The Telecom Regulatory Authority of India (TRAI) has issued recommendations for the "Rationalization of Entry Fee and Bank Guarantees" in the telecommunications sector. TRAI's action comes in response to a reference from the Department of Telecommunication (DoT), dated 3rd March 2022, seeking the rationalisation of Entry Fees and Bank Guarantees for telecom licenses.
Entry Fees represent one-time, non-refundable costs for entering a market, while Bank Guarantees ensure that licensees fulfill their financial obligations and adhere to license agreement terms.
Consultation Paper and Feedback
Following this reference, TRAI published a Consultation Paper on the matter on 26th July 2022, inviting comments from stakeholders. Written comments and counter-comments were accepted until 6th September 2022, with an extension due to industry requests. TRAI received feedback from 20 stakeholders and held an Open House Discussion on 9th December 2022, addressing the issues raised in the Consultation Paper.
With rapid technological advancements in the telecom sector, TRAI said it has recommended reductions in entry fees for various license authorisations and the merging of bank guarantees. These measures are expected to encourage new service providers to enter the market, stimulate investment, and enhance competition, ultimately improving service quality and benefiting consumers.
Additionally, TRAI has suggested waiving entry fees during license renewals to ease the financial burden on both existing and new entrants, with particular benefits for UL (VNO) licensees.
Key recommendations include:
- Reducing entry fees for Unified License (UL) and Unified License (Virtual Network Operator) (UL (VNO)) licenses.
- No entry fees for certain categories like M2M, Audio conferencing, Audiotex, Voice mail service, and ISP "C."
- Rationalizing entry fees for various UL authorizations.
- Merging Financial Bank Guarantee (FBG) and Performance Bank Guarantee (PBG) into a single Bank Guarantee for UL licenses.
- Adoption of electronic bank guarantee (eBG) for enhanced ease of doing business.
The full recommendations on "Rationalization of Entry Fee and Bank Guarantees" are available on TRAI's website. These measures aim to promote growth, investment, and competition in the telecom sector while improving the ease of doing business.