TRAI sets in motion process to lower entry fee, relax bank guarantee norms

BL Mumbai Bureau | Updated on: Jul 27, 2022
Entry fee is a fixed one-time amount that prospective entrants must pay to enter a market.

Entry fee is a fixed one-time amount that prospective entrants must pay to enter a market.

Issues consultation paper after DoT seeks its recommendations on lowering these costs

In a bid to lower the financial burden of the telecom industry, the Telecom Regulatory Authority of India has issued a consultation paper on lowering the entry fee for various telecom licenses, as well as relaxing the norms for submitting bank guarantees.

This comes after the Department of Telecom sought TRAI’s recommendations. In a letter to TRAI, DoT said the entry fee should be reduced and made uniform across all types of services. It also said financial bank guarantees and performance should be merged.

Entry fee is a fixed one-time amount that prospective entrants must pay to enter a market. Entry fees are typically non-refundable and constitute start-up costs for a firm. “In the journey from Unified Access Service Licence 2003 to Unified Licence 2013, the applicable entry fee for access service has been reduced. Under the UASL regime, in order to obtain a pan-India access licence, a licensee would have had to pay an entry fee of Rs 1,658.57 crore, whereas under the UL regime, they would need to pay a maximum of Rs 15 crore as entry fee,” TRAI said in a consultation paper.

National Long Distance players pay an entry fee of Rs 2.5 crore, whereas Internet Service Providers pay a maximum of Rs 30 lakh. DoT has said the entry fee should be reduced and be made uniform for all types of telecom players.

“While entry fees is imposed to reckon use of public resources as well as to inhibit non-serious players, it also increases entry costs for prospective entrants. This can have implications for competition in the sector. Hence, it is essential that the entry fee is set at an optimal level,” TRAI said.  

Published on July 27, 2022
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