MediaNama’s Recommendations To TRAI On Regulation Of MVAS

The Telecom Regulatory Authority of India has extended the date for submission of comments on its proposal to regulate mobile Value Added Services in the country, to the 23rd of August 2011. Please submit your comments to the TRAI at advbbpa@trai.gov.in or bbpa@trai.gov.in. Download the consultation paper here. They’re seeking answers to just 10 questions, so do write to them.

We’ve just completed our recommendations for submission (since the today was supposed to be the deadline). Click here to download our recommendations.

The executive summary is below, but we’ve explained our rationale for the recommendations, and specific responses to the 10 questions in the document. We’re open to feedback and suggestions for changes from you, our readers, so please feel free to write in. We’ll submit the final recommendations next week.

Executive Summary

1. MediaNama.com, the premier website for news and analysis of the digital ecosystem in India, welcomes the TRAI’s interest in ensuring the creation of a healthy and flourishing Mobile Value Added Services ecosystem, since this industry is an integral part of the nascent Digital ecosystem in the country, with the potential to impact the livelihood of hundreds of millions of individuals.

2. Mobile Value Added Services companies are currently operating as vendors to telecom operators, and the provisioning of their services and their fate is entirely in the control of the UASL/GSM/CDMA Access Service Providers. The MVAS business is already regulated by the authority through these Access Service Providers, and as such, we do not feel there is a need for further regulation of Mobile Value Added Services companies. Licensing is out of the question, since the digital content and services ecosystem is at a nascent stage, and licensing would act as a deterrent to entry of startups and smaller companies, which are often the most innovative.

3. The lines between MVAS, the Internet, Broadband VAS, DTH VAS, and services on connected devices (from tablets to cars and refrigerators) will blur in a ubiquitous environment, and any initiatives from the authority must take this into account: please view these services as being delivered over Internet Protocol, and not by platform company or access service provider. Digital Ubiquity is the future, and companies are Digital Service Providers, not just MVAS companies or Internet companies.

In that context, we would request the authority to initiate steps to break existing cartels, ease setting up of new businesses and unshackle these Digital Service Providers. This can be done by focusing on three changes:

a. Separation of ownership of identity of the Digital Service Provider from provisioning by Access Service Provider by creating a Common Short Code Registry, governed by a Common Short Code Registrar. At present, Digital Service Providers do not own the short codes they operate.
b. Separate billing for services/content from access charges, to bring transparency and standardization in consumer billing, and independence for the Digital Service Provider from Access Service Provider. We would recommend the removal of the existing revenue share mechanism as a means to ensure ubiquitous pricing mechanisms across digital platforms.
c. Enforce provisioning of independent mechanism for verification of billing, in order to address MIS issues, and bring billing for content and services in line with Mobile and Online Banking guidelines from the Reserve Bank of India. source

The dispute between defence and telecom on vacating spectrum must end

After the ministries of defence and telecom agreed, in May 2009, to make 45 MHz of spectrum used for defence purposes available for commercial 2G and 3G mobile services, there has been regular exchange of letters between the two ministries, but no action to release spectrum. The ministry of defence says that its commitment was subject to the department of telecom ( DoT )) laying a Rs 10,000 crore optical fibre network for it and, further, waiving any charges for spectrum use for defence purposes. 

These conditions have not been met and so Defence is not in a position to release any spectrum now. At a time when the number of subscribers continues to grow at a rapid pace and spectrum availability squeezes telecom companies' ability to offer quality service, this is not an acceptable state of affairs. When two ministries of the government are unable to reach an agreement on a matter that concerns both of them, it should be resolved through an intervention by the Prime Minister . And the matter brooks no delay. 

The effort should be to provide every Indian with highspeed data connectivity, for India to realise the productive potential of her 1.2 billion people. Developed countries are making sound progress in this regard; the French now deeming broadband access a fundamental right and the US rolling out a national broadband plan to provide every home with 100 Mbps connectivity (in India, mere 256 kbps still qualifies as broadband). It is also criminal to permit state-owned broadcaster Prasar Bharati to squat on a huge swathe of spectrum that it uses for analogue terrestrial broadcast. 

There is every need to fully fund and accelerate Prasar Bharati's desultory digitalisation programme, so as to release additional spectrum for mobile networks. India has to target achieving a high-speed data network reaching all parts of the country, on which voice is just one functionality. For meaningful inclusion of the poor in the growth process, such data networks are imperative, to provide banking, health and education services. Wireless would be an integral part of it. The PM must ensure availability of the needed spectrum, amidst the squabbles among his ministers.

Govt can raise Rs 85,850 cr by selling 50% of defence airwaves

The telecom department (DoT) believes that the exchequer can get a minimum of 85,850 crore by selling just 50% of the airwaves the defence ministry vacates.

Its calculations are based on the assumption that about 20 MHz of second generation (2G) and an equal amount of third generation (3G) can be sold to mobile phone companies if the defence ministry was to free up these radio frequencies, according to an internal DoT note reviewed by ET. In total, the telecom ministry is seeking that the armed forces vacate up to 80 MHz of airwaves for commercial telephony.

The broadband wireless spectrum auctions in India last year delivered the government an unexpected bonanza of 38,543 crore ($8.25 billion), twice the amount predicted by analysts. The 3G and broadband spectrums jointly fetched 1,06,000 crore for the government against its estimates of 35,000 crore.

The telecom department's projections are part of its response to the defence ministry's latest threat that it will not release additional airwaves for commercial use. It also marks the first time that the department has put a value to the airwaves it is seeking from the armed forces.

Defence Minister A K Antony had recently told Finance Minister Pranab Mukherjee that the telecom department had failed to meet all timelines on building an alternative communication network for the armed forces, and warned that it could result in the services stopping all vacation of airwaves.

This is because, as per the MoU between both ministries, the armed forces were to vacate 25 MHz for 3G and 20 MHz for 2G. This will happen in a phased manner and will be linked to the completion of the alternative network that the DoT is building for the defence forces. Besides, the telecom department was also slated to set up an exclusive defence band and defence interest zone for the armed forces to keep its part of the bargain.

While the armed forces have already freed up 15 MHz 3G spectrum, which was sold during last year's auctions, and also vacated 15 MHz 2G spectrum, which has been allocated to new operators, the remaining airwaves - 10 MHz spectrum in 3G (for two operators) and 5MHz in 2G - will be released only after the alternative optic fibre network being built by BSNL is completed.

Analysts say the telecom department may earn more than their estimates if 20 MHz each of 2G and 3G airwaves are auctioned.

Net-based messaging services may face Ban

After BlackBerry Smartphone, the Indian law enforcement agencies might target Internet-based messaging services, offered by Internet giants like Google and Skype, which are inaccessible to them or allow communication between users in encrypted format.
In a meeting held a few weeks ago, the Department of Telecommunications [DoT] and Union Home Ministry warned various associations of mobile operators and Internet service providers (ISPs) not to allow any communication in any encrypted form, as it may be used by anti-national elements.
 
Now ISPs providing messaging services fear that, after BlackBerry, it might their turn to face the heat. Such services offered by companies like Google and Skype might have to either follow government guidelines or face ban.source

Pre-paid mobile services ban regressive

Terming the possibility of blanket ban on prepaid mobile services in Jammu and Kashmir as regressive, Chief Minister Omar Abdullah on Monday blamed the service providers for dragging their feet on verification. "It's the mobile service providers who are dragging their heels regarding verification and
the creating a problem for everyone else," Omar said on the micro-blogging site twitter.

Omar said imposing a blanket ban would be a regressive and counter-productive measure and ways have to be found to avoid it.

"I agree, a blanket ban is regressive and counter-productive. How to avoid it is to be worked out," he said.

Department of Telecommunication in a notification to mobile operations extended the permission for prepaid mobile connections in Jammu and Kashmir till March 31, 2011, giving rise to apprehensions that the service might be banned.

The notification was issued after discrepancies and shortcomings came to surface with regard to the verification of subscriber credentials in many cases.

Prepaid connections in the state were banned in 2009 as many SIM cards were recovered from the possession of militants and their sympathisers. However, the ban was lifted in January 2010 but strict guidelines for re-verification were notified to the telecom companies.

Vodafone says - Auctioning is the only way out of 2G mess

 

Vodafone Essar has told the Department of Telecom that auctioning 2G spectrum is the only right way forward to deal with the current mess. The mobile phone company said that recommendation by the telecom regulator to price spectrum based on calculations was incorrect and unjustifiable.

“Even though the one-man committee has criticised DoT for not implementing the 2003 decision of the Cabinet to move to auctioning of spectrum….even today the TRAI refuses to advice to move to an auction model and has come out with an arbitrary and flawed administrative way of charging for spectrum, designed to aggravate the discrimination between different operators,” the Vodafone letter to DoT Secretary said.

“We believe that there is only one way out of this mess viz. allocation of spectrum through transparent auctions. In respect of an administrative approach to address legacy issues, we believe that it at all it has to be applied, the only acceptable way forward will have to be a solution that is anchored around on uniformly applied principles — i.e. no distinctions between below and beyond 6.2 Mhz or between GSM and CDMA,” it said.

The TRAI has suggested that the Government should collect a one-time fee from operators with 2G spectrum at the rate of Rs 1,769 crore per Mhz of spectrum up to 6.2 Mhz and Rs 4,571 crore per Mhz for anything beyond that. This will cost the telecom firms about Rs 16,000 crore, according to Government estimates. Over the next few years, this could go up to Rs 40,000 crore, when the operators go for renewing their licences

Vodafone said that the TRAI had not granted a hearing. The company said that TRAI has no powers to impose retrospective charges for spectrum already allocated.

Last week, Reliance Communications had come out saying that the TRAI recommendations benefitted incumbent operators such as Vodafone as it had reduced the per Mhz price compared with the May 2010 proposals. In May last year, TRAI had said that 2G spectrum should be priced on a pro-rata based on 3G auction price.source

216 crore to GOVT from penalties on TELCOS

The government has collected nearly Rs 216 crore in penalties from new telecom service providers for not rolling out their networks within the stipulated timeframe after getting licence and spectrum.

"We have received Rs 215.6 crore as liquidated damages from the new service providers for missing out roll-out obligations out of total Rs 342.6 crore demand till January 21," Telecom Secretary R Chandrasehkar told PTI.

The DoT had issued 119 notices to new telecom operators for missing their network roll-out obligations last month and imposed hefty penalties on them.

He further added, "The companies who had moved to TDSAT are also expected to pay this (liquidated damages) as soon as possible."

As per sectoral regulator Trai's guidelines, in case showcause notices were issued for cancellation of licences, the operators would be given 60 days time to respond to the notices before a final decision is taken.

In the case of penalties imposed for for missing roll-out obligations, the operators were supposed to make payment within 15 days of the notice.

As per the conditions of the licences, the licencees were required to roll-out their services in 90 per cent of service areas in metros and 10 per cent in district headquarters within 12 months (52 weeks) from the date of award of licences.

Earlier, telecom tribunal TDSAT had asked Uninor and Videocon Telecom to pay a part of the penalty imposed on them for missing their roll-out obligations.

TDSAT's interim order followed a plea from Videocon challenging the demand notice issued by the DoT, which sought liquidated damages (LD) over the telecom firm's failure to roll out services within the stipulated period of one year after the grant of a licence.

The DoT had issued the notices to Videocon on January 1, demanding LD for four circles.

In a similar case, TDSAT had directed Uninor to pay 60 per cent of the penalty amount demanded by the DoT over the service provider's failure to roll-out services in 18 circles.

As per the conditions of the Unified Access Service Licence (UASL), the telcos are required to roll-out their networks within one year from the date of allocation of spectrum.

According to the agreement, in case new licencees fail to roll-out services within the stipulated period, the DoT is entitled to impose LD on the operators, or even cancel their licences.source