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Tower Troubles: Industry perspective on infrastructure challenges

June 20, 2017

Infrastructure providers including tower companies have played a key role in establishing a robust telecom network in the country, making concerted efforts to enable seamless and ubiquitous connectivity. However, there are various challenges that plague the industry. A key challenge pertains to the poor implementation of various government initiatives taken for the industry’s benefits. For instance, the uniform right-of-way (RoW) rules released by the government in November 2016 have done little to address the challenges associated with the roll-out of telecom infrastructure. Although these rules lay down a clear framework for the grant of approvals and settlement of disputes in a time-bound manner with regard to the installation of mobile towers and laying of optical fibre cable and copper cables, their implementation remains a key issue. This is because of considerable differences in execution across states and multiple local bodies within the states.

Therefore, a lot still needs to be done on the ground. Only a couple of states have translated the RoW rules into direct state guidelines. The states face problems pertaining to the high charges imposed for site approval and the commercial terms based on which site approval will be granted. Moreover, no concrete steps have been taken to implement the rules at the municipal level.

Besides implementation issues, evolving market conditions also pose a challenge. Given the current phase of data hyperconsumption and the resultant opportunities, infrastructure providers are keen to diversify their offerings. However, there is still a fair amount of ambiguity in the industry regarding the kind of additional services an infrastructure provider can offer.

The introduction of goods and service tax (GST), which aims to avoid the multiplicity of taxes in the country, is another cause for concern. The tower industry is already subject to an excise duty on the procurement of tower equipment. This duty is now called GST input tax. Further, when the tower industry offers its services to operators, it is subject to a service tax, which is now called output GST. However, the industry will not be allowed to adjust the input GST against the output GST. This would lead to an increase in the cost structure of tower companies by 12.5 per cent to 13 per cent. Owing to these anomalies, GST, which was supposed to be a game changer, has now become a challenge. Another aspect of the GST is that it does not cover the energy sector. The exclusion of energy from the ambit of the GST is an unfavourable development for the industry as energy costs account for a major portion of the industry’s total costs.

Industry initiatives

Industry associations like the Tower and Infrastructure Providers Association (TAIPA) have been taking steps to address the issues and concerns faced by the telecom infrastructure industry. In this regard, TAIPA’s key focus areas are cost minimisation and efficiency enhancement in the infrastructure industry. In addition, it has been working in close coordination with the Cellular Operators Association of India (COAI) and the Association of Unified Service Providers of India (AUSPI) on two major issues – one is related to electromagnetic field (EMF) radiations emitted from telecom towers, and the other pertains to obtaining approval of state and municipal authorities for the establishment of telecom towers. For the former, the COAI and AUSPI have formed an EMF committee, while for the latter, TAIPA and the COAI have formed circle coordination committees, which work together and conduct regular meetings to discuss the issue.

Some recommendations

To resolve the issues and concerns in the telecom infrastructure industry, the following steps can be taken:

• A governance model needs to be adopted with regard to RoW rules, under which the central government will have the authority to make the final decision. Further, state governments should be mandated to specify permission charges, installation charges and sharing charges within a stipulated time frame.

• As the importance of public Wi-Fi in establishing last-mile connectivity increases, infrastructure providers will have to expand their service portfolio by creating Wi-Fi hotspots. To this end, the role of infrastructure providers needs to be redefined to make it more relevant to industry requirements.

• A model on energy management needs to be evolved by power companies based on their commercial viability. This model should be developed independent of the tower companies.

• The government’s Smart Cities Project Mission will be the next major source of business opportunity for tower companies. Thus, there is a need to establish a common telecom infrastructure, including towers and fibre, in these cities. To this end, TAIPA is in talks with the Ministry of Urban Development to discuss the role of infrastructure providers in the development of smart cities.

Going forward, there is a need to expand the role of tower companies to end-to-end infrastructure providers. This will help operators achieve cost efficiency and result in faster network roll-outs. s

Based on an address by Umang Das, Vice-Chairman, TAIPA


 
 

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