TRAI Releases M2M Recommendations Telecos Can Provide IOT Within Specified Circle

M2M

All existing telecom service providers can be allowed to provide Machine-to-Machine (M2M) or IoT solutions within their specified circle of operations, telecom regulator TRAI said in its recommendations. License holders can use existing spectrum to provide IoT services while TRAI is also considering de-licensing spectrum under the 867-868 MHz, 915-935 MHz and 57-64 GHz bands for M2M and IoT.

The regulator has also put forward recommendations on SIM roaming, Quality of Service levels, privacy, security, and other aspects of IoT/M2M. Below is a lowdown of the recommendations Note that these recommendations will be reviewed and approved by the Department of Telecommunications (DoT) and are not yet enforced.

1) Who can provide M2M/IoT services?                    

  • DoT license holders including VNOs: Like pointed out above all basic service (data, voice) licensees, Virtual Network Operators (VNOs), and ISPs are allowed to provide M2M service in India “including on unlicensed band, within the area of their existing authorizations, barring M2M cellular services,” TRAI said.
  • Critical IoT/M2M services should be provided under licensed spectrum: The government, through DoT, should identify critical services and differentiate them from non-critical services, the regulator said. IoT and M2M applications in healthcare, remote surgery, driverless cars etc. require high QoS, ultra reliability, very low latency, very high availability and accountability. Therefore, these critical services should be provided only by “robust wired optical fiber, copper network or LTE capable access networks,” TRAI added.
  • Each sector can have its own IoT regulations: IoT and M2M services are still at a very nascent stage in India. Industry regulators (apart from TRAI) like Central Drug Standards Control Organization, National Highways Authority of India, Inland Waterways Authority of India, Central Electricity Regulatory Commission, etc. and Ministry of Law and Justice can constitute their own regulations and policies regarding M2M and IoT solutions.
  • New M2M Service Providers (MSP) category: An IoT or M2M service provider can also be a telecom service provider and could also provide services for both enterprises and home users. TRAI wants M2M/IoT providers to identify themselves as an MSP legally. Because some telecom providers might also provide telebanking, e-commerce, call centre hosting, vehicle tracking, etc. but these will be classified under Other Service Providers (OSP) list. Exclusive guidelines for M2M Service Provider (MSP) Registration should be issued. MSPs should also provide details of the connectivity provider who would be providing connectivity to their M2M application, TRAI added.

2) Security and Privacy recommendations for IoT/M2M providers

  • “Security by design” principle: TRAI calls upon the government (DoT) to create fresh guidelines for manufacturing and importing of M2M/IoT devices to India. These guidelines should look “the amount and sensitivity of data collected and the costs of remedying the security vulnerabilities.” At the same time, “low-risk” IoT devices (like LED bulbs) need not be burdened with too much regulation, so the government could look at creating a “graded” level of security certification for devices.
  • Standards for IoT and M2M systems: Since most of the M2M applications “would be operating in (an) unlicensed band, the government should issue specific standards for devices to be used in the M2M ecosystem, in line with international standards organizations,” TRAI added. For this, the regulator suggests setting up an independent IoT/M2M certification body which certifies both hardware and software segments.
  • Special Security recommendation for North Eastern and J&K: “Suitable security mechanism similar to the existing mobile networks shall be put in place by the DoT for the Border States like J&K and NE areas, if deemed fit,” TRAI said.

3) Entry Fee, Bank Guarantee, Network requirements etc. for M2M and IoT license

Existing and new operators can get licenses from the DoT under different categories including:
-UL (M2M) Category ‘A’ for National area
-UL (M2M) Category ‘B’ for Telecom circle/ Metro area
-UL (M2M) Category ‘C’ for city bases coverage

4) Spectrum availability, usage and SIM requirements

  • Spectrum allocation should be technology and service neutral: No separate spectrum band should be allocated exclusively for M2M services, TRAI said.
  • Requirement of fresh spectrum: Requirement of additional licensed spectrum for access services to meet the projected influx of connected devices due to M2M communication will be revisited by the Authority after 2019. TRAI added “ licensed spectrum available with the telecom service providers as on date as well as the spectrum likely to be made available in the near future is sufficient” to meet spectrum requirements for IoT and M2M.
  • Imported SIM cards can be allowed for M2M/IoT: “It should not be mandatory to use only domestically manufactured SIMs in M2M. Embedded SIMs with standard specifications can be imported and relevant information shall be submitted by importer while import of the devices/SIMs,” TRAI said.

5) Roaming and sharing arrangements

  • National roaming for M2M/ IoT shall be under forbearance and the rates can be set under current Telecom Tariff Orders (TTOs) for access service (voice/data) license holders, TRAI said. TRAI, however, added that it will review and issue separate Telecom Tariff Orders (TTOs) for M2M and IoT providers “at an appropriate time in future, if deemed fit.”
  • Sharing arrangements: Telecom service providers (who want to provide IoT/M2M) can separately enter into commercial agreements to meet their roaming requirements for subscribers within India and outside India in.

TRAI mulls phased spectrum auctions for 2017

TRAI is asking whether spectrum auctions need to be held this year considering the fact that around 60% of the spectrum remained unsold last year, in a new consultation paper (pdf). Telcos had unanimously boycotted the 700 MHz and 900 MHz spectrum last year (meant for 4G LTE) stating that prices were set ‘too high’. The DoT had considered conducting a fresh auction this year, but TRAI says that the spectrum acquired by telcos in 2016 itself is yet to be deployed fully.

The regulator is also asking whether the entire spectrum needs to be put to auction in 2017 or should it be done in phased manner. Should auction for some of the bands be held now and for other bands later based on the development of ecosystem etc.? TRAI asked in the consultation paper.

Why TRAI is considering a phased auction process this year

TRAI is also concerned about the current industry scenario which is highly competitive with multiple consolidations taking place. “Some (telcos) have filed merger of their companies/licenses while a few licensees have traded their entire spectrum holding and closed their services,” it pointed out in the paper. The DoT is also yet to receive Rs 3.08 lakh crore in deferred payments from telcos, TRAI said. Operators were given an alternative payment structure stretching over 18 years to reduce the financial burden. The telecom industry also owes about Rs 4.60 lakh crore to various financial institutions and banks, TRAI added in its consultation paper.

Telcos, stakeholders had expressed concerns prior to 2016 auctions

The 2016 spectrum auctions concluded after 31 rounds and 5 days of bidding. The total worth of spectrum sold stood at Rs 65,789 crore. The government was initially targeting Rs 56,00,000 crore based on the reserve prices set by the TRAI in late January 2016. But only 965 MHz of the total 2,354.55 MHz of spectrum put out in 2016 was sold. Airtel, Telenor and GSMA, a worldwide body of mobile operators has red-signalled TRAI’s reserve prices which were set at Rs 11,845 crore for a single unit of the premium 700MHz band. This was four times more than that of the 1,800 MHz band’s discovered auction price in 2015.

Available spectrum bands for 2017 auctions

TRAI is considering auctioning off spectrum under 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, and the 2500 MHz, spectrum bands. This year will also see the addition of spectrum in the 3300-3400 MHz (meant for ISPs, now being opened for telcos) and 3400-3600 MHz (meant for defence and satellite use). More on this part below.

Overall availability for 2017 auctions:

3300-3400 MHz Band

Currently, in India, the 3300-3400 MHz bands are being used by multiple Internet Service Providers (ISPs) in various circles across the country. However, DoT suggested that the entire spectrum under 3300-3400 MHz band could be made available for telcos as well. But this will require “relocation/shifting of existing operations of the ISPs in 3300-3400 MHz band to other bands.”

DoT is also in the process of vacating more spectrum under this band, and plans to complete it by the end of this year. It has proposed to include a quantum of 100 MHz in all the 22 circles under the 3300-3400 MHz band for 2017 auctions.

3400-3600 MHz Band

The 3400-3600 MHz Band is generally used for research, defence and satellite communication purposes. Out of the quantum of 200 MHz spectrum available in this band, 25 MHz is being used by ISRO’s for its Indian Regional Navigation Satellite System (IRNSS). The remaining 175 MHz (3425 MHz – 3600 MHz) spectrum is available for this year’s auctions, TRAI added.

Questions for consultation

TRAI has issued a 19 point questionnaire with this consultation paper.

  • 1 (a) In your opinion when should the next access spectrum auction be held?
    (b) If the spectrum auction is held now, should the entire spectrum be put to auction or should it be done in phased manner i.e. auction for some of the bands be held now and for other bands later based on development of eco system etc? Please give your response band wise and justify it.
  • Q.2 Do you agree that in the upcoming auction, block sizes and minimum quantity for bidding in 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz bands, be kept same as in the last auction? If not, what should be the band-wise block sizes? Please justify your response.
  • Q.3 What should be optimal block sizes and minimum quantity for bidding in
    (a) 3300-3400 MHz and
    (b) 3400-3600 MHz bands, keeping in mind both the possibilities i.e. frequency arrangement could be FDD or TDD? Please justify your response.
  • Q.4 Do you think that the roll-out conditions for 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz stipulated in the last auctions held in October 2016 are appropriate? If no, what changes should be made in the roll out obligations for these bands?
  • Q.5 Should there be any rollout obligations in 3300-3400 MHz and 3400-3600 MHz bands? If yes, what should these be? Please justify your response.
  • Q.6 Is there a need to prescribe spectrum cap in bands 3300-3400 MHz and 3400-3600 MHz? What spectrum cap provisions should be kept for 3300-3400 MHz and 3400-3600 MHz spectrum bands? Should these bands be treated as same or separate bands for the purpose of calculation of spectrum cap?
  • Q.7 Whether the prices revealed of various spectrum bands in the October 2016 auction can be taken as the value of spectrum in the respective band for the forthcoming auction in the individual LSA? If yes, would it be appropriate to index it for the time gap since the auction held in October 2016. If indexation is to be done then at what rate?
  • Q.8 If the answer to above question is negative then, whether as per the practice adopted by TRAI in the previous valuation exercise, the valuation for respective spectrum bands be estimated on the basis of various valuation approaches/methodologies (Referred in Annexure 3.3) including those bands (in a LSA) for which no bids were received or spectrum was not offered for auction?
  • Q.9 Whether the value of 700 MHz spectrum should be derived by relating it to value of other bands by using technical efficiency factor? If yes, with which spectrum band this band be related and what efficiency factor or formula should be used? Please justify your views with supporting documents.
  • Q.10 Else, what valuation approach should be adopted for the valuation of 700 MHz spectrum band? Please support your valuation approach with detailed methodology and related assumptions.
  • Q.11 Whether the value of October 2016 auction determined prices be used as one possible valuation for 2300 MHz spectrum for the current valuation exercise? If yes, would it be appropriate to index it for the time gap since the auction held in October 2016? Please justify your response with supporting documents/ report(s), if any.
  • Q.12 Whether the value of the 2300 MHz spectrum should be derived by relating it to the value of any other spectrum band by using technical efficiency factor? If yes, which band and what rate of efficiency factor should be used? If no, then which alternative method should be used for its valuation? Please justify your response with rationale and supporting documents.
  • Q.13 Whether the valuation of the 2500 MHz spectrum should be equal to value of similarly placed spectrum band? If no, then which alternative method should be used for its valuation? Please justify your response with rationale and supporting documents /report(s)/ detailed methodology, if any.
  • Q.14 Whether the valuation of the 3300-3400 MHz spectrum bands and 3400-3600 MHz spectrum bands should be derived from value of any other spectrum band by using technical efficiency factor? If yes, what rate of efficiency factor should be used? If no, then which alternative method should be used for its valuation? Please justify your response with rationale and supporting documents.
  • Q.15 Is there any other valuation approach than discussed above or any international auction experience/ approach that could be used for arriving at the valuation of spectrum for 700/800/900/1800/2100/2300/2500/3300-3400/3400-3600 MHz bands? Please support your suggestions with detailed methodology and related assumptions.
  • Q.16 Whether value arrived at by using any single valuation approach for particular spectrum band should be taken as the appropriate value of that band? If yes, please suggest which single approach/ method should be used. Please justify your response.
  • Q.17 In case your response to Q16 is negative, will it be appropriate to take the average valuation (simple mean) of the valuations obtained through the different approaches attempted for valuation of a particular spectrum band, as adopted by the Authority since September 2013 recommendations? Please justify your response.
  • Q.18 Is it appropriate to recommend Reserve price as 80% of the value? If not, then what should be the ratio adopted between the reserve price for the auction and the valuation of the spectrum in different spectrum bands and why?
  • Q.19 Whether the realized / auction determined prices achieved in the October 2016 auction for various spectrum bands can be taken as the reserve price in respective spectrum bands for the forthcoming auction? If yes, would it be appropriate to index it for the time gap since the auction held in October 2016? If yes, then at which rate the indexation should be done?

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