TRAI Regulations

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Introduction:

The
telecom market can be split into three segments – wireless, wireline and
internet services. The wireless market comprises 98.1% of the total subscriber
base. India’s telephone subscriber base has expanded at a CAGR of 19.6%, India
is the world’s second-largest telecommunications market, with around 1.2
billion subscribers as of September 2018.

  • In rural areas, the tele density is
    far lower (56.9%) than that in urban India (171.1%).
  • Foreign Direct Investment (FDI) cap in
    the telecom sector has been increased to 100% from 74%. out of 100 per cent, 49
    per cent will be done through automatic route and the rest will be done through
    the FIPB approval route.
  • The Government of India has introduced
    Digital India programme under which all the sectors such as healthcare, retail,
    etc. will be connected through internet

Challenges
faced by telecom sector

  1. Financial Health of the Sector: Gross
    revenue has dropped by 15% to 20% for the year 2017-18 over the preceding
    year for the incumbents and overall sector revenue has dropped. Also,
    there is drop in voice and data revenue per user
  2. Limited Spectrum Availability: Available
    spectrum is less than 40% as compared to European nations and 50% as
    compared to China. Hence, it is imperative that spectrum auctioning at
    sustainable prices is the need of the hour. Also, government auction
    spectrum at an exorbitant cost which makes it difficult for mobile
    operators to provide services at reasonable speeds.
  3. High competition and tariff war: Competition
    heating up post entry of Reliance Jio. Other telecom players have to drop
    in tariff rates both for voice and data
  4. Lack of Telecom Infrastructure in Semi-rural
    and Rural areas: Service providers have to
    incur huge initial fixed cost to enter semi-rural and rural areas. Key
    reasons behind these costs are lack of basic infrastructure like power and
    roads, resulting in delays in rolling out the infrastructure.
  5. Lack of trained personnel to
    operate and maintain the cellular infrastructure.
  6. Delays in Roll Out of Innovative Products and
    Services: Substantial delays in roll out of
    data-based products and services are hampering the progress of telecom
    sectors. This is primarily due to the non-conducive environment resulting
    out of government policies and regulations.
  7. Low Broad Band Penetration: Low
    broadband penetration in the country is a matter of concern and the
    government needs to do a lot more work in the field to go up in the global
    ladder.
  8. Over the top services: Over
    the Top (OTT) applications such as WhatsApp, OLA, Viber and so on do not
    need permission or a pact with a telecommunications company. This hamper
    the revenue of telecommunication service provider.
  9. License fee: The
    license fee of eight per cent of the Adjusted Gross Revenue including five
    per cent as Universal Service Levy (USL) is one of the highest in the
    world.

Measures
taken by government

  • Infrastructure
    status: The National Digital Communications
    Policy (NDCP) 2018 accorded telecom the status of critical and essential
    infrastructure. This would help operators in reducing capex and operational
    expenditure.
  • Ease in
    Merger & Acquisition guidelines: Ease
    in M & A helps the sector to consolidate. Today there is consolidation in
    the sector leading to 4-5 operators in each of the service area, similar to the
    global average. There is also spectrum consolidation with each operator holding
    reasonable quantities of spectrum.
  • Revival of
    the National Optic Fibre Network: This
    enhance broadband connectivity. With the rising subscriber base, thrust on data
    services has enabled a smartphone revolution.
  • Payment bank
    initiative: Operators have received in-principal
    approval from the RBI for Payments Bank license, which is expected to aide in
    customer retention and enables them to build on their M-Payment services.
  • Mobile
    virtual network operators: Introduction of the concept of
    mobile virtual network operators (MVNOs) by the regulator are expected to open
    up new opportunities for operators such as wholesale revenue stream.
  • New national
    telecom policy: The Telecom Commission, the highest
    decision-making body of the telecom ministry, has given its nod to the new
    telecom policy. The policy proposes to invite sustainable investment over a
    period of time and promote fair competition. The National Digital
    Communications Policy 2018 has envisaged attracting investments worth US$ 100
    billion in the telecommunications sector by 2022.
  • Smart cities
    initiative: The Indian Government is planning to develop
    100 smart city projects, where IoT would play a vital role in development of
    those cities.

Way
Forward

  • Infrastructure
    Sharing: Since telecom business is heavy on capex and as much as 40%– 60%
    of the Capex is utilized for setting up and managing the Telecom
    infrastructure. By sharing infrastructure, operators can optimize their
    capex, and focus on providing new and innovative services to their
    subscribers.
  • Availability
    of Affordable Smart Phones and Lower Tariff Rates: This would increase
    tele penetration in rural areas.
  • Curb
    on predatory pricing: government should fix a minimum price to save the
    industry from price war.
  • Lower
    License fee: The license fee of eight per cent of the Adjusted Gross
    Revenue including five per cent as Universal Service Levy (USL) is one of
    the highest in the world.
  • Reduce
    reserve price for spectrum auction: In the past, some of the operators
    participated recklessly in these auctions leading to exaggerated prices —
    much above their true valuations. Reasonable reserve prices for the market
    mechanisms induce “truthful bidding”, and not leading to “winners’ curse”
    as witnessed in some of the previous auctions.

Conclusion

All the digital initiatives of the government
including digital identification and authentication, e-Know Your Customer,
digital finance depend heavily on the telecom and broadband infrastructure.
 Economic survey 2017-18 also underlined that the ‘crisis’ being faced by
telecom sector. Survey added that it has also deeply impacted their investors,
lenders, partners and vendors. The above steps could be taken to improve the
health of telecom sector.

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