If 2017 had been dubbed as the “Year of Mobile”, year 2018 may well be called the “Year of Digital”. It has been a landmark year for the telecom sector
If 2017 had been dubbed as the “Year of Mobile”, year 2018 may well be called the “Year of Digital”. It has been a landmark year for the telecom sector. Notable steps have been taken towards the commercial roll-out of 5G and other emerging technologies such as M2M, IoT, AI, AR and VR, among other things. Other notable things included the introduction of the National Digital Communications Policy (NDCP 2018); Supreme Court’s verdict with respect to Aadhaar based KYC and EMF testing of Telecom Towers at specific sites; and mergers, acquisitions and consolidations in the industry.
The NTP (National Telecom Policy) which existed earlier saw a change in name, scope and opportunity, aligned with the Government’s Digital India program. The new framework, called NDCP 2018 (National Digital Communications Policy), apart from focussing on telecom and digitalisation, aims to create 40 lakh new jobs through relevant skill improvement. The Telecom Commission was also renamed as the Digital Communications Commission, considering the scope of communications had broadened from what it was in the 90s. Further, the proposed investment of USD 100 billion will not only make access to communication services easy, but will also provide much relief to the financially distressed telecom sector reeling under debilitating debts, falling revenue and squeezed margins. Overall, NDCP 2018 is pivoted around guaranteeing the sector’s long-term sustainability and its readiness to invest in futuristic technologies.f 2017 had been dubbed as the “Year of Mobile”, year 2018 may well be called the “Year of Digital”. It has been a landmark year for the telecom sector. Notable steps have been taken towards the commercial roll-out of 5G and other emerging technologies such as M2M, IoT, AI, AR and VR, among other things. Other notable things included the introduction of the National Digital Communications Policy (NDCP 2018); Supreme Court’s verdict with respect to Aadhaar based KYC and EMF testing of Telecom Towers at specific sites; and mergers, acquisitions and consolidations in the industry.
The telecom industry, along with the Government of India, played a commendable role in ensuring connectivity across the length and breadth of the country. All stakeholders worked in unison to expand infrastructural capabilities in order to ensure robust connectivity and uninterrupted delivery of digital services to all. A whopping INR 10.4 lakh crore has already been spent towards building formidable and world-class telecom infrastructure. Keeping in line with the exceptional investments, India has more than 5 lakh mobile towers with over 20 lakh BTSs. The telecom sector attracted foreign direct investment (FDI) worth $6.2 billion (INR 43,400 crore) in 2017-18 fiscal, increasing five times from $1.3 billion in 2015-16.
The joint efforts of the Government and the private operators led to some significant outcomes. As per a survey conducted jointly by IMAI-Kantar IMRB, the number of internet users in India crossed the 500 million mark. This added to the mobile penetration and connectivity, which is expected to bring about a paradigm shift in how India stands to benefit from the digital revolution. India is today the second largest and the fastest growing telecom market in the world, contributing significantly to India’s GDP, with Digital at the cynosure. Everything, from people, to places, to things, will witness transition, buoyed by this digital disruption of sorts.
In fact, internet has a direct bearing on GDP growth. With every 10% increase in Internet subscribers increases the Indian states GDP by 3.2% per capita. The bygone year testifies the fact that, just by leveraging the power of internet, the country can take giant steps towards a transformative future, surpassing the rest of the world. Internet penetration is currently pegged at around 40%, leaving a lot of room for proliferation.
We have seen over the past year that the internet not only facilitated delivery of crucial Government services to the remotest of villages, but also assisted in providing inclusive social and economic benefits to everyone. Every digitally connected citizen is a part of a huge infrastructure designed to foster India’s socio-economic growth. The JAM trinity will pay a crucial role towards responsive, sensitive, effective, transparent and accountable governance. Ensuring best-in-class connectivity and improved usability of the telecom services, TSPs had laid in place infrastructural support for services ranging from 3G to 4G, now establishing ground for 5G and other emerging technologies.
Discussions around telecom infrastructure and distribution of Digital services are incomplete, without the mention of RoW policy. The Department of Telecommunications is vigorously focussing on the Right of Way Policy at the State level, to keep pace with the perennially shifting demands of the dynamic telecom ecosystem. Eleven States and the Ministry of Defence have already adopted the Right of Way (RoW) Rule 2016 and many other states are following suit. State like Haryana, Rajasthan, Uttar Pradesh, Assam & Odisha have taken the initiative for issuing the directives to all their State departments regarding down the line implementation of respective State notified policies.
As mentioned earlier, the year 2018 also saw noteworthy steps being taken to establish the country as the undisputed leader in 5G. A high level forum for 5G in India was constituted this year, in partnership with the academia and other stakeholders. Aside from the major thrust on this network technology in Budget 2017-18. The forum comprises of secretaries of ministries of communications, information technology, and science & technology, along with representatives of the industry and academia, with an aim to push participation in the process of defining global standards for the next generation of wireless technology. The Government provided the capital support for the establishment of 5G test bed which is currently underway.
The committee also identified and recommended specific spectrum bands that are to be ear-marked for 5G and now the onus lies with DoT to take it ahead and incorporate it into the national wireless plan. Spectrum has always been a matter of severe concern and now that specific bands have been identified, effectiveness of 5G can be ensured. It is anticipated that there will be around 5 billion IoT connections globally, but how many of those will be in India is to be seen. Even though we will require far more spectrum to support such a number, this is a good start for India to be 5G ready by 2020.
The industry can expect to see 5G spectrum bidding to commence by late 2019 or early 2020 as by then we will have knowledge of best practices, cost of equipment, and relevant use cases of this technology, that are unique to India. Emerging technologies such as 5G and M2M will open up several viable opportunities for service providers. A task force is also being instituted, which would be responsible for analysing global best practices pertaining to 5G.
Moreover, in line with the Government’s Digital India push, TSPs, with their inclusive approach raised tele-density from 75% in March 2014 to 88% in June 2018, with the addition of 305 million new subscribers. Infrastructural capabilities doubled over the same time frame, to manage such numbers.
Another important development was the apex court’s judgement on Aadhaar, where it mandated that individuals do not need to link their Aadhaar details while applying for new mobile connections from operators. Aadhaar is a unique digital identity and should not be handed over to anyone. The industry worked with the Government on an OTP based digital verification solution as the earlier method of getting a new mobile connection was cumbersome for the telecom operators as well as the customers. This was done to keep customer convenience in mind for an entirely paperless process.
The second edition of South Asia’s biggest telecom and internet event, the iconic India Mobile Congress, took place in 2018. The event was organised along the same lines as the Mobile World Congress that takes place in Barcelona and Shanghai, with an objective to share the India’s story with the rest of the world. With discussions pivoting on emerging technologies, policy and regulatory guidelines, the event also witnessed technology showcases and use cases and also provided a platform for budding entrepreneurs to gain exposure and build connections.
This year also saw the judgement passed by the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) on the dispute regarding penalty for EMF radiation testing fee of Telecom Towers. The tribunal passed a. Judgment holding that DoT is entitled to demand by way of cost/fee for EMF radiation test, only @ INR 4000 per test even at the shared site, till the fee is revised in future on any rational basis. It further held that ordinarily, one testing fee shall be charged, unless for good reasons further testing is required of the whole site or of any particular BTS for which fee may be charged at the rate already indicated;
The tribunal, thus, clarified that EMF testing needs to be done for the entire site and not for each BTS located in those sites. Also, apart from testing on the basis of public complaints, for normal testing of BTS sites, there is a ceiling of 10%, comprising of old as well as new BTS sites which can be randomly tested at the discretion of the TERM Cell. Any percentage increase over that will cause immense financial burden on the telcos. The judgement did leave some room for exceptions.
In another judgment, TDSAT partly allowed the industry Petition filed by COAI challenging EMF Penalty on “Shared Sites while stating that Penalty is to be fixed on per site basis and penalty on participating BTSs to be fixed in a just, rational and proportionate manner. They have further said that the revised scheme of penalty is to be issued in 12 weeks and will be applicable from date of application.
- About INR 10.44 lakh crores have been invested by the Telecom Service Providers (TSPs) in building world class Telecom Infrastructure, which is the second largest private sector investment in infrastructure among all the sectors in the country. To support the orderly growth of the Telecom Sector, TSPs have invested around INR 3.6 lakh crores in Spectrum Auctions since 2010.
- To address the problem of call drops, India have now 5 lakh mobile towers with over 20 lakh BTSs.
- The data also showed that Maharashtra has the maximum number of BTS units (1,63,773) followed by Andhra Pradesh at the second position with 1,49,901 BTSs and Karnataka coming a close third with 1,41,353 BTSs. The data is for the period for which the web portal Tarang Sanchar (www.tarangsanchar.gov.in) has been functional.
- The growth in the number of 3G and 4G BTS units testifies to the increasing demand for quality and speed of data and network.
- To increase adoption of new and advanced form of communication technologies and to implement the targets of the National Digital Communications Policy (NDCP), there is a need for Centre and States to give RoW permissions for towers and OFC in a more supportive and timely manner for enhanced infrastructure and connectivity.
- The telecom industry has been closely working with the Government in building a well-entrenched communication infrastructure and till date.
- The Right of Way (RoW) guidelines were cleared by the government, which will fast-forward India into the digital world by ensuring rollout of optical fibre cables and over-ground telecom infrastructure, ensuring success of Digital India Mission.
- The industry is also extremely thankful to the Union Telecommunications Minister and the Government of India for their unstinted support to help enhance network and infrastructure installation processes and will work with the Government to take forward the Digital India vision. The industry is especially grateful to the efforts of the DoT and Ministry for opening government buildings and land for the location of cell towers.
- Number of active wireless subscribers at the end of September, 2018 was 1,013.23 million.
Right of Way (RoW)
In November 2018 Central Government has issued notification by which levy of service tax on the services by way granting of “Right of Way” provided during the period from July 01, 2012 to June 30, 2017 by local authorities has been exempted from the retrospective effect.
- For laying of the optical fibre, TSPs need permission from the local authorities i.e Municipal Committees, Gram Panchayats etc. These bodies charge certain fess by way of raising demand note as per the agreed/approved rates, for granting the RoW.
- No service tax was being discharged by these local bodies. DGGSTI from MoF initiated investigations against a few municipal corporations across States and started raising demand of service tax with interest and penalty on such charges.
- Local bodies/municipal corporations passed such liability on the TSPs and instructed them to pay the same along with interest and penalty for the entire period. Input tax credit of the same was also not available.
- The Central Government has directed that the service tax payable during the period from July 01, 2012 to June 30 ,2017 on the amount charged by the local authorities for granting permission of “right of way” shall not be required to be paid.
General Sales Tax (J&K)
J&K state started levying tax on Services provided by telecom/cellular phone agencies This was challenged by TSPs before the High Court and a stay was obtained.
On January 11, 2018, Finance Minister of J&K announced the Amnesty Scheme for Telecom in the budget of J&K and a formal notification was issued by the Government on February 06, 2018. As per the scheme, it provides remission of 100% of penalty and interest on arrears of admitted tax.
- We, laud the efforts of the Government in implementing GST which is the most significant indirect tax reform implemented in independent India. A GST regime aligned with the overall objectives is going to be a catalyst for economic growth and sustainable development in India.
- GST has widened the tax base and created a unified national market/eliminated state level barrier and has also brought in much needed transparency and simplicity while automating much of the compliance. The telecom sector has been a significant contributor to the government treasury and accounts for 3-4% of total GST payments.
- The GST Council has been constantly reviewing various positions and has been announcing specific reliefs from time to time through its regular meetings in the last one year. The Council is conscious of ease of doing business and has accordingly continuously brought in changes/will be making changes to the relevant provisions. Given the specific focus of the GST Council on making the new law tax payer friendly and promoting ease of doing business, the key issues of the telecom sector are set out herewith with an earnest hope of positive resolution.
- There are some challenges that need to be addressed, like Levy of GST on Govt. payments (under reverse charge), Centralized Registration & Centralized Assessments for service companies etc. and we are optimistic that the government will look into them. The telecom sector, while being responsible for most of the socio-economic growth of the country, also contributes as much as 6.5% to the GDP, making it one of the most crucial and essential sectors.
- The Supreme Court has asked telecom operators to not give away new SIM or mobile connections on the basis of Aadhaar e-KYC authentication process going forward.
- If any customer wish to de-link his Aadhaar number from his existing mobile connection, he may do so by submitting fresh KYC documents such as PAN Card, Voter ID card etc., with his telecom service provider as was the case earlier.
- The industry worked with the Government on an OTP based digital verification solution as the earlier method of getting a new mobile connection was cumbersome for the telecom operators as well as the customers. This was done to keep customer convenience in mind for an entirely paperless process.
Internet of Thing (IoT)
- India is yet to witness A breakthrough of interconnected devices. A connected ecosystem will act as a catalyst in changing the future of mobile devices and enhancing their utility. More people will move to 4G network in order to benefit from the services that IoT has to offer, making life convenient.
- By 2020, internet-connected devices are expected to number between 26 billion and 50 billion globally. IoT through interplay of software, telecom and hardware promises to offer tremendous opportunities for many industries.
- Fed by sensors soon to number in the trillions, working with intelligent systems in the billions, and involving millions of applications, the IoT will drive new consumer and business behaviour that will demand increasingly intelligent industry solutions such as virtual reality, autonomous vehicles, artificial intelligence and robots, etc.
- M2M will open up new revenue streams for TSPs, allowing them to fully realise the potential of low latency data based service.
- The country is also deploying 14 smart grids and 130 million smart meters, which will fuel M2M’s application in the utility domain.
- In India, M2M modules will account for 21% (463.3 million) of all networked devices by 2022, compared to 11% (169.3 million) in 2017, (22.3% CAGR).
- In India, M2M modules will average 1.2 GB per month in 2022, up from 0.5 GB in 2017.
- Globally, the M2M connections market is projected to be worth USD 27.62 Billion by 2023, growing at a CAGR of 4.6% from 2017 to 2023.
- M2M service providers will also need make sure that the customer data is protected adequately to be in line with the data privacy rules that are currently existing in India.
- A forward looking global approach is required with inputs from the private sector to create a conducive regulatory environment for both IoT and M2M to fully achieve their potential as the internet is united, universal, interoperable and global.
- The industry appreciates the initiatives taken by the DoT and Ministry of Electronics & Information Technology (MeitY) in formulating early KYC guidelines this year for M2M and e-SIMs. This will help India stay at the forefront of this important development.
- DoT has also facilitated the adoption of M2M services by mandating that the Sim based M2M services can only be provided with 13 digit numbering scheme.
Deployment of 5G networks by 2020
- The country would need an investment of about $ 100 billion to deploy infrastructure for 5G over the next 5 to 7 years.
- 5G’s collective economic impact on India can reach $1 trillion by 2035.
- 5G India Forum high-level committee have already identified and recommended particular spectrum bands that are to be earmarked for 5G.
- New bands below 6GHz should be leveraged for 5G. High frequency bands, those above 24GHz will also be needed for applications that require very high data rates.
- 5G High Level Forum (HLF) formed by the Government of India, recommended that the release of 5G spectrum be done in three tiers.
- In the Announce Tier, the HLF recommended spectrum allocations such as 698-803 MHz, 3300-3600 MHz, 24.25-27.5 GHz, and 27.5 – 29.5 GHz. Of these identified bands, two main Bands should be opened free for two years, in order to assist rollout of 5G trials and indigenous R&D.
- For the Identify tier, the HLF recommended 617-698 MHz, 1427-1518 MHz, 29.5 to 31.3 GHz and 37.0 to 43.5 GHz. The 37.0 to 43.5 GHz bands to be kept free for two years to support indigenous R&D. For the study tier, 3600-3700 MHz bands have been allocated.
- The regulatory body has recommended a PAN India base price of Rs 4.92 billion per megahertz unpaired spectrum for the proposed 5G band of 3300-3600Mhz.
- The country’s total licensed mobile spectrum is about 220 MHz as compared to 608 MHz in the USA and 353 MHz in the UK.
- Government’s Digital India ambition firmly rests on a robust telecom and internet infrastructure and 5G will play a catalytic role in transforming India towards an all-round digital empowerment.
- The National Digital Communications Policy is a brilliant initiative on the part of the government to formally focus on not only the telecom sector but also the digitization of the country
- The policy aims to attract $100 billion investment and create 4 million jobs in the sector by 2022.
- The Indian telecom service providers pay more than 30% of their revenues as taxes and levies, while telcos worldwide pay around 10%. This was also been rationalised.
- The telecom sector currently contributes 6 percent to the GDP. The NDCP2018 has set a target of 8 percent by 2022.
- Under its ‘Broadband for all’ initiative, it aims to make sure that every citizen has access to broadband running at least at a speed of 50Mbps, while all key development institutes should be receiving at least 100Mpbs of speed by 2022.
- The policy has projected that, by 2022, 10 gigabytes per second (Gbps) connectivity shall be provided at the gram panchayat level.
- NDCP seeks to ensure connectivity in all areas that are currently uncovered through channelizing the Universal Service Obligation Fund (USOF), thereby maximising citizen-centric connectivity as well as last-mile inclusivity.
- The policy document has incorporated provisions, encouraging the adoption of “Optimal Pricing of Spectrum” to guarantee sustainable and reasonably priced access to digital communications.
- It recognises spectrum as a natural resource and as a corollary, ensures its sufficient availability, efficient usage and putting together a fair and transparent allocation method for service providers.
- Policy has also focussed on creating of an exhaustive roadmap for data privacy and protection so that all digital communications are safe, private and autonomously controlled by citizens.
- The year 2022 will be a watershed year if all the NDCP 2018’s targets are achieved.
Increased customer base:
- India’s private telecom service providers (COAI member TSPs) have a total of 10.30.74million mobile subscribers as of September, 2018.
- Amongst the individual companies, Bharti Airtel Ltd. continues to hold the top position, with total mobile subscribers reaching 343.52 million. Reliance Jio Infocomm Ltd follows Airtel, with 252.25 million subscribers.
- The industry has ensured that Government’s Digital India programme reaches the farthest corners of the country and everyone reaps the benefit of new communication technologies
- All the operators are committed to their customers with the services across the country, and have begun heavily diversifying their services beyond voice & data for the consumer.
The association and the industry will continue to work in consumer interest, advocating a stable, long term, sustainable, policy environment which will promote innovation and orderly growth for a fully connected and digitally empowered India delivered through a financially strong and viable industry.
Rajan S Mathews
(The author is Director General, COAI)