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Company Registrations, Compliances, Licenses & Permits which are to be procured:
• The Unified License, requires licensee to declare the Indian and Foreign investment in the licensee company and submit a compliance report regarding compliance with FDI norms and security conditions the Department of Telecommunications (DoT) certified by Company Secretary or Statutory Auditor, countersigned by duly authorized Director of such company.
• License for Basic Telephone Services has been open to the private sector.
• License for National Long-Distance Services operating within the territory of India.
• License for International Long-Distance Service which can be issued for 20 years with an extension of 5 years subject to the performance with regards to the Quality of Service (QoS).
• Internet Service Provider (ISP) License to permit services such as internet access and internet telephony.
• The Global Mobile Personal Communication by Satellite (GMPCS) License is another license which can help an entity provide its subscriber one telephone number irrespective of his location. GMPCS is covered under the Unified License.
• Approval of the Foreign Investment Promotion Board (FIPB) is required, if FDI in the Licensee Company has a bearing of an overall 74%.
• The Quality of Service (QoS) as may be prescribed by the Licensor must be complied with by the Licensee and it shall adhere to such QoS standard and provide timely information as required therein.
Precautionary Measures:
• The total foreign equity in the paid-up capital of the Licensee Company must not exceed 74% of the total equity. This measure must be ensured by the Licensee.
• Unified License is valid for 20 years from the date of the license, and the licensee can take precautions by renewing the license for 10 years at one time.
• An important precautionary measure during time of monsoon are that the telecom operators must set up protective covers on their tower sites, create war rooms, install motor pumps and generators in crucial areas if there occurs any power outage.
• They must also ensure that special teams are sent to cross-check any impact on the network in case of flooding due to rains.
Functioning & Management:
• Licensor may sign a suitable agreement with hardware, software manufacturer, vendors and/or suppliers of services to ensure that the equipment, services or software they supply are ‘Safe to Connect’ in the network, and have been checked thoroughly for risks that are listed with remedial measures and necessary precautions.
• In order to ensure better functioning, the Licensees should create a forum, to increase the security assurance levels and share common issues.
• The Licensee shall build, maintain and operate its own network, preferably through local maintenance personnel, because the telecom network is a security sensitive infrastructure.
• In order to ensure proper connectivity during the monsoons, the telecom operators must ensure the physical sites are properly protected with proper equipment’s and spares in cases of power cuts due to the monsoons.
Taxation Aspects:
• Telecom operators pay GST on spectrum fee, license fee, spectrum usage etc.
• Telecom operators pay nearly 30% of their revenue in taxes.
• The Universal Service Obligation Fund (USOF) Levy sought at 5% are also paid by telecom companies.
• Telecom providers in the country pay the Department of Telecommunications 3-5% of their Adjusted Gross Revenue (AGR) in spectrum usage charges and 8% as licence fees.
Export Potential:
• India’s export in telecom sector stands to more than Rs. 32,000 crores, from which Rs. 20,000 crores are from products and equipment’s while the remaining Rs. 12,000 crores are from telecom services as of 2015.
• At the end of 2019, exports from India in the telecommunication sector was around US$ 2.7 billion.
Recent Developments:
• Facebook Inc, bought 9.99% stake in Jio Platform a subsidiary of Reliance Industries Limited for Rs. 43574 crores in 2020.
• Jio’s Internet of Things (IoT) platform is commercially available from 2020.
• Jio commercially launched the Jio GigaFiber as wired broadband service.
• The merger of Vodafone India and Idea Cellular into ‘Vodafone Idea’ has become India’s largest telecom company.
• More than 542 banks have been permitted to provide mobile banking services in India in 2020.
Authored By: Adv. Anant Sharma