With this issue, we celebrate our 25th anniversary!
When this magazine was launched 25 years ago, the telecom sector was still in poor shape, six years after the launch of the National Telecom Policy in 1994.
Most of the goals of the National Telecom Policy had not been met. Telephone on demand was nowhere in sight, except in a couple of metros. Many of the villages did not have a single phone line. In most of the country, basic telephone service was a de facto monopoly of DoT and MTNL.
Indian consumers were paying almost the highest tariffs in the world for long distance and international calls. A call from Delhi to Mumbai would cost Rs 30 per minute. A call from India to the US would cost Rs 60-Rs 80 per minute. A local cellular call would cost Rs 10 per minute. Indian consumers were not getting better or cheaper service, as was the promise and purpose of the National Telecom Policy reforms.
There were many reasons for the “failure” of the policy. They included the government’s preference for managed competition, dictating both the technology and the number of operators. Licences were awarded before a regulator was in place. The bidding process was far from flawless. Most of the operators bid too high for licences. Some of them did not take the licences that they won. Those that did were losing money. And the government was not willing to open up domestic long distance or international calling to the private sector.
Something needed to be done and the new government, under the leadership of Atal Bihari Vajpayee, announced the New Telecom Policy. The government moved from unsustainably high licence fees to a revenue-sharing regime. The tenure of licences was increased. The long distance calling segment would be opened up to the private sector soon, and international calling a few years later. The government also promised to reduce the red tape and gave more powers to the regulator.
The new policy worked. In less than a decade, India became the fastest growing telecom market in the world and also had the lowest tariffs. India was the most competitive market with almost a dozen operators in some circles. It also had some of the most innovative telecom companies, with the highest market caps globally. It led the world in many best practices, sharing of infrastructure being just one example.
Not that everything was done right. We could have done more in broadband if last-mile connectivity had been opened up. The introduction of 3G was delayed because of some obstructionist players.
The way the new players were offered licences in 2007 was also questionable, maybe bizarre. CDMA operators were let in with a much lower licence fee, creating an uneven playing field. There were also now too many players in the market.
But the government made it worse with its obsession with revenue maximisation. So even while it talked of telecom as an essential service, the sector was treated as a luxury. The government imposed all kinds of cesses, high GST rates, spectrum reserve prices and AGR levies.
As a result, most of the operators were not in good shape financially. The straw that broke the camel’s back, however, was predatory pricing strategies allowed by the powers that be.
The price wars made the financial stress in the industry much worse, and the operators started closing shop or selling out. The ones who remained were not as financially healthy as they needed to be. We were headed for a situation of oligopoly, maybe even duopoly.
In 2021, things began to move in the right direction again. The government offered a package of relief measures, including a reduction in future AGR levies and a moratorium on old dues. The operators, those that remained, also seemed to end their price war.
As a result, in the last few years, ARPUs have inched up, though they are still below the “ideal” level of Rs 300. The financial health of the operators has improved, though the return on equity is still very low.
The industry has certainly been helped by the data explosion that has taken place since Covid, and recently further enabled by the successful launch of 5G services. Indians are now the biggest data consumers in the world. They are also paying the least for this privilege.
Data consumption is expected to accelerate even further in the next few years, driven both by increasing consumption of content and increasing use of artificial intelligence. Data centres probably represent the biggest growth opportunity, driven not just by AI but also IoT and cloud, according to a survey of experts especially conducted by tele.net for this anniversary issue. The other segments and technologies to watch out for, according to the survey, are satellite internet, 6G and quantum computing.
In that same survey of experts, we asked them to name the person who has made the biggest contribution to the telecom sector in the past 25 years. Sunil Bharti Mittal topped the list, well ahead of Mukesh Ambani and the late Prime Minister Atal Bihari Vajpayee. We agree with the choice of Sunil Bharti Mittal and applaud his courage, fortitude and vision.
This is a special commemorative issue to mark our 25th anniversary. So, in this issue, you will find some celebration, some nostalgia and also some self-indulgence. Photographs from past functions and get-togethers. And some of our most memorable covers.
But you will also find serious, substantive interviews and write-ups highlighting the achievements of the past, the challenges that still remain with us, the changes that are coming and the strategies we will need.
Twenty-five years ago, we set out with the mission of serving as an accurate source of news and data, an objective forum for discussion and debate, and a reliable monitor of investments, projects and deals.
Today, our mission remains the same, even as the industry has changed dramatically, in terms of industry structure, players, technologies, products, and even regulatory framework.
But to serve that mission well, we will need the continued support of all industry stakeholders. On our part, we will strive to achieve this mission, as before, in a world-class manner, with high-quality editorial and uncompromising integrity.
P.S.: A big thank you to all our readers, contributors and advertisers. As we have said before, we could not have made it this far without their support. Every subscription, every write-up and every ad has helped. We hope they will continue with that support.
