New hope for telecom sector: Why Modi government’s policy must encourage investments and ensure financial stability

By: | Updated: March 26, 2018 4:46 AM

Each NTP document has left a lasting impression and can be considered the reason behind the phenomenal success of the telecom sector in the country over the last two decades.

telecom sector, modi govt, NTP99, ICT sectorAs technology evolves, the policy environment must also keep pace with it so that all citizens get secure access in an ever-changing environment. (Reuters)

As technology evolves, the policy environment must also keep pace with it so that all citizens get secure access in an ever-changing environment. This is key to a sustained, rapid socio-economic growth of the country. Towards this goal, the government has been regularly announcing telecom policies. Thus far, we have seen four such policies—National Telecom Policy 1994 (NTP94), National Telecom Policy 1999 (NTP99), Broadband Policy 2004 and NTP 2012. Now it’s time for the next phase of communications services in India—NTP 2018. Each NTP document has left a lasting impression and can be considered the reason behind the phenomenal success of the telecom sector in the country over the last two decades.

NTP 2018 is yet another opportunity for the government to bring in the much-needed fundamental change required by the Indian telecom sector for it to recast. The new policy must encourage investments and ensure financial stability of the sector. Several current levies and taxes need to be rationalised and multiple audits must be done away with, if we want India to leapfrog to the next level of socio-economic growth and improve our ease of doing business rankings. At this time, the industry is in a downward spiral. Cumulative debts amounting to around Rs 4.6 lakh crore on revenues of under Rs 1.8 lakh crore are forcing the industry to question the long-term prospects and viability of the sector. The industry has suggested a number of options to the telecom regulator when it was conducting the consultation process, including reduction of Spectrum Usage Charge to a uniform 1% (of AGR) and create a Telecom Finance Corporation as a vehicle to mobilise and channelise financing. Other submissions included the USO Fund contribution be rationalised to 3% and ultimately be done away within 2-3 years.

In terms of operational changes, the sector has been seeking resolution for a number of issues, including a single unified licence across the country where every service provider offering the same service must adhere to the same rules. Similarly, there is a need to put a spectrum management policy in place so that the major points of conflict are dealt with conclusively. Moreover, service providers should be allowed access to satellite spectrum for any application, i.e. V-SAT, DTH, teleport or any other form of telecom services.

Other recommendations circle around ease of doing business, data privacy, network security, manufacturing and skill development—prerequisites for an investor-friendly environment. The government is targeting the end of the fiscal year to finalise the new NTP. The minister has conveyed his cognisance of these issues at various public and industry platforms for which the industry is truly grateful. Trai has released detailed suggestions for NTP 2018, with many of industry’s recommendations included. We are happy that the regulator has considered most of the suggestions and has further come out with objectives, along with specific time-lines to achieve the same. Trai’s recommended simplifying the licensing and regulatory frameworks and rationalising taxes, levies and related compliance by 2019. We agree with this simplification as it includes reduction in multiple audits—this will save both cost and time of operators.

NTP 2018 is heading towards creating an ICT policy, focusing on getting investment for building networks and creating infrastructure. Trai has even gone ahead and suggested the latest policy document to be named as an ICT Policy 2018.
NTP 2018 also needs to take into account future technologies such as 5G, whose network is envisaged to accommodate applications and services with different latency, reliability and bandwidth. This would require effective sharing of network resources and network management techniques. Technologies like Software Defined Network (SDN) and Network Function Virtualisation (NFV) would be implemented for effective sharing of the network to support 5G use cases. Network functions such as network slicing, mobile content delivery network as service can be implemented through these technologies to support various 5G use cases. The government needs to come out with a policy to see that these initiatives and innovations are facilitated and are not hampered by any archaic policy statement, or intrusive irrelevant solutions.

Trai has also come out with several strategies to achieve certain targets for leapfrogging India into the top 50 nations in international rankings in ease of doing business in the ICT sector. Investments of over `2-3 lakh crore over the next two years would be required for a fully connected and an empowered Digital India. The industry has called for a stable investment-friendly policy environment where telecom operators can be sustainable enough to invest cash into their business and work together with the government to connect over 1 billion people to the internet.

As per reports, a 10% increase in broadband penetration leads to 1.4% growth in GDP. The time is truly ripe for a bold former PM Vajpayee like reforms through this NTP. Though the government has reduced GST rates and has made IMG’s recommendations to bring about systematic changes, not much has been done yet, while the industry continues to ask for relief. The need is to create a stable, predictable, innovation and investment friendly regulatory and policy environment. We hope the government will extend urgent relief, by addressing the industry’s recommendation, in upcoming NTP 2018.

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