TRAI recommends entry fee reduction and bank guarantee merging to boost telecom sector

Image Source : PEXELS Telecommunication tower under cloudy and blue sky.

India’s telecom regulator, the Telecom Regulatory Authority of India (TRAI), has made significant recommendations to stimulate the telecom sector, including a substantial cut in entry fees for various telecom service licenses and the merging of bank guarantees. These proposals aim to promote a more favorable environment for both new and existing players in the industry. In a comprehensive set of recommendations, TRAI has suggested reducing the entry fee for Unified Licenses (UL) related to access services by half. This proposal, combined with the merger of bank guarantees and other measures, is expected to support the orderly growth of the telecom sector.

TRAI believes that these measures will encourage investments, foster growth, improve service quality, and enhance consumer welfare within the telecom industry.

According to the TRAI release, the proposed changes include:

  • Access Service: The entry fee for Unified Licenses for access service would be reduced from Rs 1 crore to Rs 50 lakh for each telecom circle or metro area. For Jammu & Kashmir and the North East regions, the fee would decrease from Rs 0.5 crore to Rs 25 lakh each.
  • National and International Long Distance: TRAI recommends a reduction in entry fees from Rs 2.5 crore to Rs 50 lakh.
  • Public Mobile Radio Trunking Service (PMRTS): The entry fee for PMRTS would decrease from Rs 50,000 to Rs 20,000 for each telecom circle or metro area.
  • Internet Service Providers (ISPs) in the National Area: TRAI suggests reducing the entry fee by one-third, from Rs 30 lakh to Rs 10 lakh.
  • ISP Category B: The entry fee for this category would drop from Rs 2 lakh to Rs 50,000 for each telecom circle and to Rs 25,000 for Jammu and Kashmir and the North East regions.

Additionally, TRAI proposes eliminating entry fees at the time of license renewal, aiming to ease the financial burden on both existing and new licensees, particularly beneficial for UL (VNO) licensees.

Furthermore, TRAI recommends merging the Financial Bank Guarantee (FBG) and Performance Bank Guarantee (PBG) into a single Bank Guarantee for securing dues, ensuring compliance with license conditions, and guaranteeing performance under the license agreement. For the Mobile Number Portability license, TRAI suggests a similar merging of bank guarantees into one and encourages the submission of electronic bank guarantees (eBG) for streamlined operations.

TRAI anticipates that these changes will lead to the entry of new service providers, increased investments, enhanced competition, and improved service quality within the telecom sector. The merging of bank guarantees is expected to facilitate ease of doing business and promote growth in the industry, ultimately benefiting consumers.

In telecom licensing terms, an entry fee is a fixed, one-time payment made by prospective entrants to enter a market. Bank Guarantees are financial instruments that safeguard the government’s interests by ensuring timely payments and fulfillment of obligations by licensees as per the license agreement’s terms and conditions.


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