After multiple rounds of intense open and transparent consultations spanning a period of over six months (involving all telecom trade bodies and professional entities and as many as a dozen DoT Committees)—a similar exercise has never been witnessed before either in India or elsewhere globally—the government, on May 1, put up the Draft New Telecom Policy 2018 for public consultation and comments.
After multiple rounds of intense open and transparent consultations spanning a period of over six months (involving all telecom trade bodies and professional entities and as many as a dozen DoT Committees)—a similar exercise has never been witnessed before either in India or elsewhere globally—the government, on May 1, put up the Draft New Telecom Policy 2018 for public consultation and comments. A truly historic instance since this is the first policy to herald India’s entry into the digital era. Please note that, appropriately, the policy is described as the National Digital Communications Policy (NDCP) because it is passé—even possibly limiting and incorrect—to try and use a policy based on obsolescent telecom for the brave new digital world.
Accepting that the exercise to create the draft NDCP was excellent and a great benchmark, what does one see as the substantive content—the much-needed reforms and policy corrections? An expert and critical study of the elaborate and comprehensive draft (probably somewhat too long?) reveals that there are several unique and brilliant proposals, which, if finalised and implemented, could well mark the beginning of the ‘achhe din’ (good days) for India’s digital ambitions.
There is already a strong groundswell of acclaim for the draft policy although, as always, there are some sceptics, naysayers and persons possibly who have only skim-read the long policy. Some of the great initiatives indicated by the draft are described in this article. The biggest challenge before the sector concerns poor business viability, and the primary causes—apart from legacy business and government decisions—are extremely high licence fee levies and spectrum usage charges (SUC) as well as exorbitant upfront spectrum prices.
How does the draft NDCP address these, without which the enormous investments so necessary for the sector will not flow? First, the draft talks of “reviewing levies and fees including Licence Fee…” Cynics would retort that they have heard this in past policies too, but nothing much has resulted from these. However, what is uniquely there this time is that the draft states that it will apply the “concept of pass through revenues with input line credit”.
This is a brilliant approach which will reduce the effective licence fee burden on the sector by avoiding double taxation. Industry had been asking for this for long and this would benefit the sector in other ways as well. It would encourage the growth of the tower infrastructure industry by removing the double whammy there and will enhance competition by making Virtual Network Operators viable. Many innovative new services would also become possible due to the feature of input line credit.
Second, the draft clearly seeks to rationalise “Spectrum Usage Charges (SUCs) to reflect the costs of regulation and administration of spectrum”. This, again, is a world-class approach, absolutely in line with international best practices. Going by published data of administration and spectrum regulation costs available in the public domain, these would be a small fraction of 1% of the operator’s revenues.
Third, as regards the killer burden of upfront spectrum prices, the draft policy eloquently calls for “Optimal Pricing of Spectrum to ensure sustainable and affordable access to Digital Communications.” This is a sea-change from the current and past policies, where maximisation of the auction prices was targeted, and not the optimum price that later proves essential for sustained benefits to the consumers and general public. Optimal pricing would obviously entail optimum auction design with optimal reserve prices. The follow-through for this goal would be to seek the Trai’s recommendations on optimal pricing after extensive consultations.
It is axiomatic that the three reforms would vastly improve the economics of the businesses. Additionally, the government has probably already accepted the Trai’s recommendations related to the ease of doing business. Apart from the other key features of the draft policy, just these four actions should ensure transformation of the sector and surely attract the targeted investments of $100 billion.
There are many other great highlights of the draft policy. One of the biggest challenges in the sector relates to quality of service, customer satisfaction and grievance redressal. In the current system, individual customers can’t go to the TDSAT, and consumer courts are not really equipped to deal with issues relating to modern digital communications. I am aware of the DoT’s efforts to create a telecom ombudsman over 10 years now, but these never saw fruition. The draft NDCP addresses this long-felt consumer need by stating that a telecom ombudsman would be set up as also a centralised web-based complaint redressal system.
Pushing for greater inclusion, the draft stipulates a review of the scope and modalities of the Universal Service Obligation Fund (USOF) as well as the targeted channelising of the Fund for achieving inclusion. A fresh and praiseworthy approach.
While India has made giant strides in strategic satellite initiatives, there is enormous scope for improvement in the area of commercial satellite communications (satcom). Satcom can be far more affordable than it is today through adoption of the modern technologies as well as through optimised policies and regulations. This important area has never been addressed in earlier policies whereas the draft policy, in at least three substantive sub-sections, covers about a dozen important action-items that could help drive the use of satcom for connecting the unconnected as well as for delivering ubiquitous broadband in India.
We need to vastly expand and upgrade our digital infrastructure of optic fibre, towers, backhaul facilities, etc, in order catch up with our peers in the global arena. There are many known and identified challenges. What is required is a dedicated and empowered authority or agency to resolve these. India is extremely low in fibre-connectivity, and the policy rightly lays down a fibre-first initiative to “take fibre to the home, to enterprises and to key development institutions” and “the establishment of a National Digital Grid” and the “creation of a National Fibre Authority”. I believe that an empowered authority for fibre and digital infrastructure on a sustainable basis is also envisaged in the policy.
India is seriously deficient in wifi. How can Broadband for All happen without adequate public wifi hotspots? We have only about 32,000 such hotspots whereas, by global norms, we should have 8 million. DoT has reportedly accepted Trai’s recommendations on wifi liberalisation, and now targets, via the policy, 5 million hotspots by 2020 and 10 million by 2022. This is broaband facility that is sorely needed.
There are many more dulcet notes flowing from the policy—on new next-generation technologies, R&D and disaster relief, on start-ups and IPR, data protection and security. For sure, this has all the makings of a great National Digital Communications Policy. As always, however, the devil will be in the implementation, and unless the government ensures the speedy implementation of the finalised NDCP, it would be a tragic missed opportunity that stems from a great policy. And, time is of the essence. As economist Keynes stated, “A wrong decision isn’t forever; it can always be reversed. The losses from a delayed decision are forever; they can never be reversed.”
The author is Honorary fellow, IET (London), and president, Broadband India Forum. Views are personal.