India: In-Flight Connectivity: "VNO" Or NO "VNO"?

Last Updated: 1 November 2017
Article by Cyril Amarchand Mangaldas

Most frequent fliers would have been familiar with the requirement to power off personal electronic devices (PEDs) for the duration of domestic flights. It was not until 2014, that Indian fliers were permitted to operate mobile phones and other PEDs on "flight mode" (in non-transmitting mode). The rationale for this restriction, as explained by the Directorate General of Civil Aviation (DGCA), is that radio transmitters in most communications devices may, and have in the past, caused harmful interference with crucial on-board flight systems. Therefore, while several Indian carriers such as Jet Airways already provide on-board Wi-Fi services, such services are limited to the provision of locally stored content to airborne PEDs, and do not enable passengers to connect to the internet cloud.

However, recent technological developments have now made it possible for passengers to use transmitting PEDs while airborne, without causing harmful interference to crucial flight operation systems or terrestrial communication networks. Together these technological solutions are labelled In-Flight Connectivity (IFC) services. Typically, IFC solutions are provided by making use of aeronautical mobile satellite services that use a satellite link to provide IFC to onboard PEDs; or by using Mobile Communications on-board Aircraft (MCA) systems, which while typically operating on terrestrial GSM communications bands, use an air-to-ground satellite link to establish connections with terrestrial networks.

To date, over 40 jurisdictions worldwide have permitted IFC services. And recent developments suggest India may soon follow, allowing its passengers to access communication services on-board aircrafts!

In a move that is expected to significantly improve passenger experience, and bolster non-aeronautical revenues for the airline industry, the Telecom Regulatory Authority of India (TRAI), acting upon a reference from the Department of Telecommunications (DoT), has issued a Consultation Paper on IFC, seeking stakeholder comments on the scope and contours of a potential regulatory framework governing the provision of IFC services.

One of the primary issues highlighted in the DoT's reference to the TRAI dated 10 August 2017, relates to delineating an appropriate licensing or registration regime for enterprises providing IFC services. In its Consultation Paper, the TRAI broadly explores the following options:

  1. Obtaining a Unified License, with Access Service authorisation (UL (AS)) or with Internet Service Provider service authorisation (UL (ISP)).
  2. Entering into an agreement with existing licensees having UL (AS) or UL (ISP) authorisation, or a Very Small Aperture Terminal – Closed User Group (VSAT-CUG) licence with ISP authorisations, or a Global Mobile Personal Communication by Satellite (GMPCS) licence.
  3. A separate standalone registration requirement for IFC service providers.

Current Regime for Reselling Telecommunication Services

For most international flights, which remain in territorial airspaces for a maximum of four to five flight hours, obtaining a dedicated service licence might be commercially unviable. It is therefore likely that most IFC service providers would be keen to enter into arrangements to resell services of existing telecommunications service providers in the territories over which the aircraft navigates.

However, the TRAI in its Consultation Paper on IFC has made no reference to the Unified Licence (Virtual Network Operator) (UL (VNO)) regime. Under extant laws, the only permissible arrangement wherein an entity may re-sell the services of a licensed telecommunications service provider (TSP) is through a VNO arrangement. In fact, certain other jurisdictions which have permitted IFC services, have also adopted a licensing framework similar to the UL (VNO) regime – the Info-communications and Media Development Authority (IDA) of Singapore, treat on-board MCA systems as an extension of existing terrestrial GSM networks, requiring IFC service providers to obtain only a Service Based Operator (SBO) licence.

Accordingly, unless the DoT takes a very liberal position on the issue, and requires IFC service providers to merely register themselves with the DoT, it is likely that IFC providers would be required to obtain a UL (VNO) licence with various service authorisations, i.e. Access Service (AS) or Internet Service Provider (ISP) authorisations for providing voice and data services to passengers; and VSAT-CUG or National Long Distance (NLD) authorisations for utilising satellite bandwidth for air to ground communications.

Further, since UL (VNO) licensees are permitted to maintain and operate requisite access infrastructure, an IFC service provider may tie up with any existing UL Licensee with AS and NLD authorisations to provide satellite bandwidth, and re-sell telecommunications services to passengers for the duration of the flight in Indian airspace. Moreover, if the Network Service Operator (NSO) parenting the IFC provider does not have requisite NLD or VSAT-CUG authorisations, the IFC provider may enter into separate NSO-VNO arrangements with other NSOs with appropriate authorisations for providing satellite bandwidth, provided that the IFC provider does not resell access services of more than one NSO.

Nonetheless, the associated licence fees for obtaining a UL (VNO) license (i.e. 8% of Adjusted Gross Revenue), and the fact that many foreign IFC service providers might lack a point-of-presence in India, might be challenges to the adoption of a UL (VNO) licence regime for IFC services.

The third, and the most light-touch regulatory option, is providing for a purely registration based regime, wherein an IFC provider would not be required to obtain a licence, but rather be required to register themselves with the DoT in accordance with prescribed rules, after entering into appropriate arrangements with existing UL (AS)/ UL (ISP)/ VSAT-CUG or GMPCS licensees. Such rules, however, would need to account for entities without a point-of-presence in India, and recognise harmonised technical standards for operation, along the lines prescribed by the International Telecommunications Union.

Moreover, the third option would also require additional security considerations to be put in place. Particularly, since the DoT, which has been considering a proposal for permitting IFC services in Indian airspace for a few years now, has treated the provision of real-time lawful interception of airborne communications as a non-negotiable prerequisite of any potential framework. In this regard, the TRAI has considered the following options:

  1. Mandating the use of Indian satellite systems while travelling over Indian airspace.
  2. Permitting the use of foreign satellites leased through the Department of Space along with Indian satellite systems.
  3. Sharing traffic to and from user terminals in Indian airspace to a node owned and operated by an Indian entity to address the requirement of lawful interception directly or in mirror mode.

Essentially, the primary technical requirement for enabling lawful interception, is that the Land Earth Station is situated in India and accessible. Should the DoT be keen on adopting a licensing regime based on the existing UL (VNO) framework, then most concerns of lawful interception would be addressed by the scope of the exiting Unified Licence itself. However, should that not be the case, then as TRAI has rightly observed, requiring all IFC providers to use Indian satellite systems might prove to be an onerous requirement in view of the lack of adequate capacity, and existing relationships that foreign carriers may have with other foreign satellite systems. While the third option raises concerns around time-lags in traffic shared in a mirror mode with the Indian nodes, it appears to be pragmatic and in tune with business requirements, especially if the DoT adopts a registration-based framework.

The DoT's recent efforts promise to significantly enhance passenger experience. However, existing research indicates that the IFC services market is rather cumbersome to navigate, particularly in view of applicable government levies, and lack of customer willingness to pay for IFC based voice and data services. Taken in this operational context, it is imperative for any potential regulatory framework to carefully balance the costs of regulatory compliance, so as to ensure sustained growth of IFC as an industry segment in India.

* The author was assisted by Indrajeet Sircar, Consultant

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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