A Contractual Character Should Be Maintained in the Telecom Service Authorization Regime: COAI

Nitin Konde, Apoorva Bajj

Oct 2, 2024 — 2 min read

A Contractual Character Should Be Maintained in the Telecom Service Authorization Regime: COAI

The Cellular Operators Association of India (COAI) stated on 30 September 2024 that to guarantee consistency, regulatory certainty, and protection for shareholders who engage in long-term capital to the sector, the new service authorization regime in the telecom sector must maintain the contractual nature of the current licenses.

The telecom regulator last week suggested that three new categories of authorizations be developed to cover the spectrum of telecom services in the nation, in line with the new Telecom Act, 2023, marking a significant reform of the licensing environment in the telecom sector.

The recommendation, according to COAI, which speaks for private telecom providers Reliance Jio, Bharti Airtel, and Vodafone Idea, also gives TRAI the chance to ease the industry's load by proposing the much-needed financial reforms.

Why Does COAI Want to Retain the Contractual Nature?

In order to calculate adjusted Gross Revenue (AGR), COAI emphasised that only revenues collected under various authorisations for telecom services should be included. It stated, however, that the recommendation makes no mention of this problem.

Telecom service providers worry that by introducing significant "regulatory uncertainty" and a lack of "predictability," changing the current licence regime—which is based on a "contractual agreement" with the government—may endanger their investments and investors.

Telecom executives made it clear during a meeting with Telecom Minister Jyotiraditya Scindia last week that the specific terms and conditions should remain part of the government-telecommunications company contract and that the new authorisations should only cover broader aspects such as the application process and eligibility requirements.

COAI stated in a release that TRAI's recommendation that the central government should grant service authorisation under Section 3(1) of the Telecommunications Act, 2024, instead of entering into an agreement with the entity, is without any valid justification and goes against the position of telecom service providers (TSPs). This undermining of the current regime, which has been successful for more than three decades, has brought enormous inflows of investments and growth to the sector.

Exclusion of OTT Is Another Major Concern

The absence of over-the-top (OTT) communication services from the new authorisation, according to TRAI, is a serious cause for concern as it provides an unlevel playing field where telcos are still required to meet stringent security and compliance standards.

TRAI contended that in spite of their expanding importance as alternatives to traditional telecommunications services, these services are also not subject to any regulatory scrutiny on important problems like spam control. It further stated that because OTT players are still mainly unregulated, concerns are raised regarding national security, customer privacy, and the fairness of the market, as well as regulatory consistency in the quickly changing digital communications industry.