TRAI recommends rationalization of entry fees, bank guarantees

New Delhi: The Telecom Regulatory Authority of India (TRAI) has issued significant recommendations concerning the "Rationalization of Entry Fee and Bank Guarantees" in the telecommunications sector.

The move aims to foster a conducive environment for the industry's growth and improve the ease of doing business, read the Ministry of Communications press release.

The Department of Telecommunication (DoT) initiated this process by referring the matter of rationalizing entry fees and bank guarantees for various licenses operating in the telecom sector to TRAI.

Entry fees are one-time payments that new entrants must make to access the market, while bank guarantees act as financial safeguards to ensure licensees meet their obligations as per the license agreement, read the press release.

In response to this reference, TRAI released a consultation paper titled "Rationalization of Entry Fee and Bank Guarantees" on July 26, 2022.
Stakeholders were invited to provide written comments and counter-comments on this paper, with multiple extensions granted for submission.
The consultation process culminated in an Open House Discussion held on December 9, 2022.

TRAI's recommendations aim to facilitate the orderly growth of the telecom sector by proposing reduced entry fees across various license authorizations and the merger of bank guarantees, read the press release.

These measures are expected to encourage the entry of new service providers, increase investment, and enhance competition within the telecom sector. Consequently, this will result in improved service quality and greater consumer welfare.

Reduction of entry fees for Unified License (UL) and Unified License (Virtual Network Operator) (UL (VNO)) licenses, read the release.
Elimination of entry fees for Machine-to-Machine (M2M), Audio conferencing/Audiotex/Voice mail service, and ISP "C" licenses.
Rationalization of entry fees for various UL authorizations, including Access service, NLD, ILD, PMRTS, ISP "B," and ISP "A" licenses.
Substantial reduction in entry fees for UL (VNO) authorizations to promote competition and improved service provision.

No entry fees at the time of license renewal, reducing financial burdens on existing and new entrants, read the release.
The merger of Financial Bank Guarantee (FBG) and Performance Bank Guarantee (PBG) into a single Bank Guarantee for Unified License.
Similar consolidation of FBG and PBG for Mobile Number Portability licenses.

Adoption of the electronic bank guarantee (eBG) submission process to enhance ease of doing business.
These recommendations align with India's commitment to fostering a thriving and competitive telecommunications sector, ensuring the growth of quality services, and benefiting consumers and industry stakeholders alike.