Column: Time for telecom 2.0

Updated: Jun 5 2014, 06:59am hrs
When I first joined telecom in 2006 for a period of two years, the industry was in the midst of a dramatic transformation. In just 15 years of its inception, almost every Indian had a mobile phone in his/her hand. With the latest technologies, the lowest prices and the most innovative business models, India showed the world how passion, ingenuity and entrepreneurship could create a world-class industry in a matter of years. In the process, the impact on the lives of people was profound. The result was an astonishing 5%-plus contribution to the GDP of India.

In early 2013, when I started my new job at Airtel, I went around the country and met hundreds of young consumers. Everywhere I went I saw excitement in their eyesthe excitement of using this amazing technology in newer and even more interesting ways. From entertainment to commerce to improving productivity to accessing new markets, the possibilities of what telecom, especially mobile broadband, could do to impact the lives of people were infinite. I saw the immense opportunity of telecom contributing to the economic growth of the countryyet again. Telecom was, quite simply, again at the cusp of a transformation.

Sadly, however, the excitement of the opportunity is at odds with the broken state of the industry today. The industry is saddled with over R2,50,000 crore of debt and a return on capital that makes investment questionable. Taxes and levies are up to a pernicious 30%. Penalties and fines have created an air of suspicion. Investments are pouring in but more for the artificially high cost of spectrum rather than for rollout of networks. Time is spent on litigation and a defence of hardened positions. The excitement of the broadband revolution still seems distant. There is massive opportunity for the new government led by Narendra Modi in correcting this. The good news is that it can be done. The even better news is that in just five years, consumers will be able to see a dramatic impact in their lives. All it calls for is bold and decisive action through a transparent framework that maximises the use of scarce resources and creates an enabling framework with a set of consistent, clear and non-discriminating rules. These can be achieved with a stroke

of a pen and will lead to

an outcome that is good for the economy, good

for the industry and good for the citizen. Industry can then get on with the job at hand. So, here is a five-point wish list.

Make more spectrum available. Spectrum is the resource that networks use. It is also a precious national resource. Without adequate spectrum there can be no broadband. Much of the spectrum in India is with the defence and what is available is fragmented because there are too many players. As a result, the average holding of Indian companies is 13 MHz compared to a whopping 100 MHz in western countries. The result of these inadequate holdings is the inefficient use of spectrum by operators with fewer customers on the one hand and congested networks and poor customer experience on the other. Additionally, it results in the need for more towers and more energyan outcome that is good for no one.

Encourage spectrum trading and sharing. Where spectrum has been allocated, it must be put to use in the most efficient way. The government must, therefore, put in place a transparent framework that encourages the trading and sharing of spectrum freely, so that a scarce national resource can be used to drive the growth of broadband.

Eliminate the artificial scarcity of spectrum and reduce the

cost of doing business. The cost of spectrum in India is very high. At R2,270 crore per Mhz, the cost of spectrum is amongst the highest in the world. This is because of the artificial spectrum scarcity that has been created by putting only very limited spectrum up for auction with much of it

remaining with defence. The government must find a way to free up this spectrum and auction all of it next year. Not doing this will lead to the cost of spectrum being needlessly inflated. Equally, the government must lower revenue-share-linked spectrum usage charges that were put in place prior to the policy of market-linked spectrum costs discovered through auctions. This will allow the industry to invest precious capital in rolling out networks, benefiting society rather than pouring money behind just acquiring spectruma benefit that leads only to short-term gain for the exchequer.

Make it easy to roll out networks. Simplify the processes, costs and rules in rolling out networks and acquiring permissions. Specifically, put in place a national framework for enabling the roll-out of fibre on the ground and eliminate the mind-boggling complexity and liaising with scores of municipal corporations that set their own rules with costs that vary dramatically from one town to another.

Make penalties transparent. Enormous penalties are being levied on the industry because of minor process-related errors with no judgement given to materiality of the offence. This has led to endless litigation. This can be dramatically simplified so that there is an environment of support and collaboration between the industry and the government.

As the new government begins its work, there is an air of excitement and hope. A broadband revolution can be unleashed. This will open up infinite possibilities to connect people to each other, to markets and to reach every citizen in the most seamless way possible. All of this has been done before in the first wave of the industry. It can be done again. In five years, Indian telecom can be on the world map once more. The consumer is ready. The industry is ready. The time for telecom 2.0 is now.

Gopal Vittal

The author is managing director & CEO, Bharti Airtel (India & South Asia)