Interview with Rajan S Mathews, Director General, Cellular Operators Association of India

In an interview with tele.net.in, Rajan S Mathews, Director General, COAI discusses concerns such as high spectrum charges, unnecessary redistribution of spectrum from 900 MHz to 1800 MHz, and huge tax burdens on the sector which has been left untouched by the government in NTP, 2012.

What are the challenges facing the telecom space today?

Ever since its inception in the mid 1990s, this industry has faced a host of challenges in spite of it being the poster boy of economic reforms and one of the major contributors towards the socio-economic as well as GDP growth of the country. The challenges are manifold. Apart from the intense competition, the profitability and sustainability of the telecom industry is at stake due to high regulatory costs such as very high spectrum prices, cost of implementing security measures, MNP, huge penalties arising under modification of contract terms and unreasonable expectations of the Government from the operators. Not to forget the high prices that the operators had to pay for 3G spectrum in the country; intense and grueling price wars and the fact that the returns on the investments have not been adequate till date.Further, the operators are finding it difficult to receive funds from the FII?s and banks that are shying away from the industry due to policy instability and uncertainty. In terms of policy framework, the industry is in dire need for a proper policy roadmap in place and needs immediate attention from the government to address these critical issues which are constraining the essential growth of the sector.

What are your views on the recently approved NTP?

COAI welcomes the long awaited NTP 2012, but is deeply disappointed on the policy not addressing crucial issues that would be decisive in reviving the industry from its present troubled state. The significant issues of the industry like poor financial health, high spectrum charges, unnecessary redistribution of spectrum from 900 MHz to 1800 MHz, high reserve auction pricing, huge tax burdens on the sector remain unaddressed in the new policy.

It is notable that the need for a new telecom policy was mooted primarily to ensure the financial health of the Telecom Sector. However, the policy seems to be silent on the most important aspect of Financial Viability and Investment Returns. On top of that, new initiatives like free national roaming, national MNP, etc. have been included, which are complex matters requiring wide industry consultation, regulatory and legal assessment and competent analytical evaluation to determine cost/benefits, impact on tariffs, impact on operators, before national resources are squandered on initiatives that have dubious value to consumers, operators and the nation. The emphasis on affordability and rural penetration is welcome, however, it is not new as the industry has already made services affordable to all segments of society and has achieved significant rural penetration. Liberalisation of spectrum too is already part of existing license conditions and hence the stress on that too is nothing unique. While the policy mentions important issues to be addressed, its success depends largely on timely prioritization and implementation with the active participation of industry, a ?light touch? regulatory environment, and converged and enabling governmental decision making by all relevant government departments and entities.

COAI is hopeful that the government will rapidly move  into implementation mode with the involvement of industry to address the key issues that will restore the industry to its former growth trajectory and contribution to national GDP. COAI is committed to assisting the government in achieving this objective.

What are your expectations from the same?

COAI is hopeful that the policy will ensure a level playing field for the all the stakeholders by increasing affordability of services to the consumers while at the same time, sustaining the financial health of the sector and restoring the confidence of the investor community.

What is COAI?s regulatory wish list?

We are hopeful of an open outlook from the Regulator towards all the stakeholders of the industry with emphasis on the sustainability of the telecom industry and its much required development and expansion. It would be imperative to ensure that the sustained growth of the industry, which has translated into affordable consumer tariffs, innovative offerings, enhanced technology, increased rural penetration, attraction of domestic and foreign investments; continues its previous growth story.

A ?light touch regulation? approach would be beneficial for the industry as opposed to focusing on micro-management of the sector which often leads to reproachful results. Greater availability of spectrum and sharing of the same should be facilitated so as to help the sector to optimize its performance. The industry requires support such as reduction in the multiple levies and fees to expand with a direction of increased penetration levels and especially for rural penetration, an incentivized approach is necessary.  More liberal M&A norms would provide a much required impetus to the sector. One of the major objectives of the government being ?Broadband for all?, a public-private partnership (PPP) approach towards the National Optical Fibre Network implementation initiative would be helpful. Unnecessary actions like redistribution of existing spectrum from 900 MHz to 1800 MHz should be avoided as it affects the efficiency as well as the financial health of the industry.

It is also essential to allow the industry freedom to innovate so as to explore newer levels of technological advancements which would enable India to enhance its presence in the global telecom arena. On a broader scale, we are looking forward to a consistent, predictable, balanced perspective on the issues of the industry and towards the protection of the interests of the consumers, the stakeholders as well as the government.