5G will create more opportunities for the operators: R S Sharma

The 1978-batch IAS officer with a master’s degree in mathematics from IIT-Kanpur and another in computer science from the University of California brings an amazing mix of technology and bureaucracy that allowed him to make a difference at every stage of his civil services—as a District Collector in Begusarai, Purnea, and Dhanbad or as UIDAI Director General, Jharkhand Chief Secretary and IT, and Communications Secretary. The Voice&Data Telecom Person of the Year for 2019 and TRAI Chairman Ram Sewak Sharma touches upon his role as a regulator, the changing business model of telecom service providers (TSPs) and opportunities that the 5G is likely to bring in. Excerpts from an interview with Shubhendu Parth.

V&D: Digital India is a key component of good governance in the country and telecom is the most important infrastructure for delivering all e-governance and citizen services. How do you see the telecom sector in India evolve in five years from now?

Ram Sewak Sharma: Digital infrastructure and services are increasingly emerging as key enablers and critical determinants of a country’s growth and well-being. With significant capabilities in both telecommunications and software, India stands poised to benefit from harnessing new digital technologies and platforms to unlock productivity, as well as to reach the un-served and underserved markets, thus catalyzing economic growth and development, generating new-age jobs and livelihoods and ensuring access to next-generation services for its citizens.

With increasing digitalization, the telecom sector has become a backbone for every other sector. With the rollout of 5G services, the role of the telecom sector will further enhance. It will create more opportunities for operators. Clearly, the ubiquitous telecom network is the prerequisite for increasing the reach of the benefit of digitalization. Overall, there is a robust demand for telecom services and India ranks 2nd in the world in terms of telecom subscription, internet subscribers and app downloads. Further, with 70% of the population staying in rural areas and a telecom penetration of about 58%, the rural market would be one of the key growth drivers in the coming years.

Looking ahead, with the implementation of 5G and associated technologies, there will be much higher broadband speed available. The government has already decided to auction the spectrum and therefore, with the rollout of 5G, higher download speeds can be provided to the customers. The task before India’s policymakers is to ensure that the advantages of the new technologies are accessible to all equitably and at an affordable cost while securing them against existing and emerging threats. For achieving this goal, the government has released the National Digital Communication Policy (NDCP) 2018. It will help unlock the transformative power of digital communications networks and enable us to achieve digital empowerment goals and improve the well-being of the people. The NDCP also aims to bring in USD 100 billion worth of investments and to generate over four million jobs in the sector by 2022.

The task before India’s policymakers is to ensure that the advantages of the new technologies are accessible to all equitably and  at an affordable cost.

V&D: TRAI will soon complete 23 years, a period during which telecom companies have evolved from being voice-based service providers to digital service providers. Do you see the need to redefine the term “telecom services”?

Ram Sewak Sharma: As per the TRAI Act, the term “telecommunication service” means service of any description, including electronic mail, voice mail, data services, audio text services, video text services, radio paging and cellular mobile telephone services. The definition also describes that these services are made available to users by means of any transmission or reception of signs, signals, writing, images, and sounds or intelligence of any nature, by wire, radio, visual or other electromagnetic means, except broadcasting services.

the above definition is quite wide, and also includes data services, which is the most predominant service today. Hence, as of now, I do not see a need to redefine the term “telecom services”. The current definition in the TRAI Act, 1997 is sufficient to regulate the telecommunication sector in India for the benefit of the nation.

V&D: Does that mean there is no need for change in TRAI’s scope of work in the days to come…

Ram Sewak Sharma: In the last couple of years, the telecom industry has shifted from being voice-centric to data-centric with changing technologies, convergence, and increasing digitalization. The telecom sector has become a backbone for every other sector. Considering the new requirements, the national telecom policy has been rightfully named as National Digital Communications Policy, 2018. Similarly, the focus should be shifted to enabling digitalization and reaping the benefits of digitalization and at the same time tackling issues such as security and privacy of devices, networks, information, etc.

So far, all the policy and regulatory decisions were based on the telecom-centric outlook. But with changing scenario, collaborative approach, and estimation of overall effects of decisions on various sectors and on the economy as a whole needs to be seen.

V&D: The core services as provided by telcos today is heavily commoditized and cannot be monetized any further despite the recent hike in tariff. How can the service providers leverage the emerging new markets like smart city, Industry 4.0?

Ram Sewak Sharma: The core connectivity services have been the main focus for the TSPs and the market today is highly competitive. The result is the inevitable commoditization of the industry’s primary services. To break this trap, the only way is to take steps to clearly differentiate their offerings. First, they must examine their cost structures, shedding nonessential activities and investing the savings in new capabilities. Then they must scrutinize their core connectivity businesses to determine where the real value lies and invest in new capabilities and technologies on which to base truly value-added services that can provide a sustainable competitive advantage. In the recent past, it has been seen that many TSPs have started taking steps such as shutting down 3G services and invest in 4G services, which is a good move.

5G is expected to play a major role in the digitalization of industries. 5G will bring new levels of performance and characteristics to the telecom networks, enabling new services and creating new ecosystems. New revenue streams will open up for operators as they go beyond mere connectivity and infrastructure providers to become service enablers and service creators. There could be plenty of services like Industry 4.0 based on network slicing whereby telecom operators will allocate network resources (slices) in line with customer requirements. Technology and standards for slicing of the network shall enable the new revenue streams for telecom operators. To remain relevant, telecom operators need to create India-specific solutions or use cases. According to an Ericsson report, 5G enabled digitalization revenue potential in India will be above USD 27 billion by 2026. As per the High-Level Forum report, 5G can create a cumulative economic impact of USD 1 trillion by 2035.

NDCP 2018 will help unlock the transformative power of digital communications networks and enable us to achieve the digital empowerment goal.

V&D: Telcos own big asset in terms of customer data. Can they make intelligent use of this to offer personalized digital services that may otherwise be difficult to roll out without the insight that these assets provide?

Ram Sewak Sharma: Telecom service providers have been using customer usage data, such as the number of minutes, numbers of SMSes, data usage, etc to optimize the network, profiling purpose and devising tariff plans to target different profiles of customers.

With the increasing convergence, the profiles based on usage of content could be the next level they could go to. However, as per the terms and conditions of the license, the TSPs are prohibited to see the content of the communication. Whereas, the services being provided through the app have increased the ability to analyze the contents of users, leading to obvious privacy concerns. The widespread adoption of smart devices amongst the populace is also a trend that must be considered. Now, smart devices are increasingly playing a gate-keeping role over the network: they determine how users connect to and experience a network.

As with TSPs, all user data flow through these smart devices, putting the device manufacturers, browsers, operating systems, and applications, etc. in a prime position to collect and process the personal information of users.

However, there is a need to look at privacy concerns as well. TSPs own big assets in terms of customer data and may have the capability to make intelligent use of this to offer personalized digital services. Privacy has been declared a fundamental right by the Supreme Court in 2018 and the Personal Data Protection Bill of 2019 is already in the Parliament. Therefore, any usage for offering personalized digital services will need to comply with the envisaged provisions.

V&D: While we are expecting the Standing Committee Report on the Personal Data Protection Bill, what role can the TRAI play in ensuring data security and privacy at the service provider end?

Ram Sewak Sharma: The digital eco-system comprising of multiple entities like devices, TSPs, communication networks, over the top service providers, M2M devices, etc. Most of these entities have the capability of gate-keeping function, and an asymmetric advantage of accessing, collecting, and collating users’ data. Thereby, these entities could infringe upon the privacy of users. It is, therefore, important to ensure that the data is collected, stored, and processed in a regulated manner with the informed and explicit consent of users.

TRAI issued a recommendation to DoT on “privacy, security, and ownership of the data in the telecom sector” on 16 July 2018. This has certain telecom-specific recommendations that need to be implemented. For example, we have recommended that all entities in the digital ecosystem, including the TSPs should be encouraged to share the information relating to vulnerabilities, threats, etc in the digital ecosystem and networks to mitigate the losses and prevent the recurrence of such events.

Secondly, we have also suggested that all entities in the digital ecosystem, including TSPs should transparently disclose the information about the privacy breaches on their websites along with the actions taken for mitigation, and preventing such breaches in the future. We have also recommended that a common platform should be created for the sharing of information relating to data security breach incidences by all entities in the digital ecosystem including TSPs. It should be made mandatory for all entities in the digital ecosystem, including all such service providers to be a part of this platform.

V&D: Another important aspect of security is the equipment in core telecom networks. How will you describe the situation since we are now on the road to adopt 5G in India?

Ram Sewak Sharma: Today's telecommunication networks are generally separated into four logical parts: radio access network, core network, transport network and interconnect network. Each network part comprises three so-called planes, each of which is responsible for carrying a different type of traffic, namely: the control plane for signaling traffic; the user plane for the actual traffic; and the management plane for the administrative traffic. In terms of network security, all three planes can each be exposed to unique types of threats. There are also uniform threats that can affect all three planes simultaneously.

Further, telecommunication network security is defined by standardization, network design, network configuration, and network deployment and operation. 5G marks the beginning of a new era of network security with the introduction of IMSI encryption. All traffic data which is sent over the 5G radio network is encrypted, integrity protected and subject to mutual authentication, like device to the network.

Standardization authorities, such as 3GPP, do not standardize how functions are implemented and realized. The main purpose of the specifications is to secure interoperability between the functions required to provide network connectivity. Simultaneously, telecommunication networks using specialized equipment can be targeted by malware which is anything but trivial. Therefore, security does not only concern just the core telecom network, but other components as well, which will be taken care of in close coordination of the government and licensor. Data protection and security measures require continuous evolution.

Diminishing of traditional TSP revenues and increased pressure for investment is a global phenomenon.

V&D: As a regulator, how satisfied are you about the quality of telecom services in India and what are you doing to further improve it, particularly since the industry is demanding a floor price?

Ram Sewak Sharma: We are measuring and asserting quality of service (QoS) against defined parameters and benchmarks. These assessments are done on a quarterly basis and for the entire License Service Area (LSA). In addition, field measurements are being done through Independent Drive Tests (IDTs). By and large, TSPs do meet benchmarks. However, during field measurements, we found that some of the TSPs were not performing well against some of the parameters.

V&D: But users continue to complain about QoS not being up to the mark...

Ram Sewak Sharma: Recently, we have conducted specific studies in a particular area to find out the reasons. During these studies, we found that the deployment of network infrastructure inside the premises is very much essential to meet customer expectations on QoS. It is ironic that users of the area who are beneficiary of deployment of such networks make or cause to make the process difficult or unviable for the TSPs to provide services. There is a need to understand that cooperation and collaboration among various stakeholders such as builders, RWAs, and authorities managing the premises is the key to improve QoS.

Some of the TSPs have recently launched Voice over WiFi (VoWifi), which will improve QoS in some of the buildings, for users having specific phones. It is expected that the remaining TSPs have the plan to launch similar services and more phone models will be added to VoWifi service.

V&D: What about the recent increase in tariffs?

Ram Sewak Sharma: As far as the tariff is concerned, presently, the TSPs have complete freedom to design their tariff offerings as per their best commercial interest and market conditions thereby giving free play to the market forces. The exponential growth in the sector is eloquent testimony to the success of the existing regulatory stance on the tariff. The telecommunications sector in India has witnessed several changes in the past few years in terms of the tariff offerings of various TSPs as well as the usage pattern of various telecom services.

There have been concerns raised in many quarters about the health of the telecom service sector, with intense competition and pricing pressures leading to a decline in revenues and profitability. One has to keep in mind that the diminishing of traditional TSP revenues and increased pressure for investment is a global phenomenon. Strategists and companies elsewhere are looking for innovative and alternative ways to augment revenues and investment rather than looking towards the government for subsidies and relief. Economists have consistently and successfully demonstrated the distortions in the market, especially in pricing, that could result from the government or regulatory intervention.

It is also important to recognize that telecom is a capital-intensive, hi-tech and fast-evolving sector that needs regular investment to sustain the growth momentum. The telecom sector serves as a backbone for other sectors of the economy. As such, ensuring orderly growth of the sector is necessary. To discuss more on these issues, TRAI has floated a consultation paper on the “Tariff issues of Telecom Services” so that the perspectives of all the stakeholders, including, inter alia, consumers, TSPs, consumer rights activists and others, are taken into account.

Competition always leads to a shrinking of revenues in any sector. To remain competitive, one needs to remain efficient. The industry needs to understand that the sharing of infrastructure and resources can help the industry in increasing the utilization of existing infrastructure and resources, thereby reducing costs. Thus, sharing is the key to success, especially with the latest technologies, such as 5G.

V&D: Going ahead, do you see telcos follow the IT sector path of diversification to bring in more revenue from existing customers and broaden their customer base? 

Ram Sewak Sharma: The TSPs are free to acquire any company as per their business interests. However, the very nature of the sector, wherein every other sector utilizes and rides on their infrastructure, gives it an edge over other sectors. With changing technologies, convergence, increasing digitalization, the telecom sector has become a backbone for almost all the sectors. So, the convergence can benefit the TSPs. 5G will create more opportunities for the operators. However, the operators need to remain innovative in creating India-specific use cases to tap into new opportunities. Further, the sharing of infrastructure and resources must be looked into by the TSPs to reduce their costs and increase the efficiency of the existing resources.