Changes to Telecom Entry Fees and Bank Guarantees proposed by TRAI

TRAI has also proposed waiving entrance fees during licence renewals, with specific advantages for UL (VNO) licensees.

Recommendations for "Rationalization of Entry Fee and Bank Guarantees" in the telecommunications industry have been made by the Telecom Regulatory Authority of India (TRAI). The decision by TRAI is in response to a request for rationalization of entry fees and bank guarantees for telecom licences made by the Department of Telecommunication (DoT) on March 3, 2022.

Entry Fees are upfront, non-refundable expenses associated with entering a market, whereas Bank Guarantees guarantee that licensees will pay their debts on time and comply with the terms of their licence agreements.

After this reference, on July 26, 2022, TRAI released a consultation paper on the subject and invited feedback from interested parties. The deadline for written comments and counter-comments was extended until September 6, 2022, in response to appeals from the business community. Twenty stakeholders provided responses to TRAI, which then convened an open house discussion on December 9, 2022 to address the concerns stated in the consultation paper.

Important suggestions include:

• Lowering the entry fees for UL (Unified Licence) and (UL (vno)) (Virtual Network Operator) licences.
• There aren't any entrance costs for some categories, including M2M, Audio conferencing, Audiotex, voice mail service, and ISP "C."
• Entrance fees for various UL authorizations should be justified.
• Creating a single Bank Guarantee for UL licences by combining the Financial Bank Guarantee (FBG) and Performance Bank Guarantee (PBG).
• Use of the electronic bank guarantee (eBG) for improved company efficiency.

According to TRAI, it has advised lowering entrance costs for a variety of licence authorizations and merging bank guarantees because of the telecom industry's rapid technical improvements. These actions are anticipated to boost investment, facilitate the entry of new service providers, and increase competition, all of which will improve service quality and benefit customers.

To lessen the financial strain on both current and potential entrants, TRAI has also proposed waiving entrance fees during licence renewals, with specific advantages for UL (VNO) licensees.