How Govt. Has Fared On Its Promise To Connect The Unconnected, Underserved

The more than 150-page Supreme Court verdict on what constitutes adjusted gross revenue (AGR) disrupting the telecom industry hinges on the link between the right of the government over all communication services, why telcos must share their revenue with the Centre and the National Telecom Policy objective of providing connectivity to the rural, far, hilly and remote corners of the country. While the right of the government over communication services and its claim over companies’ revenues as part of a contract cannot be faulted, the promise to connect the unconnected and the under-served is far from delivered. And that’s a weak link in the AGR piece as the government argument is that the revenue-share from telcos is meant to enable it to connect the unconnected.

Even 20 years after the New Telecom Policy (NTP) in 1999, which set phased goals to connect all, the rural teledensity (number of telephone connections per 100 individuals in rural India) was pegged at 56.61 as of August 31, 2019, according to the latest subscriber data issued by the Telecom Regulatory Authority of India (Trai). In other words, at least more than 40 individuals out of 100 in any rural or remote part of the country are without any phone connection. Not only that, the Trai numbers also show that rural teledensity declined from 56.67 as of July 31, 2019. The share of urban and rural wireless subscribers in the total mobile phone universe was 56.6 and 43.4 per cent respectively end of August.

The court judgment cites the National Telecom Policy 1999 to say that it ushered in a new regime, giving an option to the licensees to migrate from fixed licence fee to revenue sharing fee. Through NTP 99, the objective of the government was to achieve social and economic goals to provide the service to all uncovered areas including rural, remote, hilly and tribal areas and to create an efficient infrastructure thereby propelling India into an IT superpower and to increase teledensity from 0.4 to 4 by the year 2010 and to provide internet access to all district headquarters by the year 2000. Those numbers were of course met, but connectivity still remained a challenge.

The total wireless subscribers increased from 1.16 billion at the end of July 2019 to 1.17 billion as of August 31, 2019, recording a monthly growth rate of 0.23 per cent. While wireless subscription in urban areas increased from 659.87 million in July-end to 662.74 million in August-end, rural areas showed a drop from 508.45 million at the end of July to 508.25 million on August 31. On a yearly basis, fixed phone subscribers dropped by as much as 6.17 per cent across all circles in August 2019, from the corresponding period last year. Wireless subscribers grew by only 0.35 per cent.

In fact, since 2015, rural teledensity has grown only from 48.64 to 56.61, while urban teledensity is up from 151.09 to 161.54. The overall teledensity between August 2015 and 2019 has moved up from 80.44 to 90.34.

The overall teledensity graph is interesting — 80.44 in August 2015 to 82.54 in 2016 to as much as 93.71 in 2017. It dipped to 91.11 in 2018 and then to 90.34 in August 2019. As for rural teledensity, it was 48.64 in August 2015, 50.95 in 2016, 56.80 in 2017, 58.61 in 2018 and down to 56.61 in 2019. Urban teledensity inched up from 151.09 in 2015 to 152 in 2016, and then zoomed to 174.01 in 2017 before dropping to 161.07 in 2018. In August 2019, urban teledensity gained a bit to reach 161.54.

Between 2015 and 2019, the rural market share in mobile telephony grew from 41.7 per cent in 2015 to 42.43 per cent in 2016. In August 2017, the rural market share was down to 41.52 per cent and then was up at 43.92 per cent in 2018. In August 2019, it dipped again to 43.4 per cent.

The SC judgment states that a “bare perusal of sub-section (1) of Section 4 of the Telegraph Act shows that the Central Government has the exclusive privilege of establishing, maintaining, and working telegraphs. This would mean that only the Central Government, and no other person, has the right to carry on telecommunication activities.” However, the Act enables the government to part with “this exclusive privilege in favour of any other person by granting a licence in his favour on such conditions and in consideration of such payments as it thinks fit”. It then goes on to say that such a licence is in the nature of a contract between the Central Government and the licensee and therefore the terms and conditions of the licence, including the definition of AGR, are part of a contract between the licensor and the licensee. Soon after, it refers to the telecom policy objectives of reaching out to the remote, tribal and hilly areas.

Whatever may be the outcome of the AGR verdict on telcos, the government must revisit its goal of connecting the unconnected more aggressively to power the Other India.―Authored by Nivedita Mookerji, Business Standard