03 October 2022 – The Hindu

Telecom Sector of India

Introduction:

• With 1.20 billion subscribers, India is currently the second-largest telecoms market in the world and has had rapid expansion over the past 15 years.
• The mobile phone business made up $400 billion of the nation’s GDP in 2014, which is a significant contribution.
• The Groupe Speciale Mobile Association (GSMA) said that as of January 2019, India had had a 165% increase in app downloads over the previous two years.
• According to research from the GSMA, this industry will add over 4 million new employment by 2020.
• From a low of 3.60% in March 2001 to 84% in March 2016, the tele-density of the Indian telecom business (wireless plus wire line) has increased.
• The telecom industry is anticipated to generate up to 90% of the government’s non-tax revenue, making it the second-highest revenue generator for the government after income tax. The telecom industry is thus virtually essential to the Digital India mission.
• Along with strong consumer demand, the Indian government’s liberal and reformist policies have been crucial to the sector’s rapid expansion. The sector is one of the fastest expanding and one of the top five employers in the nation as a result of the deregulation of Foreign Direct Investment (FDI) standards.

India’s Telecom Sector’s Evolution:

• The Indian telecom industry dates back more than 165 years.
• Although telephone services were legally launched in India in 1881, telecommunications were originally introduced in 1851 when the first working land lines were built by the government close to Kolkata (then Calcutta).
• Additionally, the postal system and telephone services were combined in 1883. All foreign telecommunications firms were nationalised in 1947, the year India gained independence, to create the Posts, Telephone and Telegraph (PTT), an organisation under the control of the Ministry of Communication.
• Up until 1984, the government of India owned the entire telecom industry; only then was the private sector permitted to manufacture telecommunications equipment.
• In order to develop cutting-edge telecommunication technology to meet the expanding needs of the Indian telecommunication network, the government formalised its earlier efforts toward developing R&D in the sector by establishing an independent body in 1984 called the Centre for Development of Telematics (C-DOT).
• The Department of Posts and the Department of Telecommunications were established by the government in 1985, which marked the beginning of the industry’s genuine evolution (DoT).

Problems and Challenges in the Telecom Industry:

• High cost of right-of-way (ROW): State governments occasionally demand exorbitant fees in order to approve the laying of fibre, etc.
• India’s network has very limited fixed-line penetration, compared to the majority of developed nations, which have very high fixed-line penetration (telephone line that travelled through a metal wire or optical fibre as part of a nationwide telephone network).
• In industrialised countries, more than 70% of towers are connected to fibre networks, compared to just about 25% of towers in India.
• Towers must be connected to the 5G Network using extremely fast technology. With the radio technology in use today, those high speeds are not feasible.
• Declining Average Revenue Per User (ARPU): The Indian telecom industry is considering consolidation as the only way to increase revenues as a result of the severe and sustained reduction in ARPU, which is coupled with declining profits and, in some cases, significant losses.
• Recent Supreme Court approval of the government’s request to collect from telcos adjusted gross income of approximately Rs 92,000 crore has added to their concern.
• Limited Spectrum Availability: Compared to countries in Europe and China, the amount of spectrum that is available is less than 40% and 50%, respectively.
• Low Broadband Penetration: The country’s low broadband penetration is a cause for concern. According to a white paper on broadband given at the most recent International Telecommunication Union (ITU), only 7% of Indians have access to the internet.
• Applications that are over the top (OTT), such as WhatsApp, OLA, and others, do not require a telecoms company’s consent or a contract. The revenue of telecom service providers is hampered as a result.
• Huge shifts in the demands placed on the telecom equipment that help connect the entire system from the main server to the user.
• Timeframe for policy implementation: The government has withdrawn several initiatives to help the telecom sector, but by the time they reach the market, it is already too late.
• Lack of Telecom Infrastructure in Semi-Rural and Rural Areas: Entering Semi-Rural and Rural Areas requires Service Providers to pay a high initial fixed cost.
• Competition Heats Up, Putting Pressure on Margin: Since Reliance Jio entered the market, competition has intensified, and other telecom operators are feeling the heat from a considerable drop in tariff rates for both voice and data (more significant for data subscribers).

Steps the Government Has Taken:

• In order to meet the needs of India’s modern digital communications sector, the National Digital Communications Policy 2018 (NDCP-2018) was released in October 2018 to replace the National Telecom Policy 2012 (NTP-2012). By 2022, the strategy hopes to bring in USD 100 billion in investments and create 4 million new employment in the industry.
• The “Digital Communications Commission” has replaced the “Telecom Commission.”
• The Department of Telecom (DoT) published a gazette notification in 2017 recommending the state governments to provide ROW clearance more quickly and charge service providers very less. However, only a few states gave an answer.
• By removing some duties, the government helped the telecom industry.
• The government has accelerated reforms in the telecom industry and keeps moving ahead to provide telecom businesses freedom to expand.
• In accordance with the National e-Government Plan, the Department of Information Technology plans to establish more than 1 million common service centres around India with internet access.
• The FDI cap in the telecom industry has been raised from 74% to 100%. Out of 100%, 49% will be completed automatically, while the remaining 15% will require FIPB approval.
• Infrastructure providers that offer voicemail, dark fibre, and electronic mail are allowed to accept up to 100% FDI.
• The Digital India programme, launched by the Indian government, aims to connect various industries, including retail, healthcare, and others, to the internet.

Suggestions:

The NDCP-2018 promotes:

• Creation of a National Fibre Authority in order to establish a National Digital Grid;
• Establishing utility corridors and common service ducts in all upcoming city and highway road constructions;
• Establishing a cooperative institutional framework for Common Rights of Way, standardising fees and timeframes, and involving the Center, States, and Local Bodies;
• Elimination of obstacles to approvals; and
• Promoting the creation of Next Generation Open Access Networks.
• Investigate the possibility of a revenue-sharing deal between Internet players and telecom firms.
• Outsourcing non-core tasks including network upkeep, IT management, and customer support.
• Tower assets being divested into separate businesses will permit cost control and a focus on core activities.
• Introduce innovative and effective technologies like cloud computing and M2M (which enables networked devices to communicate information and carry out tasks without direct intervention from people).
• Benefits of industrial status must be implemented in line with other infrastructure sectors in the nation.
• The main factor driving growth will be the penetration of rural markets (72% of the population lives in rural areas).
• The government should use optical fibre to expand the network rather than the more expensive copper. To secure last-mile connectivity, this is required.
• The government must lay the groundwork for quick right-of-way approvals and cheaper right-of-way costs.
• It’s time to make a generational change so that service providers may continue to make money off the current pricing.
• The talent pool in the nation, which is bringing about many new ideas in AI, blockchain technology, etc., should be used by telecom operators.
• The need of the hour is for new infrastructure that can be shared, similar to how telecom service providers split tower costs.
• In order to make India capable of producing and exporting hardware components like mobile phones, CCTV cameras, touch screen displays, etc., the government should invest more in R&D.

Conclusion:

• The Indian telecom industry faces a number of difficulties, such as preserving an adequate spectrum, accelerating the adoption of new technologies so that they may be used to provide clients with more advanced and feature-rich services.
• Given the enormous prospects the telecom sector offers, a proactive and facilitative government engagement is urgently required.
• The Telecom Regulatory Authority of India (TRAI), an independent and statutory organisation, has a crucial job to do: monitor over the industry. The TDSAT (Telecom Disputes Settlement and Appellate Tribunal) must take a more aggressive and prompt approach to dispute resolution.