India’s telecom success can be attributed to a series of key policy and regulatory reforms. Over the years, the government has created a roadmap for spectrum management, introduced mobile number portability (MNP), allowed virtual network operators in the sector and delinked spectrum from licences, among other policy initiatives. The right-of-way (RoW) rules were notified in 2016 for the speedy roll-out of telecom infrastructure. In 2018, the government came out with the National Digital Communications Policy (NDCP) with the aim of providing a roadmap for digital transformation in the country. It focuses on connecting the unconnected population and introducing advanced technologies for the connected ones. It has an ambitious target to attract investments of $100 billion in the digital communications segment by 2022. On the regulatory side, the Telecom Regulatory Authority of India (TRAI) has released several key regulations and recommendations centred on interconnection, protection of consumer interests, quality of service, unsolicited commercial communication, infrastructure sharing, allocation and pricing of spectrum, net neutrality, data privacy, etc., which have been responsible for sector transformation. However, certain issues such as high levies and spectrum prices, RoW issues and the deteriorating quality of service continue to plague the sector and need urgent attention. Further, a thriving app economy, driven by data services, has brought to the fore a new set of challenges around cybersecurity, data protection, net neutrality, etc. At a recent virtual event organised by the Indian Mobile Congress, the regulatory heads of various telcos shared their views on the role of policy and regulation in attracting investments to the sector, driving innovation and building digital trust. Edited excerpts…
Policy and regulatory environment in the telecom industry
I believe the government, the regulator and the industry players are in a continuous dialogue to ensure that Indian citizens get access to the latest technologies in the telecom services space. So, whether it is blockchain or internet of things (IoT) technologies, we have seen a lot of proactive steps in this direction at the policy and regulatory levels. In fact, with the support of TRAI, the industry has undertaken the world’s first implementation of blockchain-based UCC (unsolicited commercial communication) services. Vodafone Idea and other operators have collaborated with TRAI to create a platform that allows telecom customers to get only those services that they opt for.
Thanks to the collective efforts of the government, the regulator and the industry, we have made rapid strides in technology evolution from older technologies to 4G. Today, we are seeing and witnessing how 4G is transforming and impacting the lives of millions of Indians in a very positive manner. The country is also getting ready for 5G. That said, there is still a lot of ground to be covered from a regulatory and policy standpoint. Certain measures in the right direction are needed to fuel the next wave of digital growth in India.
Currently, there is an immediate need to push for digital inclusiveness. On the one hand, the industry is talking about 5G, and on the other hand, there are about 300 million users who have access to only 2G networks and are completely deprived of the benefits of the data revolution. The government should consider measures for incentivising the migration from 2G to newer technologies, such as making 4G handsets more affordable through subsidies.
Even for 5G, there is a need to establish an entire ecosystem, and not just network and connectivity. As India aspires to become a world leader in 5G, there is a need to address critical policy issues around net neutrality, vertical-specific regulations, cybersecurity, cloud services, active infrastructure sharing, all of which will impact various elements of the 5G ecosystem.
If we can create an unambiguous environment through a light-touch regulatory framework, I am very confident that India will emerge as a world leader, both in the implementation and adoption of 5G and emerging technologies.
Over the past 25 years, there have been some noteworthy policies by the government as well as interventions by the regulator to ensure that the communication services reach the masses. The revenue sharing regime introduced under the National Telecom Policy, 1999, was a good enabler for the uptake of services. Subsequently, TRAI’s interventions on free incoming calls, MNP and spectrum auction have led to better proliferation. The NDCP, 2018 is a very powerful document for taking the services down to the last mile.
That said, the Indian telecom operators have been operating at below cost pricing for a long period. Currently, the tariff levels in India are one of the lowest in the world. This has led to a significant deterioration of the industry’s financial health. This, in turn, is limiting the industry’s ability to invest. To enable the Digital India vision, it is important that the financial health of the industry is addressed immediately. There is definitely a need for a relook at tariffs and some sort of intervention by TRAI. The regulator is already undergoing consultation on the floor pricing and we believe that TRAI would, at an appropriate time, intervene to ensure that the industry remains competitive enough.
Achieving targets under NDCP 2018 and regulatory support for implementation
The NDCP, 2018 is based on three pillars – Connect India, Propel India and Secure India. A lot of work is happening on the Connect India side already and some steps have been taken on the Secure India side as well. If we need $100 billion of investments into the digital economy, we have to ensure that the sector is robust and financially strong. To this end, measures such as unblocking the GST input credit, reducing the amount of bank gurantees that need to be submitted by telcos, and reducing taxes and levies imposed on the sector should be considered so that more funds are available with the industry to invest in networks.
As a policy framework, the NDCP is progressive and forward looking. If implemented in the right manner, it has the potential to make India one of the leading digital economies in the world. However, if the ambitious targets set under NDCP are to be met, it is imperative to make the much needed investments for creating and enhancing the communication infrastructure in India. So, whether we look at the target of universal broadband coverage at 50 Mbps to every citizen or the provisioning of 10 Gbps to all GPs, or increasing fiberisation, all of these will entail significant investments. In fact, NDCP talks about the need for infusing $100 billion into the sector. Considering that 90 per cent of this investment is envisaged to be secured from the private sector, it becomes even more important to create a conducive and supportive environment that can help the industry in channelising the required investments for creating the network infrastructure. Some immediate measures from the government can surely help in this direction. There is an urgent need to rationalise the existing levies and taxes. The current regime is excessive and not aligned with international norms. Further, it is important to resolve the issue of high RoW charges and bring about uniformity. The central government did a great job by notifying the RoW guidelines in 2006, but several states are still not aligned to it. As telcos, if we continue to pay exorbitant levies to municipalities for securing RoW permissions, it will surely de-accelerate the pace of fiberisation, which is critical to achieve the targets set under NDCP.
We also need an optimal spectrum pricing regime, which should be appropriately benchmarked to international practices. Unreasonable or exorbitant prices will hinder the ability of telcos to invest in the much needed network and digital infrastructure (such as cloud and data centres), which is critical in a 5G or next generation technology environment.
From a rural broadband connectivity perspective, the government has definitely put in a lot of efforts and has also launched the National Broadband Mission, as outlined in the NDCP. There is a need to further expand this broadband infrastructure and provide last mile connectivity in rural areas. To this end, the government must look at improving the overall efficacy of BharatNet. We need to come out with a workable strategy for the effective utilisation of BharatNet’s bandwidth.
With respect to wired broadband, the NDCP has set a target of providing fixed broadband to around 50 per cent households. If we have to boost the penetration of fixed broadband in India, it is imperative to undertake measures such as exemption of wireline revenue from the licence fee. This will immediately make wired broadband more affordable and boost the penetration levels.
The NDCP already has all the required ingredients for accelerating the pace of digitalisation. It is just about fast-tracking implementation to create a very strong foundation for a digitally empowered India.
To achieve the targets mentioned under NDCP, it is important to ease the RoW permission process and push for a single-window clearance mechanism. The implementation of the RoW Rules, 2016, is still pending in a few states. Further, it is important to follow TRAI’s recommendation on the mandatory provision of ducts and other infrastructure in all new buildings to encourage broadband proliferation.
The other aspect that must be considered seriously is the deployment of aerial fibre for rapid roll-out in dense urban environments and difficult terrain. This can be made possible by allowing the lightweight optical fibre to be clamped onto electricity poles, metro pillars, gas pipelines, etc.
As for underground fibre deployment, telcos must be kept informed about all the digging activity taking place or planned in the city so that they can take adequate actions beforehand to avoid any disruption of service. Customer experience is paramount, and multiple fibre cuts leading to regular disconnections can hamper the overall user experience.
At the policy level, waiving the licence fee, at least for all types of wireline technologies, can help in service proliferation. Rationalising or removing GST on revenues will also help the industry in ensuring rural broadband densification.
Regulatory framework for new-age technologies, in light of data security and protection
In light of the evolving technology landscape, building digital trust has become very important. Undoubtedly, aspects like data protection, privacy and security are paramount. That said, it is also important to understand that all of these next-generation technologies and emerging technologies like IoT and M2M are still at a nascent stage in India. Therefore, it becomes important to adopt a light-touch regulatory regime going forward. Defining a policy framework too early or having very tight policy contours may prove to be detrimental to the growth of these new and emerging technologies, which are going to be the key enablers for the growth of the telecom as well as other sectors.
I believe it is important to create a balanced framework, which is able to address the concerns around data privacy and security and at the same time, gives ample room for the innovation and growth of services.
Lastly, there is a pressing need to bring OTT providers and telcos on par, especially in terms of regulatory requirements around security, traceability, lawful interception and user data storage. Storing user data locally in a secured manner becomes very important as a policy imperative and absolutely essential if we have to ensure the sovereignty and security of digital communication, which is also one of the key endeavours outlined in the NDCP.
The telecom service providers in India are already bound by very strict licensing conditions, which require telcos to ensure consumer privacy and provide storage for the personal information of their customers. However, it is very important to understand that the issue of privacy and security of personal data is not limited to telcos. The issue is critical for all sectors and services that have digital at the core. For example, a customer sharing personal information with banks, or financial institutions, or any other commercial entity expects the same level of protection to be provided as is expected when sharing that information with a telco.
Besides telcos, there are several other participants in the telecom ecosystem, namely, internet service providers, OTT service providers, content providers, equipment manufacturers, and entities dealing with smartphones, operating systems and browsers. Thus, the data protection and customer rules should be uniform across all stakeholders, and must involve everyone operating within the digital ecosystem, irrespective of the technology and services being provided by them.