After 2016, the industry’s quarterly AGR revenue has bounced back for the first time, reaching levels prevailing before The Great Disruption that year.
The government has intervened many a times in the past 27 years of Indian telecom, almost with clockwork regularity: First, in 1994, then, the historic intervention of 1999, and again in 2004, 2012, 2018, 2019, September 2020—and in 2022, the implementation of Version 8.0 of Indian telecom expected. Every time, reforms to “disentangle” this complex sector and accelerate its growth have been announced. Similar challenges have confronted telecom in the US (PCN auctions), the UK, Europe (3G), Indonesia, etc, but none of them intervened to safeguard the interests of the consumer.
The September 2021 package of relief measures was a morale-booster for the ailing sector. After 2016, the industry’s quarterly AGR revenue has bounced back for the first time, reaching levels prevailing before The Great Disruption that year. The last Quarter has recorded a much-motivating Rs 53,510 crore.
However, much more needs to be done. As expert analyst Nandini Vijayaraghavan has specifically pointed out, private telcos need to be fairly compensated for catering to rural and EWS customers. In fact, the digital divide segregates not just urban India from rural but also those above and below the poverty line and, importantly, persons with disabilities and senior citizens who need help with ICT use. The idle USOF corpus is huge; along with the interest that could have been earned in the 18 years of USOF’s existence, the corpus would exceed Rs1 lakh crore! The next set of reforms should bring in accountability for this important resource being wasted, as envisaged in the NDCP 2018.
Although the action on spectrum tenure and levies, exclusion of non-telecom revenue from AGR, and other measures are quite bold, they need to be supplemented with more fundamental remedies. MoS Devusinh Chauhan recently indicated that the telecom ministry is currently working on reforms focussed on ease of doing business, legislative reforms, satcom services, spectrum reforms and measures to reduce litigation. These are undoubtedly good moves, but not really sweeping enough to take us to the desired level of digital success. As Vijayaraghavan highlights, the profitability of the Indian telecom industry is significantly below that of even its Asian peers and needs urgent attention.
First and foremost, the idea of seeking to maximise revenues from the sector through various spectrum and licensing levies must be discarded, and the fact that a healthy, competitive and vibrant telecom sector is a very important public good and a powerful engine for the economic growth of other verticals of the economy should be appreciated. It needs to be cherished and nurtured—not burdened with enormous costs and levies. The payback is achieved through the large socio-economic benefits to the nation and its citizens. Given the kinks of the spectrum policy prevailing since 2010, 50% of the spectrum put for auction has remained unsold and idle, resulting in a national economic loss of probably over Rs 5.4 lakh crore. This needs immediate change.
Second, talking of competition, it needs to be ascertained what India really wants—true liberalisation, technology neutrality and full competition, or to continue with the existing closed system of a small oligopoly of vertically integrated powerful incumbents in a highly consolidated market. It may be noted that the TRAI has offered a brilliant solution for achieving enhanced competition, higher operating efficiencies and increased investments: Untying the knotty legacy of unitary licensing to create licensing of the unbundled separate layers of core network facilities (Access Network Providers) and Service Delivery Operators (i.e. MVNOs). Clearly recognising that the core or access network would not support more than 3-5 players due to spectrum and capex limitations, TRAI has proposed enhanced/full competition for the players in the service delivery layer, where such resource limitations do not apply.
The layers of enhanced scope for infrastructure providers (IP1s) and MVNOs (services delivery operators) are already available and that for M2M, sensors and applications have been recommended by TRAI. All that is required is for the government to accept these expert recommendations. When implemented, this licence unbundling would be the most revolutionary measure since NTP94 or NTP99. For optimised adoption of 5G, the government must also ensure that 5G spectrum is allocated directly to enterprises of other verticals like healthcare, manufacturing, logistics and transportation, education & research, etc. Also vital is a 20-fold increase in unlicensed spectrum to spur R&D, Innovation and Affordable Hi-Speed Broadband.
Talking of recommendations, one is taken aback to note that, from April 2010 till date, TRAI has issued as many as 61 recommendations relating to telecom (majority actually sought by government!), but only 18 of them, i.e. about 31%, have been accepted, either partially or wholly. This indicates a fundamental difficulty in the system. The next reforms need to address this by placing transparency and equal obligations on both parties with regard to recommendations.
The writer is President, Broadband India Forum. Views are personal.
