The recent tariff hike announced by all three leading operators of Indian telecom signaled not just an end to the aggressive price war, but perhaps marked a turning point for the sector to finally overthrow its long-prevailing ailments and realize its prospects. In combination with relief measures recently announced by the union cabinet, they have the potential to re-establish the telecom sector’s viability that is now well acknowledged as critical for economic growth and prosperity.
Similar to other Asia-Pacific countries, over the past two pandemic impacted years, India too has leapfrogged traditional broadband technologies with a mobile-first approach, creating even greater flexibility and opportunity. Without a doubt, the nation-wide broadband will be the biggest transformational opportunity in the next 5 years, powering the entire national digital economy and creating the highways for economic prosperity.
Remaining an open economy that is conducive to global collaboration is in the best interest of India’s telecom sector.
However, shaking off the hangover of 2020 and 2021 requires strategic investment in new ICT with the unwavering hand of government, industry, vendors, and communities to help steer policy, deployment, and services. Here, 2021 will be a landmark when the government announced a big-bang relief package for the telecom sector. Measures including (but not limited to) a four-year break for companies from paying statutory dues, approval to share scarce airwaves, rationalization of AGR definition to ensure lesser payout by telecom service providers (TSPs), removal of the old regime of interest and penalties, redefining spectrum expiry timelines, increasing FDI to 100 percent via automatic route, and allocation of over `14,000-crore telecom infrastructure were some of the key points. These are bold measures that have renewed hopes for the sector’s resurgence.
JS Deepak, former secretary of DoT, had recently stated that India needs to invest up to USD 10 billion every year in data infrastructure to bridge the digital inequality. The slow success of the National Broadband Mission (NBM) gives us a better understanding of the criticality of such financial investment. The NBM seeks to extend connectivity through optical fiber-based network, spanning 50 lakh kilometers by 2024. Even with the revised right-of-way policy, which has been accepted by a few states, the cost of laying down fiber cables remains prohibitively high and time-consuming due to logistical, structural, and hardware challenges. There exists a quicker, possibly much cheaper, alternative, namely, the wireless broadband.
To move the needle on the NBM, and more quickly provide broadband in rural regions, the DoT should consider wireless solutions, which not only enable faster rollout but also reduce TSP’s time-to-market. This could even be used as a stop-gap arrangement, wherein wireless access is provided to a specific village/rural area, and then shifted once the fiber network is installed. Meanwhile, if the government were to release the E-Band it would not just generate revenue for the DoT but also help TSPs to rollout their services faster. This could provide high-capacity links for rural coverage, acting as a supplement to fiber for NBM. The government’s move to turn Bharatnet into a public-private-partnership model is another indication of the support and investment required by the public sector to achieve its vision.
On the global map, India is well on its way to becoming a critical pillar in the global ICT supply chain. Playing to its strength of a strong R&D base and rich human capital, India has progressed to be an important contributor for global chipset design, software development, and strong services offering. However, recent policies preventing ease of business for foreign telecom OEMs stand in opposition to this progress.
History shows that open trade has catapulted innovation, especially in the field of technology.
Make in India should be encouraged, but only in conjunction with global cooperation and in support of India’s already-important role as a contributor to the global supply chain system. Any disruption in this established supply chain harms all parties involved, including India. India’s recent protectionist stance has proven to be a significant disruptor to the opportunity created by global supply chain cooperation. For instance, the telecom industry has already witnessed delayed deployment and increased costs resulting from the cancellation of a key 4G tender.
Way forward – Open trade, ease of business
While the government’s recent reforms and relief measures are significant, there is a lot that can be done to help the sector realize its potential. At the moment, non-fact-based criteria are leading to questions on the ease of doing business in India. Freeing up trade will move the country toward specialization in key areas, enable access to globally developed niche technologies, and encourage innovation as locally developed products and solutions will need to compete with global players.
Remaining an open economy that is conducive to global collaboration is in the best interest of India’s telecom sector. This would allow India to take advantage of the benefits of the global supply chain – the many components for one telecom product do not have to be developed locally at great expense. With open trade, organizations and the government can focus on having globally recognized technical and security standards to ensure the quality and performance of locally manufactured products.