In an attempt to further boost the telecom industry, TRAI is currently formulating its recommendations on key issues like spectrum, licencing norms and quality of service. In an interview with tele.net, Nripendra Misra, chairman, TRAI, talks about the achievements of the Indian telecom sector, the government initiatives and the challenges ahead…
Is the target of 500 million subscribers by 2010 achievable?
We have 225.21 million subscribers as of June 2007 and are adding approximately 7 million users per month. Mobile coverage is provided to 60 per cent of the population and covers around 40 per cent of the geographical area. We hope to cross 250 million by December 2007 and reach 500 million by 2010. The analysis of data indicates that teledensity has already crossed 50 per cent in all our metros and in the major districts. The challenge ahead is to penetrate into rural areas and make services affordable to the masses. A key concern is that despite massive growth in the telecom sector, states like Assam and the other north-eastern states, Orissa, Chhattisgarh, Bihar and Jharkhand still have teledensity of around 10 per cent.
It is evident that the maximum growth will now come from these areas. The focus needs to be on semi-urban and rural areas, if the target of 500 million is to be achieved by 2010. Various parameters like future plans of telecom service providers, infrastructure creation, the business model in rural areas and present pricing trends indicate that achieving the target of 500 million by 2010 is feasible but will require coordinated effort and regular monitoring.
Do you see any roadblocks in achieving the target?
The growth pattern will be dominated by rural areas. However, creation of infrastructure in these areas is costly and initially the rate of return on investments may not fit into the business model of service providers. Therefore, the most important task is to create telecom infrastructure in these areas, encourage service providers to roll out services, facilitate infrastructure sharing to reduce costs and make good quality and affordable telecom services available to the masses.
Availability of power supply is another constraint. The unstable power supply in rural areas increases operational cost to service providers. Use of non-conventional sources of energy needs to be encouraged to overcome such problems.
What would the Telecom Regulatory Authority of India’s (TRAI) contribution be to ensure smooth sailing in the telecom sector?
TRAI had initiated a consultation process on infrastructure sharing as early as November 2006 and sent its recommendation to the government in April 2007. The recommendations advocated streamlining procedures for the standing advisory committee on radio frequency allocation clearance, encouraging service providers to share their infrastructure, facilitating permission from civic agencies to set up towers and providing incentives to create infrastructure in rural areas. TRAI has already recommended modifications in the licensing condition of unified access service license (UASL) and cellular mobile telecom service (CMTS) licences to permit active infrastructure sharing. The backhaul sharing from base transceiver stations to base station controllers has been recommended to facilitate penetration of telecom services in rural and remote areas.
The Universal Service Obligation (USO) Fund has also launched incentive schemes to set up approximately 8,000 towers and has identified 81 cluster areas where mobile services are not available at present. These towers will be shared by three service providers to roll out wireless services. The schemes for creating passive infrastructure have already been implemented and it is expected that these towers will be ready in a year’s time. This will catalyse the rollout of mobile services in rural areas.
What is TRAI’s rationale for recommending the auctioning of spectrum?
Spectrum is a scarce resource and needs to be used by all stakeholders efficiently. New technological developments are taking place to ensure this. With spectrum becoming available, the only transparent allocation procedure is to auction.
What is TRAI’s rationale for not allowing foreign players to bid for 3G spectrum?
About 25 MHz of spectrum for 3G services is likely to be available in the first tranche. With six to eight access service providers operating in each service area, the available spectrum will not even be sufficient for them. Permitting a large number of entities who are not licensees at present is likely to highlight issues of licence, interconnection and financial viability. It must be remembered that 3G is not a standalone service. Importantly, TRAI has only advocated eligibility for licensed telecom operators.
What more can be done to step up rural telephony?
TRAI forwarded its recommendations for proliferation of telecom services to rural areas to the government in October 2005.It proposed that mobile services which were earlier not covered under USO Fund schemes should be brought under its ambit and therefore, setting up of mobile towers in rural areas should be supported by the fund. Accordingly, the Indian Telegraph Act was amended so as to extend support from the USO Fund for this purpose. TRAI has also recommended infrastructure sharing which is critical for growth in rural areas.
The government’s role in funding telecom infrastructure is crucial to the spread of telephony in rural India. About 8,000 telecom towers across the country at an estimated cost of Rs 25 billion have been planned. These will provide 50 million mobile connections in rural India. The government is also planning to set up 10,000 towers in rural India.
Utilisation of the USO Fund for broadband rollout in rural India through a bidding process is already being considered. Broadband connections within a 10 km radius of all block headquarters in the country will be provided at a minimum speed of 512 kbps, where the network connects panchayats, primary schools, health centres, etc. located close to all block headquarters.
The government has targeted 9 million broadband subscribers by 2007 end. In your view, is this target achievable? What are some steps that should be taken to further promote broadband growth?
With 2.52 million broadband subscribers as of June 2007, achieving the target of 9 million broadband subscribers by 2007 end is a Herculean task. The possibility of current internet users migrating to broadband in the near future can be explored. There are 40.57 million internet users of which 31.3 million access the net through wireless devices. Moreover, around 10 to 12 per cent of subscribers already have 3G-enabled handsets. When 3G services are launched, these users will shift to broadband.
The most viable model to provide broadband services at present is using DSL technology. Most of the copper loops are available with the incumbents which need to be effectively utilised. However, the nonallocation of spectrum for 3G and broadband wireless access services is an impediment. Early allocation of spectrum will definitely increase broadband penetration.
The USO Fund Administrator has initiated talks with service providers to provide broadband in rural areas. BSNL has around 20,000 rural exchanges, which can be used for this purpose. Further, a large number of towers are available in rural areas with 10,000 more being installed. These can be used to increase broadband penetration. Government incentives to set up community information and service centres and state wide area networks along with technology developments, a supportive regulatory environment and incentives from the USO Fund will further boost broadband penetration. Nevertheless, achieving a target of 9 million subscribers by 2007 end will be an uphill task.
What is TRAI’s take on the amount of levies and taxes on the Indian telecom sector?
The regulatory levies and taxes in India are higher as compared to other neighbouring developing countries like China, Pakistan, Sri Lanka, etc. Reducing these regulatory levies is essential to bring down the cost to the customer and increase penetration of telecom services in new markets.
What, according to you, have been the Indian telecom sector’s greatest achievements or milestones over the past year?
There has been a steep growth in telecom subscribers in 2006 with nearly 7 million subscriber additions per month. This is the highest ever growth in any country in a month. With a 225.21 million subscriber base and a teledensity of 19.86 per cent, the Indian telecom network is the third largest after China and the US. While advocating fast growth, the emphasis on rural penetration has been maintained and tariffs have been regulated from time to time to ensure availability of telecom services.
A very supportive regulatory framework has been created for the growth of the telecom service sector resulting in quality telecom services to customers. A new regulation, Telecom Consumer Protection and Redressal of Grievance Regulation, has also been issued to ensure speedy and timebound redressal of consumer grievances.
Do you expect there to be further consolidation in the sector in the future?
The consolidation of companies in the sector is industry driven and as such TRAI has no specific role in this regard. The government has issued merger and acquisition guidelines to ensure adequate competition in the telecom sector. A consultation paper on “Review of Terms and Conditions and Capping Number of Access Providers” issued in June 2007 also discusses this issue. The matter is under consideration and recommendations will be sent to the government soon.
What are some future trends that you foresee?
The growth in the telecom sector will encourage service providers to consolidate their network and reduce operational costs. With convergence around the corner, many subscribers will migrate to next-generation networks. With the launch of voice over IP services, voice revenues will reduce further. Services like IPTV, mobile TV, m-commerce and other value-added services will dominate and become the main source of revenue. The value-added service revenue which was around Rs 30 billion last year and constitutes only 3-4 per cent of the service providers’ revenue at present, is expected to cross Rs 46 billion this year, registering a growth of over 50 per cent. For instance, m-commerce is picking up and has huge potential in the telecom sector.
What, according to you, are the reasons for the drop in quality of service offered by telecom service providers and what can be done to improve it?
It cannot be said that there is a drop in the quality of service (QoS). While there has been improvement on some parameters, there is deterioration in others. The main issue on addressing QoS is that the service providers have not been able to augment the infrastructure commensurate with the exponential growth in the sector. Delay in according permission to set up cell sites, and providing clearances for right of way also add to the problem. Another area of concern is that augmentation of interconnection is not happening in a timely manner leading to congestion at the points of interconnection. Though we have taken several steps to address this issue, constraints are being faced in effectively ensuring interconnection due to various litigations on these issues in the Telecom Disputes Settlement and Appellate Tribunal and the Supreme Court.
