COAI Disappointed On Captive Network Decision; Seeks Level Playing Field For Orderly Growth

Disappointed at the government's decision on captive private networks, industry body COAI has demanded a level playing field, arguing that solution providers should also pay the license fee and GST at the rates applicable for telcos on the billed amount of revenue and that such captive networks must remain "truly" private and isolated, and adhere to security norms.

In a letter to the Telecom Department, COAI argued that since a decision to enable the captive networks through direct spectrum assignment has been taken, the government must now restrict scope of such non-public networks to machine-to-machine communication inside the specific premise and plant automation only.

Such networks must ensure they do not cause any interference to public networks.

COAI said that from a national security perspective, these networks should comply with the prescribed subscriber verification norms, so as to ensure adequate verification and traceability of every user.

A periodic audit to ensure compliance must be carried out said COAI, whose members include Reliance Jio, Bharti Airtel, and Vodafone Idea.

The captive networks should be assigned spectrum only in non-IMT/5G/Commercial bands, COAI said cautioning that not doing so would result in a shortage of harmonized spectrum for telcos' networks, inefficient utilization of the precious spectrum, and loss to the exchequer.

"At present, only 330 MHz in mid-band and 2.85 GHz in mmWave has been put to auction. If the other bands which are likely to be identified for IMT are not reserved/ assigned to TSPs, it will constrain TSPs (telecom service providers) to properly plan their network to meet the customer demand in mid and long-term," COAI said in its letter to Telecom Secretary, K Rajaraman.

However, TRAI has "ignored the above issues" while recommending 3.7-3.8 GHz, 4.8-4.99 GHz and 28.5-29.5 GHz bands for captive private networks, COAI said.

COAI further suggested that captive private networks should only be assigned spectrum in the band of the non-mobile service, and no IMT spectrum band should be allocated for such private networks.

"Further technologies 2G, 3G, and 4G should not be permitted. DOT (Department of Telecom) should conduct a periodic assessment to ascertain that the allocated spectrum is being fully used," it said in its submissions.

System integrators and other intermediaries should not be allocated such spectrum, Cellular Operators' Association of India (COAI) Director-General, SP Kochhar said in the letter dated June 18.

Private networks' set-up using a dedicated spectrum must be bound by the same security conditions as applicable for telcos, that is storing call or data records for 2 years, command logs for 3 years, keeping records of software updates, data localization, remote access only from in-country and no remote access outside of India, the association wrote.

"Some of the CNPN may be very large, handling a large number of users/employees and machines for which Lawful interception become important. They should also be liable to install LIS/LIM in line with obligations of TSPs," according to COAI.

These networks must remain as truly private and isolated, COAI asserted, flagging the likelihood that enterprises obtaining the spectrum for captive networks may be tempted to connect multiple offices.

"Such interconnection shall not be allowed...Scope of CNPN must be limited to the very intent of provision of CNPN, that is M2M communication inside the premises and plant automation," COAI said.

Captive networks must be established by the end-user and not by third parties, it emphasized.

"Therefore, like the unified licensee, CNPN owners must own all equipment installed for the purpose of CNPN and not obtain on lease/rental from the third parties/intermediaries. Any third party who intends to provide/install and operate the network of CNPN must obtain the spectrum through the same process as TSPs," COAI said.

It has also emphasized that use cases meant for the masses cannot be part of captive networks, and captive networks must not be connected to any foreign location/data center for the purpose of redundancy/disaster recovery/remote management.

COAI also said that since "such solutions can be provided by licensed TSPs having spectrum acquired through auction in a transparent manner, the solution provider should pay the license fee and GST at the rates applicable for TSPs on the billed amount of revenue to ensure level playing field".

"In case of a network installed for internal use, equivalent commercial value should be used. In both cases, it should be ensured that there is no under-invoicing and a case of diversion of funds does not arise. Alternatively, revenues earned by TSPs from the provision of CPN should be exempted from payment of license fee and GST," COAI said.

It also made a pitch for 'same service same rule', saying this will ensure investors' confidence and continuous investments in the sector for the roll-out of future telecommunication networks.

"Rules applicable for CNPN should be made applicable for CPN/ PN provided by licensed TSPs. Otherwise, no investor will invest in a taxed portfolio when the same investment can be made without any tax burden through the CNPN route," COAI said.

TRAI should do initial and annual analysis and study, and such networks must provide the data sought by the regulator from time to time.

"CNPN should comply with the provisions of National Directive on Security as applicable to TSPs including sourcing of equipment from Trusted Source. Further, applicable Guidelines/security instructions/ Acts/ Regulations should be made applicable and enforceable for CNPN networks in India," COAI said.

These steps should be taken to ensure orderly growth of the sector and to maintain investor confidence.

"Accordingly, any guidelines for setting up Captive Non-Public Network (CNPN) by obtaining spectrum directly from DoT should be issued only after a demand study by DoT and subsequent recommendations of TRAI," COAI said.