T.R. Dua, Director General, Digital Infrastructure Providers Association

The Indian telecommunications landscape is undergoing a rapid transformation, driven by a surge in demand for data and the emergence of 5G technology. In this dynamic scenario, both tower companies (towercos) and digital infrastructure providers (DIPs) are playing increasingly crucial roles in enabling seamless connectivity across the country.

Traditionally, towercos focused on building and leasing passive telecom infrastructure, primarily mobile towers. However, their scope has expanded significantly in recent years. Here are some key trends:

  • Fiberisation: Recognising the growing importance of fibre backhaul for 5G, towercos are actively investing in fibre optic networks. This not only strengthens their core business but also positions them as comprehensive connectivity providers.
  • Small cell deployments: To meet the demands of high density data usage, towercos are deploying small cell networks in urban areas. Small cell sites complement traditional macro towers and provide enhanced 5G coverage and capacity.
  • New revenue streams: Beyond tower rentals, towercos are exploring new revenue streams by offering solutions such as managed services and network optimisation as well as hosting non-telecom equipment such as Wi-Fi access points and internet of things (IoT) devices.

Overall, the evolving role of towercos and DIPs in India’s digital transformation is crucial. By embracing innovation, collaborating effectively and overcoming challenges, these players have the potential to unlock a new era of seamless connectivity and empower India towards a digitally secure future.

Key challenges

The telecom industry in India has been working towards the implementation of 5G by deploying small cells on street furniture and focusing on fiberisation, among other policy interventions. However, there are still some challenges that need to be addressed. These are given below.

  • Adoption of the Indian Telegraph Right of Way [RoW] Rules, 2016, as amended in 2017, 2021, 2022 and 2023 by states/union territories (UTs) and central ministries:

36 states/UTs have aligned their RoW policies as per the RoW Rules, 2016, dated November 16, 2016. Further, 21 states/UTs have aligned their RoW policies as per the RoW Rules (Amen­dments), 2021, dated October 21, 2021, and the remaining states are expected to adopt the same going forward.

Central ministries such as the Ministry of Railways, on October 4, 2022, the Ministry of Defence, on January 18, 2023, and the Ministry of Road Transport and Highways (MoRTH), on April 17, 2023, adopted the Indian Telegraph RoW Rules, 2016, as amended in 2017, 2021, 2022 and 2023. Other central organisations such as the Airports Authority of Indian and the Ministry of Petroleum are also expected to adopt it.

  • Implementation of RoW Rules, 2016: Locations such as Ghaziabad and the Noida Authority are not abiding by the RoW policy of the state and are still following the old building by-laws. The RoW policy of the state/UT needs to be followed in true letter and spirit.
  • Property tax issues: Currently, the municipal corporations in the states of Maharashtra, Tamil Nadu and West Bengal are charging property tax on mobile towers, and it varies from 45 per cent to as high as 137 per cent. Section 16(3) of the Telecom Bill aims to mitigate the current issue of state agencies charging a huge amount of property tax from the owners of property on which towers get installed.
  • Deemed approval: 27 states/UTs have implemented the deemed approval clause in their RoW portal and the remaining nine states/UTs are going to implement the same.
  • High rental charges: Some authorities in states/UTs such as Delhi and Chhattisgarh are charging exorbitantly high rentals on digital infrastructure and this needs to be rationalised.
  • High restoration charges: These are being charged in states like Rajasthan and need to be rationalised.
  • Input tax credit: The input tax credit on telecom towers is currently not available as telecom towers are not included in the definition of “plant and machinery” under Section 17(5)(d) of the CGST Act, 2017. The input credit was recently discontinued on associated accessor­ies/parts of telecom towers such as battery banks, diesel generator (DG) sets, rectifiers, cables, shelters, and other electrical equipment. The industry expects that under the goods and services tax (GST) regime, input credit should be available for all the procurements, including telecom towers.
  • High regularisation charges: Many states such as Delhi and Chhattisgarh are putting high regularisation charges on the already installed mobile towers along with penalties. The same needs to be rationalised. For example, Tamil Nadu had regularised old telecom towers by allowing a one-time payment of Rs 10,000 per tower.
  • EB-related issues: There are also some electricity board (EB)-related issues that need to be resolved, such as charging EB tariff at commercial rates instead of industrial rates in most of the states/UTs, delay in rectification of faults, and lack of clarity in the type of documents required while applying. To avoid any delay or penalty, it is recommended to have company-wise online EB bills on registered email IDs and one company, one bill for online payment of electricity bills. Smart/prepaid electricity meters can also be installed at telecom sites.

Further, 21 states/UTs have adopted the amended Model Building Bye-Laws, 2016, and the remaining 15 states/UTs are yet to adopt the same. While most of the challenges mentioned above are addressed under the Telecom Bill, 2023, the rules and further implementation of the Telecom Bill, 2023 will be helpful in resolving the prevailing industry issues and facilitate the speedy roll-out of digital infrastructure across the country.

Future of energy

Telecom towers consume 65-70 per cent energy. To reduce their impact on the environment, there is an urgent need to move to renewable sources of energy. India has come a long way in adopting renewable energy, making significant strides in recent years. The country ranks fourth globally in the overall renewable energy installed capacity (including large hydro). The total installed capacity of renewables (excluding large hydro) is over 130 GW, with solar leading the way at over 70 GW.

Growth drivers for 2024

The Indian telecom sector is poised for another exciting year in 2024, propelled by several key growth drivers. Some of the most promising areas are:

5G roll-out and adoption: The initial phase of 5G network deployments has begun, and wider adoption is expected in 2024. This will drive the demand for infrastructure investments, 5G-enabled devices, and innovative applications across various sectors such as healthcare, education and manufacturing. Enterprise uptake of 5G private networks for enhanced efficiency and productivity will also gain traction.

Fixed wireless access (FWA): FWA technologies are emerging as a viable alternative to traditional wired broadband, especially in rural areas. We can expect competition among telecom operators to intensify in this segment, in turn offering affordable and accessible internet connectivity to underserved regions.

Rural connectivity and digital divide: Bridging the digital divide remains a priority for the Indian government and telecom operators. Initiatives such as BharatNet expansion and affordable data plans will play a crucial role in connecting rural communities and promoting inclusive growth.

Content and cloud services: The demand for video streaming, gaming, and other data-intensive content will continue to surge, driving growth in internet traffic and revenue for telecom companies. Increased cloud adoption by businesses and individuals will further boost the demand for high speed and reliable connectivity.

Cybersecurity: With greater connectivity come heightened security risks. Cyber­security solutions and services will be in high demand to protect networks and user data from cyberattacks.

AI and IoT integration: The integration of artificial intelligence (AI) and IoT technologies into telecom networks will unlock new possibilities in areas such as network optimisation, personalised services, and smart city applications.

Global partnerships: Collaborations with global technology players and international organisations will be crucial for India to access cutting-edge technologies, knowledge, and expertise in the rapidly evolving telecom landscape.

These are some of the potential growth drivers for the Indian telecom sector in 2024. The industry is poised for an exciting year with rapid technological advancements and adoption, and a focus on bridging the digital divide.

While 5G might present new opportunities for growth for infrastructure providers (IP1s), the industry needs to evolve and look beyond the regular business to tap new avenues of growth. Some of the business opportunities are monetisation of existing assets, for instance through advertisements/billboards/OOH (out of home) at tower sites, installing electric vehicle (EV) charging stations at telecom towers, data centres, etc. Other new business/revenue streams include upcoming technologies such as 5G, small cells and distributed antenna systems/in-building solutions, fiberisation, power-as-a-service/ power generation, smart cities,  (renewable energy technologies) and Wi-Fi.