Telecom Regulatory Authority of India (IS/ISO 9001:2008 Certified Organisation) Annual Report 2011-12 Mahanagar Doorsanchar Bhawan, Jawahar Lal Nehru Marg, (Old Minto Road ), New Delhi – 110002 Telephone : +91-11-23220534 Fax No: +91-11-23213036 E-mail : [email protected] Website : http://www.trai.gov.in Annual Report 2011-12 ❚ i ii ❚ Annual Report 2011-12 Letter of Transmittal To the Central Government through Hon’ble Minister of Communications and Information Technology It is my privilege to forward the 15th Annual Report of the Telecom Regulatory Authority of India to be laid before each House of Parliament. The report is for the year 2011-12. Included in this report is the information required to be forwarded to the Central Government under the provisions of the Telecom Regulatory Authority of India Act, 1997, as amended by TRAI (Amendment) Act, 2000. The report contains an overview of the Telecom Sector and a summary of the key initiatives of TRAI on the regulatory issues with specific reference to the functions mandated to it under the Act. The Audited Annual Statement of Accounts of TRAI has also been included in the report. (DR. RAHUL KHULLAR) CHAIRPERSON Dated: 16th November 2012 Annual Report 2011-12 ❚ iii iv ❚ Annual Report 2011-12 TABLE OF CONTENTS Sl.No. Particulars Page Nos. Overview 1-6 PART - I Policies and Programmes 7-60 A. Review of General Environment in the Telecom Sector B. Review of Policies and Programmes Annexures to Part - I PART - II Review of working and operation of the Telecom Regulatory Authority of India 61-106 PART - III Functions of Telecom Regulatory Authority of India in respect of matters specified in Section 11 of Telecom Regulatory Authority of India Act 107-120 PART - IV Organizational matters of Telecom Regulatory Authority of India and Financial performance A. Organizational matters of Telecom Regulatory Authority of India 121-138 B. Audited Accounts of TRAI for the year 2011-12 139-167 C. Audited Contributory Provident Fund Accounts of TRAI for the year 2011-12 169-189 List of abbreviations used in the compilation 190-194 Annual Report 2011-12 ❚ v vi ❚ Annual Report 2011-12 OVERVIEW 1. The focus of the Telecom Regulatory Authority of India during the year 2011-12 was primarily towards putting in place a new policy framework for licensing, spectrum management, migration to digital addressable systems in broadcasting and consumer protection. In line with the unique position TRAI enjoys amongst the Telecom Regulators in the world, the Authority organised a number of International seminars / roundtable / workshops on various relevant topics. The Authority also hosted a number of delegations from regulators across the world. 2. The work relating to Telecom and Broadcasting sectors during the year was as follows: A. Telecom Sector 3. The Telecom sector continued to register an impressive growth during the year. The number of telephone subscriptions increased from 846.32 million to 951.34 million, registering a growth of 12.41 %. The wireless subscriber base increased by 107.58 million and the wireline subscriber base recorded a decline of 2.56 million. The wireless segment continued to dominate with a total base of 919.17 million connections. The overall teledensity in the country increased to 78.66 from 70.89. The rural teledensity increased to 39.22 from 33.79. The urban teledensity increased to 169.55 from 157.32. 4. The growth in subscriber base resulted in an increase in the gross revenue of telecom services from Rs.1,71,719 crore to Rs.1,95,442 crore during the year, a growth of 13.82%. At the same time, the minutes of usage (MOU) per subscriber per month for GSM and CDMA full mobility service registered a decline from 349 and 263 at the end of March 2011 to 346 and 229 at the end of March 2012, respectively. The average outgo per outgoing minute decreased from Rs.0.51 to Rs.0.49 (a fall of 3.08 %) for GSM full mobility service and the average outgo per outgoing Annual Report 2011-12 ❚ 1 minute remained at Rs.0.47 for CDMA recommendations on spectrum full mobility service during the period. management, licensing, Telecom The Average Revenue Per User per Infrastructure, Green month (ARPU) which at the end of telecommunications and Telecom March 2011 was Rs. 100/- in case of equipment manufacturing. TRAI also GSM full mobility service decreased to notified several regulations relating to Rs.97/- at the end of March 2012. The consumer protection, complaint monthly ARPU in respect of CDMA full redressal and for controlling unsolicited mobility service increased from Rs.66/- commercial communications. to Rs.75/- per month during the same 7. In reference to its recommendations on period. Resultantly, the Earning Before ‘Spectrum Management and Licensing Interest, Tax, Depreciation and Framework’ issued on 11th May, 2010, Amortisation (EBITDA) for the telecom and recommendation on “The 2010 sector in 2011-12 was Rs. 23,221 crore, Value of Spectrum in 1800 MHz Band’ as against Rs. 23,266 crore in the dated 08th February 2011 DoT previous year indicating a decline of requested to review some of them. TRAI 0.19%. The EBITDA margin declined after careful consideration reiterated from 13.95% in 2010-11 to 12.91% in most of its recommendations. Further, 2011-12. The capital employed in the as an incentive, TRAI recommended a sector decreased from Rs.3,37,683 progressive reduction of the USOF crore in 2010-11 to Rs. 3,21,375 crore component of the Licence fee on the in 2011-12 i.e. a decrease of 4.83%. achievement of prescribed roll out 5. During the year, the number of Internet obligations. On Merger & Acquisition subscribers increased to 22.86 million issues TRAI recommended that from 19.67 million registering an annual spectrum holding by the Resultant growth of about 3.19 million. The entity (after M&A) would be limited to number of Broadband connections 25% of the spectrum assigned in a increased from 11.89 million to 13.81 service area. million. The provision of Internet and 8. During this period, Authority issued a Broadband continued to be comprehensive draft guideline for predominantly through digital Unified Licence / Class Licence and subscriber line (DSL) technologies over Migration of existing licences for copper pairs. The rolling out of networks comments of the stakeholders. The using 3G and BWA spectrum has started recommendations on the issue were during the year. finalized subsequently and a 6. Several significant policy consultation process on ‘Exit-Policy’ for recommendations were made by TRAI telecom licences was also initiated during the year which include during the year. 2 ❚ Annual Report 2011-12 9. In pursuance to the Order of the reduction of carbon emission by at least Hon’ble Supreme Court in February 8% of the base year (2011) emissions 2012, Authority issued a pre- by 2015. All equipment, products and consultation paper on 3rd February 2012 services should be energy and for making fresh recommendations for performance assessed and certified by grant of licence and allocation of 2015. The recommendations have since spectrum in 2G band in 22 Service Areas been accepted by the Government. by auction. Subsequently, a 12. The enormous growth of the Consultation Paper was issued on 7th Telecommunications in the country has March 2012. The recommendations on unfortunately not been accompanied by ‘Auction of spectrum’ were issued a corresponding growth of the Telecom subsequently (April-May 2012). equipment manufacturing industry. 10. Recognizing the need for creation of an Resultantly, while only about 12.5% of efficient, robust and cost-effective the demand for telecom equipment is infrastructure for the sector, the being met by domestic production, the Authority recommended a framework Indian products account for a mere 3% for efficient deployment of of the demand. The Authority issued infrastructure, deployment of towers, recommendations on telecom sharing of active and passive equipment manufacturing specifying infrastructure, promoting advanced in- the targets which include meeting 45% building solutions and Distributed of the domestic demand through Antenna Systems, Right of Way policy, domestically manufactured products by Internet Exchange Points, migration to the year 2015 and 80% by the year IPv6, Mobile Virtual Network Operator 2020; increase value addition in (MVNO) and framework for rural domestic manufactured products to telecom. 35% by the year 2015 and 65% by the year 2020. 11. India is the second largest mobile market in the world. There are currently 13. TRAI initiated a process of preparing for about 400,000 telecom towers in the consultation and eventual country, involving significant diesel establishment of appropriate policy and consumption. To ensure reduction in regulatory framework for Next carbon footprint, the Authority in its Generation Network (NGN). TRAI has recommendations on “Approach also started publishing a monthly towards Green telecommunications” technology magazine that would focus provided that 50% of all rural towers on different aspects of and 20% of the urban towers should be telecommunications technology for powered by hybrid power by 2015 and dissemination among different that all service providers should aim at stakeholders. Annual Report 2011-12 ❚ 3 14. A major initiative of the Authority in the 17. With a view to protecting the interest year 2011-12 was the work relating to of telecom consumers and particularly control of unsolicited commercial the prepaid consumers, the Authority communications, popularly known as has issued the Telecom Consumers pesky calls / SMS. “The Telecom Protection Regulations, 2012. Among Commercial Communications Customer other things, these Regulations have Preference Regulations were simplified and standardised the prepaid implemented w.e.f. 27th September vouchers offered by the service 2011. This has resulted in significant providers into three categories- Plan reduction in unwanted commercial Voucher, Top Up Voucher and Special calls/ SMS.