TRAI Calls for GSM Roll-Out Obligations on Reliance and Tata

The TRAI, the Indian telecoms regulator, has asked the government to apply roll-out obligations as well as performance bank guarantees and financial bank guarantees to Reliance Communications’ and Tata’s Unified Access Service (UAS) licenses. A revision of these licences would also allow the authorities to fine both operators should they fail to meet their GSM roll-out obligations. Tata was granted a UAS licence in January (see India: 11 January 2008: Nine Companies Given Government Approval for New Telecoms Licences in India), while Reliance was given the right to roll-out GSM networks in an additional 14 service areas. Tata will be granted GSM spectrum in its new service areas depending on the availability of sufficient frequencies.

Outlook and Implications

• DoT to Decide: India’s DoT has yet to decide on the TRAI’s recommendations. The imposition of roll-out and financial obligations on Reliance and Tata would on the one hand drive the aim of improving teledensity in rural and underserved areas. On the other hand, such an interventionist line would place greater stress on Reliance and Tata than the incumbent GSM players such as Bharti and Vodafone. Although neither Reliance nor Tata have publicly commented on the TRAI’s recommendations, Tata could argue that such intervention is disproportionate given the lack of clarity over whether and when it can access GSM spectrum (see India: 16 April 2008: DoT Begins GSM Spectrum Allocation to New Players).  

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