Telecom tower infrastructure has been regarded as the foundation of India’s telecom and digital growth story. The onset of the Covid-19 pandemic at the start of 2020 and the subsequent lockdowns that followed it brought in focus the critical role played by telecom infrastructure as infrastructure providers undertook a slew of measures to ensure 24×7 uninterrupted telecom and internet services.
India has the second-largest network infrastructure with over 600,000 towers and 2.2 million base stations. That said, there is still a lot of potential for telecom infrastructure to grow further as there are a substantial number of uncovered villages, data usage in urban areas is constantly growing and the deployment of new-age technologies is also seeing an uptick. As per the National Broadband Mission (NBM), tower density needs to be increased to 1 per 1,000 population by 2024, to enhance coverage and improve quality of service.
While the industry is actively working towards expanding the existing telecom infrastructure, key challenges such as RoW issues continue to impact business.
RoW issues
The announcement of the Right of Way (RoW) Rules in 2016 was a unique and transformational move by the government. However, there are some implementational challenges that have prevented their uniform application across the country. These include long delays and no timelines for permissions, exorbitant charges and varying fees by different bodies, no standard documentation and multiplicity of formats, coercive action/sealing of towers, non-availability of government land and buildings, and some states and UTs not following the rules.
Key recommendations
According to the Tower and Infrastructure Providers Association (TAIPA), there is a need to adopt a collaborative approach to effectively mitigate RoW challenges. To this end, the industry body has recommended that an RoW Council, similar to the GST Council, needs to be created for telecom RoW issues. This council can comprise members from central and state governments. In addition, a slew of other measures need to be taken to address RoW challenges. These include mandating all the states to follow the RoW Rules, 2016; setting up a centralised online single window portal; maintaining uniform costs across the country; and providing a speedy dispute resolution mechanism.
Apart from this, amendments are required in the RoW Rules to accommodate technological developments such as 5G. Accordingly, there is a need to make provisions for the installation of IBS, small cells, smart poles, cell-on-wheel, aerial cable, street furniture, etc. Further, timelines for clearance need to be revised to 15 days from 60 days and a ceiling price should be set for renting of telecom infrastructure on government properties including defence lands.
Over and above this, the government needs to come up with a policy for laying common ducts and make adequate panel provisions to ensure safety and security of telecom infrastructure.
Ease of doing business – Need of the hour
Going forward, the expansion of telecom infrastructure in the country would call for substantial investments from private players, which will only happen if ease of doing business is promoted in the country.
For this, there is a need to ensure rationalisation and uniformity of property tax across the states. At present, there is no uniformity in property tax rates as different rates are fixed by different local authorities including municipal corporations, municipalities and state governments. The incidence of property tax rates are highest in Maharashtra and Gujarat. In Maharashtra, the rate of property tax varies from 40 per cent to 112 per cent of annual rateable value (ARV) and penalty is levied by many municipal corporations.
Further, the government should work towards making input tax credit available to IP-1 players. At present, the input tax credit on telecom towers is not available as telecom towers are not included in the definition of “plant and machinery” under section 17(5)(d) of the CGST Act, 2017. The industry has urged that under the GST regime, input credit should be available for all the procurements including telecom towers. Hence, it has requested for an amendment of definition of plant and machinery. The revised definition would pave the way for availing of input tax credit on telecom towers and would provide the much-needed relief to infrastructure providers and the sector as a whole.
In addition, the industry has emphasised that even though telecom towers have been awarded infrastructure status, the incentives available under infrastructure status such as availability of power at industrial rates, higher ECB limit and softer lending rates have not been passed on to the sector. Therefore, towercos have requested that at least key incentives such as availability of 24×7 power, accelerated depreciation for batteries at the rate of 65 per cent instead of 15 per cent, and applicability of industrial tariff for power should be made available to the sector.
Net, net, industry bodies have expressed that telecom networks are the backbone on which other sectors ride. Therefore, telecom infrastructure should be treated as critical infrastructure and not just as a source of revenue. Enacting on industry suggestions would help in achieving this.
Based on a presentation by Tilak Raj Dua, Director General, TAIPA
