Voice&Data recently organized a webinar on: Network is the lifeline of our society.
As part of its TLF Dialogues, Voice&Data is organizing a 3-series webinar to celebrate 25 Years of Mobile Telephony in India.
This is the second part of the webinar series that will focus on the future and deliberate on how the telecom sector, particularly the emerging new 5G technology, will drive social and economic transformation in the country
As we are aware, telecommunication and mobile internet have emerged as the lifeline and backbone of the digital India, playing a pivotal role in enabling the country to continue working during the current pandemic. Experts point out that the remote working environment, which got a major push during the crisis, is the new normal and it has started to change how businesses are done and the society operates
The Voice&Data TLF Dialogue will focus on (a) importance of networks and telecom infrastructure in modern digital society, (b) the role of telcos providing internet for all, (c) networks and technologies of the future, (d) where India stands on the 5G front and 5G essentials, (e) challenges, privacy and data security concerns, and solutions.
The participants in the webinar were Ravinder Thakkar, MD and CEO, Vodafone India, TV Ramachandran, President, Broadband India Forum, Ajit Ranade, President and Chief Economist, Aditya Birla Group, and Gaurav Basra, Chief Strategy Officer, STL. Pradeep Gupta, CMD, Cybermedia Group, was the moderator.
Opening the conference, Ravinder Thakkar, MD and CEO, Vodafone India, said it is a moment of pride for all of us who have made a significant contribution to the growth of the telecom sector in India. I feel fortunate to be a part of the industry that empowers all. Telecom powers all the critical technologies that power tomorrow and make life so much better. It has brought about socio-economic development of enormous proportions.
Today, Telecom has become the ‘lifeline’ of India. It has bridged the digital divide between urban and rural, connecting 1.2 Bn Indians across the country. Telecom operators such as Vodafone Idea have taken telecom connectivity to the remotest corners of the country – to some locations where even power supply is not available 24x7 - and democratised voice & data services which are being offered at the world’s lowest tariffs.
We have set up one of the largest Telecom network infrastructure in the world with investments of over Rs. 11 Lakh crores connecting Indians across 5 lakh villages.
With pan-India 4G networks, faster speeds and better availability of 4G, we are witnessing huge increase in traffic and data consumption. In fact, just a few years ago India was one of the lowest-ranked countries in broadband penetration, but today, we are the largest data consumer with 600 million broadband users.
Talking about VIL, ever since its merger two years ago, and now, completing the world's largest telecom integration, we have more than doubled the capacity of the data networks. We are delivering two times faster speed on our latest VI-Datanet network. We have created a digital network for the new India. We are committed to serve the digital needs of the nation and the digital champions. The ongoing pandemic has necessitated the need to go digital.
We witnessed the impact of this changing digital behaviour in the first week of the lockdown itself. We reported a growth that takes nearly a year was witnessed in just seven days. The pandemic has taught us to be more relient on digital infrastructure and connectivity. The latest VIL advertisement shows how a farmer's daughter uses IoT to remotely operate a scarecrow, and how a senior professor takes online classes from the safety of his home. This indeed, is the new reality, and the new normal. Telecom will continue to play the role of an enabler and contribute to growth of people, societies, businesses and the overall economy.
Our honorable Prime Minister has a vision of Digital India. The telecom industry is realizing that connectivity needs a strong foundation for the government's supply chain development programs. There is financial inclusion, digital payments, and supporting the rollouts of various government programs, such as agriculture, rural, banking, government subsidies, distribution, and many more. As we move to the next decade, the future connected India will be built on technologies such as M2M, IoT, AI, blockchain and robotics. The NDCP 2018 highlights the need to leverage such emerging technologies. The robust digital infrastructure in the country also emphasises the need for a financially strong telecom sector. Speed implementation of the policy is the need of the hour for helping India achieve the goal of a trillion-dollar economy by 2025.
He added that 5G is now the next destination. We are making our networks ready for 5G. VIL's own network is built on the many principles of 5G architecture. Deployment of 5G-ready technologies, such as massive MIMO, DSR, small cells, Open RAN, etc., are necessary. The establishment of an ecosystem is also the need. With the Indian government's approach and support, a vibrant private sector, Digital India will grow and fulfil.
Pradeep Gupta noted that it's great that the telecom networks, there's a 50-times increase, and what was the traffic in 365 days happened in just seven days. There was 50-fold increase in place, and the industry stood up firm and ensured that would happen. Some of these things we could not have visualized 25 years back. It was considered a luxury. One could not visualize the transformational change that would happen.
TV Ramachandran, President, Broadband India Forum, added that in 1994, he entered the telecom sector. He was the CEO of Sterling Cellular and Essar Telecom. There was a challenge of setting up the networks and how they evolve. In those days, people could not even realize what a mobile phone could do. There were challenges of setting up the network, educating the customers, bringing awareness, etc. When we launched the network, the biggest thing to show off that you have arrived was by placing your mobile phone on the table at the hotels. That was a big thing in those days, and considered an elitist toy. We have come a long way.
Compared to the giant networks of today, back then, those were small networks. People did not know about mobile technology in India, except some of the experts from the defence services. Those from the defence services were a bit experienced in setting up mobile networks. All the mobile operators used to take experts from there. That's how we all went forward. When we set up the small networks, for us the challenge was not spectrum. Today, we talk about spectrum. That's one of the biggest issues today. But then, as new entrants, because we are starting from a zero base, when somebody had a mobile phone, they had to talk to somebody. There were very few mobile connections in India. So, he'd have to ring on your landline. Interconnection became the paramount criterion for success, going forward.
Interconnection with the monopoly incumbent giant government operator, who had about 40 million landlines, that became the paramount necessity. Today, we talk of new entrants, having faced problems in entry today also on interconnection.
Our big requirement was interconnection. Can you imagine, in those days, one of the things that was screened by the monopoly operator was 24 times, or, 2,400% increase in mobile tariffs? That is, if we wanted to call a landline from mobile, apart from paying the huge mobile carrier, which is 16 rupees a minute, you had to pay 24 times the landline call. That was about 24 times into 1.2. So, that was a big amount. We had to rush to justice. What do we do? There was no regulator.
We had to rush to the Delhi High Court. I remember, Chief Justice Jagannath Rao, heard this complex issue which is argued for us by senior counsel. He said that this seems to be a very complex techno-economic case for which the Telecom Regulatory Authority was supposed to be set up. Why is it not set up? Then, the government council promised, in all fairness, that he will go back to the client and talk.
Gupta noted that we discovered missed calls, SMS, etc., in a big way. We used to ring up on mobile phones and then to the call on fixed line, all those kinds of unique ways, so that we could do it in a very cost-efficient manner.
There is a very significant portion of the economy, which is governed by telecommunications, by interconnectivity, and so on. How do you see that this entire evolution? If 20% is going to be technology driven, we are talking about a tech-driven market, in the range of half a trillion to a trillion-dollar economy in terms of socio-economic impact. How has it helped in terms of SDG books?
Ajit Ranade, President and Chief Economist, Aditya Birla Group, congratulated him and all of us for celebrating this great milestone of 25 years of mobile telephony in India. Telecom, the right word is evolution. It is evolving and changing in so many different ways that we can only. Telecom is both, the bedrock, the foundation, as well as the architecture of the digital economy. Upon which, rests everything, from financial services to e-governance, and entertainment, e-commerce, etc. This is one sector where it's an infrastructure sector, almost totally driven by the private sector. The huge growth has been almost entirely due to private sector's initiative and investment. Of course, the government has played an enabling goal, through policy and regulation. In terms of the risk and capital, it has been creative, and innovation has come from the private sector.
In the Indian context it's kind of a historic and, I daresay, an unprecedented performance. Today, our data prices are the lowest in the world. In consumption, India leads the world. We're down to, by 20 times, to barely 10 cents. Voice, I think, is almost costless.
I used to imagine back in the mid-90s, when we were just beginning. I used to say, the marginal cost of providing one more phone call is close to zero. We were told in our classical economics textbooks that the price of a competitive product or service has to be equal to its marginal cost. I used to say: why is the phone call not free? People used to look at me, like, I'm crazy. I'm happy to say that in my own lifetime, very quickly, that that reality has come in our lives. The amount of investments that are required, as you said, technology is so dynamic, and especially, in telecom, it is so fast evolving.
It is a sector, which calls for technological investments all the time. While it's one thing to say that the pricing should be equal to marginal cost, it's another thing to acknowledge that since it's private sector driven, you need a return on that capital, if not, in one year, at least in a finite horizon of 10 years or something. That's a gigantic challenge.
As far as impact on socio-economics is concerned, it is one sector, which has grown at 5-10%. productivity growth. One estimate says that if you increase the Internet penetration by 15%, the per capita income can go up by 5%. There's a direct correlation between Internet penetration and growth in people's incomes. But, when you talk about so SDG or the sustainable development goals, as initiated by the United Nations, I can see that at least out of those 17 goals, at least four of them are directly affected or impacted. Telecom is relevant to that. Number one is poverty. As I said, per capita, incomes go up, new avenues of livelihoods open up, there's more efficiency, so definitely that has an impact on poverty.
Another is on a quality education. We are seeing, not just students, but faculty also, telecom is the conduit through which education is being delivered. Even before the pandemic, we had massive online education. All that requires the bedrock of telecom. So, education is goal number four. Then we have eight, that is about industrial growth and employment. With the automation, IoT, Industry 4.0, etc.
There is some inequality. The kind of telecom access impacts it. If we have digital inclusion, it does have some impact on inequality in the sense it can have a positive impact in reducing inequality in society, because it brings accessibility, resources like high quality education, when massively online lectures are available. An IIT professor being accessible to 20,000 students, or one lakh students is a different thing. Again, telecom makes it possible. It has an impact on inequality as well. So there are various aspects of SDG.
Gupta said that during the pandemic, mobile phones are becoming the lifeline for the migrant labourers. There are great stories that came out during this time.
Turning to Gaurav Basra, Chief Strategy Officer, STL, he said that we are talking about Digital India. The big comparison comes with China. We still have a very large number of unconnected people. This is a huge infrastructure challenge. What is your perspective on that? What sort of investment that is required in terms of infrastructure? What kinds of business models that can India follow?
Gaurav Basra added that as a country, there is a long way to go for us. As far as building a good quality digital infrastructure for all the citizens of the country, basically. First of all, the pandemic taught us that the networks we have today, have stood well. That clearly showed that the networks we had were of good quality, and very, robust. As we move forward, we have more and more people and applications coming online. The reach of the network has to also grow very big. It is a very capex-intensive model. It is also important to see how the other countries have done it. Government plays a big role here, in terms of building the network infrastructure. How the government builds the roads and railways, etc., digital infrastructure should be seen in the same light. The government doesn't look for returns in those areas basically.
The expectation of return on the digital infrastructure, we should look at it in the same way as we look at other infrastructures where the government invests. There are models like NBN in Australia or BT Openreach in UK, where governments are investing in rural broadband, and making sure that good-quality digital infrastructure is within the reach of the citizens.
Investment for the well-being of the citizens for their progression, as we look at other infrastructure, digital should be looked at in the same domain, basically. This is one area, where the government has to play a role. There is also the private sector, which can play a role. Especially, in areas where the economic case is not very strong, say, rural areas. There are some very clear models available about viability gap funding, which are being used in other countries. Our PM talked about it some time back in terms of connecting all the villages in the next thousand days with optical fiber. A model, which can be used is, the viability of funding model, where, investors come on board basically, and they basically build a business case for use of the building and using the digital infrastructure. That is the second area that can be used as far as the models are concerned for building the infrastructure.
We have seen recently in Europe, that a lot of capital is available in the world. Capital is chasing opportunities. That is also a good opportunity for a country like India. The government can see if there is capital available at very low cost, and can be deployed for the development of digital infrastructure in India. This is happening quite a lot in Europe. Even, second, third, fibre-to-home, overbuild, business cases are being funded. Suddenly, the pandemic has shown us that digital infrastructure is essential, like water, electricity etc. Different models are available.
From our perspective, there is long way to go, and a lot of investment is required. The government should play a part in terms of building the infrastructure In case, further funding required, a lot of capital is available in global markets. If there is a business case, people will come and invest in it.
Gupta said there should be thriving PPP models. You refer to the Prime Minister's goal of another thousand days for a huge amount of fiber connectivity. For the last 10 years, we've been talking about what are the things that need to be done. But, that sense of urgency has not been there. Is this thousand-day target, achievable? How are we placed to achieve this milestone? How can we how can it help meet the digital divide?
Ranade added that actually, as of July, I think the target that we reached was only 1.4 lakh. There seems to be a little bit of progress. The pandemic has probably affected the pace of progress.
If you're talking about fiberization, in general, there are other right of way kind of hurdles. The industry is currently reeling under debt of rupees eight or nine lakh crores. This is something that we are going to depend on the private sector to lead. The public sector or the government will enable. But, if you're expecting the private sector to lead, whether is the fiber-optic connectivity all the way to the villages, or the 5G preparedness that we need to have, for the next stage of industrialization.
That next phase of telecom will have to come from private sector investment. It's going to be a bit of a challenge because we are in the middle of a pandemic. We are also in a situation where the debt burden is huge. We don't want to jeopardize all this as the debt burden is not only on the telecom players, but also connected to the banking, and the stability and the health of the banking sector.
Gupta noted that this has to be addressed in a manner so that it becomes an agent for growth, rather than become an impediment. There has to be a proper sort of economic model.
Ajit Ranade said that the government has announced Rs. hundred lakh crore infrastructure pipe line. It's very well-designed plan, which has telecom and infrastructure there. There's quite a mix of debt and equity. There is going to be public and private funding. Since we have been hit by this pandemic, it has affected the economy and growth rates. The banking sector has to now take some of that burden of the slowdown and, the stress on loans. We need to acknowledge the reality that the telecom sector also has a fairly significant burden of loans. We need to carry that along when we talk about the next phase of telecom growth, whether it's 5G or connectivity. We are worth 500 billion people connected to the Internet.
We'll get there, I have no doubt about it. The one silver lining in the finding has been the huge push to the digital economy. That is an accelerating factor, People have so easily been able to make that transition to the digital aspects of life.
Gupta next talked about the regulations. Networks are the lifeline of the society. You've been having a lot of dialogues with the government on this entire issue. Do you think the new digital communication policy addresses all these issues? What is the kind of governing structure that is required?
TV Ramachandran said that while there are huge challenges, and although we have a long way to go. In broadband, although we have made tremendous progress in the last four years, at the highest data user, the cup is only half full still, because 600 million broadband connections represents roughly 50%. That shows connections, not subscribers, because unique subscribers will be less. There is tremendous potential for growth and development.
We have the NDCP formulated in end of 2018, which was one of the most open and consultative policies made by government, and the DoT. Everybody bought into it all the segments, and there was no voice against it at all. We believe, as an industry, that it holds all the answers, and we don't have to go elsewhere. The sooner we start implementing the NDCP, the results will come knocking on the door.
You will have investors breaking open the door and coming when there is a 50% growth, 100% growth, profitability and broadband. The answer is in the NDCP. The government has done a great job and so has the regulator. There is a first policy, since 1994. This is a first policy that has the full inputs of the telecom regulator, the government, etc.
With regard to the creation of digital infrastructure, the first chapter of the NDPC says Connect India. The item there is the creation of a robust digital infrastructure. There is something called spillover effects of digital infrastructure. When you look for a return on investment, the government must facilitate that approach, which is there in Japan. where the ADB participated. When you build a digital highway and connectivity, you can associate a lot of socio-economic development around that. It can be quantified. It has been quantified in Broadband India Forum, where we are currently doing that exercise with the ADB.
You can find a lot of benefits of the economic development to the digital connectivity provided. You must give a part of that back to digital sector as their return on investment through some concessions on the taxes and levies. We are working closely with ADB on that. The VIP Korea report showed that for every 10% increase in Internet traffic, there is 3.3% increase in GDP growth rate. That's what we need! Let's build on the NDCP. That's a great foundation on which the future can be better, whether it is for connectivity, or security, or growth.
Gupta noted that when we start talking about the future, what are the challenges involved in rolling out 5G networks?
Gaurav Basra said that from a 5G perspective, we need to understand the user perspective. 5G networks will have a role to play in mission-critical apps and entities, such as enterprises, defence, power grid, etc. Mission-critical apps will run over 5G networks. Ultra-low latency parameters are extremely important from an application perspective. These are some of the changes in terms of the user aspect. 5G will largely be a small cell architecture. More sites will be required for a continuous coverage of the 5G network.
Imagine, there are 5,000 towers for a network today. You have to build a network two to three times that size for 5G network. There are things like site acquisition, getting the power for every base station, etc. So, challenges are huge for building a 5G network infrastructure. It will probably start as a private network, for factories, campuses, etc. That will be easier to build. Or, it could be at the extreme traffic hotspots. Over there, upgrading the existing networks to 5G could be easier. This could be the way to start. Fiberization will be key. Each 5G site will require a good 5G connection. There will also be multi-location of sites.
Gupta inquired that when it comes to investment, what will be the benefits for the society? Do we require a new governance?
Ajit Ranade said that 5G is a cutting-edge technology, and we want to assume leadership. There are three main challenges. The same players are supposed to take the lead. Let us also acknowledge that there is a stress. You need to make sure this is viable. For 100MHz, you will need Rs. 50,000 crores. Second, we need to substantially increase the fiberization across the country, and that has its own challenges. Third, there is a regulation challenge, as it is a new phenomenon. What is the cyber security, for instance? The data privacy bill is currently in the Parliament. Data is the new oil, but there should some thoughts around data sovereignty. It is a new territory. Cyber security, data privacy, data sovereignty, monetization of data, etc., are some challenges that need to be looked at.
The impact will be huge. We haven't fully understood the impact of telecom upon our lives. As 5G is now upon us, it is qualitatively different as it goes into areas such as IoT. Andhra Pradesh has a vision it will be the hub of IoT for the entire state. We are also talking about Industry 4.0, and that's talking about AI/ML, robotics, man-machine interface, and skills requirements. Industry 4.0 will also bring on University 2.0! The kind of skills needed for Industry 4.0 are completely different. There will be changes in the curriculum, point of delivery, etc. Just investment in the education alone will lead to lot of growth. The growth of GDP will also ride a lot on Industry 4.0, which, in turn, is related to the telecom evolution into 5G.
The impact of broadband and connectivity will be huge on livelihood. We haven't reached anywhere close to this saturation. Investments in telecom and returns, in terms of productivity are there to stay for a long time. The share of GDP in the digital economy today is somewhere around 10%. We need to quadruple. The kinds of returns are huge.
Gupta added that we have talked about 5G and fiberization. What kind of models should be looked at for 5G spectrum?
TV Ramachandran said that spectrum is the base requirement of 5G. You also need fiber. Here, there is lot of work to do. NDPC 2018 has clearly referred to the optimal pricing of spectrum. The spectrum valuation methods need to be tweaked a bit to get to the optimal pricing. The 5G prices recommended from the government and regulator are at least 4-6 times the international level. It is something that could make 5G appear as a poor show here. If it is so costly, how will it go to the other verticals? 5G will go outside of telecom. It will go to healthcare, education, manufacturing, R&D, logistics, etc. With that level of spread, you need affordability.
In Germany, there are about 90 licenses given to public and private parties for private networks. There is a huge opportunity for 5G in private networks, as well. You can have a 5G network at AIIMS, or, at the Honda factory. Germany has shown the way, and the other European countries are also doing it. So, you need to relook at the spectrum, not only by way of valuation of the pricing. Here, we are all for an auction. If the reserve price is unrealistically high, then, the outcome is not good. We need to have a reasonable reserve price, and let the market discover the true value.
The quantum of spectrum is also important. The spectrum being provided in India is very low, probably, less than half. We will not be able to realize the benefits of 5G unless we give away even more spectrum. With the right pricing and the right quantity of spectrum, we are very confident that India can be among the leaders, as we have done with the mobile. We can do it in 5G.
Gupta said that tomorrow's networks can be software-defined. If that is the case, can we do something to define a leading position for India?
According to Gaurav Basra, In Germany, as an enterprise, you can simply walk into a post office and apply for spectrum, which you can get for Euro 300. That is one example of how easy it is for an enterprise to get spectrum for private 5G network.
The new networks will be software-defined. India has an edge. You will see fully made in India networks. A typical 5G network will have semiconductors, hardware, software and system integration. In software, India is a global leader. There are strong companies in system integration. There is lot of talent in semiconductor design in India, where a lot of chips are being designed for global companies.
India has a very strong edge in at least three out of four areas. We are confident that new types of players will emerge. We will also see lot of effort being made in semiconductor design. Dominance of Indian players in the networks of tomorrow should happen.
For the future agenda for an Aatmanirbhar Bharat, there should be programs dedicated to each one of these ecosystems. The models are very well understood. We need focused program in software, system integration and semiconductors. The entire stack should be a Made in India stack. We have the capabilities.
TV Ramachandran added that India can get into every aspect of this value chain. We have the skills, and probably, some honing is required. We have number of startups who have fantastic potential. The government should also do something to help the economy of the industry. Telecom is the backbone. Telecom should be looked at as a generator of wide spread of economic benefits. When that is done, we can be leaders. Going forward, some countries are already developing 6G. India should also start some research work on standards. 6G is expected to materialize somewhere around the early 2030s. India can be a front-runner in 6G. We must improve the economic health of the sector. That's when the benefits will start flowing.
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