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  1. Draft telecom policy of no use, change the rules

Draft telecom policy of no use, change the rules

When the Atal Bihari Vajpayee government came out with a new telecom policy in 1999, it was truly revolutionary. It announced a shift from the cripplingly high fixed-licence fees to a more reasonable revenue-share-based fee and, in return for bailing out telcos, it moved from the private sector duopoly to a many-player model that was responsible for Indian tariffs falling so low even before RJio came in.

By: | Published: May 3, 2018 3:09 AM
And while the government was keen to dismiss the Trai chief for challenging its authority, the fact that this was done by creating a more reasonable appellate structure—Trai’s rulings could now be challenged at TDSAT instead of at the Trai itself—made the move both palatable as well as progressive.

When the Atal Bihari Vajpayee government came out with a new telecom policy in 1999, it was truly revolutionary. It announced a shift from the cripplingly high fixed-licence fees to a more reasonable revenue-share-based fee and, in return for bailing out telcos, it moved from the private sector duopoly to a many-player model that was responsible for Indian tariffs falling so low even before RJio came in. And while the government was keen to dismiss the Trai chief for challenging its authority, the fact that this was done by creating a more reasonable appellate structure—Trai’s rulings could now be challenged at TDSAT instead of at the Trai itself—made the move both palatable as well as progressive.

In contrast, the Draft National Digital Communications Policy, just put out for public consultation, falls short on almost all parameters. Even before the BJP came to power, it was clear telecom levies were cripplingly high—payments to government, including spectrum costs, were up from 11% of industry revenue in FY07 to 32.4% in FY17—but the government did nothing about it; four years later, instead of cutting this, the draft policy just talks of catalysing investments by “reviewing levies and fees including Licence Fee, Universal Service obligation Fund (USOF) levy and .. rationalising Spectrum Usage Charges (SUCs) to reflect the costs of regulation and administration of spectrum”.

Nor did the government do anything about spectrum prices that had been unfairly jacked up by restricting supply, telling telcos their licences wouldn’t be renewed if they didn’t buy spectrum, etc—of the 2355 MHz of spectrum on auction in 2016, just 965 MHz were bought; and none of the 700 MHz that was priced at a minimum of over `4 lakh crore was bought.

When a cash-strapped industry is finding it difficult to invest more than $10 billion a year right now, the policy talks of attracting $100 billion in another four years. Clearly, as in the case of the 700 MHz auction, the policy is looking at what the government wants to sell spectrum at, not what telcos can afford—a 5G network will require the industry to invest as much as it has till date, but no one has the money to do this. Other goals, such as the one to ensure 50% of households have access to fixed-line broadband, sound good but serve no real purpose since delivering data on mobile has proven to be far more successful.

And while it is not clear how the government will ensure right-of-way access for laying optic fibre when it has so spectacularly failed so far, it is odd to hear it say it will identify and make available “new Spectrum bands for Access and Backhaul segments for timely deployment and growth of 5G networks”—it continues to defer a policy on E & V bands, so suitable for data networks, because it is worried about free access being dubbed a scam! Nor is it clear what is to be made of the promise to monitor “efficient utilization of spectrum by conducting systematic audits of the spectrum allocated to both commercial and government organizations” when MTNL and BSNL have been squatting on valuable spectrum for years and nothing was done.

A promise is made to make M&A rules more friendly, so does this mean the government will give up on its coercive policy to make telcos pay contested levies prior to an M&A as is happening in Bharti-Telenor and Vodafone-Idea? It would be helpful if, instead of grandiose statements and targets, the government actually implemented some changes as proof of its intent.

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  1. Arjun Iyer
    May 4, 2018 at 7:23 pm
    who wrote this?
    Reply

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