Part I
GENERAL CONDITIONS
1. Ownership of the Licensee Company
1.1 Foreign direct investment up to 100% with 49% under automatic route and beyond 49% through Foreign Investment Promotion Board (FIPB) route, subject to observance of licensing and security conditions by the licensee, as well as investors, as notified by the Department of Telecommunications (DoT) from time to time.
(i) Both, direct and indirect foreign investment in the licensee company shall be counter for the purpose of calculating FDI.
(ii) While approving the investment proposals, the FIPB may take into account security concerns. The licensee company/Indian promoters/investment companies, including their holding companies, shall comply with relevant provisions of the extant FDI policy of the government.
1.2 The licensee shall declare compliance with license and security conditions, and the Indian and foreign equity as on 1st January and 1st July, by 7th January and 7th July respectively to the licensor. This is to be certified by the licensee company’s company secretary or statutory auditor.
1.3 The licensee shall also ensure that any change in shareholding shall be subject to all necessary statutory requirements.
1.4 A change in the name of the licensee company shall be permitted in accordance with the provisions of the Indian Companies Act, 1956.
1.5 The investment approval by FIPB shall envisage the conditionality that Company would adhere to licence Agreement.
1.6 FDI shall be subject to laws of India and not the laws of the foreign country/countries.
1.7 Except prior permission in writing by the licensor, there shall be no change in the foreign promoter(s) or their equity participation . Normally there will be no objection in substituting an existing foreign promoter by another foreign promoter of similar standing subject to the total foreign equity being below the prescribed limit.
1.8 The licensee company may, under intimation to Licensor replace a promoter(s) by another promoter(s) as stipulated below:
(i) the Indian promoter(s) or person(s) acquiring the foreign promoter’s shareholding ; and
(ii) transfer of equity between Indian promoters or person(s) including Indian employees of the company .
1.9 The licensee shall also ensure that any changes in share holding shall be subject to all applicable statutory permissions.
Explanation : In case of company listed at a stock exchange(s), shares bought and sold by way of any transaction through the stock exchange(s) where the Company shares or depository receipts are listed will not be treated as change of equity for the purpose of this clause subject to total prescribed foreign equity ceiling unless otherwise it leads to change in management control within the definition of SEBI Act.
1.10 The merger of Indian companies shall be permitted.
1.11 Change in the name of the licensee company shall be permitted in accordance with the provisions under the Indian Companies Act, 1956.
2. Scope of the License
2.1 This license is granted to provide services, as defined in Clause 2.2 of this license agreement, on a non-exclusive basis in category ‘A’/‘B’ ______________________service area, and others can also be granted a license for the said service in the same service area.
PROVIDED FURTHER that the licensor, of its own, or through a designated operator, shall always have a right to operate the service anywhere in India, including the service area for which this licence is granted. Details of various service areas are enclosed as Annexure VIII.
2.2 The following services can be provided within the scope of the license for internet services:
(i) Internet Access: Internet access means the use of any device/technology/methodology to provide access to the internet, including IPTV and all content available without access restrictions on the internet, including web hosting and web co-location, but it does not include the service provider’s configured closed user group services (VPN). The content for IPTV shall be regulated as per the law in force from time to time. The permission to provide IPTV services shall be granted on an application made by the licensee, provided the licensee has a networth of Rs. 100,00,00,000 (Rupees 100 Crores) or more.
(ii) Internet Telephony: Internet telephony means a service to process and carry voice signals, offered through the public internet, by the use of personal computers (PC’s) or IP-based customer premises equipment (CPE) connecting the following :
a) PC to PC; within or outside India
b) PC/device/adapter conforming to the standards of any international agency (like ITU or IETF etc. in India) to PSTN/PLMN abroad.
c) Any device/adapter conforming to the standards of international agencies (like ITU, IETF etc.) connected to an internet service provider (ISP) node with a static IP address, to a similar device/adapter, within or outside India.
Explanation : Internet telephony is a different service in its scope, nature and kind, from real-time voice services offered by other licensed operators like basic service operators (BSO), cellular mobile service operators (CMSO) and unified access service operators (UASO).
(iii) Internet telephony, as described in condition (ii) above only is permitted.
(iv) The addressing scheme for internet telephony shall only conform to the IP addressing scheme of the Internet Assigned Numbers Authority (IANA), exclusive of the national numbering scheme/plan applicable to subscribers of basic/cellular telephone services. The translation of E.164 number/private number to an IP address allotted to any device and vice versa by the licensee. to show compliance with the IANA numbering scheme. is not permitted.
(v) The licensee is not permitted to have PSTN/PLMN connectivity. Voice communications to and from a telephone connected to PSTN/PLMN and following E.164 numbering is prohibited in India.
(vi) Unified messaging services (UMS), without any additional performance bank guarantee (PBG), within the scope of (i) to (ii) above, can be provided.
(vii) The licensee shall ensure that bulk encryption is not deployed by internet service providers (ISP’s). Further, individuals/groups/organisations are permitted to use encryption up to 40-bit key length in symmetric key algorithms, or its equivalent in other algorithms, without obtaining permission from the licensor. However, if encryption equipment higher than this limit is to be deployed, the individual/group/organisation shall obtain the prior written permission of the licensor, and deposit the decryption key, split into two parts, with the licensor.
(viii) Internet services to any VSAT subscriber (who could be served by a shared hub commercial service provider or a captive private VSAT network) can be provided if the VSAT is located within the service area of the ISP. For this purpose, a direct interconnection of VSAT or VSAT-hub, through leased lines obtained from an authorised provider, to the internet service provider’s (ISP’s) node/server shall be permitted only for the flow of internet traffic. The ISP shall provide to the licensor, a monthly statement of VSAT subscribers served, with their locations and the details of leased line interconnection with the VSAT hub. The VSAT hub, however, need not be located in the service area of the ISP.
(ix) The licensee may install, operate and commission an international internet gateway, using satellites or submarine cables as the medium, after obtaining security clearance/approval from the licensor.
(x) A licensee with an international internet gateway is allowed to sell internet bandwidth to other licensed internet service providers.
2.3 All subscribers, except dial-up subscribers, have to be within the service area
2.4 The licensee shall make its own arrangements for the infrastructure involved in providing the service, and shall be solely responsible for the installation, networking and operation of necessary equipment and systems, treatment of subscriber complaints, issuance of bills to its subscribers, collection of revenue and attending to claims and damages arising out of its operations.
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3. Duration of the License
3.1 This license shall be valid for a period of 15 (fifteen) years from the effective date of the license, unless revoked earlier.
4. Extension of the License
4.1 The licensor may extend, if deemed expedient, the period of license by 5 (five) years at one time, upon a request made by the licensee, if made during the 14th (fourteenth) year of the license period, on terms mutually agreed to. The decision of the licensor shall be final in regard to the grant of extension.
5. Modifications in the Terms and Conditions of the License
5.1 The licensor reserves the right to modify, at any time, the terms and conditions of the license, if in the opinion of the licensor, it is necessary or expedient to do so in public interest, or in the interest of the security of the state, or for the proper conduct of telegraphs. The decision of the licensor shall be final and binding in this regard.
6. Restrictions on the Transfer of License
6.1 The licensee shall not, without the prior written consent of the licensor as described below, assign or transfer this license, either directly or indirectly, in any manner whatsoever to a third party, or enter into any agreement for sub-licensing and/or partnership relating to any subject matter of the license to any third party, either in whole or in part (i.e. no sub-leasing/partnership/third party interest shall be created).
PROVIDED that the licensee can always employ or appoint agents/franchisees and employees for the provision of services.
6.2 Intra-service area mergers and acquisitions, as well as the subsequent transfer of licenses, may be allowed.
6.3 Further, the licensee may transfer or assign the license, with the prior written approval of the licensor, to be granted on fulfilment of the following conditions, and if no compromise in competition otherwise occurs in the provisions of telecom services:
(i) When a transfer or assignment of the license is requested, in accordance with the terms and conditions, upon fulfilment of the procedures contained in the tripartite agreement, if already executed amongst the licensor, licensee and lenders; or
(ii) Whenever amalgamation or restructuring (i.e. merger or demerger is sanctioned and approved by the High Court or Tribunal as per the law in force in accordance with the provisions; more particularly Sections 391 to 394 of Companies Act, 1956); and
(iii) The transferee/assignee is fully eligible, in accordance with the eligibility criteria contained in any other document for the grant of a fresh license in that area, and shows its willingness in writing to comply with the terms and conditions of the license agreement, if any; and
(iv) All the past dues are fully paid till the date of transfer/assignment, by the transferor company and its associate(s)/sister concern(s)/promoter(s) and thereafter, the transferee company undertakes to pay all future dues, inclusive of anything remained unpaid in the past period by the outgoing company.
7. Provision of Service
7.1 The licensee shall be responsible for, and is authorised to own, install, test and commission all the applicable systems for the provision of internet services under this license agreement. DTH service providers shall be permitted to provide ‘receive only internet services’, after obtaining an internet service provider (ISP) licence from the Department of Telecommunications. Further, ISP licensees shall be permitted to allow customers to download data through DTH after obtaining necessary permissions from the competent authority. DTH service providers will also be permitted to provide bi-directional internet services after obtaining a VSAT and ISP license from the DoT.
7.2 For the purpose of providing the service, the licensee shall install its own suitable equipment so as to be compatible with other eligible licensed service providers’ equipment, and connect it directly, or through any of the authorised licensed service providers, to the internet gateway for routing of international internet traffic. ISP’s are also allowed to set up international gateways after obtaining security clearance/approval from the licensor.
7.3 In the process of operating the service, the licensee shall be responsible for:
(i) the installation of internet nodes (i.e., routers/servers etc.)
(ii) the proper operation and maintenance of its network infrastructure.
7.4 If the licensee has, in addition, leased or rented any telecommunications resource from a licensed telecom service provider, for the purposes of providing the service and networking its geographically dispersed equipment, such resources will be a matter between the ISP and the service provider(s).
8. Delivery of the Service
8.1 The licensee shall commission the applicable systems within 24 (twenty four) months from the effective date of the licence and offer the services on demand to its customers. The date of commercial launch would be the date on which commercial services are provided to the subscriber, and shall be intimated to licensor within 24 (twenty four) hours of such launch.
8.2 The licensee shall be responsible for the installation, testing and commissioning of all the equipment to provide the services. It will be the responsibility of the licensee to obtain IP addresses, domain names etc. from the competent authority. However, all performance tests required for successful commissioning of the service may be carried out by the licensor, if it so desires, before the services are commissioned for public use. The licensee shall supply all necessary literature, drawings and installation materials regarding the equipment installed for the commissioning of services. The licensee shall supply all the tools, test instruments and other accessories to the testing party of the licensor to conduct the tests.
8.3 In case the licensor chooses to conduct the performance test, any delay caused due to rectification of deficiencies, if any, in the commissioning/provision of services, will be to the account of the licensee.
8.4 The licensee indemnifies the licensor against all actions brought against the licensor for breach of privacy of, or the unauthorised interruption of data transmitted by, the subscribers.
9. Requirement to Furnish Information
9.1 The licensee shall furnish to the licensor/TRAI, on demand, in the manner and as per the time frames, such documents, accounts, estimates, returns, reports or other information, in accordance with rules/ orders as may be prescribed from time to time. The licensee shall also submit information to TRAI as per any order, direction or regulation issued from time to time under the provisions of TRAI Act, 1997 or an amended or modified statute.
9.2 The licensee shall, in no case, permit services to any telecom service provider (including those other service providers (OSP’s) who do not require a license under Section 4 of the Indian Telegraph Act, 1885) whose licence is either terminated or suspended or not in operation at that point of time. Where connectivity already exists, the licensee shall be obliged to disconnect or sever connectivity immediately, without loss of time, upon receipt of any reference from the licensor in this regard. The disconnection shall be made effective within 1 (one) hour of receipt of such reference.
9.3 The licensor shall provide to the licensor, a quarterly report, indicating the details of ISP nodes or points of presence (POP’s) with their location and number of broadband/leased/dial-up subscribers. In case new nodes are to be installed, 1 (one) month’s prior notice is required to be given to the licensor.
9.4 The licensee shall provide to the licensor, on a regular basis, the volume of internet telephony traffic flowing through its network.
9.5.1 The licensee, before providing IPTV, will give a self-certified declaration to the licensor, Ministry of Information & Broadcasting, and the Telecom Regulatory Authority of India, giving details of the license number and service are under which the IPTV service is being provided/started, the start date, the areas being covered, details of network infrastructure etc.
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10. Suspension, Revocation or Termination of the License:
10.1 The licensor reserves the right to suspend the operation of this license, in whole or in part, at any time, if, in the opinion of the licensor, it is necessary or expedient to do so in public interest or in the interests of the security of the state, or for the proper conduct of the telegraph. The licence fee payable to the licensor will not be required to be paid for the period during which the operation of this license remains suspended in whole. If the situation so warrants, it shall not be necessary for the licensor to issue a notice seeking comments of the licensee for this purpose, and the decision of the licensor shall be final and binding.
PROVIDED that the licensor shall not be responsible for any damage or loss caused or arisen out of the aforesaid action.
PROVIDED FURTHER that the suspension of the license will not be a cause or ground for extension of the period of the license, and the suspension period will be taken as period spent.
10.2
(i) The licensor may, without prejudice to any other remedy available for the breach of any conditions of this license, by a written notice of 60 (sixty) calender days from the date of issue of such notice to the licensee at its registered office, terminate this license under any of the following circumstances, if the licensee:
(a) fails to perform any obligation(s) under the license, including timely payments of fees and other charges due to the licensor;
(b) fails to rectify, within the time prescribed, any defect/deficiency/correction in services/equipment as may be pointed out by the licensor.
(c) goes into liquidation or is ordered to be wound up.
(d) is recommended by TRAI for termination of the license for non-compliance with the terms and conditions of the license.
(ii) The licensor may impose a financial penalty, not exceeding Rs. 1,00,00,000 (Rupees One Crore) for the violation of terms and conditions of this license agreement.
10.3 In the event of license termination, the amount equivalent to the performance bank guarantee (PBG) shall be recovered by encashing the PBG, and the money so recovered shall be forfeited. The licensee shall not be entitled to any damages or compensation for such termination.
10.4 The licensor reserves the right to revoke the license at any time, in the interest of the public, by giving a notice of 60 (sixty) calender days from the date of issue of such notice.
10.5 The licensor reserves the right to take over the entire services, equipment and networks of the licensee or revoke/terminate/suspend the license in the interest of the public, or national security or in the event of national emergency/war, or low intensity conflict, or similar types of situations. Further, the licensor reserves the right to keep any area out of the operation zone of the service if implications of security so require.
10.6 Breach or non-fulfilment of the license conditions may come to the notice of the licensor through complaints or as a result of regular monitoring. Wherever considered appropriate, the licensor may conduct an inquiry, either suo moto or on a complaint, to determine whether there has been any breach in complying with the terms and conditions of the license by the licensee, and upon such inquiry, the licensee shall extend all reasonable facilities and shall endeavour to remove the hindrance of every type.
10.7 It shall be the responsibility of the licensee to maintain quality of service (QoS), even during the period when the notice for surrender/termination of the license is pending, and if the QoS is not maintained during the notice period, it shall be liable to pay damages. The licensee shall also be liable to pay the license fee till the end of the notice period, and more specifically, till the date on which the surrender/termination becomes effective.
10.8 Termination for Insolvency: The licensor may, at any time, terminate the license without compensation to him, if the licensee becomes bankrupt or otherwise insolvent, or applies for being adjudicated as insolvent/bankrupt, provided such termination shall not prejudice or affect any right of action that has accrued or will accrue thereafter to the licensor. The right of termination will arise on the licensee being adjudicated, or applying for being adjudicated, as bankrupt.
10.9 Termination for Convenience: If the licensee desires to surrender the license, it shall give an advance notice of 30 (thirty) days to the licensor to this effect. If the service is in operation, the licensee shall also intimate to its subscribers the consequential withdrawal of service, by serving a 15 (fifteen) days’ notice to them. The financial liability of the licensee company for termination of the license for convenience shall be as below:
(i) After start of service: No surrender charge is payable. However, if during the notice period, an acceptable level of service is not delivered to the customer, the licensee shall forfeit all claims on the performance bank guarantee (PBG), which shall be encashed, and the amount shall be adjusted towards damages.
(ii) Before start of service: Licensees who have completed the allocated period to roll-out internet services, counted from the date of issue of the ISP license, and have not yet rolled out their services, have the option to surrender the license by paying 5% (five percent) of the PBG as a ‘surrender charge’ within 6 (six) months of such notification. Further, a licensee who has not completed the allocated period to roll-out internet services, counted from the date of issue of the ISP license, and wants to surrender the ISP license, may be permitted to do so within 6 (six) months from the date of such notification by paying 2.5% (two and a half percent) of the PBG as a surrender charge.
10.10 The licensee shall not, in any manner whatsoever, transfer the licensing rights granted to it to any other party, without the written consent of the licensor. Any violation shall be construed as a breach of license, and the license may be terminated in accordance with the provisions as contained in Clause 10.2 above.
11. Actions Pursuant to Termination of License
11.1 If, under the license agreement, any material event occurs which would entitle the licensor to terminate the license agreement, the licensor shall proceed in accordance with the terms and conditions provided in the tripartite agreement read with the license agreement, wherever such agreement is executed and signed. In cases where no such agreement is signed, the action will be taken as per the clause given below.
11.2 On termination, surrender or expiry of the license, the bank guarantee (BG) shall be released after a minimum period of 6 (six) months to the licensee, only after ensuring the clearance of all dues that the licensee is liable to pay to the licensor. In case of failure on the part of the licensee to pay the amounts due to the licensor, the outstanding amounts shall be realised through encashment of the BG, without prejudice to any other action(s) for recovery of the amounts due to the licensor, without any further communication to the Licensee.
12. Force Majeure
12.1 If, at any time during the continuance of this license, the performance, in whole or in part, by either party, of any obligation is prevented or delayed, by reason of war, hostility, acts of the public enemy, civic commotion, sabotage, acts of state, or directions from a statutory authority, explosion, epidemic, quarantine restriction, strikes and lockouts (not limited to the establishments and facilities of the licensee), fire, floods, natural calamities or any act of God (hereinafter referred to as ‘event’), provided notice of the happening of any such event is given by the affected party to the other, within 21 (twenty one) calender days from the date of occurrence thereof, neither party shall, by reason of such event, be entitled to terminate the license, nor shall either party have any such claims for damages against the other, in respect of such non-performance or delay in performance.
Provided that the services under the license agreement shall be resumed as soon as practicable after such event comes to an end or ceases to exist. The decision of the licensor as to whether the service may be resumed (and the time frame within which the service may be resumed) or not, shall be final and conclusive.
12.2 However, the force majeure events noted above will not in any way cause extension in the period of the license.
12.3 While it will not normally be a ground for non-payment of licence fee, the liability for payment of licence fee for such inoperative period(s) due to the force majeure clause may, however, be reduced/waived by the licensor, at its discretion, based on the circumstances of the event.
13. Set-off Clause
13.1 In the event any sum of money or a claim becomes recoverable from, or payable by, the licensee to the licensor, either against this licence agreement or otherwise in any manner, such money or claim can (without restricting any right of set-off for counter-claim given or employed by law) be deducted or adjusted against any amount or sum of money due then, or which, at any time thereafter, may become due to the licensee under this licence agreement or any other agreement or contract between the licensor and the licensee.
13.2 The aforesaid sum of money payable to the licensee company shall include any security which can be converted into money.
13.3 After exercising the right of set-off, a notice shall always be given immediately by the licensor to the licensee.
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14. Way Leave
14.1 The licensee company shall make its own arrangements for the right of way (ROW). However, the central government may issue necessary notifications conferring requisite powers upon the licensee for the purpose of placing telegraph lines under Part III of the Indian Telegraph Act, 1885.
PROVIDED that the non-availability of the ROW, or any delay in getting permissions/clearance from any agency, shall not be construed or taken as a reason for non-fulfilment of the roll-out obligations, and shall not be taken a valid excuse for not carrying out any obligations imposed by the terms of this license.
15. General Conditions
15.1 The licensee shall be bound by the terms and conditions of this license agreement, as well as by such orders/directions/regulations of TRAI as per the provisions of the TRAI Act, 1997 as amended from time to time, and instructions as issued by the licensor/TRAI.
15.2 The statutory provisions and the rules made under the Indian Telegraph Act, 1885 or the TRAI Act, 1997 or the Indian Wireless Telegraphy Act, 1933 shall govern this licence agreement. Any order passed under these statutes shall be binding on the licensee.
PART II
COMMERCIAL CONDITIONS
16. Tariffs
16.1 The licensee will charge tariffs for the service as per tariff orders/regulations/directions issued by TRAI from time to time. The licensee shall also fulfil requirements regarding the publication of tariffs, notifications and the provision of information as directed by TRAI through its orders/regulations/directions, issued from time to time, as per provisions of the TRAI Act, 1997 as amended from time to time.
PART III
FINANCIAL CONDITIONS
17. Fees Payable
17.1 Entry fee: A one-time non-refundable entry fee of Rs. ___________ Lakh has been paid by the licensee prior to signing this license agreement.
17.2 License fees: A uniform license fee rate of 8% of the adjusted gross revenue (AGR) shall be adopted for all ISP and ISP-IT licenses, in two steps, starting from 1 July 2012 as follows:
ISP license fee
Note: Revenue, for the purpose of license fee for internet service providers, shall provisionally include all types of revenue from internet services, allowing only those deductions available for pass-through charges and taxes/levies, as in the case of access services, without any set-off for expenses. Revenues from internet services will also be included in the definition of applicable AGR provisionally for ISP-IT category, till the government takes a final decision after obtaining TRAI recommendations in this regard. Necessary amendment(s) to the license agreement to this effect will be issued in due course of time.
17.3 Radio spectrum charges:
(i) The licensee shall pay spectrum charges, in addition to the license fee, on a revenue-share basis, as notified separately from time to time by the wireless planning and coordination (WPC) wing. However, while calculating AGR for the limited purpose of levying spectrum charges based on revenue share, the revenue from wireline subscribers shall not be taken into account.
(ii) Royalty for the use of spectrum for point-to-point links and other access links shall be separately payable as per the details and prescription of the Wireless Planning & Coordination (WPC) wing. The fee/royalty for the use of spectrum/possession of wireless telegraphy equipment depends upon various factors such as the frequency, hop and link length, area of operation and other related aspects. The authorization of frequencies for setting up of microwave links by licensed operators and the issue of licenses shall be separately dealt with by the WPC wing as per existing rules.
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18. Definition of ‘Adjusted Gross Revenue’
18.1 Gross Revenue: The gross revenue shall be inclusive of the revenue from internet access services, revenue from internet content, revenue from internet telephony services, revenue from activation charges, revenue from the sale, lease or renting of bandwidth, links, R&G cases, turnkey projects etc., revenue from IPTV services, late fees, sale proceeds of terminal equipment, revenue on account of interest, dividend, value added services, supplementary services, interconnection charges, roaming charges, revenue from permissible sharing of infrastructure and any other miscellaneous revenue, without any set-off for related item of expense.
18.2 For the purpose of arriving at the adjusted gross revenue (AGR), the following shall be excluded from the gross revenue to arrive at the AGR:
(i) Charges from pure internet services and activation charges from pure internet subscribers. ‘Pure internet services’ shall mean any method/device/technology to provide access to the internet, unless explicitly prohibited, and all content available including web hosting and web co-location, which is available on the internet without access restrictions.
(ii) Service tax on the provision of services and sales tax actually paid to the government if gross revenue had been included as a component of sales tax and service tax.
(iii) Roaming revenue actually passed on to other eligible/entitled telecom service providers.
19. Schedule of payment of annual license fees and other dues
19.1 For the purposes of the licence fee, the 1st year shall end on 31st March following the date of commencement of the license agreement, and the license fee for the first year shall be determined on a pro rata basis for the actual duration of the ‘year’. From the second year onwards, the year shall consist of twelve English calender months, from the 1st of April to the 31st of March, for the payment of license fee.
Explanation: The licence fee for the last quarter of the first year and last quarter of the last year of the licence will be computed with reference to the actual number of days, after excluding the other quarters, each being of three months
19.2 The license fee shall be payable in four quarterly instalments during each financial year (FY). A quarterly instalment of the licence fee for the first three quarters of a FY shall be paid within fifteen days of the completion of the relevant quarter. This fee shall be paid by the licensee on the basis of actual revenue (on accrual basis) for the quarter, duly certified with an affidavit by a representative of the licensee, authorised by a board resolution, coupled with a general power of attorney. However, for the last quarter of the financial year, the licensee shall pay the license fee by 25th March on the basis of expected revenue for the quarter, subject to a minimum payment equal to the actual revenue share paid for the previous quarter. Further, the fourth quarter license fee should also be duly certified with an affidavit by the authorised representative of the licensee.
19.3 The licensee shall adjust and pay the difference between the payment made and the actual amount duly payable (on an accrual basis) for the last quarter of the financial year within fifteen days of the end of the quarter.
19.4 The quarterly payment shall be made, together with a statement, in the prescribed form as contained in Annexure II, showing the computation of revenue and license fee payable. The aforesaid quarterly statements of each year shall be required to be audited by the auditors of the licensee (hereinafter called the ‘licensee’s auditors’) appointed under Section 224 of the Companies Act, 1956. The report of the auditor should be in the form prescribed in Annexure II.
19.5 Any delay in the payment of licence fee, or any other dues payable under the license beyond the stipulated period, will attract interest at a rate which will be 2% above the prime lending rate (PLR) of the State Bank of India, prevailing on the day that the payment became due. The interest shall be compounded monthly, and a part of the month shall be reckoned as a full month for the purposes of calculation of interest. A month shall be reckoned as an English calender month.
19.6 Final adjustment of the licence fees for the year shall be made based on the gross revenue figures duly certified by the auditors of the licensee, in accordance with the provisions of the Companies’ Act, 1956.
19.7 An audited copy of the reconciliation between the figures appearing in the quarterly statements submitted in terms of Clause 19.4 of the agreement, with those appearing in the annual accounts, shall be submitted along with a copy of the published annual accounts. audit report and duly audited quarterly statements, within 7 (seven) calender days of the date of signing the audit report. The annual financial accounts and the statement, as prescribed above, shall be prepared following the norms as prescribed in Annexure III.
19.8 In case the total amount paid as quarterly license fee for the 4 (four) quarters of the financial year falls short by more than 10% of the payable licence fee, it shall attract a penalty of 50% of the entire amount of shortfall payment. However, if such short payment is made good within 60 (sixty) days from the last day of the financial year, no penalty shall be imposed. This amount of penalty shall be payable within 15 (fifteen) days of the date of signing the audit report on the annual accounts, failing which, interest shall be further charged as per terms of Clause 19.5.
19.9 The fee/royalty payable towards Wireless Planning and Coordination (WPC) charges shall be payable at such time(s), and in such manner, as the WPC wing of the DoT may prescribe from time to time.
19.10 All sums becoming due and payable, as mentioned in this license agreement, shall be paid by the licensee through a demand draft or pay order payable at New Delhi, drawn on any scheduled bank, in favour of the ‘Pay & Accounts Officer (HQ), DOT’ or any other authority so designated by the licensor.
19.11 The licensor, in order to ensure the proper and correct verification of revenue share paid, can, if deemed necessary, modify, alter, substitute and amend whatever is stated in Clause 19.4, 19.7, 21.5 and 21.6 hereinbefore and hereinafter written.
20. Preparation of Accounts
20.1 The licensee will draw, keep and furnish independent accounts for the service, and shall fully comply with any orders, directions or regulations as may be issued from time to time by the licensor or TRAI, as the case may be.
20.2 The licensee shall be obliged to:
(i) Compile and maintain accounting records, sufficient to show and explain its transactions in respect of each completed quarter of the licence period, or of such lesser periods as the licensor may specify, fairly presenting the costs (including capital costs), revenue and financial position of the licensee’s business under the license, including a reasonable assessment of the assets employed in, and the liabilities attributable to, the licensee’s business, as well as, for the quantification of revenue, or any other purpose.
(ii) Procure, in respect of each of those accounting statements prepared in respect of a completed financial year, a report by the licensee’s auditor, in the format prescribed by the licensor, stating inter alia, whether in his opinion, the statement is adequate for the purpose of this condition and thereafter, deliver to the licensor, a copy of each of the accounting statements not later than 3 (three) months at the end of the accounting period to which they relate.
(iii) Send to the licensor, a certified statement sworn on an affidavit, by an authorised representative of the company, containing a full account of the revenue, as defined in Clause 18, for each quarter separately, along with the payment for the quarter.
20.3 The licensor or TRAI, as the case may be, shall have the right to call for, and the licensee shall be obliged to supply and provide for, the examination of any books of accounts that the licensee may maintain in respect of the business carried on to provide the service(s) under this license, at any time, without recording any reasons thereof.
20.4 The licensee shall invariably preserve all billing and other accounting records (electronic as well as hard copy) for a period of 3 (three) years from the date of publication of duly audited and approved accounts of the company, and any dereliction thereof shall be treated as a material breach, independent of any other breach, sufficient to give a cause for cancellation of the license.
20.5 The records of the licensee will be subject to such scrutiny as may be prescribed by the licensor, so as to facilitate the independent verification of the amounts due to the licensor as its share of the revenue.
20.6 The licensor may, upon forming an opinion that the statements or accounts submitted are inaccurate or misleading, order an audit of the accounts of the licensee, by appointing an auditor at the cost of the licensee, and such auditor(s) shall have the same powers which the statutory auditors of the company enjoy under Section 227 of the Companies Act, 1956. The remuneration of the auditors, as fixed by the licensor, shall be borne by the licensee.
20.7 The licensor may also get conducted a ‘special audit’ of the licensee company’s accounts/records by ‘special auditors’, the payment for which, at a rate fixed by the licensor, shall be borne by the licensee. This will be in the nature of auditing as described in Clause 20.5 above. The special auditors shall also be provided the same facilities, and have the same powers, as that of the companies’ auditors as envisaged in the Companies Act, 1956.
20.8 The licensee shall be liable to prepare and furnish the company’s annual financial accounts according to the accounting principles as prescribed, and the directions given by the licensor or TRAI, as the case may be, from time to time.
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21. Bank Guarantees
21.1 Performance Bank Guarantee: The performance bank guarantee (PBG), valid for 2 (two) years, from any scheduled bank in the prescribed format as per Annexure IV, has to be submitted before signing the license agreement, for an amount equal to Rs. 2,00,00,0000 (Rupees 2 Crores) and Rs. 20,00,000 (Rupees 20 Lakh) for category ‘A’ & ‘B’ service areas respectively.
21.2 Financial Bank Guarantee: The licensee shall submit a financial bank guarantee (FBG), valid for 1 (one) year, from any scheduled bank or public financial institution duly authorised to issue such a bank guarantee, in the prescribed performa contained in Annexure V. Initially, the financial bank guarantee shall be for an amount equal to Rs. 10/1 lakh (for category ‘A’ & category ‘B’ service areas respectively) and which has been submitted before signing the license agreement. Subsequently, the amount of FBG shall be equivalent to the estimated sum payable, which is equivalent to the license fee for two quarters and other dues not otherwise securitised, and any additional amount as deemed fit by the licensor. The amount of FBG shall be subject to a periodic review by the licensor and shall be renewed from time to time till final clearance of all dues.
21.3 The fees, charges and royalties for the use of spectrum, and also for the possession of wireless telegraphy equipment, shall be separately securitised by furnishing a financial bank guarantee of an amount equivalent to the estimated sum payable annually, in the proforma annexed, to the wireless planning and coordination (WPC) wing, valid for a period of 1 (one) year, renewable from time to time until final clearance of all such dues.
21.4 The PBG and FBG shall be renewed from time to time. The licensee, on its own, shall extend the validity period of the bank guarantees for similar terms, at least 1 (one) month prior to the date of its expiry, without any demand or notice from the licensor, on a year-to-year basis. Any failure to do so shall amount to a violation of the terms of the license and entitle the licensor to encash the bank guarantees, and to convert into a cash security, without any reference to the licensee at his own risk and cost. No interest or compensation whatsoever shall be payable by the licensor on such encashment.
21.5 Without prejudice to its rights under any other remedy, the licensor may encash the bank guarantee (FBG and PBG) in case of any breach in terms and conditions of the license by the licensee.
PART IV
TECHNICAL CONDITIONS
22. Technical Conditions
22.1 The licensee shall provide, on demand, the details of the technology proposed to be deployed for operation of the service.
23. Engineering Details
23.1 The licensee shall furnish to the licensor, or its authorised representative(s), in such manner and at such times as may be required, complete technical details with all calculations for engineering, planning and dimensioning of the system/network, relevant literature, drawings and installation materials regarding the applicable system.
23.2 The licensee shall supply all tools, test instruments and other accessories to the testing party of the licensor and/or TEC for conducting tests, if it so desires, prior to commissioning the services, or at any time during the currency of the license.
23.3 Any delay on the part of the licensee, in offering the system for conducting performance tests to the licensor/TEC, will not be considered as a valid reason for non-fulfilment of the roll-out obligations imposed by the terms of this license.
24. Network Interconnection
24.1 Direct interconnectivity between two separately licensed internet service providers (ISP’s) is permitted. ISP’s are allowed to provide internet gateways after obtaining security clearances through the licensor. The licensee may obtain the transmission link or leased line from any operator authorised to lease such links to ISP’s. The licensee may also establish its own transmission links, within its service area, for carrying traffic originating and terminating by its subscribers.
24.2 The resources required for interconnecting the licensee’s network to the network of upstream internet access providers licensed by the licensor, including the time frame for the provision of the same will be mutually agreed to between the parties concerned. The licensee shall apply for, and obtain network resources from the concerned parties. The tariff for such network resources is outside the scope of this license agreement. The licensor will have no obligation to obtain such resources from other parties.
24.3 Interconnectivity requirements: ISP’s shall use IP (internet protocol) in conjunction with transmission control protocol (TCP) and shall meet the interface requirements of the ISP to whose network its node is connected.
24.4 Access to the internet through authorised cable operators is permitted, without additional licensing, subject to applicable cable laws (The Cable Television Networks (Regulation) Act, 1995) as modified from time to time.
24.5 ‘Last mile’ linkages shall be freely permitted within the local area, either by fibre optic, or radio communication, or underground copper cables, for ISPs. In case of radio links, clearance from the WPC wing of the DoT shall be required to be obtained by the ISP’s.
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24. (a)
(i) The telecom licensee, while providing TV channels through IPTV, shall transmit only such broadcast satellite television channels in exactly the same form (unaltered) which are registered with, or are otherwise permitted by the Ministry of Information & Broadcasting. In such cases, the responsibility to ensure that content is in accordance with the extant laws, rules, regulations etc. shall be that of the broadcaster, and the telecom licensee will not be held responsible. The IPTV service provider shall not carry any broadcast satellite television channels prohibited either permanently or temporarily, or not registered with the Ministry of Information & Broadcasting.
(ii) The telecom licensee, while providing TV services, can obtain content from a multi-system operator or a cable operator, for the provision of IPTV services.
(iii) The telecom licensee providing IPTV will show only those news and current affairs television channels which have been registered with Ministry of Information and Broadcasting. The licensee will not produce or provide any other broadcast or non-broadcast channel having any element of news and current affairs.
(iv) The provisions of the Programming code and Advertisement Code, as provided in Cable Television Network (Regulation) Act 1995 and Rules thereunder, shall be applicable even in the case of content other than TV channels from broadcasts provided by the licensee. Since the licensee will be providing this content, the licensee shall be responsible for ensuring compliance with the codes with respect to such content. In addition to this, such licensees will also be bound by various Acts, instructions, directions, guidelines issued by the central government from time to time to regulate the content.
(v) If the contents are being sourced from content providers other than the licensee, then it will be the responsibility of Licensee to ensure that their agreements with such content providers contain appropriate clauses to ensure prior compliance with the Programme and Advertisement Codes and other relevant Indian laws, civil and criminal, regarding content.
(vi) The central government in the Ministry of Information and Broadcasting shall have the right to notify the number and names of channels of Prasar Bharati or any other channel for compulsory carriage by the licensee and the manner of reception and retransmission of such channels.
(vii) The licensee, while providing IPTV services, should provide commercial interoperability so that if subscribers decide to switch over to any other service provider or platform, they should be able to do so at the least cost. Commercial interoperability here would mean that in addition to offering the receiver set on an outright purchase basis, a subscriber should also have the option to purchase it on a hire-purchase basis or on rental basis with a provision to return the receiver set on such terms and conditions as may be laid down by regulations issued by TRAI.
(viii) The government/Ministry of Information and Broadcasting may direct the licensee providing IPTV service to ensure preservation and retention for a period of 90 (ninety) days from the date of broadcast unless specified otherwise, of different kinds of content made available to their subscribers and requires it to ensure its security and also that it is not tampered with during such period. The licensee providing IPTV services may be required to produce the same to the government or its authorised representative as and when required, and the licensee providing IPTV service will be required to ensure compliance with all such directions.
(ix) The licensee providing IPTV service shall provide necessary facility for continuous monitoring of the IPTV network at its own cost. The monitoring system must provide the set-top box subscriber information, as well as contents to the law enforcement agency in plain readable, audible and viewable format as the case may be.
PROVIDED that in case of any dispute, the records of broadcast of programmes and advertisements shall be maintained till final disposal of the dispute.
PROVIDED FURTHER that the licensee shall provide access to the government or its authorised representative to all its facilities, including equipments, records, system etc. for purposes of inspection.
(x) On demand by the government in the Ministry of Information and Broadcasting, or its authorised representative, the licensee providing IPTV service shall provide the necessary equipment, services and facilities at designated place(s) for continuous monitoring of the IPTV service by or under supervision of the government or its authorised representative.
(xi) The licensee providing IPTV service shall submit such information with respect to its service as may be required by the Government in the Ministry of Information and Broadcasting or its authorised representative from time to time.
(xii) The licensee providing IPTV service shall furnish any such information at periodic intervals as may be required by the government in the Ministry of Information and Broadcasting or its authorised representative concerning programme content and quality, technical parameters etc. relating to the service in the format as may be required by the government or its authorised representative from time to time.
(xiii) The licensee providing IPTV service shall furnish the complete details such as name, technical details and license etc. of the value added service being provided through the IPTV network.
PROVIDED that in case any new value added service is added, the licensee providing IPTV service shall obtain the prior approval of the government or licensor. The government or the licensor may from time to time, prescribe or prohibit certain value added services.
(xiv) Any breach of the provisions of act/license/registration/permission by the licensee/cable operator/broadcasters shall be dealt with by designated agencies which are responsible for administering such acts/licenses/registrations/permissions.
(xv) The government shall have the right to modify, at any time, the provisions of these guidelines and/or the terms and conditions of permissions/registrations, if in the opinion of the government, it is necessary or expedient to do so in public interest or in the interest of the security of the State. The decision of the government shall be final and binding in this regard.
(xvi) The decision of the Ministry of Information & Broadcasting regarding any violation of prevailing acts/rules/guidelines pertaining to their administrative jurisdiction in respect of content carried on IPTV service shall be final. The quantum of penalties for such violation will be decided by licensor in consultation with the respective ministries/departments.
25. Quality of Performance
25.1 The licensee shall ensure quality of service (QoS) as prescribed by the licensor or TRAI. The licensee shall adhere to such QoS standards and provide timely information as required therein.
25.2 The licensee shall be responsible for:
(i) Maintaining performance and QoS standards.
(ii) Maintaining the mean time to restore (MTTR) within the specified limits of the QoS.
(iii) The licensee will keep a record of the number of faults and rectification reports in respect of the service, which will be produced before the licensor/TRAI as and when, and in whatever form, desired.
25.3 The licensee shall be responsive to the complaints lodged by its subscribers. The licensee shall rectify the anomalies within the MTTR specified, and maintain the history sheets for each installation and the statistics and analysis of the overall maintenance status.
25.4 The licensor or TRAI may carry out performance tests on the licensee’s network and also evaluate QoS parameters in the licensee’s network prior to the grant of permission for commercial launch of services, after the successful completion of interconnection tests, and/or at any time during the currency of the license, to ascertain that the network meets the specified QoS standards. The licensee shall provide ingress and other support, including instruments, equipment etc. for such tests.
25.5 The licensee shall enforce and ensure QoS, as prescribed by the licensor/TRAI, from the infrastructure provider(s) with whom it may enter into agreements/contracts for leasing/hiring/ buying, or any such instrument for the provision of infrastructure or bandwidth. The responsibility of ensuring QoS shall be that of the licensee.
PART V
OPERATING CONDITIONS
26. Customer Service
26.1 The licensee shall register the demand/request for provision of services, without any discrimination, from any applicant, at any place in the licensed service area, and provide the service, unless otherwise directed by the licensor. The licensee shall not, in any manner, discriminate between subscribers, and provide services on the same commercial principle, and shall be required to maintain a transparent, open-to-inspection, waiting list. The licensee shall clearly define the scope of services to the subscriber(s) at the time of entering into a contract with such subscriber(s). The licensor shall have the right to impose a suitable penalty, not limited to a financial penalty, apart from any other actions for breach of this condition. The licensee shall launch the service on a commercial basis, only after commencement of registration in the manner prescribed. Before commencement of services in an area, the licensee shall notify and publicise the address where any subscriber can register the demand/request for the provision of services. Any change in this address shall be duly notified by the licensee.
26.2 PROVIDED that nothing contained herein will affect or prejudice the rights of the licensee to carry out checks on the credit worthiness of its prospective subscribers.
26.3 The licensee shall ensure continuity of services to its customers, unless the license is terminated or suspended by the licensor for any reason whatsoever.
26.4 It shall be the responsibility of the licensee to issue, or cause to be issued, bills to its subscribers for use of the service. The licensee shall maintain such records so as to produce itemised billing information. The billing system of the licensee shall be able to generate billing information, in adequate detail, to ensure satisfaction to the customer about the genuineness of the bill. The directions of TRAI, from time to time, in this regard shall apply.
26.5 All complaints of customers in this regard will be addressed/handled as per the guidelines, orders, regulations or directives issued by the licensor or TRAI from time to time.
26.6 The licensee’s contractual obligations (to various telecom service providers, including Other Service Providers not requiring a license under Section 4 of the Indian Telegraph Act, 1885) will include the terms and conditions under which the service may be obtained, utilised and terminated.
26.7 The licensee shall notify, in writing, all arrangements with respect to repairs, fault rectification, compensation or refunds. All complaints in this regard will be addressed/handled as per the guidelines, orders, regulations or directions issued by the licensor or TRAI from time to time.
26.8 Any dispute with regard to the provision of services shall be a matter only between the aggrieved party and the licensee, who shall duly notify this to all, before providing the service. In no case shall the licensor bear any liability or responsibility in the matter. The licensee shall keep the licensor indemnified for all claims, costs, charges or damages in the matter.
26.9 The licensee is to set up a consumer grievance redressal mechanism at the following two levels:
(i) call centre level;
(ii) an appellate authority within the company.
FURTHER, the licensee must publicise its redressal mechanism on a regular basis through various advertising means, or through bills sent to its subscribers.
27. Subscriber Terminals
27.1 The licensee shall have the right to undertake the sale, hire-purchase, lease or renting of the subscriber/mobile terminals. Proper usage of terminals at the subscriber’s premises shall be as per agreement between the licensee and the subscriber.
27.2 The licensee shall be responsible to ensure that the subscriber terminal is operated in accordance with the terms of the license and the wireless planning and coordination (WPC) license. The SIM card/any type of service enactment card, is non-transferable.
27.3 The subscriber will be free to obtain the subscriber terminal, at his option, from any source that meets the technical specifications prescribed by the licensee and within the scope of services mentioned in the license.
28. Obligations Imposed on the Licensee
28.1 The provisions of the Indian Telegraph Act, 1885, the Indian Wireless Telegraphy Act, 1933, and the Telecom Regulatory Authority of India Act, 1997, as modified from time to time, or any other statute on their replacement, shall govern this license.
29. Inspection and Testing of Installations
29.1 The licensor/TRAI may also carry out all performance tests required for checking the quality of service (QoS), if it so desires. The licensee shall supply all necessary literature, drawings etc. regarding the equipment installed, and shall also supply all the tools, test instruments and other accessories to the testing party of the licensor/TRAI to conduct the tests. The list of performance tests will be furnished by the licensee 1 (one) month prior to the date of commissioning, to the licensor. In case the licensor chooses to conduct performance tests, and some deficiency is found therein by the licensor, the delay caused for rectification of the deficiencies, if any, will be entirely on account of the licensee.
29.2 The acceptance testing for each and every interface with BSNL/MTNL/other authorised licensed service provider may be carried out by mutual arrangements between the licensee and the other party involved. The interconnection test schedule shall be mutually agreed upon.
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PART VI
SECURITY CONDITIONS
30. Right to Inspect
30.1 The licensor, or its authorised representative, shall have the right to inspect the sites used for extending the service, and in particular, but not limited to, the right to have access to leased lines, junctions, terminating interfaces, hardware/software, memories of semiconductors, magnetic and optical varieties, wired or wireless equipment, distribution frames, record files, logbooks and to conduct the performance test, including entering into dialogue with the system through input/output devices or terminals. The licensee will provide the necessary facilities for continuous monitoring of the system, as required by the licensor or its authorised representative(s). The inspection will ordinarily be carried out after reasonable notice, except in circumstances where giving such a notice will defeat the very purpose of the inspection.
The licensor, or its authorised representative, or the Ministry of Information & Broadcasting in respect of IPTV Service, or its authorised representative shall have right to access and inspect sites used for extending the service, and in particular but not limited to leased lines, junctions, terminating interfaces, hardware/software, memories of semiconductors, magnetic and optical varieties, wired or wireless equipment, distribution frames. The licensor or its authorised representative may also conduct the performance test including to enter into dialogue with the system through input/output devices or terminals. The licensee will provide the necessary facilities for continuous monitoring of the system in the licensed service area, as required by the licensor or
its authorized representative(s). The inspection will ordinarily be carried out after reasonable notice except in circumstances where giving such a notice will defeat the very purpose of the inspection.
30.2 Wherever considered appropriate, the licensor may conduct an inquiry either suo moto or on a complaint, to determine whether there has been any breach in complying with the terms and conditions of the license, by the licensee, and upon such inquiry, the licensee shall extend all reasonable facilities without any hindrance.
Wherever considered appropriate, the licensor or the Ministry of Information & Broadcasting in respect of IPTV services, may conduct any inquiry, either suo motu or on the complaint to determine whether there has been any breach in compliance of terms and conditions of the license by the licensee and upon such inquiry, the licensee shall extend all reasonable facilities without any hindrance to the licensor/Ministry of Information & Broadcasting as the case may be.
31. Location of Switches
31.1 The licensee, upon request, shall provide to the licensor, the location details of switching centres, transmission centres, including routing details etc.
31.2 In areas which are sensitive from a security point of view, as may be notified from time to time by the licensor, the implementation of any equipment installation and execution of the project shall be taken up only after obtaining the licensor’s approval.
32. Confidentiality of Information
32.1 The licensee shall not employ bulk encryption equipment in its network. However, the licensee shall have the responsibility to ensure the protection of privacy of communications, and to ensure that the unauthorised interception of messages does not take place.
32.2 Subject to the conditions contained in these terms and conditions, the licensee shall take all necessary steps to safeguard the privacy and confidentiality of any information about a third party and its business to whom it provides the service, and from whom it has acquired such information, by virtue of the services provided, and shall use its best endeavours to secure that:
(i) No person acting on behalf of the licensee, or the licensee, divulges or uses any such information, except as may be necessary in the course of providing such services to the third party; and
(ii) No such person seeks any information other than is necessary for the purpose of providing services to the third party.
PROVIDED the above paragraph shall not apply where:
(i) The information relates to a specific party, and that party has consented in writing to such information being divulged or used, and such information is divulged or used in accordance with the terms of that consent; or
(ii) The information is already open to the public and otherwise known.
32.3 The licensee shall take necessary steps to ensure that the licensee, and any person(s) acting on its behalf, observe confidentiality of customer information.
32.4 The licensee shall, prior to commencement of the service, confirm in writing to the licensor that the licensee has taken all necessary steps to ensure that it, and its employees, shall observe confidentiality of customer information.
33. Prohibition of Certain Activities by the Licensee
33.1 The licensee shall not engage, on the strength of this license, in the provision of any other service requiring a separate licence.
33.2 To remove any doubt, it is, hereby, clarified that nothing contained in the paragraph above shall preclude the licensee from engaging in advertising and promotional activities relating to any of the services.
33.3 The licensee shall take necessary measures to prevent objectionable, obscene, unauthorised or any other content, messages or communications infringing copyright, intellectual property etc., in any form, from being carried on its network, consistent with the established laws of the country. Once specific instances of such infringement are reported to the licensee by the enforcement agencies, the licensee shall ensure that the carriage of such material on its network is prevented immediately.
33.4 The licensee is obliged to provide, without any delay, all tracing facilities to trace nuisance, obnoxious or malicious calls, messages or communications transported through its equipment and network, to the authorised officers of the government of India, including police, customs, excise and intelligence department officers etc., when such information is required for investigations or the detection of crimes, and in the interest of national security. Any damages arising on account of the licensee’s failure in this regard shall be payable by the licensee.
33.5 In case any confidential information is divulged to the licensee for the proper implementation of the agreement, it shall be binding on the licensee, its employees and servants to maintain its secrecy and confidentiality.
33.6 Obscene material and applicability of cyber laws: The licensee shall ensure that objectionable, obscene, unauthorised or any other content, messages or communications infringing copyright, intellectual property rights and international/domestic cyber laws, in any form, or inconsistent with the laws of India, are not carried in its network, and the ISP should take all necessary measures to prevent it. In particular, the licensee is obliged to provide, without delay, all tracing facilities to trace nuisance or malicious messages or communications transported through its equipment and network, to the authorised officers of the government of India/state government, when such information is required for the investigation of crimes or in the interest of national security. The activities shall also comply with the provisions of the Information Technology (IT) Act 2000, as modified from time to time. Any damages arising out of default on the part of the licensee, in this respect, shall be the sole responsibility of the licensee.
33.7 The use of the network for anti-national activities would be construed as an offence punishable under the Indian Penal Code or other applicable law. The networks cannot be used in such manner as to endanger, or make vulnerable, any networked infrastructure. Acts such as break-ins or attempted break-ins of Indian networks shall be regarded as an anti-national act and shall be dealt with in accordance with the Indian Penal Code. ISP’s must ensure that their services are not used for such purposes.
34. Security Conditions
34.1 The licensee shall provide necessary facilities, depending upon the specific situation, at the relevant time to the government to counteract espionage, subversive acts, sabotage or any other unlawful activity.
34.2 The licensee shall make available, on demand, to the person authorised by the licensor, full access to the switching centres, transmission centres, routers etc. for technical scrutiny and inspection, which can be visual inspection or an operational inspection.
34.3 The licensee will ensure that the telecommunications installation carried out by it should not become a safety hazard, and is not in contravention of any statute, rule or regulation and public policy.
34.4 In the interests of security, suitable monitoring equipment, as may be prescribed for each type of system used, will be provided by the licensee for monitoring as and when required by the licensor. The specific orders or directions from the government, issued under such conditions, shall be applicable.
34.5 The precise delineation of the geographical borders taken by the licensee for the purpose of defining the service area across international borders, if any, shall have the prior approval of the government of India. The terrestrial boundaries of India shall be as depicted in the maps issued by the Survey of India.
34.6 The designated person of the central/state government, as conveyed to the licensee from time to time, in addition to the licensor or its nominee, shall have the right to monitor the telecommunications traffic in every node, or any other technically feasible point in the network set up by the licensee. The licensee should make arrangements for the monitoring of simultaneous calls by government security agencies. The hardware at the licensee’s end, and software required for monitoring of calls, shall be engineered, provided/installed and maintained by the licensee at the licensee’s cost.
34.7 The licensee shall install necessary infrastructure in the service area with respect to internet telephony services offered by it for processing/routing/directing/managing/ authenticating internet telephony calls, including the generation of call detail records (CDR’s). CDR shall contain calling/ called IP address, called numbers, date, duration, time and charges of internet telephony calls.
34.8 Each ISP must maintain a log of all users connected, and the service they are using (mail, telnet, http etc.). ISP’s must also log every outward login or telnet through their computers. These logs, as well as copies of all the packets originating from the customer premises equipment (CPE) of the ISP, must be made available in real-time to the telecom authority. The type of logins, where the identity of the logged-in user is not known, should not be permitted.
34.9 The government, through appropriate notification, may debar the usage of mobile terminals in certain areas in the country. The licensee shall deny services in areas specified by designated authorities immediately, and in any case within 6 (six) hours on request. The licensee shall also provide the facility to carry out surveillance of mobile terminal activity within a specified area.
34.10 The licensee shall be responsible for ensuring the privacy of communications on its network and also to ensure that unauthorised interception of message does not take place.
34.11 The licensor shall have the right to take over the services, equipment and networks of the licensee (either in part or in the whole service area) in case any directions are issued in the public interest by the government of India, in the event of a national emergency/war or low-intensity conflict, or any other eventuality. Any specific orders or directions from the government of India issued under such conditions shall be applicable to the licensee and shall be strictly complied with.
34.12 A complete list of subscribers shall be made available by the licensee on its website (having password controlled access), so that authorised intelligence agencies are able to obtain the subscriber list at any time, as per their convenience, with the help of the password. The list should be updated on a regular basis. Hard copies, as and when required by security agencies, shall also be furnished. The licensee shall ensure adequate verification of each and every customer before enrolling him as a subscriber; instructions issued by the licensor in this regard, from time to time, shall be scrupulously followed.
34.13 The list of internet leased line (ILL) customers and their sub-customers is to be placed on a password-protected website in the following performa:
i) Name of Customer
ii) IP Address Allotted
iii) Bandwidth Provided
iv) Address of Installation
v) Data of Installation/Commissioning
vi) Contact Person, with phone number and e-mail
34.14 Internet leased line (ILL) refers to any dedicated transmission link (on wired or wireless media) from an ISP node to a subscriber’s premises . The login ID/password shall be provided to the DDG (Security) DoT HQ and the concerned DDG (Term Cell ) of the DOT on a monthly basis. Online updation of ILL customers’ data by ISP’s should be done. This information shall be accessible to authorised government agencies.
34.15 Monitoring of high user datagram protocol (UDP) traffic value, and to check for cases where upstream UDP traffic is similar to downstream UDP traffic, and monitor such customers monthly with physical verification of the premises and personal identity of the customers to be submitted to DDG (Security) DOT HQ and the concerned DDG (Term Cell) of the DOT.
34.16 Service activation shall take place only after checking the bona fide of internet leased line customers, verifying details mentioned in Annexure VII and physical inspection of the site. Further, the reasons for taking the link by the customer shall be recorded.
34.17 Periodical inspections are to be carried out at the premises of internet leased line customers to check possible misuse and possible interconnection of internet leased line with PSTN, ISDN and PLMN, and the details thereof shall be included in the inspection as per the Annexure VII. The first inspection at the premises of the customer must be done within 15 (fifteen) days of commissioning the internet leased line.
34.18 A record of the complete network diagram of its set-up at each of the internet leased line customer premises, along with details of connectivity, shall be available at the site. All details of other communications links (PSTN, NLD,ILD, WLL, GSM, other ISP) plus the reasons for taking the link by the customer are to be recorded before activation of the link. The same shall also be readily available for inspection at the respective premises of all internet leased line customers.
34.19 An agreement shall be executed with each internet leased line customer, which clearly mentions the activities that are prohibited, which, inter alia include the activities specified under Clause 33 of the ISP license agreement.
34.20 Any entity requesting an internet leased line connection, who wants to/is likely to use this interconnection with the licensee’s set-up for the provision of internet services to its customers, should have a valid ISP license.
34.21 Internet leased lines (ILL’s) provided to customers should not be misused. In case of detection of misuse by the ILL customer on account of non-abidance of the above, it shall be construed as a breach of the terms and conditions of the license agreement. In such cases of misuse, the licensor would determine the monetary gain derived by the customer and the same would be final and binding on the licensee. The penalty shall be determined by the licensor, based on such monetary gain derived by the customer and/or on other factors deemed fit by the licensor, and the penalty shall be borne by the licensee as per the terms and conditions of the license agreement. This would be without prejudice to any other action under the license agreement.
34.22 The licensor, or its representative(s), will have access to the database relating to the subscribers of the licensee. The licensee shall also update the list of its subscribers and make it available to the licensor at such intervals as may be prescribed. The licensee shall make available, at any prescribed instant to the licensor or its authorised representative, complete details of subscribers using the service.
34.23 The licensee shall maintain all commercial records with regard to the communications exchanged on the network. Such records shall be archived for at least 1 (one) year for scrutiny by the licensor for security reasons, and may be destroyed thereafter, unless directed otherwise by the licensor.
34.24 The licensee shall provide to the licensor, the location details of equipment provided by the ISP. Implementation of any equipment installation and execution of the project shall be taken up only after the approval by the licensor has been obtained, and locations of these centres shall not be changed without the prior approval of the licensor. This requirement shall be applicable only to such areas as are sensitive, from a security point of view, as may be notified from time to time by the licensor. In the interest of national security or public interest, the ISP’s shall block internet sites and/or individual subscribers, as identified and directed by the licensor from time to time.
34.25 The licensee shall not use any hardware/software that is identified as unlawful and/or renders network security vulnerable. The licensee shall make available, on demand, to the agencies authorised by the government of India, full access to equipment provided by the ISP for technical scrutiny and detailed inspection.
34.26 The traffic of internet nodes at places of security importance would be routed as per directions issued from time to time by the licensor. Interconnection of these nodes to other nodes within the country directly is not permitted.
34.27 Monitoring facilities
(a) At each international gateway location and/or ISP node with a router/switch having an outbound capacity of 2 Mbps or more:
(i) Every international gateway location and/or the ISP node with a router/switch having a capacity of 2 Mbps or more shall be equipped with a monitoring centre at the cost of the internet service provider (ISP). A suitable and appropriate monitoring system is to be set up by ISP’s carrying internet telephony traffic through their internet gateways and/or ISP nodes at their own cost, as per the requirement of security agencies, and the cost of maintaining the monitoring equipment and infrastructure, at the monitoring centre located in the licensee’s premises, shall be borne by the ISP.
(ii) Office space of 10 feet x 10 feet, with adequate uninterrupted power supply and air-conditioning, which will be physically secured and accessible only to the monitoring agencies, will have to be provided by the ISP at each location, free of cost.
(iii) In addition to the equipment, one local exclusive telephone line is to be made available by the ISP at the monitoring centre, the cost of which is to be borne by the ISP.
(iv) The cost of maintaining the equipment and infrastructure mentioned above at the monitoring centre located in the ISP’s premises is to be borne by the ISP.
(v) Each router/switch of the ISP should be connected by the LAN, operating at the same speed as the router/switch, the monitoring equipment will be connected to this network.
(vi) For a national ISP or an ISP having multiple nodes/points of presence, if it is possible to monitor traffic in all routers/switches from a central location, a central monitoring centre would be acceptable. However, in such a case, the ISP would, at the outset, have to demonstrate to the licensor that all routers/ switches are accessible from the central monitoring centre. Moreover, the ISP’s would have to inform the licensor of every change that takes place in their topology/configuration, and demonstrate that all routers/switches continue to be accessible from the central monitoring centre. The decision of licensor will be final on the issue.
(b) At locations where the ISP node router/switch has an outbound capacity less than 2 Mbps the ISP’s shall provide (i) a LAN, (ii) office space of 10 feet x 10 feet and (iii) a local exclusive telephone line, all at the cost of the ISP. The monitoring equipment will be provided by the monitoring/security agencies.
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34.28 Other general security conditions:
(i) The chief officer in-charge of technical network operations and the Chief Security Officer should be a resident Indian citizen.
(ii) Details of the infrastructure/network diagram (technical details of the network) could be provided on a need-basis only to the telecom equipment suppliers/manufacturers and the affiliate/parents of the licensee company. Clearance from the licensor (Department of Telecommunications, Government of India) would be required if such information is to be provided to anybody else.
(iii) For security reasons, domestic traffic of such entities as may be identified/specified by the licensor shall not be hauled/routed to any place outside India.
(iv) The licensee company shall take adequate and timely measures to ensure that the information transacted through a network by the subscribers is secure and protected.
(v) The officers/officials of the licensee companies dealing with the lawful interception of messages will be resident Indian citizens.
(vi) The majority directors on the board of the company shall be Indian citizens.
(vii) The positions of the Chairman, Managing Director, Chief Executive Officer (CEO) and/or Chief Financial Officer (CFO), if held by foreign nationals, would require to be security vetted by Ministry of Home Affairs (MHA). Security vetting shall be required periodically on yearly basis. In case something adverse is found during the security vetting, the direction of the MHA shall be binding on the licensee.
(viii) The company shall not transfer the following to any person/place outside India:-
(a) Any accounting information relating to subscriber (except for international roaming/billing)
Note: It does not restrict a statutorily required disclosure of financial nature; and
(b) User information (except pertaining to foreign subscribers using an Indian operator’s network while roaming).
(ix) The company must provide traceable identity of its subscribers. However, in case of providing services to roaming subscribers of foreign companies, the Indian company shall endeavour to obtain traceable identities of such roaming subscribers from the foreign company as a part of its roaming agreement.
(x) On request of the licensor, or any other agency authorised by the licensor, the telecom service provider should be able to provide the geographical location of any subscriber (BTS location of wireless subscriber) at a given point of time.
(xi) The remote access (RA) to the network would be provided only to approved location(s) abroad through approved location(s) in India. The approval for location(s) would be given by the licensor (DOT) after satisfying itself of its appropriateness.
(xii) Under no circumstances should any RA to suppliers/manufacturers and affiliate(s) be enabled to access the lawful interception system (LIS), lawful interception monitoring (LIM), call contents of traffic and any such sensitive sector/data, which the licensor may notify from time to time.
(xiii) The licensee company is not allowed to use remote access facilities for monitoring of content.
(xiv) Suitable technical devices should be made available at the Indian end to the designated security agency/licensor in which a mirror image of the remote access information is available online for monitoring purposes.
(xv) A complete audit trail of the remote access activities pertaining to the network operated in India should be maintained for a period of 6 (six) months, and provided on request to the licensor, or any other agency authorised by the licensor.
(xvi) The telecom service provider should ensure that necessary provision (hardware/software) is available in its equipment for lawful interception and monitoring from a centralised location.
(xvii) Telecom service providers should familiarise/train TERM Cell/security agency officers/officials in respect of relevant operations/features of their systems.
(xviii) It shall be open to the licensor to restrict the licensee company from operating in any sensitive area from a national security angle.
(xix) In order to maintain the privacy of voice and data, monitoring shall only be upon authorisation by the Union Home Secretary or Home Secretaries of the states/union territories.
(xx) For monitoring traffic, the licensee company shall provide access to its network and other facilities to the security agencies, as well as its books of accounts.
(xxi) In case of other service providers, the bandwidth can be provided only to registered other service providers (OSP’s).
34.29: The licensee shall apply to the licensor for security clearance, along with details of the equipment(s), equipment(s) suppliers and manufacturers, including original equipment manufacturers (OEM’s), before placement of the final purchase order for procurement/up-gradation of equipment/software for provisioning of telecommunications services under the license. In case no response is received from the licensor within 30 (thirty) working days, it shall be presumed that there is no objection to the procurement.
Note: This shall also include any such activity by the franchisee, agents or persons of that licenses. Also refer to No. 813-5-/10-DS dated 6 April 2010 for the guidelines in this regard.
(i) Licensees shall be completely and totally responsible for the security of their networks. They shall have a well-outlined organisational policy on security and security management of its network, network forensics, network hardening, network penetration test, risk assessment, actions to fix problems and to prevent such problems and to prevent such problems from reoccurring etc. should be part of the policy and they should take all measures in respect of these activities. They should submit their policy to the licensor within 30 (thirty) working days from the date of this amendment for record.
(ii) In furtherance of their organisational security policy, licensees shall audit their networks or get the network audited, from a security point of view, once a year from a network audit and certification agency. The first audit of the network should be completed within 12 (twelve) months of the issue of this amendment and thereafter, once in a financial year. A list of some of the agencies that might carry out the network audit from a security point of view will be displayed on the website of the DoT. The list is purely for information dissemination as a facilitating measure and telecom service providers are free to engage the service of any other agency for this purpose, which is certified to carry out the audit as per ISO 15408 and ISO 27001 standards, because network security is their responsibility.
(iii) The licensee shall induct only those network elements into its telecom network that have been tested as per the relevant contemporary Indian or international security standards (for example, IT and IT-related elements against ISO/IEC 15408 standards; for information security management system against the ISO 27000 series standards; telecom and telecom related elements against the SGPP security standards; 3GPP2 security standards etc. from any international agency/labs of the standards e.g. Common Criteria Labs in the case of ISO/IEC 15408 standards until 31 March 2013. From 1st April 2013 the certification shall be done from an authorised and certified agency/lab in India). The copies of test results and test certificates shall be kept by the licensee for a period of 10 (ten) years from the date of procurement of equipment.
(iv) The licensee shall include all contemporary security related features and features related to communications security, as prescribed under relevant security standards, while procuring equipment, and shall implement all such contemporary features into its network. A list of features, equipment, software etc. procured and implemented shall be kept by the licensee till they are in use, which may be subjected to inspection and testing by the licensor at any time, in the network or otherwise, at the option of the licensor.
(v) The licensee shall employ only resident, trained lndian nationals as Chief Technical Officer/s (CTO), Chief Information Security Officer (CISO) and nodal executives for handling of interception and monitoring cases, and to be in-charge of international long distance (ILD) gateway switches, softswitches, the central database and as system administrator/s.
(vi) The license shall:
a. Ensure that all documentation, including the details of software is obtained from the manufacturer/vendor/supplier in English.
b. Keep a record of operation and maintenance procedures in the form of a manual.
c. Keep a record of all operation and maintenance command logs for a period of 12 (twelve) months, which should include the actual command given, who gave the command, when it was given (with the date, time and from where it was given). For the next 24 (twenty-four) months, the same information shall be stored/retained in a non-online mode. For this purpose, the licensee shall keep a list of user ID’s linked with the name and other details of the user, duly certified by the system administrator. The user list shall be provided to the licensor, or such agencies designated by the licensor, as and when required.
d. Keep a record of all software updates and changes. The major updates and changes should be informed to the licensor within 15 (fifteen) days of completing such updates and changes.
e. Keep a record of the supply chain of the products (hardware/software). This should be taken from the manufacturer/vendor/supplier at the time of procuring the products.
f. Comply with the conditions of remote access (RA).
(vii) The licensee shall create facilities for the monitoring of all intrusions, attacks and frauds, and report the same to the licensor and/or to CERT-In. Such facilities shall be created by the licensee within 12 (twelve) months of the issuance of this amendment and shall be reported to the licensor as and when created during this period.
(viii) The licensee, through suitable agreement clauses with its vendors, shall ensure that the vendor/supplier allows the telecom service provider/licensor/DoT and/or its designated agencies to inspect the hardware, software, design, development, manufacturing facility and the supply chain, and subject all software to a security/threat check any time during the supply of equipment. The number of such visits will be limited to 2 (two) in a given purchase order. The expenditure for such visits for an order valued at more than INR 50,00,00,000 (Rupees Fifty Crores) up to 40 man-days per visit, shall be borne by the licensee directly or through the vendor.
(ix)
(a) A penalty of up to INR 50,00,00,000 (Rupees Fifty Crores) will be levied for any security breach that has been caused due to any inadvertent inadequacy/inadequacies in taking precautions on the part of the licensee, as prescribed under this amendment. The licensor shall constitute a five-member committee, which shall include two cybersecurity experts, to determine whether the breach is due to any inadvertent inadequacy or otherwise. The committee shall also decide the amount of penalty depending upon the loss, gravity of breach etc.
(b) In case of any inadequate measures, as prescribed under this amendment, acts of intentional omissions, deliberate vulnerability left into the equipment, or in the case of a deliberate attempt at a security breach, the penalty amount will be INR 50,00,00,000 (Rupees Fifty Crores) per breach. The same breach, in the same equipment, purchased through the same purchase order, or in the same lot, or the same negligence at the same time at multiple locations in an operator’s network, will be considered as a single breach for the purpose of levying penalty under this clause. The licensee shall deposit the penalty amount with the licensor within 30 (thirty) days of the issue of notice.
(c) Besides the penalty, liability and criminal proceedings under the relevant provisions of various Acts such as the Indian Telegraph Act, Information Technology Act, the Indian Penal Code (IPC), Criminal Procedure Code (CrPC) etc. can also be initiated. In such cases, the license of the licensee can also be cancelled, and the vendor or supplier who supplied the hardware/software that caused the security breach could be blacklisted from doing business in the country, or both. The licensee must include a clause in the agreement signed with the vendor/supplier about the licensor’s discretion in blacklisting of vendors or suppliers.
Note: Some other suggested steps, which help in increasing the security of the telecom network are given below (Annexure to the letter). The government may, however, make any of these suggestions mandatory whenever it feels it necessary to do so.
Some suggested steps, which help in increasing the security of the telecom networks are as follows:
a) The licensee may sign a suitable agreement with the hardware/software manufacturer/vendor and/or supplier of services to ensure that the equipment/services/software they supply are ‘safe to connect’ in the network, have been checked thoroughly for risks and vulnerabilities, all addressable vulnerabilities have been addressed and that non-addressable vulnerabilities have been listed with remedial measures and precautions have been provided. The agreement should cover aspects related to security measures like access control, password control and management etc. Clauses addressing service continuity and service up-gradation should also be suitably included in the agreement, with consequences defined for each party in the case of breach, particularly for security breaches. As an information dissemination and facilitating measure, the suggested clauses for such agreement, in the form of a template, will be available on the website of the DoT. Service providers may take all, or selected, provisions from this template, depending upon the type of services they avail from a vendor/supplier. They are free to add, modify, delete any of the clauses from this template, because security of their networks is their responsibility and they will be liable for any security breach.
b) Licensees should endeavour to create a forum, say the Telecom Security Council of India (TSCI), on a voluntary basis to increase security assurance levels and to share common issues.
(c) The licensee shall build its own capability and capacity to maintain and operate the network, preferably through local maintenance personnel, because telecom networks are security sensitive infrastructure.
35 Application of Indian Telegraph Act:
35.1 The licensee shall adopt all means, and facilitate in every manner, the application of the Indian Telegraph Act, 1885 and Indian Wireless Telegraphy Act, 1933 as modified or replaced from time to time. The service shall be provided in accordance with the provisions of Indian Telegraph Rules, as modified and amended from time to time.
35.2 As per the provision of Section 5 of the Indian Telegraph Act, 1885 the licensee will provide necessary facilities to the designated authorities of the central/state government as conveyed by the licensor from time to time for the interception of messages passing through its network.
Section 5 (2) of the Indian Telegraph Act 1885 reads as under:
“On the occurrence of any public emergency or in the interest of public safety, the Central Government or a State Government or any officer specially authorized in their behalf by the Central Government or a State Government may, if satisfied that it is necessary or expedient to do so in the interest of the sovereignty and integrity of India, the security of the State, friendly relations with foreign states or public order or for preventing incitement to the commission of an offense for class or messages to or from any person or class of persons or relating to any particular subject, brought for transmission by or transmitted or received by any telegraph, shall not be transmitted or shall be intercepted or detained or shall be disclosed to the Government making the order or an officer thereof mentioned on the order:
PROVIDED that press messages intended to be published in India of correspondents accredited to the Central Government or a State Government shall not be intercepted or detained, unless their transmission has been prohibited under this subsection.”
PART VII
FREQUENCY AUTHORISATION
36. Frequency Authorisation
36.1 A separate specific authorisation and license (hereinafter called the ‘WPC license’) shall be required from the Wireless Planning and Coordination (WPC) wing of the Department of Telecommunications, Ministry of Communications permitting the utilisation of appropriate frequencies/bands for the establishment, possession and operation of wireless elements of the telecom services under the license agreement of internet services under specified terms and conditions, including payment for the authorisation and the WPC license. Such grant of authorisation and the WPC license will be governed by normal rules, procedures and guidelines, and will be subject to completion of necessary formalities therein.
36.2 For this purpose, a separate application shall be made to the “Wireless Advisor to the Government of India, WPC Wing, Department of Telecommunications, Ministry of Communications, Sanchar Bhawan, New Delhi-110 001” in a prescribed application form available at the WPC wing.
36.3 The clearance in respect of fixed stations and its antenna mast shall be obtained from the WPC wing, for which the applicant shall separately apply to the Secretary, Standing Advisory Committee on Frequency Allocations (SACFA), WPC Wing in the prescribed application form, to the following address:
The Secretary (SACFA), WPC Wing, Ministry of Communications, Department of Telecommunications, Sanchar Bhawan, New Delhi-110 001.
Explanation: SACFA is the apex body in the Ministry of Communications for considering matters regarding the coordination of frequency allocation and other related issues/matters. (Siting clearance refers to the agreement of major wireless users for the location of proposed fixed antennae from the point of view of compatibility with other radio systems and aviation hazards. It requires inter-departmental coordination and is an involved process). Normally the siting clearance procedure may take 2 (two) to 6 (six) months, depending on the nature of the installations and the height of the antennae/masts.
36.4 The licensee shall not cause, or allow to be caused, any harmful interference to other authorised users of radio spectrum. For the elimination of harmful interferences to other users, the licensee shall abide by all instructions and orders issued by the government.
36.5 The licensor/WPC wing/TRAI shall have the right to inspect, from time to time, the installations from technical angles to check its conformity with the license authorising spectrum uses.
36.6 In case of provision of bandwidth by the licensee through satellite media, the licensee shall abide by the prevalent government orders, regulations or directions on the subject, like satellite communications policy, VSAT policy etc.
36.7 For the use of space segments and the setting up and operationalisation of an Earth station etc., the licensee shall coordinate with, and obtain clearance from, the Network Operations Control Centre (NOCC), apart from obtaining SACFA clearance and from other authorities.
ISP - VNO - IPTV - VoIP (Internet Telephony)
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Ozg Law Group | Follow @ozglaw | WhatsApp # 8779696580
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