GSM lobby objects to Trai playing licensor in telecom

New Delhi: Can a regulator also be the licensor? The answer is, of course, yes, since the Reserve Bank and Sebi are both licensors and regulators in their respective fields.

However, the association of GSM (Global System of Mobile communications) telecom operators disagrees. The Cellular Operators Association of India (COAI) plans to write to the Department of Telecom soon objecting to the Telecom Regulatory Authority of India’s (Trai’s) proposal to be the licence issuer, too.

Till now, licensing has been the domain of DoT but Trai has recommended that this function be passed over to it as part of its draft ‘Guidelines for Unified Licence/Class Licence and Migration of Existing Licences’ unveiled on Monday.

“We plan to write to DoT soon on this. How can Trai be both judge and jury? It should either regulate or award licences,” COAI Director General Rajan Mathews told Firstpost.

[caption id=“attachment_278639” align=“alignleft” width=“380” caption=“The association is also miffed at Trai’s suggestion that mobile towers should also need licensing.Reuters”] [/caption]

Another bone of contention is a proposal to allow broadband wireless access (BWA) players to offer voice calls. COAI says the opening up of internet telephony could create problems for existing operators. Trai has recommended that BWA operators be allowed to offer voice calls originating on their data networks to terminate on a mobile network, which Mathews said dilutes the “rights of mobile operators”.

Technically, this could mean that Reliance Industries, which holds a pan-India licence for 4G services, could offer voice on its data network, too. Though this may happen eventually, COAI’s contention is that the earlier system of allowing only computer-to-computer calls (as in Skype) or computer to another device (but not to a mobile) should be continued.

The association is also miffed at Trai’s suggestion that mobile towers should also need licensing, calling it an instance of “Double taxation” since towers generate revenue through both GSM and CDMA operators. Mathews said there is a 30-day window available with COAI to write to DoT and a communication would be sent soon.

But not all of Trai’s recommendations are detrimental to COAI’s interests. The regulator has recommended that all communication services be allowed under one composite licence with an entry fee of Rs 15 crore compared to Rs 1,658 crore at present (which, admittedly includes some free spectrum). This means a universal licence for almost everything, at a much lower cost.

But these pan-India mobile permits will not come bundled with spectrum or airwaves, and companies that obtain them must buy radio frequencies by participating in auctions. Currently, a pan-India permit comes bundled with 4.4 Mhz of start-up GSM spectrum, or 2.5 Mhz of CDMA airwaves, in all the 22 circles. Circle level permits will now come for Rs 1 crore each, except Jammu & Kashmir and North-East, where the entry fee is Rs 50 lakh per circle each. For a district level licence, Trai has said that the entry fee should be fixed at Rs 10 lakh each.

A leading GSM player dismissed Trai’s recommendations, saying it has failed to address the critical issues of base price for spectrum, how much block of spectrum one operator can hold, what fraction of the 2G and 3G price is to be paid for licence renewal and what price will be paid for excess spectrum. “Trai said that spectrum auctions and other details would be announced by 15 April. Instead, they’ve come up with these recommendations, where their thought process was largely known. We ourselves were keen that there be a unified licence for all communication services.”

In its recommendations, Trai has also lowered the maximum penalty to Rs 10 crore from Rs 50 crore and linked penalties to the nature of the infringement besides determining the quantum of penalty to the number of such violations. The regulator has also differentiated between major and minor violations and recommended a separate set of penalties for each category.