Pradip Baijal, Former Chairman, TRAI

The first and second industrial revolutions were in the fields of manufacturing and technology, a preserve of Europe and the US. These industrial revolutions (IRs) changed the world after AD 1800. Till then, India and China shared half of the world’s GDP. The first industrial revolution led to the UK increasing its share in the world’s GDP to 6 per cent from 1 per cent, and the US taking it to 35 per cent from 5 per cent. Meanwhile, GDP in China and India fell from 50 per cent to 5 per cent.

The third industrial revolution (IR 3.0) occurred on the back of IT and telecommunications. For various reasons, especially globalisation, and the world being connected on networks, enabling technologies were immediately available to developing countries. This again changed the world, with China/India growing rapidly, and accounting for 30 per cent of the world’s GDP. In all likelihood, technologies will continue to rule the world, and their implementation will determine a country’s future. Today, providentially, IR 4.0, IR 5.0 and IR 6.0 are also occurring on this medium, and these are far more disruptive than the earlier IRs. Whoever manages the IT/telecom sectors better will rule the world. Fortunately, India and China have done well in these sectors, and Indians also have a genetic advantage in IT.

Let us start at the beginning of the telecom story. India was one of the first countries to introduce telephone lines, in 1850. It was then lost in the debate whether telephones were for the government and elite or for everyone. The government used it for the elite and the next 100 years only saw a teledensity growth of 0 to 0.02 per cent.

The IR 3.0 brought in wireless telephone technology in 1950, but our policy planners considered this a luxury for the poor Indians. No one stated the obvious, that the technology was cheap but our tariffs were very high, loaded with all kinds of taxes and subsidies. Till 1995, our fixed lines grew only to 1.94 per cent. Attempts were made to improve these lines through C-DOT, etc., but teledensity did not grow much till the onset of mobiles. In the meantime, the private sector was allowed entry into the sector in 1995; however, it could not interconnect in the absence of a regulatory authority. The Telecom Regulatory Authority of India (TRAI) was created after a high court directive in 1997 but it also could not help; the act having many loopholes led to more litigation. The New Telecom Policy [NTP] 1999 led to the amended 2000 Act, but the tariffs were still very high – Rs 32 per minute, in 1996, mainly on account of taxes and cross-subsidies. Teledensity moved up to 4 per cent only in 2002.

The sector also had many problems in defining wireless, etc., with digital technologies, broadband/IPTV having come in. Some countries such as the US, the UK and Malaysia sorted this out by bringing in converged licences. India too finalised a Convergence Act in 2001, but the act did not move forward till 2004, when the parliamentary committee recommended a modified act. The government and the regulator grew restless in the meantime, and approved a unified access licence in January 2004, a partial unification not requiring any amendment to the act. Further, the regulator and the government removed many cross-subsidies and taxes, and left the tariffs to the market in a far more competitive regime. All these actions were challenged and passed scrutiny by the Supreme Court, that too in record time.

These measures changed the sector and the tariffs came down more than 50 times between 2002 and 2015, and teledensity grew from 4 per cent to 80 per cent. We used to add 0.2 million mobile subscribers per month in 2003. The growth increased 100 times to 20 million mobiles per month, a threefold jump vis-à-vis China, which is so far considered the leader in the sector. Despite very low tariffs and taxation, the sector started giving more revenues to the government, and a performing sector got more private and foreign investments. A sector with 90 per cent public investment in 2002 became a sector with 90 per cent private investment. It started being called the best performing sector in the world.

The growth in the sector slowed down after 2012, post the 2G scam, etc., but it still continues to be one of the best performing sectors. It has some problems which need resolution. The government/regulator had only adopted a unified access licence regime in 2004, and was to move to a full unification in six months. Courtesy the 2G scam, etc., this has not happened so far. Some measures have been taken towards full unification, but these are not enough in the current digital regimes and with the upcoming IR 4.0 and IR 5.0, which will replace all means of communication with 4G, 5G and 6G networks. We need a fully unified regime with legislative backing to move further and remove doubts surrounding multiple interpretations on telecom/broadband/TV given by various regulators/courts.

India has the capacity to quantum jump all other countries if unification is properly implemented on telecom networks with full legislative backing. The present government has taken a number of steps in this regard. In the words of Raoul Pal, a leading invester, “It is very rare indeed that a country makes an outsized technological infrastructure breakthrough that leaves the rest of the world far behind. But exactly this has happened in India – and no one noticed. India has, without question, made the largest technological breakthrough across countries in living memory. Its technological advancement has even left Silicon Valley standing. India has built the world’s first national digital infrastructure, leaping at least two generations of financial technologies, and has built something as important as the railroad was to the UK or the interstate highways were to the US. India now presents the most attractive investment opportunity in the world. It’s something called Aadhaar and it is a breathtakingly ambitious plan with flawless execution.”

To support these ambitious measures, maybe the time has come for a comprehensive convergence policy to give boost to developing IR 4.0, IR 5.0 and IR 6.0 which will happen over converged digital technologies.

Let us understand this better. The first data packets were transmitted over what is now known as the internet and only comprised four network nodes at universities in the US. The technology has matured enormously and is changing the world dramatically by carrying IR 3.0, IR 4.0, IR 5.0 and IR 6.0 on these networks. In 2019, the world celebrated the first full year when more than half of the world’s population (51.2 per cent, or 3.9 billion people) participated in the global digital economy by logging onto the internet. At a household level, most households in the world now have access to the internet (57.8 per cent in 2018, up from 18.9 per cent in 2005). The world is turning completely digital. It is expected that China will have a 840 million subscriber base by the end of 2019-20 and 1 billion by the next year with superior speed, whereas India has only touched 600 million broadband subscribers. China has also created massive internet companies such as Baidu, Alibaba and Tencent just like their peers in the West, whereas India doesn’t have any of this to execute its tech prowess.

China has created companies that are leading in 5G, AI, quantum computing and other digital products, and it is shaping the digital behaviour of people because they are deploying networks faster. China is also leading in standardisation and patents concerning the digital ecosystem. This will have an enormous impact on innovation thus allowing Chinese products to be consumed by India and the world. In contrast, the Indian 5G process is yet to commence (allocation of spectrum and the installation of 5G equipment).

India can succeed in IR 4.0 given its human capital pool, algorithm prowess and an established IT hub, only if it installs 4G and 5G systems adequately.

China is leading in 5G deployment to an extent that it is ahead of the ITU’s vision 2020. The country has deployed almost 20,000 5G base stations in Beijing, Shanghai, Guangzhou and Shenzhen. It plans to deploy 150,000 5G base stations by the end of this year. 5G is very different in terms of its enabling capacity for future innovations. 4G has enabled services such as Uber, Google Maps and social media. However, unlike 2G, 3G and 4G, which are largely built on voice and data services, 5G will enable high capacity, ultra-fast and low latency communications, which will revolutionise a new breed of digital applications including driverless cars, factory internet (IoT) and smart cities. India can catch up if it installs its 5G networks fast, but with crystal-clear rules.