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MSOs and LCOs can provide broadband service with VNO licence

MUMBAI: Multi-system operators (MSOs) or local cable operators (LCOs) who want to provide broadband services through their cable network may do so by obtaining a virtual network operator (VNO) licence, the Telecom Regulatory Authority of India (TRAI) has said in its recommendations on ‘Introducing Virtual Network Operators in telecom sector’.

The authority also said that MSOs and LCOs have to register themselves as an IP-I service provider if they want to share their cable infrastructure with VNOs.

VNOs are service delivery operator (SDO) licensees who do not own the network but rely on the network and support of the infrastructure providers and telecommunications operators for providing telecom services to end customers.

The last-mile local loop of cable TV operators reaches more than 100 million homes and the High Frequency Cable (HFC) network of the LCOs covers lakhs of kilometres, TRAI said.

Noting that the cable TV operators are the predominant broadband providers in a number of countries, the authority said that the LCOs/MSOs can utilise their infrastructure for extending converged telecom services over broadband.

According to TRAI, the introduction of VNOs, where some of the licensing conditions such as lawful interception and rollout obligations are to be complied by the NSO only, it is expected that some of the LCOs/MSOs having large networks and willing to invest in upgrading their existing cable network to Data Over Cable Service Interface Specification (DOCSIS or Dx) systems or Dx3 will be willing to become VNOs.

It further added that this would open up huge revenue opportunities for such LCOs because of the introduction of digital addressable system (DAS) in the country.

TRAI wants to bring VNOs under a licensing framework to allow them to provide voice, data, and video services.

Consequently, the authority has recommended a separate category of licence, namely UL (VNO) comprising two parts. The first part will be the general terms and conditions for the VNO licence and the second part will be the terms and conditions specific to the service authorisation for the VNO.

An operator who wishes to provide telecom services to its customers using the underlying network and/or access spectrum of an existing NSO will have to obtain UL (VNO) licence, the authority said. Such UL (VNO) licensees will be permitted to build their own infrastructure.

Since VNO is a new concept in India, the authority has recommended that initially the duration of a VNO licence should be fixed at 10 years and extendable further by 10 years at a time by the licensor.

However, depending on technological developments and experience gathered, this duration of licence can be reviewed after 3–4 years, the authority added.

An entry fee of Rs 7.5 crore (Rs 75 million) has been recommended for VNOs who want to provide all the services.

The authority also recommended that there should not be a restriction on the number of VNO licensees per service area.

For providing broadband service at the national level, the authority has recommended a licence fee of Rs 15 lakh (Rs 1.5 million), while for a telecom circle or a metro city a licence fee of Rs 1 lakh has been recommended.

In order to increase utilisation and efficiency of telecom infrastructure, there should be no restriction on the number of VNOs parented by an NSO, it stated further.

VNOs will be allowed to have agreements with more than one NSO for all services other than access services and such services that need numbering and unique identity of the customers.

The authority has recommended putting a restriction of 10 per cent or more equity cross-holding to be applicable between (i) a VNO and another NSO (other than VNO’s parent NSO) and (ii) between a VNO and another VNO authorised to provide access services using the access spectrum of a different NSO in the same service area.

A VNO shall be liable to pay LF as a percentage of AGR at the same rate as that of the parent NSO, the authority said.