capital and also dissuades companies from selling through online aggregators.

E-commerce companies will also have to file returns on the TCS deductions, but in case of return of goods by the consumer, these companies will not have to deduct TCS as there is no actual sale.

The model law had defined 'electronic commerce' as supply of goods or services, including digital products, over electronic network.

'Electronic commerce operator' would mean those persons who own, operate or manage digital or electronic facility or platform for electronic commerce. (Source: Economic Times)

H-1B priority suspension: Indian companies would have to better plan its onsite staffing in US

H-1B priority suspension: Indian companies would have to better plan its onsite staffing in US The US decision to suspend priority processing of H-1B visas would require Indian companies to better plan onsite staffing of critical resources, as the move would mean longer waiting time for employees to be deployed at client locations.
A statement on Friday from the US Citizenship and Immigration Services (USCIS), the agency that oversees lawful immigration to the United States, said it would temporarily suspend premium processing for all H-1B visa petitions from April 3. Premium processing is akin to "tatkaal" scheme for H-1B visas: A decision is made on each application within 15 calendar days for a fee of $1,225 under this programme. In the normal course, an application usually takes between three to six months for processing.

USCIS said the suspension may last up to six months and will help it "process long-pending petitions that we have currently been unable to process due to high volume of incoming petitions and the significant surge in premium processing requests over the past few years; and prioritise adjudication of H-1B extension of status cases that are nearing the 240 day mark." Experts believe the move would slow down onsite deployment of skilled professionals from India.

"This slows the professional down by three months. The impact will call for a lot more forward planning for companies. In many cases, H-1Bs are often needed quickly so this will create significant difficulties for India IT firms dealing with US clients. I anticipate a huge influx of visa application between now and April 1," Phil Fersht, chief executive at research firm Horses for Sources, told ETin an email response.

At present, the US has a cap of 65,000 visas for the general category under H-1B visas and allows a further 20,000 people who have a US master's degree from an accredited institution to also apply. The USCIS uses a computer-generated process, also known as the lottery, to randomly select the petitions.

IT industry body National Association of Software and Services Companies agreed the suspension would create some process delays for the companies - Indian and American - but does not see it as a significant impediment. "This has happened in the past for a couple of months to clear the backlog and we will work with the US Embassy in India to ensure that mobility of skilled talent is not affected due to process issues," Nasscom told ET in an email response.

The most impact to the IT industry will be on fresh H-1B applicants, said Rajiv Dabhadkar, founder of the National Organisation for Software and Technology Professionals, which works for Indian workers overseas.

"Applications will be scrutinised more now.There will be an impact on next year's lottery because of this greater scrutiny," he said. Tata Consultancy ServicesBSE -1.03 %, the largest Indian software exporter said it does not disclose the number of H-1B premium processing requests it raises in a year. An industry analyst who did not wish to be named, however, said TCS had in the past told investors that it files very few such applications.

Infosys, Wipro, HCL and Tech Mahindra didn't respond to a request for comment for this report. The timing of the USCIS announcement, within hours of an Indian foreign ministry delegation saying it had received a positive response from the US on H-1B visas, also raised some eyebrows. (Source: Economic Times)

Centre opposes news broadcast on FM

Centre opposes news broadcast on FMThe government has told the Supreme Court it is against granting of permission to community radio channels and FM radio stations to broadcast news programmes because of a "possible security risk" in the absence of a proper mechanism to monitor such content. In a sworn affidavit filed in the court recently, the ministry of information and broadcasting cited views expressed by the home ministry that there were several pitfalls to guard against, including the possibility of minds being manipulated by vested interests. It said the home ministry was of the view that "CRS (community radio stations) operators and private FM operators may not be allowed to broadcast news and current affairs programmes" because of the following reasons:

Broadcasting of news by these stations/channels "may pose a possible security risk as there is no mechanism to monitor the contents of the news bulletins of every such stations".

The ministry said these stations/channels were run mainly by NGOs/other small organisations and private operators, and "several anti-national/radical elements within the country" could misuse them for "propagating their own agenda".

"Community radio stations also air programmes involving chats with NRIshe local population settled abroad. These stations may be exploited by foreign radical organisations to broadcast fabricated/radical views of some of these NRIs, as due to paucity of funds, the radio stations would not be able to afford authentic news sources," the Centre said.

The Centre's affidavit came in response to a recent directive by a bench headed by Chief Justice of India J.S. Khehar on a public interest plea filed by the NGO Common Cause in 2013. The plea had questioned the government's logic in not allowing private FM radio stations to broadcast news and current affairs programmes.

According to the Centre, public interest was the predominant consideration for the government while formulating policy guidelines and implementing them. "News and current affairs programmes on community radios are not allowed in the policy guideline to prevent the possibility of misuse of the platform by vested interests for furthering their designs/agenda," the government said.
"Community radio is a powerful medium for dissemination of information among the local people. It needs to be ensured that it is not used as a tool by vested interests."

The Centre recalled that in the 1995 I&B ministry-versus-Cricket Association of Bengal case, the court had observed that "airwaves or frequencies" were "public property"and their use had to be "regulated by a public authority in the interests of the public and to prevent the invasion of their rights".

The government said broadcasting of news bulletins and current affairs programmes on radio were at present the "exclusive preserve" of national broadcaster All India Radio and "outside the ambit of private FM Radio stations". "In case of policy departure, there are several pitfalls to guard against, bearing in mind the sensitive nature of such broadcasts. It is believed that news and current affairs, with their inherent capability to manipulate the minds of the people, have been advisedly kept beyond the tether of private radio stations," it said.

"Unlike television which is an omnibus medium, FM radio caters to disparate audiences of much smaller size, owing to limited coverage of the FM signal. Such a situation calls for local monitoring throughout the country, which is a complex task."
The affidavit added: "Unfettered freedom to community radio and private FM radio operators to put out news bulletins and/or current affairs programmes may be detrimental to national interests and it may be prudent to allow community radio operators to only broadcast AIR's news without any charges and allow private FM operators merely to relay AIR's output for a price based on a national and local rate card of AIR." The matter is expected to come up for hearing before the top court next week. (Source:Telegraph)

After H-1B visa curbs, two more US Bills may stymie Indian tech

After H-1B visa curbs, two more US Bills may stymie Indian tech The Indian IT industry has more than just the H-1B visa Bill to worry about. Two more legislations have been introduced in the United States Congress over the last two weeks that can hit the domestic tech sector’s prospects. While the H-1B visa Bill seeks to more than double the minimum wage for an H-1B visa holder to $130,000, the ‘End Outsourcing Act’ asks for a ban on outsourcing by states. Another is a 2007 Bill that has been reintroduced by Senators Chuck Grassley and Dick Durbin — long time proponents of work visa reform. This Bill too seeks revamp of the H-1B visa programme. This comes even as buzz about US President Donald Trump signing an executive order that reforms the H-1B programme is still alive.

Senate Judiciary Committee Chairman Grassley and Assistant Democratic Leader Durbin announced on the former’s website that they will introduce the legislation to "prioritise American workers and restore fairness" in visa programmes. This comes even as buzz about US President Donald Trump signing an executive order that reforms the H-1B programme is still alive. Senate Judiciary Committee Chairman Grassley and Assistant Democratic Leader Durbin announced on the former’s website that they will introduce the legislation to "prioritise American workers and restore fairness" in visa programmes.

"Congress created these programmes to complement America’s high-skilled workforce, not replace it," Grassley said. He added that some companies are trying to exploit the programmes by cutting American workers for cheaper labour.

The Bill, introduced on January 20, aims to give preference for talented foreign students educated in the US for H-1B visas.

Meanwhile, three Senate democrats — Joe Donnelly along with Senator Sherrod Brown and Senator Kirsten Gillibrand — on January 30 introduced the ‘End Outsourcing Act’. The legislation seeks that companies that outsource jobs should not be subsidised by US taxpayers and also be disallowed to do business with the US government.

"We should encourage businesses to invest here and make sure taxpayer funded contracts are awarded to companies that employ American workers," Brown said in a statement. "We need programmes dedicated to putting American workers first. When skilled foreign workers are needed to meet the demands of our labour market, we must also ensure that visa applicants who honed their skills at American colleges and universities are a priority over the importation of more foreign workers."

While on Monday when Democrat Zoe Lofgren — who represents a Congressional district in California that includes Silicon Valley — introduced ‘The High-Skilled Integrity and Fairness Act of 2017’, which proposes a skill and wagebased system for allocation of H-1B visas and doubling the H-1B wage to $130,000, stocks of major Indian software exporters such as Infosys, Wipro and Tata Consultancy Services nose-dived, with five IT stocks losing about .`33,000 crore in market value.

Meanwhile, the ministry of external affairs has downplayed the impact. Asserting that no executive order has been passed by the Trump Administration for overhauling of H-1B visas so far, a government spokesperson said the country will not "prejudge" the outcome of the three private Bills raised in this regard when they go through the full Congressional process.

"No executive order has been signed so far... Three private Bills have been introduced in the US House of Representatives. Such Bills have been introduced in the past also and such Bills have to go through the full Congressional process," MEA spokesperson Vikas Swarup said.

He also said India remains in dialogue with the Trump Administration as well as US Congress at the senior levels over the issue. "They are fully aware of our position in this particular matter i.e., Indian software exports and Indian software technical professionals add to the competitiveness of the US industry," Swarup said.
Adelegation from the tech industry body Nasscom is leaving for the US in the last week of February to discuss the issue with US policy makers.

Shivendra Singh of Nasscom said such Bills have to go through many levels of scrutiny before they become law. "We would look forward to laws which bring about changes that are applicable to all companies and not alter level playing field. We should aim for global unhindered equal trade relations," he said. (Source: Economic Times)

Telecom companies seek clarity on tax treatment of spectrum payments

Telecom companies seek clarity on tax treatment of spectrum paymentsMobile phone companies have urged Finance Minister Arun Jaitley to clear the air on tax treatment of spectrum payments in Union Budget to ensure uniformity in tax policies and pre-empt potential litigations in future. Telcos are hopeful that Jaitley will issue a clarification, saying capital expenditure incurred on spectrum allocated before April 2016 will not have to be amortised over a 20-year span, and will continue being eligible for depreciation-linked tax benefits under Section 32 of Income Tax Act, since spectrum is an intangible asset.

The confusion stems from the recent enactment of Section 35ABA of the I-T Act, which entails amortization of spectrum over its 20-year tenure, effective April 1, 2016. “Section 35ABA is applicable from FY2016-17 and regulates airwaves allocated post April 1, 2016, but tax officers, in some cases, have taken a contrary view insisting that the right to use spectrum is amortizable, which would automatically reduce tax benefits for telcos,” Rajan Mathews, director general of Cellular Operators Association of India (COAI), told ET.

The COAI represents India’s largest phone companies such as Bharti Airtel, Vodafone India, Idea Cellular and newest operator Reliance Jio Infocomm. Accordingly, phone companies have urged the finance ministry to issue a budget clarification that “spectrum allocated before April 1, 2016, would continue to be governed by Section 32 of the Act and not Section 35ABA, which would allow telcos to continue capitalising spectrum expenses and claim depreciation-related tax benefits.

The finance minister “needs to clarify that Section 35ABA will not be applicable retrospectively for spectrum allocations before April 2016,” Mathews said. Telecom operators have also urged the finance minister to exempt spectrum from the ambit of service tax on grounds that allocation of airwaves is a sovereign function and must not be taxed. Spectrum was brought within the ambit of service tax last April.

Mathews believes any consideration payable on allocation of spectrum “is a statutory payment and applicability of service tax thereon leads to payment of a tax on a statutory levy, resulting in a tax on tax, which is punitive,” resulting in material distortion and discrimination to the industry, that would also jack up the cost of providing telecom services.

Mobile phone companies also want the FM to clarify that airwaves allotted before April 1, 2016, will not attract service tax. They are also looking to next week’s budget for a possible cut in the applicable withholding tax from 5% to 2% on discounts offered to distributors of prepaid mobile connections.

A senior industry executive said “prepaid distributors are not agents of telecom companies, and the discounts extended to them are not commissions,” a position that COAI’s Mathews endorses.

“The applicable withholding tax rate on such routine discounts must be lowered to 2% from 5%, given the low margins that these distributors of prepaid connections, typically, make,” he said. Analysts at rating agency ICRA expect to the FM to announce concrete measures to boost broadband penetration in rural pockets, in line with the Narendra Modi-led government’s mission to make India a less cash-dependent society.

“Infrastructure companies should be encouraged to install towers and telcos must be incentivised to boost network connectivity in rural areas to boost broadband penetration,” ICRA said in a note. (Source: Economic Times)

Trai may suggest Aadhaar eKYC for outstation SIM buyers

Trai may suggest Aadhaar eKYC for outstation SIM buyersTelecom regulator Trai is likely to recommend to the Department of Telecom (DoT) that Aadhaar-based eKYC be allowed even for outstation customers who want to get a mobile connection in a particular service area. It will also rid telecom operators of the hassle of keeping verification paper documents

Telecom regulator Trai is likely to recommend to the Department of Telecom (DoT) that Aadhaar-based eKYC be allowed even for outstation customers who want to get a mobile connection in a particular service area.

Further, the regulator may suggest that the existing mobile subscribers in the country should be encouraged to go in for Aadhaar-based eKYC verification, for which telecom service providers could offer incentives like free data or talktime. The facilitation of Aadhaar-driven eKYC for the existing customer base will ensure proper verification of subscribers and address the security concerns pertaining to fake or bogus mobile connections, according to sources. It will also rid telecom operators of the hassle of keeping physical customer verification paper documents which could get damaged or misplaced in the long run.

However, Trai is of the view that since eKYC verification cannot be mandated per se, a proper programme should be evolved by the telecom department in consultation with telecom service providers (TSPs) to nudge the existing subscribers to go for Aadhaar-based eKYC.

It feels that the same should be done in a phased but time-bound manner. While Trai is in favour of telecom operators offering sweeteners so that people come forward for eKYC, the regulator is not likely to specify exact incentives.

At present, eKYC has been adopted for new mobile connections or SIM cards, but existing customers -- who form the overwhelming majority of the over 100 crore mobile users -- remain outside the purview of Aadhaar-based eKYC verification ambit.

Sources further said not allowing eKYC process for SIM purchases by outstation customers is creating an artificial barrier among users. Trai has favoured opening up the Aadhaar eKYC process for outstation customers too to remove the distinction between users.

It may be recalled that in August last year, the government allowed application, validation and activation of new pre-paid and post-paid mobile connections using Aadhaar card and fingerprint at the point of sale. The e-KYC has made the process of application and authentication faster and simpler for new subscribers.

Besides easing the verification process and enhancing security, the move has cut down the time for new SIM activation as against the previously lengthy document-based process of applying for a mobile connection. (Source: ETtelecom)

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