Telecommunications Regulation INDIA Amarchand Mangaldas Suresh A. Shroff Co. CONTACT INFORMATION Mr. Saurav Kumar Amarchand Mangaldas Suresh A. Shroff Co. Amarchand Towers 216, Okhla Industrial Estate Phase-III, Delhi-20 +919818538400 saurav.kumar@amarchand.com 1. What is the name and nature of the regulatory body(ies) in your jurisdiction? To which bodies (if any) are decisions appealed? Under the Indian Telegraph Act, 1885 (ITA), the Central Government has exclusive privilege to establish & maintain telecommunication and to grant license to operators. The Department of Telecommunications, Ministry of Communications and Information Technology, Government of India (DOT), acts as a licensor, formulates and enforces policies, allocates and administers resources such as spectrum and number, and coordinates matters in relation to telecommunication services in India. The DOT also promotes standardization, research and development, private investment and the international co-operation in the matters relating to telecommunications services. Further, the Wireless Planning & Coordination (WPC) wing of the DOT is responsible for frequency spectrum management and exercises the statutory functions of the Central Government to issue licenses for allotment of spectrum and for establishing, maintaining and operating wireless stations. The Telecom Regulatory Authority of India (TRAI) is the independent regulatory body which is empowered to make recommendations, either suo moto or on a request from the licensor on the matters relating to the telecommunications sector. The TRAI
issues regulations on interconnection, quality of service, fixation and revision of tariff etc. Telecom Dispute Settlement Appellate Tribunal (TDSAT) is a special tribunal setup exclusively to adjudicate any dispute between the DOT and a licensee, or between two or more service providers, or between a service provider and a group of consumers etc. An appeal against any order, not being an interlocutory order, of the TDSAT shall be filed before the Supreme Court of India within a period of ninety days. No appeal shall lie when the decision or order was made with the consent of parties. 2. Has your jurisdiction adopted the WTO Basic Telecommunications Agreement? If yes, with what exceptions, if any? India has adopted the WTO Basic Telecommunications Agreement, through the General Agreement on Trade and Services (GATS) in April, 1997 and India has made specific commitments to liberalize telecom services within India. Further, India has been granted certain exemption under GATS with regard to the telecommunications services. Such exemptions are available for measures which relate to the application of different accounting rates for: different operators/ countries covered by International Telecommunication Services Agreement between Videsh Sanchar Nigam Limited (VSNL) and various foreign operators; and different neighboring countries covered by Telecommunication Agreements between the Government of India and the government of neighboring counties (Pakistan, Bangladesh, Nepal and Bhutan). This exemption is created on account of bilateral agreements between VSNL and various foreign operators dealing with various aspects of cooperation, and between the Government of India and government of neighboring countries. 3. Are operators in your jurisdiction privately or publicly/state owned? Prior to the National Telecom Policy 1994 (NTP94), telecom operators were owned by the Government of India and there were only two government owned telecom operators namely, Bharat Sanchar Nigam Ltd. & Mahanagar Telephone Nigam Ltd. With NTP94, the Government of India aimed to increase the availability of telephone on demand, world class services at reasonable price, ensuring India s emergence as major manufacturing/ export base of telecom equipment etc. The Government of India also recognized that the required resources for achieving these targets would not be available only out of government sources and allowed private investment and private sector participation in the telecom sector. The DOT invited private sector participation for providing telecom services and awarded licenses to government operators and private operators in different states of India.
Presently, apart from the Government operating, there are many private operators providing telecom services in India. 4. What are the primary differences between the regulation of wire line, wireless, satellite, cable and VoIP providers? The governing statute for wireless & wireline services and VOIP is the Indian Telegraph Act, 1885 whereby the Government of India has privilege to grant license for telegraph services. The DOT on behalf of the Government of India grants license of unified access service (UAS) and cellular mobile telephone service (CMTS) to telecom operators for providing wireless and wireline services. Further, India is divided into 23 service areas and for every service area UAS license is granted to the telecom operator. However, license for national long distance license is granted on pan India basis. Furthermore, the DOT has also issued instructions/ guidelines for the telecom operators willing to provide their service on satellite network. Furthermore, on the basis of the said instructions/ guidelines, the DOT has granted license to telecom operators for providing their service by using satellite system in the licensed service areas. For VOIP, the DOT has permitted only to licensed internet service providers (ISPs) for providing the internet telephony in the licensed service area. The internet telephony is permitted only three ways i.e. PC to PC (within as well as outside India), PC in India to telephone outside India, and IP based H.323/SIP terminals in India to similar terminals both in India and abroad, employing IP addressing scheme of internet assigned number authority. Further, the ISPs are not permitted to use PSTN/ISDN/PLMN for their internet telephony. Separately from the above services, cable service providers (CSPs) are governed under the Cable Television Networks (Regulation) Act, 1995 and any person can be registered as CSPs for providing the cable television network within their service area. 5. Are broadcasters regulated separately from telecoms? The broadcasters are regulated by the rules and regulations of the MIB and TRAI. The MIB acts as a licensor for providing direct-to-home TV service. The MIB has also issued separate guidelines for the uplinking and downlinking of TV channels, Radio FM channels and IPTV services. The TRAI is empowered to make recommendations relating to addressable system, parameters for advertisements of channels, fixation and revision of tariffs etc.
6. How are satellite earth stations and submarine cable landings regulated? Satellite earth stations and submarine cable landings are regulated by the DOT and the TRAI. The DOT has issued Guidelines and General Information for Setting up of Submarine Cable Landing Stations for Internet Gateways for Internet, whereby private ISP can set up their own international gateways using submarine cable landing stations, within their licensed service area. Setting up of the landing station is subject to the prior approval/ clearance of the DOT. Such landing station should be located within 100kms from the sea shore. The TRAI has issued International Telecommunication Access to Essential Facilities at Cable Landing Stations Regulations, 2007 to ensure that every owner of cable land station shall provide, access to any eligible Indian International Telecom entity requesting for accessing international submarine cable capacity on any submarine cable systems, fair and non-discriminatory terms and conditions. The DOT has issued Guidelines/ Instructions to Telecom/ Broadcast Service Providers for Satellite Communications. A new entity willing to have license for operation of telecom and broadcast service using satellite media shall apply to satellite cell of the DOT. The licensee is required to obtain allotment of or reserve a space segment from the department of space or other authorized satellite operators. The licensee is also required to approach the WPC and network operations control centre for clearances. Existing telecom licensee is also required to approach the satellite cell of the DOT for starting a new service on satellite or carrying out any major reconfiguration to the existing network on satellite. The DOT has also issued guidelines and license for Global Mobile Personal Communication (GMPC) by Satellite Service in India. Companies with upto 49% foreign equity participation are eligible for GMPC license on non-exclusive basis subject the security clearance. 7. How is the radio spectrum generally regulated? The radio spectrum is regulated by the WPC, wing of the DOT. WPC is divided into three segments i.e. Licensing and Regulation, New Technology Group and Standing Advisory Committee on Radio Frequency Allocation (SACFA). SACFA is responsible to make the recommendations on issues of frequency allocation and is responsible for formulation of the frequency allocation plan. Upon grant of license for a certain circle, the licensee is required to apply to the WPC for grant of applicable spectrum based on the National Frequency Plan. Initially a cumulative maximum of upto 4.4 MHz + 4.4 MHz shall be allocated in case of TDMA based system and 2.5 MHx + 2.5 MHz for a CDMA based systems, subject to
availability. The frequencies allotted may not be contiguous and may not be the same in all cases. The WPC may consider allocation of additional spectrum beyond the prescribed stipulation after ensuring optimal and efficient utilization of the already allocated spectrum taking into account all types of traffic and guidelines/ criteria prescribed from time to time. However, spectrum not more than 5 + 5 MHz in respect of CDMA system or 6.2 + 6.2 MHz in respect of TDMA based system shall be allocated to any new unified access service (UAS) Licensee. The DOT has prescribed subscriber base criteria for allocation of additional spectrum, subject to availability. 8. Are any operators granted exclusivity? The Indian Government has exclusive privilege to grant license, subject to the restriction and conditions as it may think fit for establishment, maintenance and working of telegraph. The DOT on behalf of the Indian Government grants license, on non-exclusive basis to the telecom operators to establish, maintain or work at telegraph. However, no service zone of 500 meters width along the international border within Indian territory for wireless/mobile service is exclusive to the Indian Government. The licensee is not permitted to provide wireless/mobile service in such zone. The licensee is required to use requisite technology to ensure that the signals become unusable within 500 meters of international boundaries. Further, the licensee is required to create a buffer zone, 10 kms width along the Line of Control, Line of Actual Control and international border between Akhnoor in J&K and Pathankot and they shall not deploy their cell site/bts/radio transmitter for mobile services. 9. Are anti-competitive practices subject to regulation or general competition (e.g., antitrust) laws? Any practice of anti competitive agreements, abuse of dominance, anti competitive combinations and promotion of competition in markets is regulated under the provisions of Competition Act, 2002 (Competition Act). The Competition Act aims to establish a Competition Commission of India (CCI) which is responsible to eliminate practices having adverse effect on competition, promote and sustain competition, protect the interests of consumers, and ensure freedom of trade carried on by other participants, in the markets of India. The CCI may conduct an enquiry on its own motion or on receipt of any information in the prescribed manner from any person, consumer or their association or trade association; or on reference by the Government of India or State Government or statutory authority. An appeal can be preferred against any direction or order of the CCI to the Competition Appellate Tribunal within sixty days.
10. What services have been liberalized or designated as competitive services? The Government of India with NTP94 allowed participation and investment by the private parties for value added services (voice mail, data services, audio text services, video text services, video conferencing, radio paging and cellular mobile telephone). Thereafter, the Government of India announced the National Telecom Policy of 1999 (NTP99) and focused on creating an environment which enabled continued attraction of investment in the telecom sector and also allowed creation of communication infrastructure by leveraging on technological development. Further, the scope of services provided by access providers, public mobile radio trunking service providers, national/ international long distance operators, global mobile personal communication by satellite, V-SAT based service providers etc was enlarged. Such amplification of scope of telecom services is competitive in nature by considering that DOT has issued a number of licenses to the said telecom service providers and operators. 11. Are there regulated tariffs or price lists? If so, for what types of services? The TRAI regulates the tariff of all telecom service (fixed, mobile, or other services) throughout the Indian territory as well as those originating within India and terminating outside India. The service providers are required to report their tariff plans to the TRAI within seven days from the date of implementation subject to the self-check with the relevant regulatory principles. The TRAI has provided that not more than twenty five tariff plans (post paid & pre paid tariff plans) can be offered an access provider. Such reporting requirement & the ceiling limit are exempted in case of to bulk customers. The tariff plans offered by such access providers to bulk customers shall be as per the relevant regulatory requirement and to this effect, they are quarterly required to give a certificate of compliance to the TRAI. Under the license, licensee is required to be in compliance with the TRAI tariff order/ regulations/ directions. 12. Are there restrictions on foreign investment in any types of communications companies? If so, what are the restrictions? The foreign direct investment policy of India provides that foreign investment in telecommunications sector and for ISP with gateways is allowed up to 74% with prior approval of the Foreign Investment Promotion Board (FIPB). Out of such 74%, 49% is under automatic route (without government approval). Such foreign investment would be subject to the guidelines notified in the Press Note 3 of (2007) and licensing & security requirements of the DOT. Under the Press Note 3 of (2007), such foreign investment ceiling would be applicable for basic services, CMTS, UAS, national/international long distance, V-SAT, public mobile radio trunked services, GMPC and other value added services. For ISP without gateway; infrastructure provider providing dark fibre, right of way, duct space, tower (category I); and electronic email and voice mail, foreign
investment is allowed to 100%, out of which with 49% is under automatic route and beyond 49% it is with prior approval of the FIPB. 100% foreign investment in the said services are subject to the condition that the companies (having foreign investment and providing internet service without gateway; infrastructure for dark fibre, right of way, duct space, tower (category I); and electronic email or voice mail) shall divest 26% of their equity in favor of Indian public in five years, if these companies are listed in other parts of the world. Such foreign investment is also subject to the licensing requirement, where required. Foreign investment for manufacture of telecom equipments is allowed to 100% under the automatic route, subject to the sectoral requirements of the DOT. 13. What are the approval processes for mergers and acquisitions? Do these vary by type of operator? The DOT has issued Guidelines for Intra Service Area Merger of CMTS and UAS Licenses (Guidelines). The Guidelines provide that prior approval of the DOT is necessary for merger of license and merger of licenses shall be restricted to the same area. Merger of licenses shall be permitted in the three categories of licenses i.e, CMTS license with CMTS license, UAS license with UAS license, and CMTS license with UAS license. It shall be kept in mind that the Guidelines provide that equity stake of one licensee/ legal person/ promoter company shall not be more than 10% equity, in more than one licensee of the same license area. Further, permission for a merger will be granted by the DOT only after the completion of three years from the effective date of the licenses. Furthermore, the merger will not be allowed if the number of service providers falls below four in the relevant market, consequent upon such merger activity. Furthermore, the market share of the merged entity in the relevant market shall not exceed 40%, either in terms of separate subscriber bases for wireless and wireline services or in terms of adjusted gross revenue. Post merger, the licensee becomes a significant market power (SMP), the applicable law of SMP would also apply to the merged entity. The duration of license of the merged entity in the respective service area will be equal to the remaining duration of the license of either two merging licensee whichever is less on the merger date. The license also provides that prior approval of the DOT is required for transfer or assignment of license to a third party either in whole or in part, subject to the condition that the merger & acquisition is sanctioned by the High Court/ Tribunal under Section 391 to 394 of the CA1956 and all dues are paid by the transferee or assignee and transferee company undertakes to pay all future dues inclusive of anything remained unpaid of the past of the outgoing company. 14. Is interconnection between carriers mandatory? It is mandatory for the licensee to give interconnection to all eligible telecom service providers as well as national long distance (NLD) operators whereby the subscribers could have a free choice to make inter-circle/ international long distance (ILD) calls
through NLD/ ILD operator. For ILD call, the licensee shall normally access ILD operator network through NLD operator network subject to the guidelines/ orders/ directions/ regulation of the DOT/ TRAI from time to time. 15. Are interconnection fees/rates regulated? The TRAI has issued the Telecommunication Interconnection (Charges and Revenue Sharing) Regulation, 2001 and therefore, the TRAI regulates and monitors the interconnection fees, charges, and revenue sharing models rates between telecom operators with regard to the provision of services to customers within India, as well as originating in India and terminating outside India. 16. Must carriers make available network components to competitors? If so, what are fees/prices based on cost, or market rates? No. 17. Is there an obligation to serve all customers? If yes, is there a fund to subsidize eligible carriers? Which carriers contribute to the fund? Which carriers are eligible to receive these funds? Are broadband services subsidized or otherwise promoted through tax or other incentives? Under the license (UAS, ILD, CMTS), the licensee is required to register demand/ request for telephone connection without any discrimination from any applicant, at any place in the licensed service area and provide the service, unless otherwise directed by the DOT. The Government of India has provided universal service obligation (USO) fund policy which gives financial/ subsidy support to the eligible operator for providing telegraph services (includes mobile services and broadband connectivity) to people in the rural and remote areas at affordable and reasonable price. Such financial support is granted by the Government of India to the eligible operator, selected through the specified procedure form time to time, for implementation of USO. The contribution of money for implementation of USO is raised by a universal service levy which has presently been fixed at 5% of the adjusted gross revenue of all telecom service providers except the value added service providers (internet, voice mail, e-mail etc). The activities relating of USO is carried out by the eligible operators, which includes basic, CMTS, UAS licensees and infrastructure providers (IP-I). 18. Are there mandatory requirements to customer agreements (subscriptions, etc.)? The telecom operators may enter into an agreement with the customers for providing services to the customer. Under the license (UAS, CMTS, ILD), the licensee shall ensure adequate verification of every customer before enrolling them as a subscriber, subject to the DOT instructions. The SIM card used in the user terminal/ hand-held
subscriber terminal shall be registered against each subscriber for his bonafide use. The licensee shall make it clear to the subscriber that the SIM card used in the user terminal registered against him is non-transferable and he alone will be responsible for proper and bonafide personal use of the service. A format is prescribed by the DOT to delineate the details of information required before enrolling a customer as a subscriber from time to time. Identification of subscribers supported by documents like photo ID, driving license, voter ID card etc. shall be pre-requisite before enrolling. Subscription fee may also be charged by the telecom operators. 19. Are there any general or telecommunication specific requirements as to data retention? Under the license (UAS, CMTS, ILD etc.), the licensee is required to retain and maintain documents and make them available to the authorities from time to time, such as: billing details; record of number of faults and rectification reports in respect of each service area; accounting records sufficient to explain its transaction for each completed quarter of the license period or of such lesser periods as the authority may specify; all records including called and calling numbers, date, duration and time, etc. of the communications exchanged on the network for a period of 1 year or as directed for scrutiny by the authorities; record of inspection of bulk users premises by the service providers at regular intervals so as to satisfy the bonafide use of facilities, should be maintained for minimum one year; time/date and duration of interception; location/ telephone number of target subscribers; data records for failed call attempts; and call data record of roaming subscriber etc. 20. Is number portability mandatory? If so, for which types of carriers (e.g., wireline, wireless, voice over internet protocol)? The DOT has issued guidelines/ instructions for provisioning of mobile number portability (MNP) service. Under the instructions, MNP service shall be build, operate and owned by neutral third parties who have been issued a separate license for MNP service. The DOT has granted license to two telecom operators namely, M/s. MNP Interconnection Telecom Solutions India Pvt. Ltd. and M/s. Syniverse Technologies (India) Pvt. Ltd. Vide the said guidelines the DOT has instructed that MNP is to be implemented in the service areas zone1 & 2 within six months of the award of license (i.e. September 20, 2009) and in rest of the service areas within one years of the ward of license (i.e. March 20, 2010). The TRAI has issued a consultation paper on determination of port transaction charge, dipping charge and porting charge for MNP. Thereafter, the TRAI has also issued a draft of regulation for MNP.
21. Is equal access dialing selection mandatory? If yes, for which types of carriers? No. 22. Is access or other contributions ( ADCs ) required of new entrants? No. Access deficit charge has been phased out in India with effect from September 30, 2008. 23. Is VoIP regulated? If yes, to what extent? VoIP is regulated by the DOT and the TRAI. Pursuant to the NTP99, the DOT has issued Guidelines for Issue of Permission to Offer Internet Telephony Service (Guidelines 2002), with the objective to allow ISPs to process and carry voice signal (internet telephony or VoIP) within their licensed service area, with effect from April 01, 2002. Such processing of voice signals is permitted only from PC to PC (both within as well as outside India); PC to telephone (PC in India to telephone outside India); and IP based H.323/SIP terminals in India to similar terminals both in India and abroad, employing IP addressing scheme of IANA. Several categories of processing of voice signals are not permitted under the Guidelines 2002, such as voice communication from anywhere to anywhere by means of dialing a telephone number (PSTN/ISDN/PLMN) as defined in National Numbering Plan; originating the voice communication service from a telephone in India; terminating the voice communication to telephone within India; establishing connection to any Public Switched Network in India; dial up lines with outward dialing facility from nodes; and interconnectivity between the ISPs who are permitted to offer internet telephony services and the ISPs who are not permitted to offer internet telephony services. Tariff or fees for providing internet telephony by the ISPs shall be regulated by the TRAI. The ISPs willing to provide internet telephony shall be required to sign an amendment to the ISP license to such effect. With the objective to lay down the standards of quality of services to be provided by the service providers, the TRAI has issued a Regulation on QOS for VoIP Based International Long Distance Service, 2002 (Regulation 2002). The Regulation, 2002 is applicable to all the international long distance service providers using VoIP based networks. 24. Are any major changes to telecommunications laws expected in the near future? The DOT has issued guidelines for the auction and allotment of spectrum for 3G and broadband wireless access (BWA) services on August 1, 2008 and selected N. M. Rothschild & Sons (India) Pvt. Ltd. selected for conducting e-auctions of spectrum in
2.1 GHz, 2.3GHz and 2.5 GHz frequency bands. The DOT had issued a notice dated December 30, 2008 for starting the auction of 3G and BWA spectrum from January 9, 2009. This process has been delayed till December 2009. Meanwhile, the Government has allotted spectrum for 3G and BWA services to Bharat Sanchar Nigam Ltd. and Mahanagar Telephone Nigam Ltd. The DOT has issued guidelines for MNP Service license on August 01, 2008. The DOT has ordered for implementation of the MNP services vide notification dated May 6, 2009. Vide such notification the DOT has instructed that MNP is to be implemented in the service areas zone1 & 2 within by September 20, 2009 and in rest of the service areas by March 20, 2010. 25. Is resale of telecom services permitted? If yes, is this activity regulated? What is the process to become a reseller? Are foreign companies permitted to be resellers? Resale of international private leased circuits (IPLC) segment has been permitted by the DOT. The DOT regulates the said resale of IPLC segment by way of grant of license agreement, with effect from September 24, 2008. The applicant company willing to be reseller of ILPC segment is required to make an application to the DOT, in the prescribed manner. The applicant company must be an Indian company, registered under the CA1956. The networth as well as paid-up capital of the applicant company should be minimum Rs. 2.5 Crores. The entry fee shall be Rs. 1 Crore and the annual license fee shall be 6 % of adjusted gross revenue or Rs. 5 Lakhs whichever is higher. The applicant company can apply only for one license of the resale of IPLC segment. The application for license of the resale of IPLC segment would be granted by the DOT on a non-exclusive basis, subject to the prescribed terms and conditions. The foreign companies are not permitted to be reseller of IPLC segment.