Key Takeaways from DCIP Recommendations

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Key Takeaways from DCIP Recommendations

On August 8th, 2023 the Telecom Regulatory Authority of India (TRAI) issued a notification regarding the digital connectivity infrastructure provider under Unified License. For the growth of the economy, a robust digital connectivity infrastructure (DCI) is required and its importance is mentioned in the Economic survey of the Ministry of Finance 2022-23 as well. 

Many businesses are shifting their core businesses to cloud or hybrid digital platforms. For any Government service delivery, dependence on digital infrastructure platforms and applications is going to increase over time. Soon, there will hardly be any sector in which service delivery to the citizens will not be undertaken through digital media.

In the present legal and licensing framework in India, there are no entities whose scope of work includes both passive and active digital connectivity infrastructure creation. Thus, there is a need to create a new category of License that focuses on the creation of both active and passive digital connectivity infrastructure. 

Different Layers & Licensing Frameworks in India

As per the above figure, currently, in India, no entity has been envisaged to work both in the Infrastructure and network layer. The scope of IP-I is restricted to only the passive infrastructure layer. If an entity has to establish active infrastructure such as antenna, feeder cable, Node B, Radio Access Network (RAN) and transmission media, it has to take a unified license. 

However, the newly envisaged Digital Connectivity Infrastructure Providers (DCIPs) can work at both Layer 1 and Layer 2 provide passive infrastructure and create active networks. Below key takeaways below are about DCIP notification.

What is New Digital Connectivity Infrastructure Provider (DCIP) License?

The Telecom Regulatory Authority of India (TRAI) recommends for creation of a new category of Licence that allows for the creation of both active and passive digital connectivity infrastructure by an infrastructure provider. This new category of license is called ‘Digital Connectivity Infrastructure Provider (DCIP) License’. The DCIP license should not be a standalone license, but an authorization under Unified License.

Purchase Radio Equipment without Assignment

The Authority has therefore proposed a clause in DCIP authorization - The DCIP Licensee should be eligible to apply for and issue of licence under the Indian Wireless Telegraphy Act, 1933 to possess such wireless telegraphy apparatus (without assignment of any spectrum) that is permitted under the scope of DCIP authorization. However, the DCIP authorization holder should not be eligible to apply for an assignment of any kind of licensed spectrum. 

So, as the Authority recommends enabling provision should be made by DoT for DCIP Licensees to purchase radio equipment without assignment of any spectrum.

Application Processing and Entry Fees

There are no license fees applicable to DCIP authorization. The Authority recommends that for obtaining DCIP Authorization under UL, the entry fee should be kept at Rs. 2 lakhs and the application processing fee should be kept at Rs. 15,000. The penalty for violation of DCIP Authorization under UL should be kept at the level that is prescribed for ISP Category ‘B’ Authorization.

Performance Bank Guarantee and Commercial Arrangements

The Authority recommends that no Performance Bank Guarantee (PBG) should be imposed on DCIPs. Also, the authority recommends that an amendment should be made to the Unified License that in case a UL licensee (hirer of service) obtains and utilizes DCI from DCIPs (hiree of service), their commercial arrangements should have stringent terms and conditions obligating DCIPs to ensure that various License conditions applicable on Hire including the operating and security conditions are not breached due to use of DCI of DCIP.

DCIP and Electricity License

The Authority has added a clause in the proposed DCIP authorization whereby a DCIP licensee who is also licensed under the Electricity Act should be allowed to offer such infrastructure (that is permitted under the scope of this authorization) on an access rights basis. On the recommendation, the authority said, that DoT should add a similar clause in the IP-I registration agreement.

Telecom Infrastructure Licensees

The Authority reiterates its recommendations made vide recommendations on ‘Use of street furniture for small cell and aerial fibre deployment’ dated 29th November 2022 that enabling provisions or suitable terms and conditions shall be introduced in all telecom licenses and IP-I registration agreement prohibiting the TSPs/IP-I providers from entering into any exclusive contract 52 or right of way(s) with infrastructure owners/CAAs (Controlling Administrative Authorities) or any other authority.

The Authority has also used the term ‘DCI’ in its recommendations on ‘Use of street furniture for small cell and aerial fibre development’ dated 29th November 2021. Thus, the use of the terms ‘Digital Connectivity Infrastructure’ (DCI) and ‘Digital Connectivity Infrastructure Provider’ (DCIP) brings more coherence to terminologies. 

Therefore, instead of calling these entities Telecom Infrastructure Licensees (TILs), the Authority would like to call them Digital Connectivity Infrastructure Providers (DCIPs) as in view of the 25 Authority, this term better explains the work that these entities will be undertaking. So, the new category of license is called ‘Digital Connectivity Infrastructure Provider (DCIP) License’.

Right of Use

The Authority has put a clause in the proposed DCIP authorization whereby the DCIPs have been forbidden from entering into legally binding contractual agreements conferring Indefeasible Right of Use (IRU) of its DCI to a specific eligible entity(ies), which may lead to the exclusion of others. The Authority recommends that a similar clause may also be introduced in IP-I registration.

New License Under Unified License

The Authority recommends a separate light touch license authorization under Unified License to be created for DCIP, as per the terms and conditions detailed in Annexure V.

TRAI’s recommendations on Enhancing the Scope of IP-I Registration cannot be accepted. In the legal opinion sought by DoT on this issue, it has been opined that: 

• Active Infrastructure can only be provided by Telecom Licensees. 
• IP-I registration holders cannot be allowed to provide active infrastructure under their IP-I registration unless they are shifted to a licensing regime.

Conclusion

Existing IP-I can continue to work at infrastructure layer 1 for the provision of passive infrastructure. The newly envisaged Digital Connectivity Infrastructure Providers (DCIPs) can work at both layer 1 and layer 2 to provide passive infrastructure and create active networks (excluding core elements).

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