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Cabinet Approves NDCP-2018

September 27, 2018 was a landmark day for the Indian telecom industry. The Union Cabinet approved the National Digital Communications Policy – 2018 and re-designated the Telecom Commission as the Digital Communications Commission. The policy shall form the main pillar of Digital India, addressing emerging opportunities for expanding not only the availability of telecom services but also telecom-based services.

Impact

The NDCP-2018 envisions supporting India’s transition to a digitally empowered economy and society by fulfilling the information and communications needs of citizens and enterprises by establishment of a ubiquitous, resilient, and affordable digital communications infrastructure and services.

The customer focused and application driven NDCP-2018 shall lead to new ideas and innovations, after the launch of advanced technology such as 5G, IoT, and M2M, which shall govern the telecom sector of India.

Objectives

The key objectives of the policy are broadband for all; creating 4 million additional jobs in the digital communications sector; enhancing the contribution of the digital communications sector to 8 percent of India’s GDP from ~ 6 percent in 2017; propelling India to the top 50 nations in the ICT Development Index of ITU from 134 in 2017; enhancing India’s contribution to global value chains; and ensuring digital sovereignty. These objectives are to be achieved by 2022.

Features

The policy aims to provide universal broadband connectivity at 50 Mbps to every citizen; 1 Gbps connectivity to all gram panchayats by 2020 and 10 Gbps by 2022; ensure connectivity to all uncovered areas; attract investments of USD 100 billion in the digital communications sector; train one million manpower for building New Age Skill; expand the IoT ecosystem to 5 billion connected devices; establish a comprehensive data protection regime for digital communications that safeguards the privacy, autonomy, and choice of individuals; facilitate India’s effective participation in the global digital economy; and enforce accountability through appropriate institutional mechanisms to assure citizens of safe and secure digital communications infrastructure and services.

Strategy

The policy advocates establishment of a National Digital Grid by creating a National Fiber Authority; common service ducts and utility corridors in all new city and highway road projects; creating a collaborative institutional mechanism between the center, states, and local bodies for Common Rights of Way, standardization of costs and timelines; removal of barriers to approvals; and facilitating development of Open Access Next-Generation Networks.

Shares of telecom companies rose immediately after the announcement. Vodafone Idea gained about 1.5 percent, and Reliance Communications rose more than 3 percent.

Industry response

“The ICT sector plays an important role in the socio-economic development of a nation. There is a direct correlation between ICT development – the availability of telecom, broadband, computers, and software and the overall economic growth of a country. Considering the importance of a digitally inclusive community for economic development, civic participation, education, healthcare, and public safety, the Indian Government has proactively taken the Digital India initiative which aims to transform India into a digital economy. Access to ubiquitous, good quality, secure, and affordable ICT infrastructure is vital to build a foundation upon which applications, processes, businesses, and new technologies such as 5G, IoT/M2M could be developed for implementing the Digital India vision.

The new National Digital Communication Policy – 2018 (NDCP-2018) has been recently approved by the cabinet which aims to cater to the modern needs of the digital communication sector of India.NDCP-2018 envisions supporting India’s transition to a digitally empowered economy and society by fulfilling the information and communications needs of citizens and enterprises by establishment of ubiquitous, resilient, and affordable digital communications infrastructure and services.The key objectives of the policy are provisioning of broadband for all; creating four million additional jobs in the digital communications sector; enhancing the contribution of the digital communications sector to 8 percent of India’s GDP from ~6 percent in 2017; propelling India to the top 50 nations in the ICT development index of ITU from 134 in 2017; enhancing India’s contribution to global value chains; and ensuring digital sovereignty.

This policy will facilitate development of the communication infrastructure and services to achieve inclusive socio-economic growth in the country and will also propel India into becoming the front-runner in the Fourth Industrial Revolution.

However, some of the critical issues such as right of way, fiberization, sharing of infrastructure and resources, development of data centers, licensing framework, and spectrum management require attention to address challenges being faced by the industry and fuel the next wave of growth.”

RS Sharma
Chairman,
TRAI

“The policy enunciations are very critical for future tech adoption and also for citizen’s privacy rights and hence the government, industry, and other stakeholders will have to work together to achieve some of the desired outcomes and drive the country to the right path. According to IAMAI, if we miss out on these critical areas, then we will not have an effective policy on new technologies, will not have access, and if we do not take care of the citizen’s rights and yet not harm businesses, then the policy will not have the desired outcomes.”

The Internet and Mobile Association of India (IAMAI)

“COAI congratulates DoT and TRAI on a well-crafted and comprehensive policy document that had wide industry and stakeholder input and support. The industry welcomes the much-awaited policy, NDCP 2018, the implementation of which will have a positive, long-term impact on the sector. We hope that DoT will closely monitor the timely implementation of this policy, so that the industry can recuperate from the deepening  financial stress. Thus, the most important and urgent requirement is to restore the financial health of the sector for which the policy document envisages the reduction in levies and ease of doing business. This will help the industry in achieving the goals and fulfilling the objectives outlined in the policy.”

Rajan S Mathews
DG,
COAI

“The new policy is a significant step forward in building a future ready digital communications sector in the country. It recognizes and promotes investment in all aspects of the industry – R&D, product development including incentives for local manufacturing. It also recognizes and seeks to correct the previous market challenges around fixed line fiber infrastructure.”

Ashish Sharma
Partner,
PwC Strategy

“The thrust of the National Digital Communications (NDC) Policy 2018 aims to recognize telecom as a key utility and therefore facilitate its universal access. However the policy does not lay down specific measures to address the financial stress build up in the sector over the last 2 years. The policy aims toward accelerating broadband penetration through ramping up fiber coverage and deployment of 5G to achieve universal broadband coverage across India at 50 Mbps speed by 2022. Upgrade to 5G will require significant investments to be made into spectrum and fiber rollout. The NDC Policy recognizes spectrum as a key natural resource and aims at ensuring availability for new spectrum bands for access and backhaul segments for timely deployment and growth of 5G networks and next-generation access technologies. The policy also aims at optimal pricing of spectrum and further liberalizing spectrum sharing and trading regime. Pricing for the 5G spectrum will remain a deciding factor for telcos to make further investments.

As it stands today, Indian telcos capacity to invest into 5G in 2018 could be restrained due to weaker operational cash flows, already high debt levels, pressure on EBITDA, currently low level of 4G penetration, and pending consolidation. The policy envisages investments to the tune of USD 100 billion to meet 5G targets, mobilizing the same in the near term from private participants would be challenging. Such investment shall be necessary toward meeting the objectives of providing universal broadband coverage and infrastructure upgradation. Initial investment envisaged in the proposal is likely to be driven by public investments. This is because the internal free cash flows at the industry level have been subdued over the last 2 years.”

India Ratings

 

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