An enabling regulatory environment has been the key driver in India’s telecom growth story. Over the years, the role and focus areas of the Telecom Regulatory Authority of India (TRAI) have undergone a change with evolving market dynamics and technological developments. In an interview with tele.net, Dr Ram Sewak Sharma, chairman, TRAI, talks about the progress of the telecom sector, the enabling role of regulations in shaping the sector and the way forward…
How would you assess the progress of the sector over the past two decades? What are TRAI’s key landmark regulations that have helped shape the sector?
The telecom sector has registered a phenomenal growth during the past two decades, propelled largely by the unprecedented growth of mobile telephony and infrastructure. For an assessment of the progress, I believe that the numbers themselves speak the success story. In terms of mobile subscribers, India ranks second (after China) in the world, with a subscriber base of 1.2 billion. In the past 20 years, teledensity has increased from 3 per cent to 91 per cent. Internet subscribers have increased from 0.95 million to 687.62 million. Starting from call charges of Rs 16 per minute to a few paise as it stands today, and no data to per capita download reaching 10 GB per month, it is a remarkable journey. Overall, the countrywide data download has reached almost 7 EB per month. All the apps that make our day-to-day life easier ride on the telecom infrastructure today.
The regulatory landscape has evolved with the market and technological developments. Initially, all the regulations were voice-centric. Now voice traffic is also IP-based. Thus, the focus has shifted to data. TRAI took a firm stand on net neutrality when companies such as Facebook wanted to promote some select partners’ sites in the name of offering “free basics” Internet services, which could have enabled them to work like gatekeepers. Also, initially, spectrum was bundled with the licence and was allocated for a specific technology. But the spectrum was delinked from the licence in 2013, and is currently assigned through an auction process. The auctioned spectrum is liberalised and technology neutral.
The evolution of the sector brought in new challenges and TRAI has always taken prompt steps to handle these issues such as unsolicited commercial communications, cloud services, transparency in tariff schemes and other customer communications, quality of service (QoS) issues, data privacy and security, and ease of doing business. Some of the key landmark regulations by TRAI that have shaped the sector are:
- QoS Regulations, 2000
- Forbearance of mobile tariffs in 2002, and fixed line in 2003, giving telecom service providers (TSPs) the freedom to innovate
- Introduction of calling party pays regime in mobile services with the introduction of interconnect usage charges in 2003
- Launch of mobile number portability in 2010
- Various steps have been taken to enhance spectrum utilisation by giving recommendations to the government on aspects such as spectrum auctioning, sharing, trading and liberalisation.
What are the key telecom-related regulations that TRAI is working on currently?
The key regulations that we are working on are:
- Traffic management practices (TMPs) and multi-stakeholder body for net neutrality
- Tariff issues of telecom services
- Transparency in publishing of tariff offers
- Review of the scope of infrastructure providers
- Unified numbering plan for fixed line and mobile services
What are your views on the existing financial situation of the sector?
Generally, in any sector, the level of competition is linked with the number of players, the more the merrier. However, in telecom, too many players lead to duplication of investments in networks and a reduction in spectrum efficiency. The Indian telecom sector has recently undergone a phase of consolidation after an intense tariff war. Now, things have started to stabilise. With the recent increase (rationalisation) in tariffs, revenues of TSPs will increase. Having said that, recognising the importance of ensuring the financial stability of telecom companies, due to the crucial role played by the sector in ensuring India’s development, TRAI has given recommendations on the rationalisation of AGR (adjusted gross revenue); reduction of licence fee, spectrum usage charge and Universal Service Obligation Fund contribution; easy payment options for the auctioned spectrum, etc. TRAI has also proposed to the Department of Telecommunications (DoT) to take up the issue of reduction in GST rate from 18 per cent to a flat 5 per cent with the finance ministry by declaring telecom as a core infrastructure industry. Further, sharing of infrastructure and resources can help TSPs in reducing costs.
What is your opinion on the need for regulatory intervention in tariff fixing? What have been the global practices in this regard?
At present, TSPs have complete freedom to design their tariff offerings as per their best commercial interests and market conditions. The exponential growth in the sector is an eloquent testimony to the success of the existing regulatory stance on tariffs.
Recently, there have been concerns raised in many quarters about the health of the telecom services sector, as intense competition and pricing pressures are leading to a decline in revenues and profitability. One has to keep in mind that diminishing of traditional TSP revenues and increased pressure for investment is a global phenomenon. Strategists and companies elsewhere are looking for innovative and alternative ways to augment revenues and investment, rather than looking towards government for subsidies and relief. Economists have consistently and successfully pointed out to distortions in the market, especially in pricing, which could result from the government or regulatory intervention. To discuss these issues, TRAI has floated a consultation paper on the “Tariff issues of telecom services” to seek perspectives of all the stakeholders. Although most of the countries have refrained from regulatory intervention in fixing of tariffs, a few countries such as Bangladesh, Zimbabwe and Nigeria have undertaken floor price fixation exercises. In Sri Lanka, floor tariffs benefitted the existing large incumbents by insulating them from competitive pricing by new entrants. It later dropped its floor price regulation in 2018.
How did operators fare on the QoS front?
By and large, TSPs do meet benchmarks. But users continue to complain about QoS being not up to the mark. We have found out that limited deployment of network infrastructure inside the premises is a key reason. Ironically, it’s the users that often make such network deployments difficult or unviable by telcos. There is a need for collaboration among various stakeholders such as builders, RWAs and authorities managing premises to improve the QoS. Some of the TSPs have recently launched voice over Wi-Fi (VoWi-Fi), which will improve QoS in some of the buildings for users with specific phones. It is expected that other TSPs will also launch similar services soon.
What has been the progress in terms of public Wi-Fi roll-outs?
The National Digital Communications Policy, (NDCP) 2018 aims to deploy public Wi-Fi hotspots to reach 5 million by 2020 and 10 million by 2022. As per the information gathered from the service providers, there were 83,813 Wi-Fi hotspots available in the country as on September, 2019. In view of India’s abysmal share in the global public Wi-Fi hotspots, TRAI had examined the need for encouraging such networks through a consultation process. We later forwarded our recommendations to the government in March, 2017. These included sharing of infrastructure by ISPs, doing away with OTP authentication and adoption of e-KYC authentication. Further, a new framework has been recommended to set up public data offices to provide internet services through public Wi-Fi.
What are your views on India’s readiness for 5G services?
India has been working hard to ensure that 5G services roll out in the country along with the rest of the world. Trials are being conducted and India-specific use cases are being developed. The government needs to take immediate steps on the following fronts to ensure an early 5G roll-out:
- Allot sufficient harmonised spectrum
- Open up E-band for meeting immediate backhaul needs
- Make approvals for right of way, access to street infrastructure, etc. simpler, time-bound and non-discriminatory
- Promote sharing of infrastructure and resources including spectrum
- Earmark mmWave spectrum (26 GHz) for IMT services
- Ensure data protection and security
What is your outlook for the telecom sector in the next few years?
The government has fast-tracked reforms in the telecom sector and continues to be proactive in providing room for growth for telecom companies. Implementation of 5G and associated technologies such as SDN, NFV and network slicing will push for the utilisation of telecom services across different industry verticals.
It is equally important that rural and remote areas are provided with telecom services. Low earth orbit satellites could be seen as a practical solution for connecting the unconnected. Moreover, a lot still needs to be done to achieve the objectives defined under NDCP, 2018 such as National Broadband Mission and Fibre First initiative, and TRAI will play its active role in achieving this.
What will be TRAI’s key priorities in 2020?
Enabling 5G is one of our top priorities. Meanwhile, we have received a reference from DoT on unbundling of different layers through differential licensing. The idea is to develop a new telecom licensing model, where sharing will be in-built. Further, it will support application providers with a light touch regulation.
During the year, we will come out with recommendations on enhancing the scope of infrastructure providers, TMP under the net neutrality regime, and framework for the registration of cloud service providers’ industry body.
We are also working on a consultation paper to enhance the scope of VSAT CUG service providers, as satellite connectivity is very important for remote, hilly and far-flung areas.