Regulators

TRAI issues consultation paper on AGR issues relating to Spectrum

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NEW DELHI: Following a query by the Department of Telecom on 25 Jun e 2016, the Telecom Regulatory Authority of India has asked stakeholders if spectrum assignment on location basis/link-by-link basis on administrative basis to ISPs, be continued in the specified bands.

In a new consultation paper issued following the DoT letter, the regulator has discussed issues relating to minimum presumptive AGR for ISP licenses and VSAT licenses and other issues raised by DoT in its reference of 25 June 2014, and 15 May 2015. The information/clarifications were furnished to DoT in the letter of 2 March 2016.

Stakeholders have been asked to respond by 19 September 2016 with counter-comments if any by 3 October 2016.

The DoT had sought TRAI’s recommendations in terms of clause 11(1) of TRAI Act 1997 (as amended) on:

(A) ISP license

(i) Rates for SUC;

(ii) Percentage of AGR including minimum AGR;

(iii) Allied issues like schedule of payment, charging of interest, penalty and Financial Bank Guarantee (FBG).

(B) Commercial VSAT license

(i) Floor level (minimum) AGR, based on the amount of spectrum held by commercial VSAT operators.

The Authority said in 2014 it had suo motu undertaken the exercise of review of definition of revenue base (AGR) for the reckoning of licence fee (LF) and spectrum usage charges (SUC). The Consultation Paper was issued on 31st July 2014 and Recommendations on 6 January 2015. The Recommendations along with other issues also contain recommendations on minimum presumptive AGR.

In the Recommendations of 6 January 2015, the Authority had recommended that minimum presumptive AGR for the purpose of LF and SUC should not be made applicable for any licenses granted by the Government for providing telecom services. The recommendation was based on the fact that in the new licensing regime, spectrum is allocated through an auction process and TSPs are required to pay market-determined prices which can generally be expected to be sufficient motivation to licensees to start the commercial operations. Further the respective licence agreements include provisions on rollout obligations to be met by the licensee within a specified time frame, failing which, there are provisions for penalty (including prospects of cancellation of assigned spectrum).

Therefore, it said the rationale for imposition of levies based on presumptive AGR does not hold good. However as the DoT letter of 25 June 2014 contains specific reference on minimum presumptive AGR in respect of ISP license and VSAT license, the same has been discussed afresh
Some of the questions asked by TRAI are:

Q1: Should the spectrum assignment on location basis/link-by-link basis on administrative basis to ISPs, be continued in the specified bands. If not, please suggest alternate assignment mechanism.

Q2: Should minimum presumptive AGR be introduced in ISP license for the purpose of charging SUC? If yes, what should be the value of minimum presumptive AGR and basis for its computation?

Q3: Is there a need to introduce SUC based on percentage of AGR for ISPs or should the existing formula based spectrum charges continue? Please give justification while suggesting a particular method of charging SUC.

Q4: If AGR based SUC is introduced, whether the percentage of AGR should be uniform for all ISP licenses or should it be different, based on revenue/spectrum-holding/any other suitable criteria?

Q5: What mechanism should be devised for ISP licensees to identify revenue generated from use of spectrum and revenue generated without use of spectrum?

Q6: In case minimum presumptive AGR is prescribed for the ISP license, what percentage should be applied on minimum presumptive AGR to compute SUC?

Q7: In case, Formula based spectrum charging mechanism in ISP license is to be continued, do you feel any changes are required in the formula being currently used that was specified by DoT in March 2012? If yes, suggest the alternate formula. Please give detailed justification.

Q8: Do you propose any change in existing schedule of payment of spectrum related charges in the ISP license agreement?

Q9: Should a separate regime of interest rates for delayed payment of royalty for the use of spectrum be fixed in ISP license or should it be the same to the prevailing interest rates for delayed payment of license fee/ SUC for other licensed telecom services?

Q10: Should separate financial bank guarantee or single financial bank guarantee be submitted by the ISP licensee covering LF payable, fees/charges/royalties for the use of spectrum and other dues (not otherwise securitized)? If yes, what should be the amount of such financial bank guarantee in either case?

Q11: Is there a need to specify minimum presumptive AGR for commercial CUG VSAT license for the purpose of charging SUC? If yes, what should be the value of minimum presumptive AGR and basis for its computation?

Q12: Should the SUC applicable to commercial VSAT services be reviewed? If yes, what should be the rate of SUC to be charged? Please give your view on this with justification.

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