Umang Das, Chairman, Foreign Investors India Forum, and Co-chairman, Broadband Infrastructure Committee
Umang Das, Chairman, Foreign Investors India Forum, and Co-chairman, Broadband Infrastructure Committee
The year 2021 can be termed as one where the digital age finally caught up with India and digital connectivity became imperative. This trend has been enabled by the rapid expansion of digital infrastructure, especially after the Covid-19 pandemic.
Current scenario – Key highlights of 2021
- The launch of the National Gati Shakti Mission represents an integrated approach to the National Infrastructure Growth Plan and Digital Infrastructure received its due recognition as the backbone of Digital India and is reflected in all spheres of socio-economic development.
- The announcement of the telecom revival package has been a major shot in the arm for the telecom industry and will signal the growth of the telecom sector as a whole going forward. It also augurs well for digital infrastructure providers in terms of shared infrastructure growth leading to rapid roll-out and cost optimisation for telcos.
- The Telecom Regulatory Authority of India (TRAI) recommendations on unbundling of different layers through differential licensing is a historic step and has happened for the first time since the inception of the telecom revolution more than 25 years ago. It recognises and differentiates between different layers, namely the network creation layer and the service layer, and recognises the need to treat them separately and not with a hard-handed unified licence (UL) as is the case today. Currently, all telecom service providers need to have a UL while passive infrastructure providers, who provide only shared passive infrastructure to the licensed service providers, have an IP-1 registration.
- TRAI has also made recommendations to enhance the scope of IP-1s by permitting active infrastructure along with passive infrastructure without a change in registration. It has also recognised that “registration” is another form of licensing. Permission to share active infrastructure by IP-1s would provide a clear fillip to national priority projects, namely smart cities and in-building solutions, since over 80 per cent of the data is generated in indoor spaces.
- There is also a major thrust to the proliferation of digital connectivity through the PM Wani Public Wi-Fi initiative, acceleration of fibre connectivity to all 640,000 villages, and the upcoming 5G spectrum auctions and possible roll-out in the latter half of the year. 5G infrastructure readiness will be a key challenge as well as a huge opportunity for infrastructure players. It will involve massive hybrid growth of towers along with fiberised backhaul and street furniture as also small cells. This infrastructure package will be the key to success for 5G services in the country.
Growth metrics
As per TRAI data, during the past six to seven years, broadband subscribers have increased from a mere 65 million in 2014 to 801 million as of November 2021. Further, the adoption of smartphones has increased from 165 million in 2014 to 750 million in 2021. Similarly, growth in average monthly data consumption per subscriber has increased from 0.1 GB in 2014 to over 14.73 GB. This growth is linked to the declining trend in data tariffs, which have reduced by about 95 per cent from Rs 200 per GB in 2014 to Rs 9.53 per GB in 2021.
Further, the growth of digital infrastructure, both passive and active, has enabled an expansion in broadband connectivity and increase in smartphone adoption. The number of telecom towers, which was just about 400,000 in 2014, has grown to over 650,000 in 2021. Similarly, fibre coverage, which stood at just about 1,100,000 km in 2014, has grown to 2,800,000 km in 2021 and continues to grow.
Digitalisation catching up among domains
The digital way of life has been adapted in every aspect of the value chain, starting from the democratisation of the radio access network and its connectivity to a third-party core network hardware through open source software but also in other supporting areas viz. BSS/OSS, NOC, etc., which all go towards forming a complete telecom network.
Other areas viz. business process outsourcing, information technology (IT)-enabled services, and telecom and electronics manufacturing, are all seeing rapid digital transformation. These segments include education, healthcare, financial services, logistics, agriculture and manufacturing. Our dream is that by 2025 we should become a $5 trillion economy, out of which $1 trillion must come from the digital economy. This would enable us to acquire a pole position in terms of leadership among the fastest growing economies as far as digitalisation is concerned.
Fiberisation is rising, but not enough
In terms of global comparison, fiberised telecom towers stand at around 80 per cent in China, 75 per cent in the US and 70 per cent in South Korea. Compared to this, in India, they are nearly 33 per cent. This means that although fiberisation is happening, it is still far behind that in other developed countries. However, this big gap is also an opportunity.
Similarly, in terms of fixed line broadband connections, China has around 800 million connections, the US has over 150 million and South Korea has 22 million, which is more than 50 per cent of the fixed line penetration in their respective countries. Unfortunately, in India, fixed line penetration is at a paltry level of around 2 per cent. So, effectively, there are gaps in all areas of digital connectivity when we compare ourselves with developed economies. However, this is also an opportunity that needs to be seized.
Market size
As per assessments, $1 trillion will come from the digital economy by 2025, of which about $500 billion will come from the core sector (IT-enabled services, telecom, media and electronic manufacturing), but another $500 billion needs to come from other sectors of the economy such as healthcare, education, transportation, logistics, agriculture and manufacturing. In addition, we need to leverage our strength amongst micro, small and medium enterprises (MSMEs) and the start-up sector.
Key challenges to scale up digital infrastructure
One of the major drivers of digital infrastructure has to be the enhancement of fibre penetration across the country. Not only do all towers need to be connected with fibre, but there also has to be fibre everywhere in the intercity, intra-city, metro core, and fibre-to-the-building/curb and home.
However, the bane of fibre penetration is the lack of alignment of central policies around right of way (RoW) and lack of implementation of the same by the states, municipalities and local self-governments. We need to review the methodology of implementation of central policies and align state policies in such a way that the states understand the importance of how digital infrastructure growth would lead to an increase in the state domestic product.
Although the central RoW rules were brought out in 2016, all states are still not aligned completely to these. Even those states that came out with their policies do not comply fully, particularly in the commercial aspects. Further, implementing them at the local level becomes even more difficult because the municipalities have their own set of rules, regulations and priorities.
We have to find different ways of resolving these issues and can look at some global best practices. One practice that has succeeded in India is the sharing principle. Sharing has to be accelerated and wherever possible, we should encourage sharing without thinking about the passive or active infrastructure bucket.
We can look at external sharing by promoting the dig-once policy or the common-duct policy. All elements that constitute digital infrastructure irrespective of whether they are active or passive, should be permitted for roll-out. Sharing of infrastructure is the most cost-effective and most efficient way of rolling out digital infrastructure. This is a very important aspect, which should be built into policies.
The way forward
We propose an apex committee for coordinating centre-state relations to facilitate fast-track and zero/low-cost RoW clearances in a time-bound manner. It could function along the lines of the Goods and Services Tax Council. The committee’s decisions should be made binding on all central bodies, states, municipal bodies and other local bodies without demur.
At the state and local levels, there should be district-level bodies/committees manned by relevant stakeholders whose task would be to implement the apex committee’s decisions in a timely manner. They should be supported at the state level with other instruments of administration – state-appointed nodal officers, single-window portals and executive officers of the local administration.
The other major issue is implementation of the National Digital Communications Policy, 2018, for enhancing the scope of IP-1s by permitting active and passive infrastructure to be provided by them under the existing IP-1 registration. The TRAI recommendations of April 2020 in this regard need to be approved and implemented. This, inter alia, would include the definition of digital infrastructure providers as digital infrastructure creators of shared infrastructure, the terms of reference for registration, the scope of elements of shared digital infrastructure, roll-out guidelines, and so on.
In addition to the above issues, backhaul infrastructure must be taken care of through the telecom tower fiberisation programme. Fiberised towers need to go up from merely 34 per cent to around 70 per cent, as per the targets laid down by the National Broadband Mission. This has to be achieved and will be fundamental for 5G readiness.
Further, there should be a holistic way of capturing data, which aims at sharing information so that operators and service providers can take advantage of what is already there and come up with a comprehensive policy of shared common resources and telecom infrastructure, which constitutes both active and passive elements that can be commonly shared. So, cooperation in the shared infrastructure layer and enhancement of competition in the service layer will be the basic paradigm of the future.
The creation of a national digital grid for all kinds of digital infrastructure including towers, fibre, data centres, content delivery networks and in-building solutions having a collaborative structure, is the way to go, where you can coordinate across multiple agencies for RoW and related matters.
