Peeyush Vaish, Partner and Telecom Leader, Deloitte India

Policy successes in the telecom space so far

Many of the Government of India’s measures to enhance the status of social inclusion, infrastructure, and affordability rely on reliable broadband access which is being the backbone of economy at one end and highly regulated at the other.

Some of the significant government initiatives that have been implemented to facilitate the deployment of the latest generation of mobile networks are:

  • National Digital Communications Policy (NDCP) – Founded in 2018, with the goal of meeting citizen and business’ information and communication needs by establishing a resilient, secure, accessible, and affordable Digital Communications Infrastructure and Services, as well as assisting India’s transition to a digitally empowered economy and society.
  • Indigenous 5G Test Beds – In March 2018, the Department of Telecommunications (DoT) approved a financial grant (INR 224 crores) for a multi-institute collaborative 3-year project to set up a “Indigenous 5G Test bed” (Building an end-to-end 5G Test Bed) in India, keeping in mind India’s specific requirements and to take the lead in 5G deployment. The goal of the project was to make 5G networks more accessible for developing and proving applications or use cases that are important to Indian society, as well as to install and showcase IoT (Internet of Things)-based systems and services across the country.
  • PM-WANI – The Wi-Fi Access Network initiative by the GOI. Cleared in 2020, the project will include PDOs, multiple industry players and others to set up a network of Wi-Fi Access hotspots across the rural India. It will be a cost-effective measure to extend the Digital India vision.
  • BharatNet – Being the world’s largest rural broadband project, it aims to connect all of the villages in the country. Currently, out of 2.5 lakh gram panchayats, 1.6 lakh have already been connected. In addition, over 5 lakh kilometres of fibre have already been laid across the country

Favourable Government initiatives will be the key in harnessing 5G’s potential to transform social, economic and business growth of the country.

The expected possible amendments in the industry for the 5G push

Considering the transformative impact of broadband across business, economy and society, it is critical for India to exploit and harness this growth opportunity. Following are amendments are expected for the 5G push –

  • Amendment in Right of Way (RoW) rules- The telecom sector is campaigning for modifications to Right of Way (ROW) law to include provisions on “small cell placement” as India prepares to roll out the future of 5G networks. Small cells are being lauded as a critical component of 5G networks, however there is presently no regulatory framework in place, there is a backhaul scarcity, and governments and municipal bodies do not adhere to RoW requirements uniformly. Due to the reluctance to adopt centrally set norms, telecom carriers and infrastructure providers have had to pay substantially more for network growth. In some cases, telcos pay up to 1,000 per cent more than the necessary rate of Rs 1,000/km. The need of the hour is a unified central policy for small cell deployment that will enable, India to fully leverage the promise of 5G whilst also contributing to the country’s ambition in  shaping towards a USD 5 trillion economy.
  • Utilisation of Universal Service Obligation Fund (USOF)- 5G networks require smartphones, and an estimated 280 million mobile phone users in India still use basic or feature phones. 5 per cent of the licence fee paid by telecom operators goes to the Universal Service Obligation (USO) Fund, which was set up in April 2002 for achieving universal service objectives by providing access to telephone services in rural and remote areas and creation of infrastructure for mobile services and broadband in these areas. However, The Comptroller and Auditor General of India (CAG) had highlighted short transfer to the Universal Service Obligation Fund (USOF) as it was being retained in the Consolidated Fund of India and being used for other purposes. As on 30.11.2021, total accrual in UAL was Rs 1,215.7 billion but only 624.87billion was transferred to the USOF. Thus, there was a short transfer of INR 590.82 billion. To ensure comprehensive affordability, nimble adoption of futuristic technologies and supportive policy tools like the use of the USO fund to subsidise smartphone devices will foster greater digital inclusion and will give an impetus to the country-wide 5G push.

How 5G is reshaping the communications value chain

5G technology is poised to redefine the future of telecommunications sector in India. Apart from the significant network performance improvements over previous generations, 5G is expected to add new service dimensions beyond traditional voice and data through enabling technologies such as the Internet of Things (IoT), Artificial Intelligence (AI), Robotic Process Automation (RPA), Augmented Reality / Virtual Reality (AR/ VR), and others, resulting in use cases across industries.

In the 5G value chain, new business models and intermediaries are emerging to meet the demand for connectivity and differentiated services among niche market segments and customers –

  • For Mobile Operators – New radio access capabilities enabled by 5G, combined with solutions such as Low-Power Wide-Area Network (LPWAN) networks for IoT connectivity, mobile edge computing, content caching, and content delivery networks for augmented and virtual reality, are expected to create new experiences and revenue streams. 5G is also projected to allow operators to charge a premium for their services, enter markets faster, and deliver a better customer experience through higher service adoption, thus increasing the Average Revenue per User (ARPU).
  • For Original Equipment Manufacturers (OEM) – Manufacturing, energy, utilities, healthcare, pharmaceuticals, transportation, and logistics are among the industries where 5G is expected to embrace and support specialised use cases. OEMs are moving into these industries to design and construct next-generation features like end-to-end network security, automation, and analytics. Equipment vendors are well positioned in creating partnerships to produce solutions and driving implementation for different requirements across sectors, thanks to new development channels within vertical industries.
  • For Customers – Digital has become a way of life. It’s not just about traditional voice and data services anymore as there is shift towards smart homes, connected cars, smart wearables and high-quality video / gaming experience. 5G promises to offer high speed mobile data, a better video viewing experience (e.g., 4K / 8K / UHD) on any device, irrespective of the user being static, or mobile. 5G is expected to offer the requisite bandwidth and low latency that is fundamental to mobile VR experiences. 5G can take VR beyond gaming where users would be able to attend sporting events and concerts via their VR headsets capturing live experiences. All in all 5G is equipped to meet the voice of the digital customer.

Key trends and growth areas in the upcoming Budget 2022

With a renewed focus of the GOI towards digital, this year’s budget will be much awaited and following asks can be expected from the telecom sector perspective: –

  • Introduction of an appropriate financial policy and regulatory assistance to encourage commercial deployment of 5G networks
  • Custom duty exemption on import of critical telecom equipment
  • Improving the existing export ecosystem for electronic products through Free Trade Agreements (FTA) with large economies. Also, supporting domestic R&D and skill development to enable India in being a global hub for electronic products. India currently accounts for less than 2 per cent of the global electronics production.
  • Internet has been undoubtedly the most crucial factor in maintaining financial and social services for work, education and health. With the advent of 5G, the budget should be favourable for rural internet penetration thereby helping in exploiting its full potential.
  • Categorizing petroleum products under GST – The telecommunication towers run on diesel and there is a cascading effect, since at present both VAT and Central excise is charged on it.