The Department of Telecom has refused to compensate telecom companies for bearing the cost of implementing the new security norms for importing network equipment.
The department has also insisted that the operators should ensure that imported equipment are tested in Indian certification laboratories by April 2013.
Testing labs
Mobile operators had requested DoT that they should be given fiscal benefits, including lower revenue share for spectrum usage and decreased contribution to the Universal Services Obligation. The new security rules for import of telecom gear, issued by the DoT earlier this year, requires operators to invest in a number of facilities such as setting up equipment testing labs and location-based services.
Operators are required to provide location of a subscriber up to 50 metres of a mobile tower through location-based services.
According to the operators, it will cost as much as $5 billion in order to comply with the latest regulation.
The operators had also suggested that they should be allowed to get certification from test labs in other countries.
They had also sought relaxation in the accuracy levels required for pin pointing subscribers using location based technology.
Matter of national security
Rejecting the demand, DoT has said that this was a matter of national security and test labs have to be set up within the country over the next two years.
On the issue of location-based service (LBS), DoT has taken a view that this was anyway part of mobile services which the operators would have to launch commercially.
“LBS is a known commercial service and therefore, it will not be possible to distinguish between the commercial use and security. Hence, there cannot be any cost sharing by the Government,” DoT noted in an internal note.
Mobile operators had argued that since security is a matter for Government to deal with and if the onus is being put on the operators, then there has to be some form of compensation.
DoT will also impose a penalty of Rs 50 crore, if any security breach is found on the operator's network.
The policy comes after security agencies raised concerns about the volume of telecom equipment being imported into the country.
The security agencies are worried that foreign agencies can embed spyware in key equipment and then use it to snoop into the network or even control it remotely.
Initially, the DoT had asked operators to sign a stringent agreement with the equipment suppliers, which imposed a number of conditions, including making it mandatory for vendors to submit source codes.
When vendors opposed signing such an agreement, the DoT revised its position to issue a new set of rules.
While the latest policy has done away with several of the stringent measures from the equipment vendor point of view, it has put the onus on operators.