Overview of Telecom

Sector

Introduction
Telecommunications An Infrastructure
sector
Telecommunication depends on
Technology & Legal framework
regulating the Telecom sector of India.

Overview of telecom sector

(1)
Telecommunications
has
been
recognized the world-over as an
important tool for socio-economic
development for a nation.
It is one of the prime support
services needed for rapid growth and
modernization of various sectors of
the economy.

Overview of telecom sector

(2)
It has become especially important in
recent years because of enormous
growth of information technology and
its significant potential for the impact
on the rest of the economy
The Telecom Sector, which has the
multiplier effect on the economy, has a
vital role to play in economy by way of
contributing to the increased efficiency

Overview of telecom sector

(3)
The available studies suggest that income
of business entities and households
increases by the use of telecom services.
Thus it contributes to the growth in GDP
In recent times, country has emerged as
one of the fastest growing telecom
markets in the world, particularly by the
unprecedented
growth
in
mobile
telephony. This high growth rate has been
achieved in major part due to sharp fall in
tariffs

Overview of telecom sector

(4)
The rapid growth in Indian telecom
services has prompted major global
manufacturers of telecom equipment
to consider investing in India, paving
the way for extensive provision of
modern communication services in
rural areas and also provide a strong
boost to government revenues.

Overview of telecom sector

(5)
With the successfully concluded
auctions of the 3G and BWA
spectrum, this growth is set to
become even more pronounced.
Indian telecom has become the
second largest wireless network in
the world after China

Snap Shot of Telecom Sector

Indian Telecom market is one of the fastest

growing markets in the world.
It is the second largest network in the world after
China.
Over 18 million connections are being added
every month.

Services in
Telecommunications (1)
Land line or fixed network telephone
services
GSM cellular telephone services
(Mobile phone services)
Wireless
in
local loop mobile
telephone services
Internet Service
Electronic Mail Service

Services in
Telecommunications (2)
V Sat Communication Service
Radio Paging service
Voice mail services
Data services
E-commerce
Global mobile personal
communication services
Wireless broadband communication
Broadcasting

Legal Framework
Indian Telegraph Act 1885, and rules made
thereunder
The Wireless Telegraphy Act 1933 and
rules made thereunder
The telegraph wires (Unlawful Possession)
Act 1950, and the rules made thereunder
The Cable Television Network (Regulation)
Act 1996, and the rules made thereunder
The Telecom Regulatory Authority of India
Act 1997, and the rules made thereunder

Telegraph, Telecommunication
Services and Wireless
Communication
Telegraph
The Indian Telegraph Act 1885, only defines the term telegraph; it does
not define telecommunications services or provide for any standard for
the provisions of telecommunication services The main focus of the
Telegraph Act 1885 is to govern the establishing, operating and
maintaining of telegraphs and thereby it covers each form of
Telecommunication
Services
telecommunication
service
under it.
The definition of the term telecommunication services is defined in
2(k) of the Telecom Regulatory Authority of India Act 1997
Wireless Communication
Any means of transmission, omission or reception of signs, signals, writing,
images and sounds or intelligence of any nature by means of electricity
magnetism, conductors between the transmission and receiving apparatus.

Why TRAI
The entry of private service providers
brought with it the inevitable need for
independent regulation.
The Telecom Regulatory Authority of India
(TRAI) was, thus, established with effect
from 20th February 1997 by an Act of
Parliament, called the Telecom Regulatory
Authority of India Act, 1997, to regulate
telecom
services,
including
fixation/revision of tariffs for telecom
services which were earlier vested in the
Central Government.

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TRAIs mission is to create and nurture
conditions
for
growth
of
telecommunications in the country in
manner and at a pace, which will enable
India to play a leading role in emerging
global information society.
One of the main objectives of TRAI is to
provide a fair and transparent policy
environment, which promotes a level
playing
field
and
facilitates
fair
competition.

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In pursuance of above objective TRAI has issued
from time to time a large number of regulations,
orders and directives to deal with issues coming
before it and provided the required direction to
the evolution of Indian telecom market from a
Government owned monopoly to a multi
operator multi service open competitive market.
The directions, orders and regulations issued
cover a wide range of subjects including tariff,
interconnection and quality of service as well as
governance of the Authority

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The TRAI Act was amended by an ordinance,
effective from 24 January 2000, establishing a
Telecommunications Dispute Settlement and
Appellate Tribunal (TDSAT) to take over the
adjudicatory and disputes functions from TRAI.
TDSAT was set up to adjudicate any dispute
between a licensor and a licensee, between
two or more service providers, between a
service provider and a group of consumers,
and to hear and dispose of appeals against
any direction, decision or order of TRAI

The Telecom Regulatory Authority of

India (TRAI)
TRAI is to supervise the functioning of different telecom service providers
and their activities can be regulated in accordance with provisions of the said
Ordinance.

Original Functions of TRAI

I. Need & Timing for introduction of new service provider
II. Terms & Conditions of license to a service provider
III. Revocation of license for non-compliance with its terms and
conditions
IV. Measures to facilitate competition and promote efficiency in the
operation of telecommunication services so as to facilitate growth
in such services
V. Technological improvements in the services provided by the
service providers:
VI. Type of equipment to be used by the service providers after
inspection of equipment used in the network
VII.Measures for the development of technology and any other matter
relatable to telecommunications industry in general:
VIII.Efficient management of available spectrum

TRAI
Regulatory Functions of TRAI are:
I. Ensure compliance of terms and conditions of license
II. Fix the terms and conditions of inter-connectivity between the service
providers, irrespective of the terms of the license issued prior to the TRAI
amendment Act 2000:
III. Ensure technical compatibility and effective inter-connection between
different service providers:
IV. Regulate arrangements amongst service providers for sharing their
revenue derived from providing telecommunication services
V. Lay down the standards of quality of service to be provided by the service
providers to ensure the quality of service conduct periodic and survey of
such service provided by the service providers so as to protect the interest
of the consumers of telecommunication service
VI. Lay down and ensure the time period for providing local and long distance
circuits of telecommunication between different service providers
VII.Maintain register of interconnection agreements and of all other matters as
may be provided in the regulations
VIII.Ensure effective compliance of universal service obligation

National Telecom Policies

In 1991, telecom equipment manufacturing was opened to private sector
and. In July 1992, private investment was allowed in the sub-sector of value
added services
Electronic mail
Voice mail
Data services
Audio text services
Video text services
Video conferencing
Radio paging
Cellular mobile telephone

National Telecom Policy

1994
National Telecom Policy 1994 (NTP 1994) was a broad statement of objectives to
bring into focus the requirement for promoting the development sector in India
through private participation.

Basic Services Foreign equity restricted to 49%

Cellular Services Foreign equity restricted to 49%
Radio Paging E-mail

Key features of the NTP 99

Strengthening of Regulator.
National long distance services opened
to private operators.
International Long Distance Services
opened to private sectors.
Private telecom operators licensed on a
revenue sharing basis, plus a one-time
entry fee. Resolution of problems of
existing operators envisaged

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Direct interconnectivity and sharing
of network with other telecom
operators within the service area was
permitted.
Department of Telecommunication
Services (DTS) corporatised in 2000.
Spectrum
Management
made
transparent and more efficient.

New Telecom Policy 1999

The requirement for a new policy
framework due to the unsatisfactory
implementation of the National
Telecom Policy 1994, is recognised in
the New Telecom Policy 1999, which
states:
The government recognizes that the result of privatization
has so far not been entirely satisfactory. While there has
been a rapid rollout of cellular mobile networks in the
metros and states with currently over 1 million subscribers,
most of the projects today are facing problems. The main
reason , according to the cellular and basic operators are
unable to arrange financing for their projects and therefore

The New Telecom Policy 1999 sought to create a

new regulatory framework for the various telecom
service providers and towards that end
specifically characterized the various service
providers as follows:
1.
2.
3.
4.
5.
6.
7.
8.

Cellular mobile service providers, fixed service providers

were collectively characterized as access providers
Radio paging service providers
Public mobile radio trunking service providers
National long distance operators
International long distance operators
Other service providers
Global mobile personal communication by satellite
service providers
V-SAT based service providers

GMPCS
GMPCS is a personal communication system
providing transnational, regional or global
coverage from a constellation of satellites
accessible with small and easily transportable
terminals. Whether the GMPCS satellite systems
are geostationary or non-geostationary, fixed or
mobile, broadband or narrowband, global or
regional,
they
are
capable
of
providing
telecommunication services directly to end users.
GMPCS services include two-way voice, fax,
messaging,
data
and
even
broadband
multimedia.

RADIO PAGING SERVICES

A pager (often called a beeper) is a simple
personal telecommunication device for short
messages. A one-way numeric pager can only
receive a message consisting of a few digits,
typically a phone number that the user is then
requested to call. Alphanumeric pagers are
available, as well as two-way pagers that
have the ability to send and receive email,
numeric pages, and SMS messages

What is PMRTS?
Public Mobile Radio Trunking Service
(PMRTS) is an instant, two-way
mobile
(radio)
communication
service that allows a group of people
to communicate with each other,
even if some or all of them are on
the move. When radio channels are
trunked, it means that your radios
automatically get a free 'path', at the
press of a button, to communicate

Migration package
The New Telecom Policy 1999, was
immediately sought to be implemented
for
the
existing
licensees.
The
government offered, what came to be
known as the migration package in
accordance with the terms of which the
existing cellular and basic service
licensees would migrate from the regime
established pursuant to the National
Telecom Policy 1994 to one being sought
to be established under the New Telecom
Policy 1999.

Some of the main terms of the

migration package that had been
reported were as follows:
i.

the licensees were required to pay a onetime entry fee and thereafter a license fee as
a percentage share of the gross revenue of
the licensee under the license.
ii. The duopoly regime for licenses was
terminated and replaced by a multiple player
market.
iii. The shareholder lock-in period was extended
from three years from the effective date, to
five years from the effective date.
iv. The license period was extended to 20 years.

3G Cellular Technology
One of the main developments of technology in
relation to cellular telephony has been the
development of what has come to be popularly
referred to as 3G Cellular Technology.
3G Cellular technology indicates the ability to
provide a cellular service customer with
multimedia communication on his cellular
telephone using the cellular service providers
network.
Using 3G technology it would be possible for a
cellular user to access the internet, receive
multimedia messages and even have movies and
other live multimedia feeds transmitted and
shown on the phone.

Guidelines for infrastructure service

providers category-I (IP-I)
The applicant must be an Indian company, registered
under the Companies Act 1956.
There is no restriction on the level of foreign equity in
the applicant company.
The registration for IP-I shall be on a non-exclusive basis
without any restriction on the number of entrants.
The applicant company shall make its own arrangement
for Right of Way.
The IP-I registered company shall provide dark fibers,
right of way , duct space, towers on lease or rent out or
sale basis to the licensees of the telecom services on
manually agreed terms ad conditions.

Guidelines for Infrastructure Service

Providers category-II (IP-II)
a) In order to ensure that the application submitted
by the applicant company is considered, the
following criteria should be satisfied;
i. The applicant must be an Indian company,
registered under the Companies Act 1956.
ii. The foreign equity in the applicant company will
not exceed 49 per cent at any time during the
entire license period
In case the applicant is not found to be eligible
for grant of license for IP-II, the applicant will be
informed accordingly where after , he can file a
fresh application removing the deficiencies.

b) The applicant company shall make its own

arrangements of right of way (RoW). However
, the Central Government will issue necessary
notification on request bringing the IP-II
licensees for the purpose of placing telegraph
lines under Part III of the Indian Telegraph Act
1885.
c) An IP-II licensee can lease or sell or rent out
end-to-end bandwidth to the other licensees
of telecom services on mutually agreed terms
and conditions, subject to the restrictions
issued by TRAI under the TRAI Act 1997.
d) An IP-II licensee has to provide the
infrastructure in a non discriminatory
manner.

V-SAT Service

In accordance with the New Telecom Policy

1999, the government of India has allowed
grant of license on non-exclusive basis to
Very Small Aperture Terminal (VSAT) service
provider for a 20 years extendable one time
by 10 years.

The commercial VSAT service provider can

offer the service on commercial basis to the
subscribers by setting up a number of Closed
User Group (CUG) where as in the captive
VSAT service, only one CUG can be set up for
the captive use of the licensee.

Essential Requirement for

Telecom Network
Level Playing Field and
Interconnection
Allocation of Frequency
The Right of Way
The main Clearances include service
clearance, WPC license, SACFA
Clearance

Level Playing Field and

Interconnection
The value of any telecom network is only
when it is able to provide subscriber with
ability to communicate with subscriber of
existing network.

This
is
only
possible
through
interconnectivity
between
the
two
network the terms of interconnection
should encourage economic and efficient
use of investment in telecom sector in
terms of:

Level Playing Field and

Interconnection
1. Encouraging efficient entry and exist of messages between the
networks.
2. Encouraging efficient build or buy decision to be taken by
service provider for efficient use of resources, providing
appropriate incentives to various service provider to invest
innovate increase quality reduce cost of providing services.
3. Maximize benefit to subscriber to networks of service provider.
4. Interconnection can be categorized as being two types:
A. Access interconnection is when two provider agree to provide
to each other the facility to allow call to originate from there
networks and end on other network.
B. Transit interconnection comprises an interconnection between
two networks for conveying a call or signal but not for
originating and terminating the call.

Level Playing Field and

Interconnection
Another important issue relating to
interconnection
is
that
of
interconnection pricing.
When interconnection costs are low ,
the new entrant has less incentive to
build its own network- to lay its own
cables, establish new links where
existing network already exists.

Allocation of Frequency
Upon obtaining a license from the
WBPC wing of DOT, a licensee has to
obtain the approval of standing
advisory committee on frequency
allocation (SACFA) for each of the
sites at which the licensee intends to
established a fixed station and
antena
for
undertaking
telecommunication using frequency
so allocated

The Main Clearances

Service License:- for undertaking the
establishment,
operation
and
maintenance of telegraph under s.4
of Telegraph Act.
WPC
License:For
allocation
frequency that can be used by
telecom network.
SACFA Clearance: This is site specific
approval for placing or establishing
wireless equipment at specific site.

The Right of Way

A telecommunication network require the acquisition of
easementary right to lay down the telecommunication
wires or optical fibre cable or other form cable
Under telegraph Act, 1885 the telegraph authority has
power to place and maintain a telegraph line under,
over, along or across and post in or upon an immovable
property.
The new telecom policy 1999 clearly deals with the
aspect of right of way but does not provide a structured
delegation of power of telecom authority to the
licensee under provision of telegraph Act, 1885.

ISSUES RELATING TO
FINANCING
Financing of telecommunication projects
has certain distinct issues due to nature of
the infrastructure sector.
In telecom sector, the construction period
carries for almost entire period since
network need to constantly grow to
achieve greater subscriber penetration.
The viability of telecom project depends on
its ability to achieve subscriber penetration
levels.

ISSUES RELATING TO
FINANCING
1. Viability of Network plan, Project plan,
and consumer and revenue projections.
The plan provide network rollout by the project
company and plan providing the
implementation of entire project by project
company is critical in telecommunication sector.
The consumer and revenue projection are
directly dependent upon roll out of network and
implementation of the project.
Lenders to link reimbursement of debt to
development of network.

ISSUES RELATING TO
FINANCING
2. Project Cost
The projected cost of various phases of telecommunication
project would be critical factor in terms and condition of
financing as in every financing, the lenders would be
analyzing the basis for the projection of project cost.
3. Technology
The lenders would be looking at technology of the
network.
If technology is too outdated or is at risk of being
outdated, there may be specific conditions that may be
imposed by the lenders.
If technology is too advanced the lenders may require
majority of network to be built on tested technology.

ISSUES RELATING TO
FINANCING
3. Technology
The type of technology to be used would be clear
dependent on cost of technology and ability of potential
market to absorb such cost.
The Iridium project was to have single mobile number
throughout the globe even in most remote areas. It failed
in India because it was too expensive for its limited market.
4. Rights of Way
The cost of obtaining the rights of way and the time frame
within which these rights can be obtained by the project
company would be crucial factor for cost of project and
time frame of implementation, ability to achieve service
penetration and generate sufficient revenues.

ISSUES RELATING TO
FINANCING
5. Debt, debt redrawn and debt repayment
Based on project details the lenders would have
to determine the extent of exposure that they
are willing to undertake, the conditions
precedent to the drawdown of debt, the debt
repayment schedule that they want to impose.
It
assumes
more
importance
in
telecommunication sector owing to specific
features and risk that may be associated with
given project.

Lender Security
The most valuable assets of telecom company are:
1. The license granted to it by licensor
2. The frequency allocated to it by the WPC(WIRELESS
PLANNING & COORDINATION ) Wing of the DOT.
The regime under telecom licenses does not provide any comfort
to lenders.
The Tripartite Agreement between the licensor, the licensee and
the lender agent to licensee(which had to be an Indian bank or
NBFC).
The tripartite agreement sought to provide a step in right to the
lenders to a licensee and to that extent, curtail the powers of the
licensor to terminate the telecom license and make it mandatory
for the licensor to first provide an opportunity to the lenders to
either ensure the settlement of the default of the licensee or
substitute the licensee with another entity that meets the
qualifications required by the licensor.

Issues relating to Termination of

License
The provisions for ISP states as follows:
10.5.1 in the event of termination of the
license, the licensor may procure upon such
terms and conditions and in such manner as
deemed appropriate, the required resources
that will make up for those not installed, not
delivered or not brought into commission so
as to enable provision of service and the
license shall be liable to the licensor for any
extra cost for such corrective efforts

Issues relating to Termination of

License
2. Whenever the license is terminated or not extended,
the licensor may, in order to ensure continuity of service
takes such step as necessary, include the following:
a. Permit the DOT/ MTNL or its successor to take over; or
b. Issue license to another Indian company for running
the service.
c. During the period when Termination of License is
pending the quality of service to the subscriber shall be
maintained, if service quality is not maintained it will
be treated, as breach of license condition and will be
dealt with as such including recovery of damages

BANDWIDTH AGREEMENT
The term Bandwidth Agreements is generic
term used to describe agreements for procuring
capacity or such specific services in relation to
telecommunication network.
The structure of bandwidth agreements and
dark fiber sale agreements are essentially those
of agreements providing a flexible framework in
accordance with which a party can procure a
specific service or a bouquet of services from
the relevant telecommunication network .

Generally certain important provisions of a Bandwidth

agreement would include
a) Scope of service : The agreement would provide the
obligation to provide specific services generally defined
in the schedule . The level of bandwidth being procured
from a network is usually described as the available data
transfer rate.
b) Description of network : The agreement would
provide
the
specific
nature
of
the
relevant
telecommunication network and obligations of the
service provider in relation to the operation and
maintenance of the network.
c) Interconnection and interface with customers
equipment : The agreement would provide a framework
for the interconnection between the telecom network and
the customers network and would provide the manner of
interface between the equipment of the two networks.

d) Price, billing and payment: The

commercial heart of the agreement
will, as in all agreements, be clearly
identified.
e) Limitation of liability: The service
provider would not want to be liable
for loss of data or other related direct
or consequential losses. A specific cap
on the liability would generally be
agreed to.

ASPECTS FOR A NEW FRAMEWORK

The following could be stated to be some of the important aspects
that would be covered by any legal framework that is sought to be
introduced.
i. Providing framework for the provision of telecommunication
services.
ii. Promoting convergence in order to ensure a technologically
advanced telecommunication system in India.
iii. Facilitating interconnection between networks on the basis of
commercial understanding under a regulated framework,
iv. Regulations, planning and allocation of frequencies.
v. Providing a suitable framework for the protection of lenders
concerns.
vi. Providing the principles of determination, revision and collection of
tariffs.
vii.Enabling licensing to obtain the required clearances within a
specific time frame so as to avoid lengthy delays.
viii.Establishing dispute settlement mechanism between all parties
involved in the implementation of telecommunication projects.

The Communication Convergence Bill 2001

The information Communication and Entertainment Bill
200 was replaced by the Communications Convergence
Bill 2001 .
The Communication Convergence Bills objective is to
promote, facilitate and develop in an orderly manner the
carriage and content of communication and establish an
autonomous regulatory body to be known as the
Communication Commission of India having wide ranging
powers.
The bill seeks to provide a uniform regulatory framework
for all types of broadcasting, telecommunication and
information technology services.
The bill also propose to replace the large number of
categories of licenses with the following five broad
categories to enable services providers to offer a range of
services within each category.

a) To provide or own network infrastructure facilities. This

shall include earth stations, cable infrastructure, wireless
equipments, towers, ducts and pits used in conjunction
with other communication infrastructure and distribution
facilities including facilities for broadcasting distribution.
b) To provide network application services. This shall include
public services, fixed links and mobile links
c) To provide network application services. This shall include
public switched telephony, global mobile personal
communication by satellite, internet protocol telephony,
radio paging services, public mobile trunking services,
public switching data services and broadcasting.
d) To provide content application services. This shall include
satellite
broadcasting,
subscription
broadcasting,
terrestrial free to air television broadcasting and
terrestrial radio broadcasting .
e) To provide value added network application services.

Universal Service Obligation Fund

Another major step was to set up the

Universal Service Obligation Fund with
effect from April 1, 2002. An administrator
was appointed for this purpose.
Subsequently,
the
Indian
Telegraph
(Amendment) Act, 2003 giving statutory
status to the Universal Service Obligation
Fund (USOF) was passed by bothHouses
of Parliament in December 2003.

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The Fund is to be utilized exclusively for
meeting the Universal Service Obligation
and the balance to the credit of the Fund
will not lapse at the end of the financial
year.
Credits to the Fund shall be through
Parliamentary approvals. The Rules for
administration of the Fund known as
Indian Telegraph (Amendment) Rules,
2004 were notified on 26.03.2004.

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The resources for implementation of USO
are raised through a Universal Service
Levy (USL) which has presently been fixed
at 5% of the Adjusted Gross Revenue
(AGR) of all Telecom Service Providers
except the pure value added service
providers like Internet, Voice Mail, E-Mail
service providers etc. In addition, the
Central Govt. may also give grants and
loans.

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An Ordinance was promulgated on
30.10.2006 as the Indian Telegraph
(Amendment) Ordinance 2006 to amend
the Indian Telegraph Act, 1885 in order to
enable support for mobile services,
broadband
connectivity,
general
infrastructure and pilot project for new
technological developments in rural and
remote areas of the country.
Subsequently, an Act has been passed on
29.12.2006 as the Indian Telegraph
(Amendment) Act 2006 to amend the

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USFO has initiated action to bring mobile
services within the ambit ofUniversal
Service Obligation Fund (USOF)activities.
Under
this
initiative,
7387
mobile
infrastructure sites are being rolled out, in
the first phase, across 500 districts and 27
states of India.
This scheme will provide mobile services
to approximately 0.2 million villages which
where hitherto deprived of the same.

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As on 30thJune2010, 7183 shared
towers have been set up under the
First Phase of the scheme.
TheUSOFof DOT has proposed to set
up about 10,128 additional towers in
order to extend the mobile coverage
in other uncovered areas under the
Second Phase of the Scheme.

THANK U!