Over the years, direct inward dialling (DID) franchisees have partnered with various operators to drive growth in the Indian telecom market. Typically, DID franchisees have been small entrepreneurs who have entered into commercial agreements with telecom operators to provide services in various unconnected parts/clusters of the country.

To streamline the DID franchise re­-g-ime and bring franchisees under a proper licensing framework, the Depart­ment of Telecommunications (DoT), in July 2016, released guidelines to introduce the Unified Licence (Virtual Network Opera­tor) Cate-gory-B, or UL (VNO) Cat-B, licence with access service authorisation in a district of a state/Union Territory. It further asked the Telecom Re­g­­­u­­latory Autho­rity of India (TRAI) to give its recommendations in this regard.

In response, TRAI has released a paper, “Introduction of UL (VNO) for Access Service Authorisation for Category B Licence with Districts of a State as a Service Area”, which has identified certain areas for consultation with industry stakeholders. It has sought stakeholder views on whether DID franchisees shou­ld be mandated to migrate to the UL (VNO) Cat-B-based licensing regime and on the likely challenges in the migration from the franchise regime to the licensing regime, and if migration is not required, how can the DID franchisees be accommodated in the existing licensing regime?

Scope of services and duration of licence

Currently, DID franchi­sees are allowed to provide voice telephony services through wireline networks only. In the proposed UL (VNO) Cat-B licence regime, the transition of these franchisees should be such that it accommodates their existing business model to facilitate a smooth transition. Such licensees can be authorised to provide voice as well as internet services using their existing infrastructure by installing additional equipment such as digital subscriber line access multiplexers with minimum additional in­vest­ments. This app­roach will also contribute to inc­reasing broadband penetration in the areas served by such licensees.

However, allowing DID franchisees to provide wireless services as well may lead to several complexities. Users would have to pay roaming charges when they move away from the UL (VNO) Cat-B licensee’s geographic area, creating technical issues. The methodology for calculating adjusted gross revenue and spectrum usage charges would also become more complex and could have an adverse impact on government revenues. Comments have thus been invited on whether the scope of UL (VNO) Cat-B licences should be limited to providing landline (voice) and internet services or should include mobile services as well.

As per DoT’s UL (VNO) guidelines, the licence should have a validity period of 10 years. TRAI has asked whether the validity period should be kept the same.

Financial obligations

Stakeholder comments have been invited on what should be the net worth, equity, entry fee, performance back guarantee, finance back guarantee, etc. for district-level UL (VNO) Cat-B licences in case these are allowed for only wireline and internet services, as well as in case they are allowed for mobile access service too.

Compliances and penalty structure

The existing DID franchisees are only re­sellers acting on behalf of telecom operators and they have to follow only  mutually agreed financial obligations. As such, they face no or very limited regulatory compliance. However, under the licensing net, these franchisees would enroll customers in their name and provide services directly to them. Therefore, they would be required to comply with certain penalty norms, quality of service (QoS) parameters and complaint redressal norms. In this context, stakeholders have been asked to suggest a penalty structure for UL (VNO) Cat-B licensees for violation of licence terms and conditions, and for failing to meet QoS parameters. Another point of consultation is whether UL (VNO) Cat-B licensees will be required to report tariff plans to TRAI and follow TRAI’s telecom tariff orders/regulations/directions.

Provision of telecom resources from multiple operators

Often franchisees have to enter into agreements with multiple operators as a single operator’s network does not cover the franchisee’s entire area of operation. The DID Franchisees Association highlighted this issue stating that hiring telecom resources from multiple operators has be­come relevant as most operators are reluctant to sign service-level agreements to provide guaranteed QoS.

Stakeholder comments have been solicited on whether a UL (VNO) Cat-B licensee should be permitted to enter into agreements with more than one operator in its area of operation.

Conclusion

Over the past two decades, the licensing regime for access services has witnessed periodic transformations to accommodate technological advancements and meet changing market requirements. Bringing more telecom entities under the licensing regime may allow the industry to benefit from convergence. The TRAI paper will focus industry attention on whether a new licence category – the UL (VNO)-Cate­gory B – is indeed required.