GUIDE TO NTP 2018

Where are we headed with NTP 2018? Voice&Data digs into past NTPs to un­der­stand what went wrong there and what learn­ings can be taken for­ward

Voice&Data - - FRONT PAGE - kr­ish­nam@cy­ber­me­dia.co.in kr­ishna Mukher­jee

The deci­bels are high around Na­tional Tele­com Pol­icy (NTP) 2018, un­like NTP 94, NTP 99 and NTP 2012, NTP 2018 has to pave the way for newer tech­nolo­gies and the fourth in­dus­trial revo­lu­tion.

Over the past few years, the In­dian telecom­mu­ni­ca­tions in­dus­try has shown stu­pen­dous growth from 600 mn wire­less con­nec­tions at the end of FY 2009- 10 to 1.2 bil­lion con­nec­tions to­day.

Some of the re­mark­able fea­tures re­main -- In­dia has the world’s sec­ond­largest mo­bile phone user base, In­dia has over­taken the US as the world’s sec­ond largest smart­phone mar­ket, the In­dian mar­ket has wit­nessed one of the low­est tar­iffs of the world.

One of the key fea­tures of the In­dian tele­com sec­tor is that it has main­tained some of the low­est tar­iffs in the world, which has helped in cur­tail­ing in­fla­tion to some ex­tent.

This has also helped the in­dus­try to cross the bil­lion con­nec­tions mark and be­come the sec­ond largest tele­com mar­ket in the world in such a short time, pro­vid­ing a plat­form for a vi­brant e-com­merce, tech­nol­ogy and dig­i­tal ser­vices ecosys­tem.

In­dian Tele­com-At a Glance

In ad­di­tion, about INR 9,27,000 crores have been in­vested so far by tele­com ser­vice providers (TSPs) in or­der to create a strong tele­com in­fra­struc­ture, which is the sec­ond largest pri­vate sec­tor in­vest­ment in in­fra­struc­ture amongst all the sec­tors in the coun­try. To sup­port the or­derly growth of the tele­com sec­tor, TSPs have in­vested around INR 3,27,000 crores in spec­trum auc­tions alone since 2010.

Ac­cord­ing to in­dus­try body Cel­lu­lar As­so­ci­a­tion of In­dia (COAI), the in­dus­try has made con­sis­tent and sig­nif­i­cant ef­forts to op­ti­mise net­works, with more than 3.9 Lakh sites be­ing in­stalled in the last 12 months for 3G and 4G ser­vices across the coun­try.

In­dia cur­rently has more than 6,70,000 4G Base Transceiver Sta­tions (BTSs), whereas over 3,72,000 BTSs are for 3G.

As of Novem­ber 30th, 2017, there has been an ad­di­tion of about 3.90 lakh

3G and 4G BTSs in the last 12 months to ad­dress the prob­lem of call drops. Cur­rently, the in­dus­try is head­ing to­wards a new phase with con­sol­i­da­tion tak­ing place in the sec­tor.

In the year 2016, new en­trant Re­liance Jio (RJio) dis­rupted the in­dus­try by of­fer­ing un­match­able free­bies that in­cluded ul­tra-low data prices, free calls for con­sumers. Post RJio’s en­try, the hy­per-com­pe­ti­tion pushed the in­dus­try to a con­sol­i­da­tion phase, which was never wit­nessed be­fore.

The ris­ing com­pe­ti­tion com­pelled the in­cum­bents to come out of com­pla­cency and they ex­panded their 4G ser­vices and started of­fer­ing ser­vices at ex­tremely com­pet­i­tive prices - across the coun­try.

The op­er­a­tors also ex­panded their ser­vices beyond voice and data, cre­at­ing a huge bo­nanza for the con­sumers.

The sig­nif­i­cant in­vest­ments into the sec­tor has con­trib­uted to the econ­omy, in ad­di­tion, has also fa­cil­i­tated progress in bridg­ing the dig­i­tal di­vide in the coun­try. The tele­com ser­vices have be­come es­sen­tial for ex­is­tence as it is not only con­nect­ing peo­ple but si­mul­ta­ne­ously im­prov­ing their lives by fa­cil­i­tat­ing ad­vances in medicine, trans­port, ed­u­ca­tion and lifestyle.

The sec­tor to­day is also wit­ness­ing an ex­plo­sive growth of mo­bile pay­ments, lead­ing to many opt­ing for mo­bile wal­lets and mak­ing dig­i­tal fi­nan­cial trans­ac­tions for the first time. The ex­plo­sive growth even led to the Re­serve Bank of In­dia (RBI) look­ing into in­ter­op­er­abil­ity of mo­bile wal­lets and other ways to drive the up­take of dig­i­tal ser­vices.

Also, the In­dian Govern­ment is try­ing to make dig­i­tal in­clu­sion a pos­si­bil­ity as soon as pos­si­ble with pro­grams such as Dig­i­tal In­dia, Aad­haar, Bharat Net and the JAM trin­ity.

The UMANG App, launched by Prime Min­is­ter Naren­dra Modi at the GCCS con­fer­ence (Global Con­fer­ence on Cy­berSpace), aims to bring over 162 govern­ment ser­vices on a sin­gle mo­bile app, with a larger goal to make the Govern­ment ac­ces­si­ble on the mo­bile phone of cit­i­zens. In a nut­shell, all th­ese in­di­cate that how mo­bile phones

have be­come in­dis­pens­able and cre­at­ing a ro­bust pol­icy frame­work around them is the need of the hour.

The above suc­cess sto­ries would not have been pos­si­ble with­out lib­er­al­iza­tion in In­dian tele­com. The In­dian tele­com ser­vices have gone through in­nu­mer­able trans­for­ma­tions, with ma­jor pol­icy de­ci­sions that had taken place with NTP94 and NTP-99.

Past NTPs

The In­dian tele­com in­dus­try was opened for pri­vate par­tic­i­pa­tion in 1992 and a clearer pic­ture was drawn when the govern­ment an­nounced its mo­tive of lib­er­al­iz­ing the tele­com sec­tor with the Na­tional Tele­com Pol­icy res­o­lu­tion of May 13, which was fol­lowed by New Tele­com Pol­icy 99, which pro­duced an­other set of guide­lines clearly rec­og­niz­ing the need for strength­en­ing the reg­u­la­tory regime.

Pro­vid­ing a boost to the in­vest­ment

cli­mate, NTP-99 also pushed the need of re­struc­tur­ing the de­part­men­tal of tele­com ser­vices to that of a pub­lic ser­vice cor­po­ra­tion.

The telecom­mu­ni­ca­tion in­dus­try, which is one of the prime sup­port ser­vices needed for rapid growth and mod­ern­iza­tion of var­i­ous sec­tors of the econ­omy, has un­der­gone a process of change over the years through sig­nif­i­cant pol­icy re­forms; and now when there are counted days left for NTP 2018, we should look back and try to learn from our past mis­takes in shap­ing up NTP 2018.

Look­ing back at NTP 2012, the best part was it tried to sim­plify li­censes through uni­fied li­cens­ing. How­ever, the way tech­nol­ogy and tele­com has evolved, it is not a sim­ple value chain any­more and there­fore, it could have cu­rated the pol­icy in a bet­ter way. Tele­com is an amal­ga­ma­tion of dif­fer­ent seg­ments, where some­one brings the equip­ment, some­one puts the net­work and some­one de­liv­ers the ser­vice. To­day, we have tower com­pa­nies, within them we have small cell com­pa­nies. Ear­lier it was just voice and data. Now it is far more com­plex. And there­fore, it should have worked bet­ter, for ex­am­ple it should have al­lowed li­censes as per the ser­vices be­ing of­fered.

“One would have re­quired uni­fied li­cens­ing, if he wanted to be in so many cat­e­gories of ser­vices. How­ever if some­one just want to be in one or two ser­vices space, he can just take an­other li­cense and start his busi­ness,” says Am­resh Nan­dan, Re­search Vice Pres­i­dent, CSP Re­search, Gart­ner.

While fram­ing NTP 2012, one of the key de­mands of the in­dus­try was it should not only fo­cus on tele­com but should fo­cus on ICT so that both de­part­ments (IT & Com­munca­tions) from the same Min­istry (Min­istry of Com­mu­ni­ca­tions & IT) can work in tan­dem as one with­out the other can­not help In­dia to move in the fast track. And we need to think in a dis­rup­tive way if we plan to achieve the larger goals.

Be­sides, the in­dus­try has al­ways taken a beat­ing due to spec­trum & li­cens­ing, be it mov­ing from limited mo­bil­ity to full mo­bil­ity or pro­vid­ing new li­censes for 2G ser­vices.

The in­dus­try also de­manded that high pri­or­ity should be given to con­sol­i­da­tion, by eas­ing merg­ers and ac­qui­si­tions pro­cesses. In case of merger, the merged en­tity should not have a mar­ket share of more than 30% in the merged cir­cle. This would re­strict two large ex­ist­ing op­er­a­tors from merger and would pro­hibit mo­nop­o­lis­tic trade prac­tices. Prior ap­proval of the DoT should be taken which should base on the mar­ket share, mar­ket power and AGR of the in­tend­ing op­er­a­tors to merge.

While some de­mands were taken care of, some were given a miss while fram­ing NTP 2012. NTP 2012 was re­leased with the vi­sion of trans­form­ing the coun­try into an em­pow­ered and in­clu­sive knowl­edge-based so­ci­ety, us­ing telecom­mu­ni­ca­tion ser­vices as the plat­form. There were se­ries of ob­jec­tive and strate­gies laid out in the NTP 2012 to lever­age tele­com in­fra­struc­ture in ru­ral and ur­ban ar­eas to par­tic­i­pate in the in­ter­net and web econ­omy for an in­clu­sive de­vel­op­ment.

Much of the Na­tional Tele­com Pol­icy 2012, piv­oted on the pro­posed one-time

Sim­pli­fy­ing li­cens­ing and reg­u­la­tions, in­cen­tivis­ing re­search and de­vel­op­ment, pro­mot­ing skill de­vel­op­ment cre­at­ing a ro­bust frame­work for tele­com net­work se­cu­rity

spec­trum fee, delink­ing of spec­trum from li­cence, spec­trum shar­ing, trad­ing, re-farm­ing and pool­ing and li­cence re­newal fee.

Sim­pli­fy­ing li­cens­ing and reg­u­la­tions, in­cen­tivis­ing re­search and de­vel­op­ment, pro­mot­ing skill de­vel­op­ment cre­at­ing a ro­bust frame­work for tele­com net­work se­cu­rity and data pri­vacy are were of the ar­eas which the NTP2012 did not fully ad­dress.

Spec­trum re­mains the key fail­ure. The ap­proach to set­ting the re­serve price (RP) in spec­trum auc­tions is clearly faulty it leads mostly to spec­trum sale at only the RP or marginally above it. There is no dis­cov­ery of the true mar­ket price. This is re­spon­si­ble for the in­or­di­nately high spec­trum prices and the tremen­dous debt bur­den of the sec­tor.

“Apart from cor­rect­ing the set­ting of spec­trum RP, the NTP should have set out the clear roadmap for meet­ing the set tar­gets of 300 MHz and 700 MHz by 2017 and 2020 re­spec­tively. The fail­ure to ad­dress the spec­trum is­sues not only ad­versely af­fected the in­dus­try fi­nan­cials but also im­pacted the Qual­ity of Ser­vice re­ceived by the cus­tomer,” says TV Ra­machan­dran, Pres­i­dent, Broad­band In­dia Fo­rum.

NTP 2012 also erred in not ad­dress­ing the other se­ri­ous prob­lems of the sec­tor such as du­ties and levies as com­pared to other com­pa­ra­ble economies/regimes, he adds.

“The third ma­jor short­com­ing of the 2012 pol­icy was that al­though by 2010 the dawn of the Data Age was am­ply vis­i­ble, the pol­icy con­tin­ued to look at the sec­tor through the de­fi­cient look­ing-glass of con­ven­tional tele­com and not adopt the re­quired pro­gres­sive vi­sion of a Dig­i­tal Com­mu­ni­ca­tions Pol­icy,” Ra­machan­dran adds.

Bharat­net- A Big Miss

Al­though NTP 2012 called for im­prov­ing ru­ral pen­e­tra­tion and im­prov­ing the tele­com in­fra­struc­ture, through Bharat­net, mi­nus­cule de­vel­op­ment was seen in th­ese ar­eas. It promised to im­prove ru­ral tele­den­sity from 39 to 70 by 2017 while 100 by 2020. The tele­den­sity still hov­ers at 56 in 2018. The pol­icy didn’t lay down a spe­cific roadmap as to how this will be achieved in a time­bound and or­derly man­ner, says He­mant Joshi, Part­ner, Deloitte In­dia.

Two im­por­tant ob­jec­tives of NTP-2012 were to pro­vide high speed and high qual­ity broad­band ac­cess to all vil­lage pan­chay­ats through a com­bi­na­tion of tech­nolo­gies by the year 2014 and pro­gres­sively to all vil­lages and habi­ta­tions by 2020, and to pro­vide af­ford­able and re­li­able broad­band-on-de­mand by the year 2015 and to achieve 175 mil­lion broad­band con­nec­tions by the year 2017 and 600 mil­lion by the year 2020 at a min­i­mum of 2 Mbps down­load speed.

How­ever, the Bharat­Net project (con­nect­ing the GPs) has now started tak­ing shape as late as 2016-17 in com­par­i­son to the tar­get year of 2014. Fur­ther, the ad­e­quate broad­band cov­er­age with the de­sired speed is yet to be achieved es­pe­cially in ru­ral ar­eas.

“As per the Right to Broad­band pol­icy, the NTP 2012 promised to pro­vide high speed broad­band ser­vices to all vil­lage pan­chay­ats by 2014 which is yet to be ful­filled af­ter sev­eral pol­icy changes and budget over run,” ac­cord­ing to Joshi.

“In my opin­ion, 2012 was the perfect time to think of tele­com in­fra­struc­ture as one of the most im­por­tant el­e­ment from growth across so­ci­ety and busi­ness. That should have been the thought process in 2012. One of the first things that should have been done at that point in time, was to put the pol­icy frame­work for bet­ter in­fra­struc­ture across the coun­try – ra­tio­nal­iz­ing in­vest­ments across all par­ties, pub­lic and pri­vate,” adds Nan­dan.

“There are ar­eas where there is sur­plus ca­pac­ity through fiber net­works, and there are ar­eas where there is lack of am­ple in­fra. In­dus­try lead­ers started think­ing of dig­i­tal trans­for­ma­tion many years ago – around 2012. Peo­ple got the

sense that things are go­ing to con­verge. Ideally, pol­icy mak­ers should have looked at tele­com beyond the pur­pose of con­nec­tiv­ity in 2012 it­self,” he added.

Ac­cord­ing to in­dus­try ex­perts, con­nec­tiv­ity is a ba­sic min­i­mum need. Trans­for­ma­tion is re­quired for go­ing beyond con­nec­tiv­ity i.e. col­lab­o­ra­tion, trans­ac­tion and in­tel­li­gence. Th­ese things also re­quire ad­e­quate pol­icy frame­work to ad­dress pri­vacy is­sues, se­cu­rity is­sues, pro­tec­tion of dig­i­tal iden­tity etc. Th­ese could have been dealt in a much bet­ter man­ner.

Also, even though the NTP 2012 stated that it looks to make In­dia a ‘global man­u­fac­tur­ing hub’ for telecom­mu­ni­ca­tions hardware, in or­der to en­sure that the prices of de­vices come down in In­dia, the pol­icy failed to de­fine how it is go­ing to achieve that, and by when.

NTP 2012 promised to create a com­plete value chain for do­mes­tic pro­duc­tion of telecom­mu­ni­ca­tion equip­ment to meet In­dian tele­com sec­tor de­mand to the ex­tent of 60% and 80% by 2017 and 2020 re­spec­tively. Still the do­mes­tic man­u­fac­tur­ing is poor and 90% of the tele­com equip­ment is be­ing im­ported.

The NTP-2012’s stated vi­sion was to pro­vide se­cure, re­li­able, af­ford­able and high qual­ity con­verged telecom­mu­ni­ca­tion ser­vices any­time, any­where for an ac­cel­er­ated in­clu­sive so­cio-eco­nomic de­vel­op­ment. Yet it didn’t de­fine a frame­work as to how that is to be achieved.

By en­abling poli­cies, au­to­ma­tion of pro­cesses in the govern­ment in­ter­faces and an­a­lyt­ics, In­dia can be­come an im­mensely busi­ness friendly coun­try and im­prove its own rank­ings aligned with Prime Min­is­ter Naren­dra Modi’s vi­sion.

Ex­pec­ta­tions from NTP 2018

It is more than just tele­com (net­work) and IT. It is about the con­ver­gence of IT and OT – across the in­dus­try. OT is op­er­a­tional tech­nol­ogy across tele­com, man­u­fac­tur­ing, health­care etc.

“While we talk about dig­i­tal trans­for­ma­tion, dig­i­tal gov­er­nance, dig­i­tal ser­vices, so on and so forth, all of th­ese de­pend on tele­com in­fra­struc­ture and its qual­ity. How­ever, we seem to re­duce the con­cepts like IoT and dig­i­tal ser­vices to mo­bile apps and ser­vices. That is not en­abling trans­for­ma­tion. Yes, we need an app, but a lot more is needed in the back­ground,” elab­o­rates Nan­dan.

And there­fore, the key fo­cus of NTP 2018 should be en­abling newer tech­nolo­gies. At the out­set, the back­end or the in­fra­struc­ture needs to be ro­bust for in­tro­duc­ing new tech­nolo­gies.

The pol­icy must fo­cus on im­prov­ing and en­hanc­ing tele­com and broad­band pen­e­tra­tion in the coun­try. NTP 2018 should fo­cus on en­hanc­ing broad­band pen­e­tra­tion in the coun­try to 70% by 2020 from the present level of 23%.

It should fo­cus on im­prov­ing the rank­ing of In­dia in com­par­i­son to other coun­tries in terms of Broad­band Pen­e­tra­tion, ICT De­vel­op­ment, and Net­work Readi­ness etc.

“In­crease in pen­e­tra­tion and af­ford­abil­ity can come from sim­pli­fy­ing ex­ist­ing li­cens­ing and reg­u­la­tions on the lines of har­mo­nized and equal poli­cies for the com­pet­ing tech­nolo­gies,” ex­plains Ra­jan Math­ews, Di­rec­tor Gen­eral, COAI.

He also added that the new pol­icy should en­cour­age in­vest­ments and en­sure fi­nan­cial sta­bil­ity of the sec­tor. Sev­eral cur­rent levies and taxes need to be ra­tio­nalised and mul­ti­ple au­dits must be done away with, if we want In­dia to leapfrog into the next level of so­cioe­co­nomic growth and im­prove our ease of do­ing busi­ness rank­ings.

The sec­tor should not be treated as a ‘Cash Cow’ and the levies that add to the Govern­ment rev­enue should be ra­tio­nalised. Al­most 30% of rev­enues from the sec­tor go to the Govern­ment ex­che­quer. Re­duc­tion and ra­tio­nal­i­sa­tion is the only way to re­lieve the sec­tor from present fi­nan­cial bur­dens. How­ever, for that to re­ally hap­pen, more tax cuts, low­er­ing of li­cense fees and favourable re­forms are ab­so­lute ne­ces­si­ties, ac­cord­ing to Ma­hesh Up­pal, Di­rec­tor, ComFirst In­dia.

More so, as the sec­tor is reel­ing un­der fi­nan­cial stress for a long time now, op­er­a­tors are com­plain­ing about the fact that around 30 paise of ev­ery rupee earned by tel­cos is paid as fees and taxes to the govern­ment, and this alone is one of the key rea­sons for the in­dus­try’s INR 4.6 lakh crore debt, against steeply de­clin­ing rev­enues.

Be­sides, IT is get­ting into tech­nolo­gies of var­i­ous in­dus­tries and that con­ver­gence has to be en­abled me­thod­i­cally. It is not just about tech­nol­ogy. Poli­cies also in­flu­ence such things and that is crit­i­cal for dig­i­tal trans­for­ma­tion.

In NTP 2012, there were cer­tain loop­holes about spec­trum li­cens­ing, etc. and li­cens­ing seems to be the big­gest prob­lems in In­dia. When it comes to NTP2018, we all ex­pect that it would be sans dra­co­nian rules, prov­ing more lee­way to the in­dus­try to grow with the rest of the world.

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