TRAI recommends cut in entry fees for telcos to spur growth

New Delhi, Sep 19

TRAI has recommended to the government that the entry fees for telecom companies across various license authorisations should be reduced and bank guarantees that they have to provide should be merged in order to spur growth and make it easier to do business in the telecom sector.

“It is expected that reductions in entry fee will lead to the entry of new service providers in the market, increase investment and enhance competition in telecom sector,” Trai said it its recommendations on Tuesday.

“The merging of bank guarantees will encourage ease of doing business and enable licensees to make investments in the sector thereby ushering growth in the sector. Both these measures will improve the quality of service and enhance consumer welfare,” the recommendations state.

The Authority has also recommended no entry fee at the time of renewal of license. Such a move will ease the financial burden on existing, as well as new entrants, and will be beneficial for UL (VNO) licensees especially.

The salient features of the recommendations are:

The entry fee should be reduced from the present levels for Unified License (UL) as well as Unified License (Virtual Network Operator) (UL (VNO)) licenses.

No entry fee for M2M (“A”/ “B”/ “C”), Audio conferencing/ Audiotex/ Voice mail service, ISP “C” recommended.

Entry fee for following UL authorisations should be rationalized:

a) Access service: from Rs 1 crore to Rs 50 Lakh for each telecom circle/ metro area; from 0.5 crore to 25 lakh for J&K and North east each.

b) NLD and ILD: from Rs 2.5 crore to Rs 50 lakh.

c) PMRTS: from Rs. 50 thousand to Rs. 20 thousand for each telecom circle/ metro area.

d) ISP “B”: from Rs. 2 lakh to Rs. 50 thousand for each telecom circle and Rs. 25 thousand for J&K and North-East each.

e) ISP “A”: from Rs. 30 lakh to Rs. 10 lakh.

(iv) The entry fee for UL (VNO) authorizations reduced substantially to promote competition and improved provision of services.

(v) There should be no entry fee at the time of renewal of licenses.

(vi) For Unified License, Financial Bank Guarantee (FBG) and Performance Bank Guarantee (PBG) should be merged into a single Bank Guarantee for securitizing the dues, to cover the violation of license conditions and to ensure the performance under license agreement.

(vii) Similarly, for Mobile Number Portability license, FBG and PBG should be merged into a single Bank Guarantee.

(viii) For enhancing the ease of doing business, the process for submission of electronic bank guarantee (eBG) should be adopted.

Full text of the recommendations on “Rationalisation of Entry Fee and Bank Guarantees” have been placed on TRAI’s website www.trai.gov.in.