We are at a unique moment in India’s history. With the announcement of the New Digital Communications Policy (NDCP), India is poised at the cusp of the Industrial Revolution 4.0 and continues to steadily move forward toward the vision of a digitally empowered society and a knowledge economy. The objectives and strategies stated in the policy will go a long way in shaping the future of the communications sector as well as of Digital India. Besides the historic announcement of the Digital Communications policy, the year so far has witnessed the data revolution, a mega merger deal, initiation of 5G roadmap and trials, and enormous push to digital infrastructure that includes fibers, towers, Satcom, and public wi-fi.
Data spurring innovation
Data, one of the most valuable assets in the current global economy is spurring innovation by leaps and bounds similar to the game-changing original industrial revolution. The data services are helping bridge the gaps in physical infrastructure by putting in place the digital infrastructure and empowering every Indian to access improved governance, education, business communication, security, and enhance the overall socio-cultural fabric of the country. As per Deloitte’s Global Analysis, India has crossed the inflexion point for hyper Data Usage which happens when smartphone penetration crosses 25–30 percent. With high adoption of smartphones in rural as well as urban India, broadband is fast matching the importance of essentials like road, water, and electricity.
The year of a new and efficient market structure
This was a remarkable year of much-needed consolidation with many mergers and acquisitions. The most awesome one was the merger of Idea Cellular Ltd and Vodafone India Ltd in August 2018, which created the country’s largest telecom
company with 408 million active subscribers, the second largest in the world after China Mobile with revenue market share of 34.7 percent. This phase of consolidation is bound to usher in the direly-needed improvement in the financial health and sustainability of the telcos.
The big bang announcement – NDCP
In a first, the National Digital Communications Policy (NDCP) announced in Sep 2018 that the sector will move away from telecom and take the new role of digital to capture the realities of ever changing technology in the new converged world.
The policy addresses broadband infrastructure in the very first objective – Connect India. It also recognizes that the digital era cannot happen without India marching toward Fiber First that constitutes setting out optical fiber links throughout the nation. The policy for the first time refers to Satcom in great detail, which will go a long way in enhancing connectivity especially in rural and remote areas. Liberalization of public wi-fi policy, based on the TRAI recommendations, is a brilliant new approach – one that is direly needed for India.
It is heartening to see that the government is moving away from the conventional goal of revenue maximization from auctions to a regime of optimal reserve price and valuation of spectrum. For the first time in India’s history, policy is recognizing spectrum as a key natural resource for public benefit to achieve India’s socio-economic goals. Reference to Optimal Pricing of Spectrum is a big positive. This is the first time that the government has conveyed that auctions would be based on optimal design.
The policy also highlights the need to review all levies and duties. The concept of pass through revenues with input line credit will help reduce the effective license fee burden on the sector by avoiding double taxation.
5G for a networked society
5G is being perceived as the foundation for expanding the potential of the networked society. 5G is expected to be a game changer for various sectors such as automotive, healthcare, manufacturing, and energy/electricity. Working closely with the Government of India as part of the 5G high level (HL) forum, Broadband India Forum (BIF) has formed a committee of 5G, a first of its kind, to champion the roll-out of 5G trials with key industry players and translate the 5G linked policy objectives into on-ground reality and business friendly implementation. First Response Public Safety Network has been proposed as the first trial case. The committee also zeroed down on the two other industry verticals as Internet of Things (IoT) and manufacturing, where the first set of 5G trials will be carried. Each of these verticals will be headed by an industry leader who will be driving the 5G trials with support and collaboration of other leading industry players. The companies identified as industry leaders for carrying out the first set of 5G trials include Nokia for Public Safety, Sterlite for Manufacturing, and Aeris for IoT. In fact, the first set of these trials is expected to be completed by end of 2018 or early 2019.
The HL forum has submitted its report to the government, suggesting various measures to boost 5G uptake. According to the report released by DoT, the price of spectrum should be lowered and the quantum of airwaves increased. The government expects the commercial launch of 5G services in 2020. The key recommendations and action plan for the report include spectrum policy, regulatory policy, education and awareness promotion, application and use case labs, participation in international standards, development of application layer standards, and major 5G trials.
Ubiquitous digital infrastructure
The urgency for creating a good digital infrastructure in a ubiquitous manner is being realized by all – the industry, the regulator, and the Government. While towers and antennae would remain a major element, the role of optic fiber would be further enhanced to an all-pervasive, essential status and the importance of public wi-fi hotspots, E&V band Wireless Fiber, would assume high proportions. Digital infrastructure needs to increase threefold in the next five years to help achieve the goal of trebling GDP to USD 7.5 trillion over the next five years requiring investment to the tune of USD 100 billion.
The NDCP 2018 has rendered importance to Fiber First initiative, a National Digital Grid with constitution of National Fiber Authority and fiberization of towers. In terms of the total fiber deployed to the population ratio, India lags far behind comparable regimes like the United States of America and China. The United States of America and China ratios stand at 14× and 9× of India, respectively. India is at least 4-5 years behind China in terms of connecting last mile.
Globally, the satellite industry is growing by leaps and bounds. The overall space market is about 323 billion USD, of which nearly 40 percent is that of commercial communications. While India is currently making excellent progress in the strategic segments, we are lagging behind in the commercial communications segments. About 10 Gbps of data bandwidth is going waste all over India from satellites while rural India remains starved of connectivity. Satcom is quick and can become economical to deploy in rural areas through the adoption of modern technologies and through optimized policies and regulation. For the first time, this unexploited sector has received elaborate and fair treatment in the NDCP.
The NDCP targets to supply 5 million wi-fi hotspots by 2020 and 10 million by 2022. For India to reach today’s global average of 1 hotspot for 150 persons, India would need another 8 million hotspots. Liberalization of public wi-fi policy is a veritable dose of oxygen for broadband in India.
2018-19 certain to be a landmark year
In telecom, India has leapfrogged more than once. It skipped analog and leapt straight to 2G GSM digital with remarkable success. Again, with scant attention to 3G, it has jumped to 4G with outstanding results on data consumption and broadband take-up. Once more, an opportunity is arising to rapidly race ahead on the broadband highway to Industry 4.0. It is highly likely that the powerful thrust of the NDCP 2018, 5G, and the new breed of services such as converged services through FTTH, M2M communications, cloud computing, and the IoT will usher in a new wave of growth and resurgence into the sector. For sure, the year 2018-19 will go down in the annals of Indian telecom as a landmark year in view of the historic new policy that will restore investor confidence, business sustainability, and public benefit through launch of new technologies and growth of digital infrastructure. Much has been achieved and there is a long haul ahead but the future is indeed digitally bright and enticing.
Research inputs provided by Garima Kapoor and Abhijit Panicker.