With a new minister at the helm, the telecom industry is hoping some of its expectations will be met. Here is an industry “wish-list” for A. Raja:
Rajesh Charria, President, Internet Service Providers Association of India
In other parts of the world, internet service providers (ISPs) are defined as a focused industry running alongside access service providers. Moreover, they are being helped in various ways such as providing services on a retail minus policy. We request the government for the same treatment, especially since it has declared 2007 as the Year of Broadband. In order to reach the broadband targets, the government should promote us rather than putting hurdles in our way.
The government should allow us to provide unrestricted internet telephony.This will not only help achieve the broadband target but will also enable penetration into rural areas. Internet telephony is the only application that ISPs can provide to help promote broadband.
The government should provide us with infrastructural benefits under income tax, service tax, etc. in order to promote broadband. It should allow focused ISPs to access last mile copper for broadband penetration as per commercial terms. The government should not accept TRAI’s recommendations in toto.
Abhishek Kapoor, Manager, Advisory Services, KPMG
The minister should take a number of initiatives. First, there should be some standard procedure for reporting subscriber numbers. Subscriber base reporting is a very sensitive and controversial matter.
This assumes significance since it has a direct correlation with the valuations in the market. Further, some aspects of licence allocation are also dependent on the reported subscriber base. The differences between the figures reported by the government and the regulator have been highlighted. This clearly establishes the need for detailed guidance from the regulator. Further, looking at the importance of these numbers, it may be a good idea to include these in the audit checklist used by the panel of auditors selected by TRAI.
The new minister should also introduce new key performance indicators (KPIs) for benchmarking of operations and emphasis on data. Further, there should be more policy initiatives to promote infrastructure sharing and equipment manufacturing. The rapid rollout of Wi-Max should be facilitated in order to further push broadband penetration. Finally, the Universal Service Obligation (USO) Fund should be effectively and fully utilised.
S.C. Khanna, Secretary General, Association of Unified Service Providers of India
The major success of telecom is due to both CDMA and GSM technologies. Both these technologies are competing with each other and the benefit goes to the customer. A level playing field should be the basis for allocation of spectrum to CDMA and GSM service providers. The present target to achieve 500 million subscribers by 2010 and 600 million by 2012 will not be possible if spectrum is not released in time to these service providers. The group of ministers must ensure that spectrum is vacated by the defence forces and allocated, keeping in mind equal importance for both technologies. The government must ensure that CDMA operators are given adequate spectrum in the 1900 MHz band. In the rest of the world, CDMA players have adequate spectrum. In China, for instance, the 800 MHz and 1900 MHz bands are available for CDMA players. The honourable minister should ensure that DoT and the Wireless and Planning Coordination Wing make sufficient efforts to get 1900 MHz spectrum vacated from the defence forces for CDMA service providers.
Another important issue is high levies.Currently, we are paying 12.26 per cent as service tax, which is the highest in the world. The licence fee is 6 to 10 per cent, including 5 per cent as universal service obligation (USO). We also pay 2 to 6 per cent spectrum usage charges. The revenue share should come down to 6 per cent, including USO. In any case, the USO Fund already has over Rs 80 billion in reserves. So, there is no case for 5 per cent revenue share for USO; it should not be more than 2 per cent. The honourable communications minister should coordinate with the prime minister and the finance minister to reduce these levies to just 6 per cent. The prime minister has said: “I am proud of telecom reforms.”
On the broadband front, we have set very ambitious targets, but progress is very slow. We should learn from the success story of mobile phones. In the last five years, prices of mobile phones have come down hugely. Similarly, the prices of computers have to come down. DoT should request the finance ministry to provide tax benefits to people who buy computers. The local loop must be unbundled by BSNL and MTNL. USL licensees should be allowed to use the unbundled local loop only on commercial terms. TRAI can fix a price for it on commercial terms.
Rakesh Malik, General Secretary, Telecom Equipment Manufacturers Association of India
Thanks to government policies, the present regulatory regime, low tariffs and overall economic growth, India is witnessing the highest growth in telecom with the who’s who of the world making a beeline for India. Newer and newer technology solutions are coming up every day. Several manufacturing units have established their facilities in India. We are confident that the policies of the UPA government under the leadership and guidance of Thiru A. Raja will continue to make India a hub for telecom equipment manufacturing.
T.V. Ramachandran, Director-General, Cellular Operators Association of India
The need of the hour is to give an aggressive thrust to rural telephony. There is a need to expedite the implementation of the USO project on a war footing and amplify the length and breadth of the rural telephony project. Service providers will have to make significant investments to reach the rural and remote areas. This task poses a big challenge for operators, who, due to the combined pressure of the lowest tariffs and highest levies in the world, are unable to generate adequate free cash flows to fund aggressive rollouts into the rural areas.
An allied requirement for giving a push to rural telephony is the imperative to rationalise costs and levies in the country. It is estimated that over 30 per cent of the service providers’ revenues are given to the government by way of service tax, licence fee, spectrum usage charges, etc. This is an exorbitant tax rate for a sector that is offering the lowest tariffs in the world and critically needs the cash flows to roll out into rural areas. Telecom should be viewed not just as a revenue generator for the government but as a key infrastructure sector. A lower level of taxation leads to improved affordability, higher take-up of services and thus, improved revenue generation. An immediate step in this regard would be a reduction in the licence fee revenue share to 6 per cent. This has been repeatedly recommended by the regulator and is warranted to ensure a level playing field vis-? -vis other segments such as NLD operators.
Another imperative for fuelling wireless/mobile expansion is the need to have adequate spectrum for the current 2G services. Suboptimal availability of spectrum not only constrains the operators from adding more subscribers but more importantly, affects the quality of service. The government is making all-out efforts to get additional spectrum vacated from the defence forces. These efforts need to be intensified so that lack of spectrum does not come in the way of meeting India’s aggressive telecom objectives.
One solution to India’s spectrum scarcity concerns could be the early introduction of 3G services. India is already well behind the rest of the world in launching 3G. If it has any aspirations of becoming an Asia-Pacific superpower, it must introduce 3G without further delay.
A recent DoT initiative to achieve its vision for Indian telecommunications and establish its leadership in the Asia-Pacific region pertains to the setting up of telecom centres of excellence across the country.This initiative will help tap into a vast pool of human resource talent for collaborative R&D so that India is able to keep pace with world-class technology. This will ensure planned predictive growth, minimising obsolescence loss; attract more FDI; and induce export growth.
Other key initiatives could include introduction and spread of mobile TV and IP-TV, making India a hub for telecom manufacturing, promoting export of telecom equipment and services, etc. An aggressive push in this regard is needed to convert these objectives into reality.
However, one issue that needs to be addressed on a priority basis is with regard to clarity on the jurisdiction of the regulatory authority. The regulator must be given clear powers to regulate in order to ensure that it is able to protect the interests of service providers, and promote and ensure the orderly growth of the telecom sector.
These initiatives will provide a further impetus to the growth of telecom services and help cement India’s position as an emerging regional superpower.
Namrta Sudan, Associate, Corporate Department, Kochhar and Company
The Indian telecom sector has undergone a major revolution through important policy reforms and witnessed tremendous growth during the last few years. However, for further growth, the sector needs to focus on certain key areas such as framing new policies to enhance the present telecom infrastructure by introducing latest technology trends and telecom access to rural India. In the current circumstances, my wish-list for the honourable minister would essentially include a more proactive and concentrated emphasis by the ministry on ensuring greater indigenous manufacturing, future technologies and R&D work within India.Also, policies would need to be revised/framed to ensure that service providers fulfil their obligation towards increasing rural teledensity.
Another key area that requires further progress is broadband. Broadband plays a major role as it provides communication, information and entertainment through voice, data and video on a single platform at affordable prices. A recent study reveals that broadband penetration in India is low.Therefore, the ministry should frame supportive policies for easy broadband access, ensure availability of adequate spectrum, promotion of the various technologies, etc.for increased broadband penetration.
