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Interview with T.V. Ramachandran, President, Broadband India Forum

September 06, 2017

Interview with T.V. Ramachandran, Presid...
The Indian telecom industry witnessed many ups and downs during the past year. On the one hand, the government took concrete steps to address some long-pending issues such as right of way (RoW), spectrum harmonisation and a unified tax regime in the form of the goods and services tax (GST). On the other, the entry of a new player intensified competition and negatively impacted the profitability of key players. T.V. Ramachandran, President, Broadband India Forum shares his views on the progress in the telecom sector, challenges that remain unaddressed and the way ahead....

What has been the progress in the telecom sector in the past one year?

To my mind, the singular achievement of the telecom sector in the past year is the entry of a new disruptive player, which has taken the market by storm due to its disruptive pricing strategy and fully digital approach. Such has been the impact of this new entrant that other players have been forced to drastically reduce their tariffs, enhance their service offerings and take measures to ensure customer satisfaction and retention. This has led to increasing 4G penetration and brings us on par with global technology advancement. It has also brought about staggering growth in mobile data, while we were languishing at around the 100th position in 2016; in just 6 months in 2017, we have achieved numero uno position in data usage and consumption. The average data consumption has shot up 4 times from around 250MB/month to over 1 GB/sub/month over the last six months. The past year also saw India dethroning USA to become the 2nd largest user of smartphones in the world.The other major milestones in the sector in the past one year include among others:

• The shifting focus on digital payments and the need to increase financial inclusion due to the government’s demonetisation move.

• The increased focus on Digital India and BharatNet programs to improve rural connectivity, giving great impetus to the proliferation of broadband services.

• The in-depth consultations undertaken by the Telecom Regulatory Authority of India (TRAI) on important issues related to licensing, spectrum and quality of service requirements for machine-to-machine (M2M) communications, draft guidelines for M2M service providers and the increased focus on internet of things (IoT) as one of the principal drivers of the 5G policy.

• The government’s emphasis on launching a long term backhaul spectrum plan and policy.

• The initiatives undertaken to bring India at the forefront of the global 5G ecosystem.

• The launch of the goods and services tax on all services including telecom.

• The launch of payment banks, which is expected to play a key role in financial inclusion.

• The acceptance of e-Aadhar authentication and Aadhaar-enabled payment systems, launch of Aadhaar applications (BHIM, etc.) for mobile subscriptions.

• The emphasis on defining and improving minimum wireless broadband data speeds and labeling them to enable easier and transparent choice for the consumers.

What have been the most impactful policy developments over the past year?
Most of the major items of progress listed in my response to Q.1 above are due chiefly to the initiatives of the Government, the Regulator and the industry.While the sector is still reeling under enormous debt burden of about Rs.4.5 trillion, policies for restoring the health of the players of this industryis of paramount importance. With this as the backdrop, the Government recently constituted and Inter-Ministerial Group consisting of Secretaries to Govt. from the Ministry of Telecom, IT, Finance and Department of Industrial Policy and Promotion to look into the matter and suggest reforms/measures to improve the overall health of the sector. The announcement of the government to come up with a New Telecom Policy to address these policy related issues and others is also a welcome move in this direction.

What are the key challenges that remain unaddressed?
The biggest challenge before us is the expeditious enhancement of broadband penetration which is currently quite low - barely 276 million broadband users (TRAI Report on Telecom Services Performance Indicators of March’ 17) in the country. We are lagging way behind our peers and rank pretty low in the global order. Unless this is improved on a war footing, our socio-economic progress and the vision of Digital India are veritably under serious threat. The current Government has been taking and is continuing to take giant strides to overcome the spectrum deficiency and it is hoped that we would soon be better positioned in this respect.
The second challenge relates to the huge infrastructure rollout difficulties that continue to plague the sector.To ensure quality of service, delivery of high bandwidth services like and data usage growth, a strong backbone and backhaul infrastructure is essential and the conventional microwave cannot meet this requirement. Though the DoT has taken a historic step forward by gazette-notifying the ROW rules in November 2016, the local bodies, municipalities and State Governments are still are not amenable to implement the same.
The third key challenge that I would like to highlight is that of maintaining business viability while meeting the ever-increasing demand for enhanced affordability. The sector is already delivering one of the lowest mobile tariffs in the world while reeling under a gargantuan debt burden of about Rs 4.5 trillion. Most anomalously,  this sector is also having to operate with globally one of the highest load of duties and levies of about 30 per cent as against single digit or low two-digit figures elsewhere, eg, Malaysia is at 6.5 per cent while China is around 5 per cent. If this factor is corrected, it would help improve take-up of broadband immediately.
Last but not the least, is the need for increased public awareness and ability to use broadband services. TRAI has rightly stressed a highly local approach to content, applications, skills and affordable access such as shared use model. Regional/local content development would need to be strongly incentivized and, here, the Government and the Regulator could play a key role through a combination of the delivery of DBT, mandating of broadband availability in schools, colleges, libraries and hospitals,etc. Through its all-inclusive and technology-neutral approach, Broadband India Forum is fully poised to contribute its best efforts towards expeditious enablement of the goals of Digital India and availability of ubiquitous and affordable Broadband for all.
What is the sector outlook for the next one-two years?
With the data explosion and increasing 4G and smartphone penetration, the outlook of the sector looks positive but the growth of the sector will be strained over the next few years due to disruptions caused by the entry of new player.The prospects of the sector could be inextricably linked with the potential and performance in the broadband sector. With around 1 billion citizens waiting to be broadband-connected, there is imperative need to overcome the spectrum deficiencies, and overcome the difficulties in rolling out OFC & towers. Once done, with the enormous opportunities of Digital India, the potential in Indian Broadband is, I believe, truly remarkable and one of the best globally. With all efforts and dedication, we might accomplish global parity in maybe 5 to 7 years.However, the great take-off could well happen in the next 1-2 years as the RoW challenges are expected to be resolved over the next 1-2 years with State Governments streamlining their processes with the Central policy. While the broadband trajectory would be the key factor over the next couple of years, other major prospects would be the growth of 4G as well as the advent of 5G and growth of use of M2M and IoT in various segments viz. health, transportation, safety and security, agriculture, etc . I also foresee great contributions from the telecom sector in the area of digital financial inclusion, with the rise of digital payments.
The outlook of the sector will also depend on how the ongoing consolidation shapes the market. Due to the market consolidation and the Govt. taking deep interest to pull the sector out of financial duress, it is expected that the general financial health of the sector would improve significantly while the vibrancy of competition would remain high. There is a tremendous scope as still half of its population has to enabled with mobile phones and 70 per cent have yet to enabled with smartphones – which offers a very big market potential.


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