Telcos seek level playing field with captive network operators

Telcos seek level playing field with captive network operators

20 Jun    Finance News

Expressing its disappointment over the government’s decision on captive private networks, the Cellular Operators Association of India (COAI) has asked for a level playing field, stating that private captive network solution providers should also pay licence fee and GST at the rates applicable for telcos on the billed amount of revenue, and that such captive networks must remain “truly” private and isolated, and adhere to security norms.

In a letter to the Department of Telecommunications, the COAI argued that since a decision to enable the captive networks through direct spectrum assignment has been taken, the government must now restrict the scope of such non-public networks to machine-to-machine communication inside the specific premise and plant automation only.

Such networks must ensure they do not cause any interference to public networks.

The COAI said that from a national security perspective, these networks should comply with the prescribed subscriber verification norms, so as to ensure adequate verification and traceability of every user.

Periodic audits to ensure compliance must be carried out, said the COAI, whose members include Reliance Jio, Bharti Airtel and Vodafone Idea.

The captive networks should be assigned spectrum only in non-IMT/5G/commercial bands, the COAI said, cautioning that not doing so would result in shortage of harmonised spectrum for telcos’ networks, inefficient utilisation of the precious spectrum, and loss to the exchequer.

“At present only 330 MHz in mid band and 2.85 GHz in mm wave has been put to auction. If the other bands which are likely to be identified for IMT are not reserved/ assigned to TSPs, it will constrain TSPs (telecom service providers) to properly plan their network to meet the customer demand in mid and long-term,” the COAI said in its letter to DoT secretary K Rajaraman.

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However, the Telecom Regulatory Authority of India (Trai) has “ignored the above issues” while recommending 3.7-3.8 GHz, 4.8-4.99 GHz and 28.5-29.5 GHz bands for captive private networks, the COAI said.

The COAI further suggested that captive private networks should only be assigned spectrum in the non-mobile services band, and no IMT spectrum band should be allocated for such private networks.

“Further technologies 2G, 3G and 4G should not be permitted. DoT should conduct periodic assessment to ascertain that the allocated spectrum is being fully used,” it said in its submissions.

Private networks’ set-up using dedicated spectrum must be bound by the same security conditions as applicable for telcos — storing call or data records for two years, command logs for three years, keeping records of software updates, data localisation, remote access only from in-country and no remote access outside of India, the association wrote.

“Some of the CNPN may be very large, handling a large number of users/employees and machines for which lawful interception become important. They should also be liable to install LIS/LIM in line with obligations of TSPs,” according to the COAI.

These networks must remain truly private and isolated, the COAI asserted, flagging the likelihood that enterprises obtaining the spectrum for captive networks may be tempted to connect multiple offices.

“Such interconnection shall not be allowed… Scope of CNPN (captive non-public network) must be limited to the very intent of provision of CNPN, that is M2M communication inside the premises and plant automation,” the COAI said.

Captive networks must be established by the end user and not by third parties, it emphasised.

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“Therefore, like the unified licensee, CNPN owners must own all equipment installed for the purpose of CNPN and not obtain on lease/rental from the third parties/intermediaries. Any third party who intends to provide/install and operate the network of CNPN must obtain the spectrum through the same process as TSPs,” the COAI said.

It has also emphasised that use cases meant for the masses cannot be part of captive networks, and captive networks must not be connected to any foreign location/data centre for the purpose of redundancy/disaster recovery/remote management.

The COAI also said that since “such solutions can be provided by licensed TSPs having spectrum acquired through auction in a transparent manner, the solution provider should pay license fee and GST at the rates applicable for TSPs on the billed amount of revenue to ensure level playing field”.

“In case of a network installed for internal use, equivalent commercial value should be used. In both cases, it should be ensured that there is no under-invoicing and a case of diversion of funds does not arise. Alternatively, revenues earned by TSPs from provision of CPN should be exempted from payment of license fee and GST,” the COAI said.

It also made a pitch for ‘same service same rule’, saying this will ensure investors’ confidence and continuous investments in the sector for roll-out of future telecommunication networks.

“Rules applicable for CNPN should be made applicable for CPN/PN provided by licensed TSPs. Otherwise, no investor will invest in a taxed portfolio when the same investment can be made without any tax burden through the CNPN route,” the COAI said.

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Trai should do initial and annual analysis and study, and such networks must provide the data sought by the regulator from time to time.

“CNPN should comply with the provisions of national directive on security as applicable to TSPs including sourcing of equipment from trusted source. Further, applicable guidelines/security instructions/Acts/regulations should be made applicable and enforceable for CNPN networks in India,” the COAI said.

These steps should be taken to ensure orderly growth of the sector and to maintain investor confidence.

“Accordingly, any guidelines for setting up captive non-public network by obtaining spectrum directly from DoT should be issued only after a demand study by DoT and subsequent recommendations of Trai,” the COAI said.

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