India is the second largest telecom market and the largest data consumer in the world. Today, 1.3 billion Indians access voice and data services at the world’s lowest tariffs, courtesy a ubiquitous wireless network that is unmatched in its reach and the impact it has on people’s lives.
The unprecedented success of India’s telecom sector is attributable to the growth in its wireless sector, backed by a robust and state-of-the-art telecom infrastructure. This infrastructure has served as the fundamental backbone of telecom services and has played a pivotal role in bridging the digital divide, connecting the unconnected and facilitating ubiquitous mobile connectivity. The Indian telecom infrastructure industry has laid a strong foundation of growth for the telecom sector and has supported it in keeping up with the fast-paced technology advancements.
Needless to mention, the telecom sector has stood the test of time during the ongoing pandemic crisis, as it has during other natural calamities/disasters in the past, by ensuring connectivity on a 24×7 basis. The sector played an extremely critical role in managing the Covid-19 pandemic.
Telecom infrastructure, especially, has an important role to play in the enablement and proliferation of upcoming technologies such as internet of things (IoT), artificial intelligence (AI), virtual reality (VR), augmented reality (AR) and 5G. Tower densification and fiberisation will be required to utilise these emerging technologies and support the new applications they enable.
New business opportunities for telecom infrastructure providers
Government programmes such as BharatNet and the Smart Cities Mission, as well as new technologies such as 5G, AI and IoT, are adding to the demand for fibre deployment. Moreover, they necessitate 100 per cent tower fiberisation. A tower company will be more suitable for undertaking this deployment, in line with global developments. Further, in August 2020, our prime minister laid out the vision to connect every village in the country with optic fibre cable in 1,000 days. To achieve this vision, cables would have to be laid at nearly 3.6 times the current speed, up from the existing average of 350 km a day to over 1,251 km a day.
Bandwidth-intensive applications such as IoT/machine-to-machine (M2M) and VR/AR will demand network densification and deployment of a huge number of indoor and outdoor small cells. As per estimates, IoT connections in India are expected to grow to about 423 million by 2023. This presents a huge opportunity for IP-1s, making them the best choice for deployment of small cells due to their expertise in right of way (RoW) and the sharing model.
The National Digital Communications Policy, (NDCP) 2018 targets to deploy 10 million Wi-Fi hotspots by 2022. However, lack of monetisation models hinders the growth of public Wi-Fi in India. Neutral hosts such as IP-1s can provide shared infrastructure supporting multiple operators and, in turn, make the business model profitable for all stakeholders.
On December 9, 2020, the union cabinet approved the Pradhan Mantri Wireless Access Network Interface (PM-WANI) scheme. This scheme aims to strengthen the government’s commitment to substantially and speedily boost high speed internet penetration across the nation, covering the last mile. Increased internet penetration will not only provide a momentous boost to the country’s economy, but also provide the currently underserved population with endless opportunities to power the internet’s enormous potential.
The Smart Cities Mission was launched in 2015. Under the mission, the government aims to build 100 smart cities, which will require the setting up of huge information and communications technology infrastructure as a prerequisite. The experience of tower infrastructure providers in securing priority RoW for the installation of smart poles and the roll-out of fibre can be leveraged to achieve the objectives of the mission.
The data centre market is poised to witness robust growth at a compound annual growth rate of 8.4 per cent over 2018-23 due to exponential growth in data traffic. As the data centre business is capital intensive and depends heavily on leasing capacity to enterprises, IP-1s may be allowed to set up data centres as well.
- Issues in the adoption and implementation of RoW Rules, 2016: With support from the Department of Telecommunications headquarters and licensed service area field units, till date, 20 states have aligned their policies with the RoW Rules, 2016. However, some of the big states, such as Andhra Pradesh, Telangana, Gujarat, Karnataka, Tamil Nadu and Punjab, are yet to align their telecom infrastructure policies with the central rules. Further, the states that have aligned their policies with the central rules face serious implementation issues. It is important to realise that the adoption of the RoW Rules and their implementation in a consistent manner across all the states are crucial for hassle-free RoW processes, and will result in effective and faster readiness of the states to contribute towards the connected Digital India road map.
- Exorbitant permission fees and multiple charges: The local authorities in many states continue to levy hefty permission fees for granting permissions for the installation of mobile towers and RoW to lay fibre. The fee goes as high as Rs 500,000 per km. This is in direct contravention of the RoW Rules, 2016, which mandate the levying of one-time charges of Rs 10,000 per tower and Rs 1,000 per km for laying fibre.
- Coercive actions by local authorities: In many states, the local authorities continue to follow their own rules/policies and initiate coercive actions such as shutting down/sealing/demolition of operational sites, and public protests arising from alleged and unfounded fears of electromagnetic field emissions and non-adherence to their demands. Many local bodies initiate suo moto coercive actions on telecom tower sites, which disrupts telecom services in the region and hamper critical emergency services. Such actions not only increase operational costs for the companies, but also create regulatory uncertainty, dampening investors’ confidence.
- Varying property tax rates: Mobile towers are being equated with “land and buildings” for the calculation of property tax. The Supreme Court, in its judgment dated December 16, 2016, observed that “a mobile tower is certainly not a building…” Therefore, mobile towers ought to be categorised separately for evaluation under property tax. Some states such as Gujarat and Maharashtra are levying property tax on tower sites at highly varying rates. For instance, in Maharashtra, property tax rates vary from 40 per cent to 125 per cent, and are further increased by adding various sets of penalties, charges and levies, going as high as 325 per cent in some cases. There is also a need to ensure uniformity in the taxes/penalties being charged by the local municipal bodies.
Enhancing the scope of IP-1s
Enhancement of the scope of telecom infrastructure providers, as envisaged under the NDCP, 2018, is imperative to encourage and facilitate further investments in the telecom infrastructure space. Telecom infrastructure providers can play a vital role in faster roll-out of 5G services and other new technologies and applications, which, in turn, will lead to huge cost savings for service providers. Enabling infrastructure providers by permitting active infrastructure sharing can attract huge investments to the sector, which are much needed for the successful roll-out of 5G. They can also give a much-needed boost to other technologies such as in-building infrastructure, Wi-Fi, voice over Wi-Fi and fibre-to-the-home.
The way forward
The National Broadband Mission was launched by the government on December 17, 2019 with the vision to fast-track the growth of digital communications infrastructure. The mission aims to set up an additional 1,000,000 mobile towers over the next five years in a phased manner, to increase the tower density in the country from the present 0.42 per 1,000 population to 1 tower per 1,000 population.
The implementation of the National Broadband Mission is expected to propel India to the next phase of the digital revolution, thereby facilitating complete participation of all citizens to create a truly digital society. The outcomes of the mission are foreseen to help fulfil the vision of “Broadband for All” as well as the various goals laid down by the NDCP, 2018.
This presents a huge opportunity for telecom infrastructure providers, and will also enable the roll-out of new technologies such as 5G, IoT, M2M and AR/VR. However, this will be possible only when various issues concerning the telecom infrastructure sector are addressed by the government on priority. The existing infrastructure would have to be complemented with small cell, Wi-Fi and in-building solutions. Thus, the role of a robust and secure telecom infrastructure will continue to be important and critical.