5G rollout in FY 2022-23 is expected

TLF 2022, the 21st annual telecom industry event from Voice and Data, featured the who’s who from India’s Telecom, Internet, and digital industries. The event recognized the stellar contributions of individuals who have made a difference in their respective fields and in the sector. Most of these are through work in areas of cutting edge technology, policy development, Regulatory reforms, research and development, and public administration (political leadership without which reforms are impossible).

This year the Jury selected Anshu Prakash as the Telecom Person of the Year. Anshu Prakash, is the former Secretary, Telecom, and Chairman of the Digital Communications Commission or DCC. His work on creating a new framework in Telecom Policy and Licensing has had an immense and positive impact on the mobile and telecom industry. Anshu Prakash tackled some of the most thorny issues that continued over decades and were a pain point for the industry. By showing a path forward he allowed the sector to focus on more constructive areas of growth for the sector and for the customers.

The Policy framework proved to be a lifeline in some cases and provided room for further growth. In his humility, he acknowledges that the: “credit goes to the teamwork of DoT. All of us have undertaken the reforms process together. Under the able, constant guidance of the Minister whose support helped us achieve these path-breaking reforms.”

Reminiscing on these and other important issues during his tenure, Anshu Prakash spoke to Pradeep Gupta, Chairman, CyberMedia Group sharing the thoughts that went into the making of policy. And also on what it means for the future of mobile operators.

“The philosophy behind the telecom reforms of 2021 was essentially to make things simpler. Promoting ease of doing business, addressing certain legacy issues, ensuring industry has sufficient liquidity and attracting investments and FDI in the industry with the overall objective to equip telecom to deal with challenges in the coming decades,” he said while recollecting the various initiatives.

“These reforms were in keeping with the requirements of the times. But most importantly we had the unstinted support of the Hon. Minister, without which it would not have been possible.” The bureaucracy was ready and willing, and we saw the reforms unfold.

What distinguishes the current reforms from previous efforts is the scale and the depth of the reform process. The biggest of which was the issue of Adjusted Gross Revenue (AGR), a format for calculating the revenues of Telecom operators on which a percentage would be levied by the Government as License Fees.

“AGR was the elephant in the room,” said Anshu Prakash in his chat. TRAI had given a recommendation long back. And now the Government has adopted this. This matter was in the courts over the last decade and a half. “We closed this and resolved this once and for all.” Clarity on AGR was a lifeline and the rationalised definition is now the reference point for the future.

Anshu Prakash explained: “We have not favored any one group or player. This was a general reform, it was a win-win for all concerned, especially the investors and the network operators, but also the consumers and we also ensured there was enough competition, nobody went out of business.”

More importantly, this laid the foundation for the subsequent Financial reforms which permitted the Government to provide a moratorium on interest payments for the impacted operators. Those who needed or wanted to, could avail of the benefits of a moratorium on interest payments or even convert their dues to an Equity stake to be taken up by the Government.

Though this happened a little after Mr. Anshu Prakash had moved out, the groundwork was already done.

All of this was never seen in the past. “In the current reforms package, the government addressed the issue of structural reforms, financial reforms, and ease of doing business in a big way.” And for all of this Political support was a sine qua non. “No reforms can happen without this support,” Mr. Prakash said.

Under Mr. Prakash, other major structural reforms happened on the Spectrum side. Spectrum usage charges (SUC), which is a quarterly or yearly recurring charge (over and above the cost of the bid for acquiring) were a big burden and amounted to a dual charge. SUC has been done away with for future auctions.

This is a fundamental step as a big burden (of double charging) is reduced on operators. They need to just pay a one-time upfront auction fee. Then, in 2012, the spectrum was auctioned for a 20-year period. “We increased this time frame to 30 years. A long time gives operators certainty, and investors a better time horizon to plan Capex and build a stable business model. Networks can be built for a longer period without pressure to recover higher prices from subscribers,” he said.

And most interestingly, the Spectrum reform policy made it easier for operators to walk away. “Earlier there was a lock-in. But now Spectrum can be surrendered after 10 years by giving 1-year prior notice.” It is a scarce resource and should be used optimally.

“Then a bold reform was to remove the requirement for bank guarantees. Earlier, the annual spectrum payments were required to be secured with a bank guarantee. In the future such bank guarantees will not be required, this releases liquidity for the operators.” All of this will set the foundation and make it easier for 5G auctions to happen. Spectrum bands in the sub-Gigahertz and the most popular mid-band (approximately from 3.3 Ghz to 7 GHz) should see a good response from Operators. “In FY 2022-23, I sincerely hope that 5G rollout happens, not necessarily pan India, since there is a huge requirement for infrastructure.”

For 5G there are other major infrastructural requirements like the right of way, more towers and fiberisation of towers, and the use of street furniture for setting up small cell sites to provide better coverage.

On the new and exciting area of Satellite Broadband, he said that this service is seeing good interest from some of the largest Indian and global players. “But, satellite-based broadband will never be a competition for GSM networks.” Satellite Broadband is likely to be more expensive and focus on remote and unreachable areas. TRAI will address the Spectrum related matters for Satellite Broadband.

Local Manufacturing and Aatmanirbhar

Prakash said: “One area where India is behind, and we are lacking is we do not have the entire value chain of manufacturing in India.” Telecom equipment manufacturing is required but such equipment also requires chips, and semiconductors, along the entire value chain, he said referring to the SemiConductor Policy that has generated renewed interest.

“Surprisingly, Indians everywhere in the world are the ones involved in doing this, but they are doing it for others. It is high time we start this manufacturing, we cover the entire value chain, from the initial product to the final product, in India itself. “The incentives now being given by the govt and the new Semiconductor policy of MeITy is very far reaching in its impact.”

“We now have many Indian companies making mobile phones, and they are making good phones. But, value addition in India is very less. We need to encourage these mobile companies to add value in India, that means, the entire chain of what goes into a mobile, should get manufactured in India. This is also one of the PLI schemes which are happening, and is a step in the right direction.”

“We are encouraging foreign companies to manufacture in India. Foreign companies should use India as their preferred site for manufacturing. Create employment here, value addition should be here and we would like the patent should be with India/ Indians.

This also has a ripple effect on India’s economy too. “Adding local production for the entire value chain, the contribution of Telecommunications to our Economy will become even more,” he said. “Nearly 20% of the non-tax revenue for the Government comes from Telecom today.” Added to this is the tax revenue from GST which is another 18%. Thus the contribution of Telecommunications to the Economy is significant.

“As the telecom sector grows it will not only contribute to the growth of the country’s Economy but revenues for the Government and it will touch all our lives in multiple positive ways,” he said.

And it is notable that there is a noticeable positive effect. “The investments, which are taking place now are positively impacting the rate of growth. India as an investment destination is becoming increasingly popular.”

Automatic approvals of foreign direct investment (FDI) upto100% is one of the other significant reforms. This encouraged international players to be confident and invest.

The production-linked incentive (PLI) is creating its own new focus and enthusiasm. The value addition and manufacturing impetus will only accelerate this in the future. If you see the Telecom sector globally, we are growing the fastest.

Anshu Prakash

Telecom Person of the Year

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