Highlights of the telecom sector in 2019

The year 2019 can truly be dubbed as the year of the digital and the internet for everyone. For the telecommunications industry, the bygone year has witnessed significant strides on several important aspects, be it in terms of widening and strengthening of telecom infrastructures or digitally connecting the last mile through affordable and sustainable communication services. The year also witnessed added fillip to emerging technologies, such as 5G, IoT, AI, AR and the like.

While there were many new beginnings, there were also a few challenges which did not augur well for the already cash crunched telecom sector, lurching under rising debts, falling revenues and collapsing profit margins. While the consolidations, cascading taxations, hyper competitions and the resultant low tariffs shook the sector to the core, no actual relief was announced in the government budget 2019-20. We expect this situation to improve going forward.

It must be noted that the Indian telecommunication sector is currently the second largest and fastest growing in the world, with the number of telephone subscribers reaching to (both fixed and mobile phone), 1.19 billion as on 30 September 2019. However, it is still faced with issues such as intermittent call drops, less to no network coverage in some parts of the country, etc. Yet, in terms of data usage, the number stands at a staggering 5.3 million TB per month. For long, the industry has consistently advocated for better policy reforms and soft touch regulatory environment and have worked in tandem with the government, to build a world class telecom infrastructure providing connectivity to all and sundry. Still, much is yet to be done if the government’s ambitious Digital India program is to be realised soon, in its true letter and spirit.

While the NDCP 2018 came out with a detailed prescription to restore the health of the sector and lay the roadmap for future growth, the implementation needs to be speeded up. NDCP is focused on bringing in long-term sustainability and stability into the sector, while readying the ground for new emerging technologies. With proposed targets such as universal broadband coverage of 50Mbps, 10Gbps at all gram panchayats, 10 million public Wi-Fi hotspots and 4 million new jobs, India will definitely be a global knowledge economy to be reckoned with.

Also, with 5G and other emerging technology, poised to be the way of life in the near future, telecom’s absolute indispensability cannot be ignored. Once 5G gets commercially deployed, India is set to witness several disruptive alterations that will not only transform business landscapes and networks, but will go a long way in making India an economically stronger global knowledge economy.

The honourable prime minister has now challenged the industry to cover every “uncovered village” in a year so that no part of the country is left without communication services. India has already crossed the billion connections mark, improved macro-economic indicators, thereby significantly contributing to the country’s overall GDP growth. It played an important role in connecting the country as ‘One Nation’.

Below are some important developments which took place in the telecom industry in 2019:

India Mobile Congress 2019
• The third edition of the marque telecom, technology and internet mega-event, South Asia’s biggest and the most significant digital forum, India Mobile Congress 2019 started with a grand inaugural ceremony at Aerocity on 14th October, and lasted till 16th October, 2019
• The inauguration ceremony was attended by over 3,000 people and was graced by the presence of the telecom minister, Ravi Shankar Prasad, along with Anshu Prakash, chairman, DCC and Secretary (T) and other national and international delegates including Malcolm Johnson, deputy secretary general, ITU; Jim Whitehurst, global president and CEO, Red Hat; Nunzio Mirtillo, senior VP- South East Asia, Ericsson; Jay Chen, CEO, Huawei India, among others. The promoters of our three private operators, Airtel, Reliance Jio and VIL were represented by Rakesh Mittal, Mahendra Nahata and K.M. Birla.
• The event saw a footfall of more than 500 journalists who extensively covered the event.

Adjusted Gross Revenue
• The Supreme Court’s recent ruling in the 15 year old case with telcos and government being at loggerheads over the definition of AGR, which mandates a stream of pay-outs by the telecom operators already facing with immense financial strain, was near death blow.
• The Supreme Court held that such charges should be levied on the basis of entire revenues earned by a telco – including non-telecom related sources such as deposit interests and asset sales. On the contrary, service providers believe that AGR should consist of revenues generated from telecom services only.
• COAI believes that the Supreme Court ruling on the telecom sector revenue definition, will deal a “disastrous blow” to the industry, given its precarious financial condition.
• Given the broad implication of the Supreme Court ruling which has now ensnared companies outside the telecom space, we hope the government will devise a suitable way out of the corundum.

5G Spectrum Allocation
• DoT had said that 5G spectrum auction will be held by early 2020.
• Under the scheme, the government plans to auction around 8,293.95 MHz of airwaves at an estimated total base price of Rs 5.86 trillion. DoT has suggested a base price for 5G airwaves at Rs 4.92 billion per MHz and proposed a sale of a minimum 20 MHz blocks, which would mean a telco spending close to Rs 100 billion for 20 MHz, and Rs 500 billion for 100 MHz.
• There has been uncertainty over Huawei and ZTE’s participation in India’s 5G field trials and commercial networks going forward. Indian telecom operators had earlier this year sought clarity over the participation of Huawei in 5G field trials and permitting its equipment in their 5G networks. The Indian government has already conveyed that it will not compromise on the security of its telecom networks and accords high priority to data sovereignty while deciding on the issue.
• Telecom operators in October this year urged the government to look into spectrum pricing as they are currently exorbitant.
• We request an early referral from DoT to TRAI to make a recommendation for including the 26 GHz band for the planned spectrum auction in conjunction with other bands as this is imperative and will have a significant bearing on realising the deployment of 5G in India.

Interconnect Usage Charges
• The telecom regulator, TRAI in mid-September this year invited public views to its consultation paper on “Review of Interconnection Usage Charges” to re-examine the original January 1, 2020 deadline for service providers to end IUC on account of slow adoption of VOLTE technology and continuing “imbalance of inter-operator off-net traffic”.
• As an outcome of the consultation process, TRAI has decided to postpone the date for implementation of Bill and Keep regime till January 1, 2021.
• The majority of our members welcomed this move of TRAI.

Machine-to-Machine (M2M)
• Machine-to-Machine technology has huge potential to disrupt communications in the coming years.
• Telcos will invest huge sums on M2M communications, which is predicted to grow at a staggering rate of 40 per cent annually by the end of the decade.
• M2M technology offers a variety of benefits, including low power consumption, low cost and effective connections.
• A forward looking approach is required with inputs from the private sector to create a conducive regulatory environment for both IoT and M2M to fully achieve their potential.
• The industry appreciates the initiatives taken by the DoT and Ministry of Electronics & Information Technology (MeitY) in formulating early guidelines and standards for M2M. This will help India stay at the forefront of this important development.

Digital KYC
The industry worked with the government on an OTP based digital verification solution as the earlier method of getting a new mobile connection based on paper process was cumbersome for the telecom operators as well as the customers. This was done to keep customer convenience in mind for an entirely paperless process. This also proves to be a more robust and secure process as there is authentication based on an OTP.

Curbing Unsolicited Commercial Communications
TRAI has issued the Telecom Commercial Communication Customer Preference Regulations, 2018. The Regulation prescribes implementation of Distributed Ledger Technology (DLT) in order to curb the menace of spam calls and SMSs. The industry is working along with TRAI to implement the DLT system through co-regulations. Various provisions of the Regulations have already been implemented by the TSPs and now they are at an advance stage of completion. This regulation lays down stringent norms for the telemarketers and also ensures that only those customers who have given explicit consent to the respective companies (e.g. banks, e-commerce, retail outlets, etc.), receive the promotional/service messages as per their choice.

Increased Customer Base
• India’s telephone subscriber base expanded at a CAGR of 15.69 per cent, reaching 1,183.51 million during FY07–19.
• Tele-density (defined as the number of telephone connections for every 100 individuals) in India, increased from 18.3 per cent in FY07 to 90.11 per cent in FY19.
• Total telephone subscriber connectivity and tele-density reached 1195.24 million and 90.52 per cent, respectively, at the end of September 2019.
• The number of internet subscribers in the country increased at a CAGR of 45.74 per cent during FY06-19 to reach 665.31 million in 2018-19.
• As of 2019, India holds the world’s highest data usage per smartphone at an average of 9.8GB per month. It is expected to double to 18GB by 2024.

Electro-Magnetic Field (EMF) Emissions
• The Department of Telecommunications (DoT) has organised several awareness workshops on electromagnetic field (EMF) emissions and telecom towers in Bhopal and Jaipur.
• In a bid to dispel myths about EMF emissions from telecom towers, a session on “Breaking the Myths of Radiation” was organised by medical experts from COAI and dignitaries from the Telecom Enforcement Resource and Monitoring (TERM) Cell LSA of Department of Telecommunications (DoT) in Jaipur’s Pearl Green Society on June 2, 2019.
• COAI confirmed to work through various forums to educate the public on the safety aspects of EMF.

Optical Fibre Cables
• All telecom and internet service providers offering services in Bengaluru had signed a memorandum of understanding (MoU) with Bruhat Bengaluru Mahanagara Palike (BBMP) in the year 2014 to lay the OFC cables in all areas falling under BBMP’s jurisdiction for a fee of Rs 850 per meter.
• BBMP has been carrying out drives to remove unauthorised cables and filed a complaint against telecom service providers. As a result of the active involvement and follow up of the COAI and local teams, we have resolved the issues with BBMP. BBMP has issued permissions for the requested moving of overhead fibre/cables to underground locations, by extending the permissions for a further 2 months to complete the work.
• COAI and Tower and Infrastructure Provider’s Association (TAIPA) have approached Urban Development Department of Karnataka, to direct BBMP to withdraw the notice restricting the deployment of optical fibre cables which could impact the IT city and create a digital blackout. After a rigorous follow-up from COAI, BBMP is now also giving new permissions for laying of optical fibre.
• Given the increasing need for fiberisation of our networks. COAI continues to work with state and local agencies to lay fibre and connect cell towers, to cater to the increasing volume of calls and data.

Right of Way policy
• To hasten the deployment of underground (optical fibre) and over ground (mobile towers) infrastructure in India, RoW policy was introduced by the DoT. As per its rules, RoW looked to standardise administrative expenses across the country to the maximum of Rs 1000 per km for fibre and a maximum of Rs 10,000 for overhead towers. This rate is much lower than the existing 1,000-1,500 per running meter which amounts to Rs 10 lakh per kilometre – put by many states.
• As a part of the renewed focus, 16 states and 2 Central Agencies have been aligned until now, including Rajasthan, Haryana, Odisha, Maharashtra, Assam, Arunachal Pradesh, Tripura (only fee part), Jharkhand, Meghalaya, Madhya Pradesh, Manipur, Karnataka, Tamil Nadu, Uttar Pradesh, Uttarakhand, Ministry of Defence (MoD) and Ministry of Environment, Forest and Climate Change (MOEFCC).
• However, still the tower installation process is still facing major challenges in states such as Gujarat, Punjab, Himachal Pradesh, West Bengal, etc. It is a fact that a conducive RoW policy will massively bring down delays that arise from variable and complex permission procedures laid down by local authorities, mitigate non-uniformity in levies and collect necessary approvals from state departments.
• Furthermore, state policy needs to be disseminated to all the line ministries in the state for the implementation and adoption at all levels.
• COAI is working with the states to implement automated systems to track tower and fibre permission grants, installation and completion of projects for the efficient and timely roll of networks.

Lastly, we would like to thank Anshu Prakash, Secretary, DoT and RS Sharma, Chairman, TRAI for his leadership and efforts to address the ever changing and extremely dynamic telecom ecosystem. The industry will continue to work closely with the regulator and the government to bring about improvements and enhance consumer experience by creating sustainable models for a digitally connected India.