Telecom Needs Policy on Demand
The industry highlights its expectations from the New Government
According to GSMA 2013 report on India Mobile Economy, the country ranks 98th out of 144 for burdensome Government Regulations; 99th out of 144 in irregular payments i.e., bribes; 65th out of 144 in Transparency of Policy Making.
HIGH SPEED BROADBAND
RIGHT OF WAY FOR INFRASTRUCTURE
SPECTRUM AVAILABILITY
REDUCE BURDEN OF TAXES, LEVIES…
PREFERENTIAL MARKET ACCESS
Telecom has been one of the engines of GDP growth, socioeconomic development and inclusive growth ever since it opened up for private participation over 20 years ago. Institutions such as World Bank have established strong correlation between teledensity increase and GDP growth. According to some of these reports, every 10 percent teledensity rise leads to 1.2 percent rise in the GDP growth rate. The acceleration in growth for emerging economies is pegged at even higher rate and increase in broadband penetration can further accelerate this growth rate.
Consider this. In India, the sector has been contributing at least 6.9 percent annually to GDP and employs 1.5 crore of India’s population. In fact, in the last decade, telecom has been the third highest foreign direct investment (FDI) contributor in the country. However, in the last two years FDI has fallen on an average more than 80 percent year-onyear. GSMA 2013 report on India Mobile Economy states that the country ranks 98th out of 144 for burdensome Government Regulations; 99th out of 144 in irregular payments i.e., bribes; 65th out of 144 in Transparency of Policy Making.
Also, in spite of being accorded infrastructure status the sector is reeling under multiple levies: license fee at 8 percent of AGR (including 5 percent of USO levy); Spectrum Usage Charges (SUCs) of 5 percent (for auctioned spectrum) and higher for administratively allocated spectrum are exceptionally high compared to international standards; service tax that ultimately adds to end consumer’s cost of ownership; the levy of excise duty and NCCD on handset manufacturers - a double blow not only to the manufacturers, but consumers also. Plus this carries the potential risk of massively increasing the handset grey market. All of this adds to the final price paid by the end consumer.
However, the tariffs in India are said to be most competitive, globally. Courtesy high number of operators in the market, while every other country has two to four operators, India has 12. Even though some consolidation activity has begun in 2014 and is likely to pick up steam, the market will still have possibly the highest number of telecos in operation for pretty much rest of the decade. In that light, challenges the sector has to deal with multiplies and we have not even factored the disruptions that are expected in such a dynamic market yet.
The sector is on government development agenda. Ambitious targets were set in the 12th Five Year Plan. Such as 100 percent teledensity and 600 million broadband connections by 2020. And National Optic Fiber Network (NOFN) – to bring high quality broadband access to 250,000 village panchayats. However, two years have gone by with little or very slow action. As per Planning Commission’s 12th plan projections – Telecom sector being an infrastructure sector is expected to invest over 900,000 crore during this five-year-plan and over 90 percent of this is expected to come from the private sector. But has the government done enough to make the climate conducive to such investment?
In the ensuing pages, Voice&Data highlights the 5 major issues facing the industry for the policy makers to take note. India’s telecom industry is literally crying for attention.