Date: 13/01/2023

Relevance: GS-3: Science and Technology- Awareness in the fields of information and communication technology

Key Phrases: Draft Indian Telecommunication Bill, 2022, 5G services, Universal Service Obligation fund, Mandatory Performance Verification Testing, adjusted gross revenue, Right-of-Way (RoW) policies.

Why in News?

• The year 2022 was a game-changing one for the telecom sector, which crossed new milestones on the way. Bold reforms announced in September 2021 helped to improve the sector’s viability.
• The launch of commercial 5G services in October 2022 was a historic moment for the country.

Draft Indian Telecommunication Bill, 2022

• The introduction of the draft Indian Telecommunication Bill, 2022 has been a step in the right direction.
• It has several positives, including the government’s power to defer/waive operators’ dues and graded penalty structure to minimise their financial burden.
• A more simplified system that eliminates the need for prior approval will help remove operational bottlenecks.
• Further, rebranding and repurposing the USO (Universal Service Obligation) fund to Telecommunication Development Fund and including R&D and new technologies under its ambit is likely to lead to better utilisation of the fund.

Satellite communication:

• Strategic importance:

  • Considering the strategic importance, the government has come up with a slew of reforms to enhance the ease of doing business and streamline clearances.
  • It is likely to aid the speedy rollout of Satcom services across the country.
• Streamline clearances:
  • Simplified scrutiny, self-certification in place of the MPVT (Mandatory Performance Verification Testing) of satellite antennas, and online processing of applications will go a long way in minimising the time taken for approvals.
  • In addition, enhancing the scope of licences to include IoT is in line with global trends, with satellites playing a complementary role to terrestrial IoT services.
• Investment:
  • In 2023, significant investment is required to ramp up the 5G network rollout across the country.
  • Operators have outlined ambitious plans for pan-India 5G coverage and are expected to invest close to $10 billion in 2023-24.
• Viable tariff structure:
  • A headline tariff hike is imminent to help bolster the financial health of operators as CAPEX will be elevated in the next 1-2 years.
  • Mobile data prices are still lower in India at $0.17 per GB as compared with the global average of $3.12 per GB.
  • A viable cost structure is necessary for innovation to thrive and to capitalise on new 5G use cases.
  • The current mobile tariff in India is still not sustainable in the long term.
  • More frequent tariff hikes are likely in 2023, which will bolster ARPU (average revenue per unit).
  • India’s current mobile ARPU of $1.8 is significantly lower than the global average of $7.3.
  • ARPU needs to be doubled in the long term for the sector’s sustainability.

5G: A defining theme in 2023.

• Coverage:
  • Operators have focused on offering enhanced mobile broadband as a key value proposition to start with as they look to steadily increase 5G coverage.
  • As has been the case globally, initial consumer 5G use cases in India focus on immersive content/gaming using a combination of AR/VR/MR.
• Revenue:
  • The stage was set for the successful completion of 5G spectrum auctions, which fetched the exchequer over ₹1.5-lakh crore — higher than any other auction.
  • Operators displayed a significant appetite for 5G, with 90 per cent of the total spectrum sold for 5G bands.
• Wider impact:
  • It is important to identify 5G use cases that have a wider impact on the lives of people.
  • For instance, immersive education or for that matter 5G-enabled telemedicine.
  • India needs to ride on the 5G innovation bandwagon to capitalise on the true benefits of the technology.
• Connectivity:
  • 5G fixed wireless access (FWA) has the potential to offer a flexible and cost-effective solution to connect sparsely populated areas.
  • The higher bandwidth available in households through 5G FWA would help to connect more devices and open-up access to a gamut of services.
• Enterprise-focused 5G:
  • Enterprise-focused 5G use cases are likely to pick up from 2024 onwards, with a more mature ecosystem in place and a focus on 5G standalone characteristics.

Way forward:

• Simplified version of licences:
  • A simplified version of licences is required. Currently, all types of licences have the same general conditions and stiff compliances. It is important to streamline the different types of licences.
  • A different class of licence for operators who offer only B2B telecom services can be considered.
• Adjusted gross revenue:
  • Clarity is required on the adjusted gross revenue (AGR) definition for the bundling of services with connectivity, which would become a larger reality with 5G.
• Financial health:
  • Improving the financial health of the sector is important for innovation to thrive.
  • A phased plan of action needs to be formulated to improve liquidity, create more avenues of investment, and enhance long-term sustainability.
  • Regulatory levies on the Indian telecom sector are one of the highest in the world.
  • Approximately, 30 per cent of the revenues of telecom operators is spent on taxes and levies.
• Rationalisation of the licence fee
  • In most countries, the licence fee is negligible, or a one-time upfront payment is required.
  • The current licence fee of 8 per cent (including contribution to USOF) should be rationalised to ease operators’ financial burden.
• GST credit refunds:
  • The accumulation of GST credits of approximately ₹32,000 crores has added to the working capital woes of the operators.
  • Necessary measures should be taken for refunds of accumulated GST credits.
• Investment:
  • Substantial investment is required in setting up the underlying infrastructure.
  • Subsidising fibre deployment through viability gap funding (for example, USOF) can significantly help accelerate rollout.
• Bandwidth sharing:
  • Bandwidth sharing can be mandated, and IP-Is should be permitted to bid.
• Right-of-Way (RoW) policies:
  • Greater alignment is required between State’s and local bodies’ Right-of-Way (RoW) policies in line with the Central RoW Rules.
• National dig-once policy:
  • A national dig-once policy can be formulated for fibre deployment across State and municipal roads and national highways. This will help to bring down costs and reduce time-to-market.

Conclusion:

• Exciting times are ahead for the telecom sector. Prudent policy measures have set the ball rolling.
• Once the Telecom Bill is finalised by mid-2023, it will pave the way for more game-changing reforms in the future.
• However, broader business interest needs to be protected. Also, the ambit to cover new technology products/services may require a tailored approach.
• With the right kind of support and push from all stakeholders, and by adopting corrective steps, the sector can do very well in the future.

Source: The Hindu BL

Mains Question:

Q. What are the challenges and opportunities in the telecom sector in India, and how can the rollout of 5G services in India play a game-changing role for the sector? Discuss.