The past two decades have been remarkable for the Indian telecom sector. By being a flagbearer of the Digital India initiative, the telecom sector has positioned itself as a core infrastructure service provider that can touch and transform over a billion lives. However, poor financial health continues to impact the sector’s growth prospects and its transition towards a 5G economy. Industry stakeholders share their views on the key achievements of the sector, challenges being faced and policy interventions needed to overcome these.
How would you assess the progress made in the Indian telecom sector over the past two decades? What were the key drivers of change during this period?
In the past two decades, mobile service providers, device makers, infrastructure providers and internet companies have built a virtual second world for us to live, work and play in – a digital one.
The telecom tower industry has played a pivotal role in the unhindered growth of India’s telecom sector. There are close to 583,000 telecom towers in India at present and on average 5,000-6,000 mobile towers are installed per month. In the next four to five years, it is expected that approximately 300,000 additional telecom towers will be put up and this will take the count to around 850,000 telecom towers by 2024. There has been a spectacular growth in fibre roll-outs as well.
Due to the rapid consolidation of telecom service players, the tenancy ratio has decreased in the past couple of years. It is expected to pick up again with upcoming technologies/applications such as 5G, internet of things (IoT) and artificial intelligence (AI). The key drivers of change during this period were:
- Upgradation in technologies from 2G to 3G to 4G to now 5G
- Evolution of the telecom infrastructure industry and pan-India roll-out of mobile and data services
- Innovative concept of “tower sharing” by the telecom infrastructure industry through Project MOST (mobile operators shared towers)
- Government initiatives such as the National Digital Communications Policy (NDCP) 2018 and the Right of Way (RoW) Policy, allowing the installation of telecom infrastructure on government land and buildings, and the launch of the National Broadband Mission, 2019
- Online platforms to provide permissions for speedy roll-outs of telecom infrastructure in states.
How different are the challenges for the sector at present as compared to two decades ago? What are some of the areas that urgently need policy and regulatory attention?
The common challenges that are hampering the telecom industry are:
- Restriction on the location of cell sites
- Multiplicity of policies by local bodies and municipal corporations
- Delay in the processing of application and multiple clearances
- Requirement of multiple no-objection certificates (NOCs) from various departments resulting in delayed roll-out
- Problems in obtaining RoW clearance from government authorities
- Alleged fear of electromagnetic field (EMF) emissions
- Retrospective implementation of state-specific tower policies
- Erratic/Non-availability of power supply
- High fees/Multiple levies
- The Lack of telecom infrastructure in rural areas
- States not willing to align their policies with those of the central government
- Non-availability of government land and buildings for telecom installations.
Do you have a regulatory/policy wish list?
- Enhance the scope of telecom infrastructure providers
- Align telecom infrastructure policies with central RoW Rules
- State protection for critical telecom assets with strict penal actions against any form of disruption, theft of and hindering smooth functioning is a must
- Need to rationalise property tax across the states
- Formulate policy for setting up towers on government land and buildings
- No coercive action policy for telecom towers
- Provide priority power connections to telecom BTSs, and affordable tariffs (at industrial rates) for the telecom sector
- Modify/Revise RoW Rules for the establishment of 5G infrastructure
- Extend availability of input tax credit for telecom towers
- Grant infrastructure status incentives to the telecom infrastructure sector
- Need for rationalisation of administration charges as one-time charges being levied by the states are much higher than the one-time fixed charge of up to Rs 10,000 at present.
What are your views on the evolving 5G ecosystem in the country? What are the key opportunities and challenges?
5G enablement would require a massive growth in small cells. IP-1s can play a vital role in faster deployment of small cells through huge investments and support TSPs to save on capex and opex. However, challenges such as no policy for the mandatory provisioning of telecom installations in new buildings, no single-window clearance, no provision for batch processing of groups of small cells, and separate laying of cables by each operator are hampering small cell deployment. Tower fiberisation is also a must for 5G.
5G will open up opportunities in:
- Fibre: The deployment of high frequency 4G and 5G spectrum needs fibre backhaul. Further, small cells have to be necessarily backhauled through optical fibre cables due to line of sight constraints.
- Small cells: Globally, towercos are already adding small cells to their inventory of site typologies – mostly functioning as site acquirers, with small cells owned by telcos. A bigger opportunity lies where towercos acquire and own their small cells, and offer fiberised small cell sites to telcos.
- Smart cities: Towercos have already jumped on the smart city bandwagon. Under the public-private partnership model, towercos can build the communications infrastructure for the city and in lieu use the RoW and site rights for mounting their own infrastructure for revenue generation.
- Data centres: Upfront high capex investments by towercos in data centres to lease out space for co-location or provision of managed hosting services is a prospective business model.
- Edge computing: With steady power supply and ready backhaul, tower sites can support edge data centres closer to the user, reducing the need to send backhaul data traffic to a centralised hub.
What is your outlook for the telecom sector in the coming years? What key trends will shape the future of telecom in India?
New-generation technologies require formidable network performance, which has triggered the need for a diverse infrastructure mix. The carrier-neutral towerco model, which hinged on tenant addition, has to be rebuilt, reloaded and rebooted.
In order to keep pace with the growing data consumption, tower companies are reshaping their business models and exploring newer business avenues such as small cells, in-building solutions, edge computing, fibre leasing, data centres and Wi-Fi deployments by leveraging the sharing concept.
To summarise, infrastructure providers are in the transformational mode to support data-centric growth in the telecom sector, which would continue to grow as the technology evolves to 5G.