Stressed, stretched, and supporting during lockdown

Despite the financial tangle and the lockdown to deal with COVID-19, the telecom industry is leading from the front, keeping India connected and working.

By Rajan S Mathews

Over the last 20 years, the telecom sector has designed, implemented, and maintained in India, one of the largest, most complex and innovative voice and data networks that have been seen anywhere in the world. It supports a customer base of close to 1.2 billion—globally second only to China—with monthly data consumption above that of the USA and China put together and a growing infrastructure base of over 550,000 cell towers and 2.23 million BTSs. This network now provides broadband connectivity to around 650 million of the total subscribers in the country.

The telecom industry that contributes 6.5% to the GDP, has invested over Rs 11.25 lakh crore to take the benefit of mobile services to every Indian at rock bottom tariff, which is globally the most affordable. The industry looks forward to continuing to attract both domestic investments and FDIs so that it can continue to improve the reach and quality of its networks and introduce innovative services and state-of-the-art technology. Rural connectivity and the empowerment of women remain key foci of the industry.

Telecom is now an essential service and the very backbone of the economy without which ambitious government programs like Digital India and the smart city cannot happen.

The Union Budget 2020-21, and NTP-2018 have reiterated the importance of telecom networks for digital India, a priority initiative of the central government. Hence It would be wise not to discount the role of IT and Telecommunications in many policy initiatives announced in the country.

The success of many governments and private company initiatives and programs, hinges largely on adequate telecom and, internet-infrastructure being in place. The renewed focus on technologies such as cloud computing, IoT, AI, VR, robotics, device-agnostic tech solutions, as outlined by the government in the recent Union Budget, reiterates the importance of the industry.

Since the liberalization of the economy in the 1990s, the sector, which was the first to be opened up,  has achieved many noteworthy milestones. The telecom sector, since the last two decades, has been a critical contributor to the economy and is often dubbed as the economic backbone of the nation. Today, it not only provides the lowest voice and data rates compared to the rest of the world, but it is also counted amongst the highest contributors when it comes to FDI.

However, the telecom industry is under tremendous financial pressures with a debt of more than Rs 4 lakh crore and the payment of adjusted gross revenue (AGR) in the billions of US dollars, as per the order of the Supreme Court, among others. Besides, the sector faces heavy taxes and levies in the range of 29% to 32%, which are globally the highest.

The NDCP 2018 gave much hope to the strained telecom sector and the industry expected its early implementation, but it has been languishing.

The industry has to pay nearly 30% of every rupee that it earns as fees and taxes to the government besides the heavy price paid as spectrum fee, which are the two key reasons for the telecom sector's Rs 4.6 lakh crore debt. The high levy and low returns have been plaguing the telecom sector for long. Comparatively, telecom operators globally pay around 10% of their earnings as taxes. For example, in many countries across Europe, there are very low annual spectrum fees or no charges at all. Similarly, in the US and Australia, the yearly fee is levied only for the management and regulation of the spectrum.

While the spectrum prices paid by international operators are multiple times lower than those paid by Indian operators, in many jurisdictions, the spectrum is given in perpetuity and becomes the company's asset.

Under the circumstances, it is not surprising that the industry is knocking at the doors of government for financial relief from the distressing financial condition, it is facing. The industry has urged policymakers to use the many "tools" available to it, to find appropriate solutions expeditiously to prevent the sector from slipping into a crisis.

Keeping the sector's weakened financial health in perspective, the government had released the  National Digital Communications Policy (NDCP 2018). The document did give much hope to the strained sector and the industry expected its early implementation, but it has been languishing. One of the key points included in the NDCP is the rationalization of multiple taxes and levies, such as license fees, spectrum usage charges, universal service obligation fund, and GST.

The COVID-19 whammy

Even as the industry was still coming to terms with the massive financial burden, a tsunami in the form of the COVID-19 has hit both the country and the industry. The telecom industry has witnessed an enormous surge in data usage, following the lockdown announced by the government to counter the virus, which has driven people to work from home.

Despite the deep financial stress, the industry continues to ensure that the uptime of their networks remains at 99.99% while maintaining the key quality of service parameters. All telecom networks in India are geared to meet the increase in demand for bandwidth due to work from home communication needs and data usage for entertainment.

This would not have been possible without the proactive support received from the Department of Telecommunication (DoT), Ministry of Home (local police), Ministry of Health, the state governments, and others, as they are at the forefront fighting the COVID-19 virus. The standard operating procedure issued by the Ministry of Home in the movement of staff and logistics to maintain the network was a significant relief.

The state governments were also quick to respond. It would not have been possible for the industry to maintain the operations if, problems in telecom towers were not attended to immediately. The telecom industry is also in the process of implementing intra-circle roaming (ICR), so as to facilitate seamless connectivity to the subscribers.

The industry has gone the extra mile to ensure those at the "bottom of the pyramid” receive some free voice and SMS services during the quarantine.

The industry is aggressively pursuing with all the stakeholders to provide safety, accessibility, and bandwidth to mobile phone users during these challenging times. Very early, it directed many of their non-essential staff to work from home. It sent personnel at the medical and grocery stores, and other locations approved to be kept open by the government so that customers can top up their service packs. Online access through company websites have been streamlined and made easy to navigate and for payments to be made.

The industry has also gone the extra mile to ensure those at the “bottom of the pyramid” receive some free voice and SMS services during the quarantine. It is hoped that customers would exercise prudence in usage and avoid binging on broadband services so that critical services and applications are able to perform their tasks effectively. The ultimate objective for all the exercises and efforts is to keep people connected and safe until the authorities working to solve the COVID-19 threat can come up with a permanent solution.

With support from government departments and various ministries, the telecom industry successfully provided service to the users in such a difficult phase. Over the past few days, the industry has witnessed a flattening of traffic demand on the networks. We believe this has been made possible by the active engagement of the telecom service providers with stakeholders such as streaming platform players, the state governments, and DoT.

Some of these actions relate to video streaming, where the respective service providers reduced their content quality from HD to SD, while local municipalities worked with operators to bring sealed towers back online, and some redistribution of traffic on the network was done, among other things. Based on the current status, operators believe they can continue to provide reliable and quality services to customers.

We live in a world where communications,  manufacturing, commerce, logistics, virtual reality, gaming, entertainment, autonomous vehicles, IoT, among other things, are all converging on the mobile networks. The critical nature of mobile networks is becoming increasingly clear, especially as seen in the most recent national and global emergency. In such a situation, it would not be cavalier to say that the health of the industry is also the health of the nation! In such a scenario the government support for a vibrant telecom sector is critical.

The industry strongly believes that all stakeholders—government, civil society, the judiciary, industry, and operators—must pull together and move forward uniformly, if we are to achieve the Prime Minister’s vision of making India a data and knowledge powerhouse. A 5-trillion dollar economy is not a pipe-dream, but a reality to be grasped and executed once we overcome the pandemic, and I am confident that the telecom sector will play its part in achieving this milestone.

The author Rajan S Mathews is Director General of the Cellular Operators Association of India (COAI)

The article was first published in the April 2020 print edition of Voice&Data