Telcos resist differential licensing

Trai plans to introduce differential licensing via unbundling of various layers

New Delhi: Telecom operators have collectively opposed any move to introduce differential licensing via unbundling of various layers, arguing that the proposal goes against regulatory consistency and would wreak unknown and unpredictable impact on investments made, leading to investor uncertainty. The operators Reliance Jio, Vodafone Idea, and Airtel, as well as industry body Cellular Operators Association of India (COAI) have asserted that such unbundling is neither necessary nor desirable.

Debt-laden Vodafone Idea has told the Telecom Regulatory Authority of India (Trai) that that there is an urgent need to address underlying issue of poor financial health rather than recommend or implement yet another licensing framework that would “create ambiguity and additional challenges”, and deter investments.

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India’s largest telecom operator Reliance Jio — in its submission on Trai’s discussion paper ‘Enabling unbundling of different layers through differential licensing’ — has said that a converged licence for network and service layer offers clarity, and certainty to an operator making investment in the network. Any move to split the functions would be “regressive” and increase the sector’s compliance burden.

“We submit that any step to separate a network licence will be a regressive step which will introduce uncertainty in the licensing regime, increase the compliance burden and adversely impact the future investment in the networks,” Jio said.

The telco has opposed the proposal to introduce differential licensing, for unbundling different layers, saying it goes against the principles of regulatory predictability and consistent policies. The ‘Unified Licensing regime’ is culmination of many evolutionary steps, it said and added that process of unification is yet to be completed, as the “artificial boundaries” of licence service areas and services still persist. Hence, complete unification and convergence “is still a few steps away”.

“Thus clearly, the proposal to introduce a disruption in the form of seeking to unbundle network and service layers with a completely new type of licensing regime would introduce a great level of uncertainty in the system, with unknown and unpredictable impact on investments made, leading to investor uncertainty,” Jio said.

Responding to Trai’s paper, Bharti Airtel asserted that there must be no fundamental change to licensing regime, “which in any case is working fine”. Citing the massive investments that have been ploughed into the sector, Airtel said priority areas like strengthening of telecom infrastructure and broadband services would require enormous fund infusion.

The investment requirements is estimated to be about Rs 2,00,000 crore over the next 2-3 years for spectrum, technology, equipment and fibre backbone.