Page 82 - SAMENA Trends - September 2021

REGULATORY & POLICY UPDATES SAMENA TRENDS

The Cabinet has approved a reform package for the been removed. Regarding future spectrum auctions,
beleaguered telecoms industry, which the government meanwhile the following changes are to be made: no
says will promote healthy competition, encourage BGs will be required to secure instalment payments; the
investment and reduce the regulatory burden on service duration of spectrum licenses will be extended to 30
India providers. The package comprises nine structural years from 20, with providers able to return spectrum
reforms, five procedural reforms and four measures after ten years; no SUC will be charged on frequencies
to address liquidity requirements of service providers. purchased in future auctions; and spectrum sharing
The overhaul tackles a number of the industry’s long- is to be encouraged by the removal of the additional
standing grievances, such as the definition of Adjusted 0.5% SUC on shared spectrum. Spectrum auctions
Gross Revenue (AGR) – which will be altered to will also be held in the final quarter of each financial
exclude non-telecom revenue – whilst relieving some year. With an eye on improving ease of doing business
of the immediate financial pressures on operators by and increasing investment, the reforms will eliminate
providing a moratorium on payments. In an interview red tape in some areas. To that end, operators will be
with the paper, Telecom Minister Ashwini Vaishnaw permitted to increase foreign direct investment (FDI)
dismissed the suggestion that the government’s to 100% through the automatic route, requirements for
decision to approve the package was triggered by the customs notifications regarding wireless equipment
threat that Vodafone Idea (Vi) might be forced to close, will be replaced with a simple self-declaration and
narrowing the mobile market to just two private players the Standing Advisory Committee on Radio Frequency
and one state-owned operator. Instead, the official Allocation (SACFA) clearance requirements will be
said that the government was looking to address the eased so that providers pay submit data to an online
‘underlying malaise’ that was restricting investment Department of Telecommunications (DoT) portal.
and preventing the ‘massive capital injection’ needed to Elsewhere, customer registration will be streamlined
meet the administration’s goals regarding the narrowing with the use of app-based user identification (referred
of the digital divide. In a similar vein, a public statement to as ‘know your customer’ or KYC) permitted, the
from the government on the matter stressed that the charge for completing electronic KYC reduced to INR1
package will ‘boost 4G proliferation, infuse liquidity (USD0.014) and the removal of the requirement to
and create an enabling environment for investment renew KYC when changing subscription type (i.e. post-
in 5G networks. The package encompasses the paid to pre-paid or vice versa). Similarly, customer
rationalization of AGR – the figure upon which most of acquisition forms will be replaced with digital storage
the fees paid by telcos are based – and bank guarantee of data. Finally – and perhaps most importantly – the
(BG) systems, the former by excluding revenue from government green-lit an option for operators to defer
non-telecom sources and the latter by reducing BG for up to four years payments on dues arising from
requirements against license fees and similar charges the Supreme Court’s October 2019 decision on AGR
by 80% and removing the requirement for multiple BGs and dues for spectrum purchased at auction before
for different service areas. In a similar vein, from 1 2021. The Net Present Value (NPV) of the dues will be
October 2021 interest rates charges for delayed license protected, however. Service providers will be given the
fee and spectrum usage charge (SUC) payments will option to pay the interest arising from such deferral by
be levied at the Securities and Exchange Board of way of equity and to potentially convert the due amount
India’s (SEBI’s) marginal cost of lending rate (MCLR) by equity at the end of the moratorium/deferment
plus 2%, rather than the current MCLR plus 4%, with period – guidelines for which will be finalized by the
interest to be compounded annual rather than monthly, Ministry of Finance.
whilst penalties and interest on penalties for such have (September 17, 2021) The Economic Times

A veto decision blocking Irish regulator the constraints exerted by mobile on fixed voice calls)’,
Commission for Communications Regulation while it argued the Irish regulator had ‘inappropriately
(ComReg) from adopting proposed regulation related delineated the geographic market’. Further, the EC said
to the market for retail fixed telephony services and the it considered that, with the market tending towards
Ireland corresponding wholesale markets in Ireland has been effective competition, the analysis proposed by the
Irish regulator ‘is not sufficiently forward looking’,
issued by the EC. According to the European agency,
it considers that the proposed measures ‘would have while adding that it was ‘insufficient to conclude that
led to unnecessary continuation of regulation in a the historic incumbent still holds significant market
fixed voice telephony market’. In a press release, the power and would therefore be in a position to behave
EU claimed that ComReg’s proposed definition of independently of competitors and ultimately end
the product market was ‘not sufficiently supported users in this market’. For its part, ComReg has issued
by the evidence presented (in particular on the a statement noting the EC’s ‘Withdrawal Decision’, in

82 SEPTEMBER 2021