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From getting Digital India to take flight to ensuring spectrum pricing doesn’t trip operators, the challenges are many
Anup Jayaram
Information technology secretary Ram Sewak Sharma has been appointed as the seventh chairperson of the Telecom Regulatory Authority of India (Trai), nearly two-and-a-half months after Rahul Khullar demitted office. Sharma, who holds a Masters in Mathematics from the Indian Institute of Technology Kanpur, as well as a Masters in Computer Science from the University of California, is well versed with the intricacies of the Indian telecom sector.
Considering that the telecom industry has been through a series of controversies, Sharma is definitely getting into a hot seat. He will need to tackle some key issues quickly in his three-year term.
So, what are the big challenges the new Trai chairperson has to tackle immediately?
The OTT versus telecom operators battle
The 800-pound gorilla that is on everyone’s radar is the tussle between over the top (OTT) providers such as WhatsApp, Viber and Skype and incumbent telecom service providers. The telcos have already lost the majority of revenue from SMS services to messaging applications like WhatsApp that provide free access anywhere in the world.
Now, with voice services on offer, free- to-use OTT players could hit the biggest revenue stream of telcos.
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It all came to a head when, in early April, Bharti Airtel rolled out Airtel Zero, an open marketing platform that allowed consumers to access mobile applications on its network free of cost. What it meant was that applications which were on the platform could be accessed by users free since they pay a certain fee to the operators. That meant other applications could well get sidelined. In end-March, Trai came up with a consultation paper on a regulatory framework for OTT services. There were over a million responses to the paper, but since Khullar’s term as chairperson ended in mid-May, Trai has yet to come up with the recommendations.
Meanwhile, the Department of Telecommunications (DoT) has released a 111-page report with 24 recommendations which stated, among other things, that domestic long-distance calls offered by both telecom operators and OTTs would be treated similarly from a regulatory point of view, a huge positive for the industry. However, DoT was of the opinion that international calls should not be tampered with. Sharma has to finish the job that Khullar started. Based on the recommendations that he comes out with, DoT will come out with its final report. Sharma needs to first go through the million-odd responses and come up with a credible solution. That’s the cat that Sharma has to bell for now.
Getting Digital India to work
This is by far the most ambitious programme launched by the Narendra Modi government. It looks to integrate multiple government departments that people can access online. The three primary aims of the initiative are creating digital infrastructure, delivering services digitally and promoting digital literacy. To achieve that, it aims to build a National Optic Fibre Network (NOFN) that will connect 2.5 lakh gram panchayats. But for this to work,
the NOFN has to be built on time. Second, for Digital India to work, there should be faster broadband connectivity.
Trai has defined broadband speed at 512 kbps, whereas in almost all countries it is a minimum of 2 mbps. That makes India among the slowest markets for broadband connectivity. In sharp contrast, broadband speed in South is a scorching 25 mbps; Japan (15 mbps) and the UK (10.7 mbps). For Digital India to work seamlessly, it’s time
Indian telecom operators offer high speed broadband connectivity matching the world. It’s for Trai to raise the
minimum speed bar to ensure that there is faster connectivity across the country.
Spectrum pricing
Over the past couple of years, spectrum auctions have helped the government raise Rs 1.7 lakh crore (Rs 61,000 crore in FY14 and Rs 1.1 lakh crore in FY15). That has led to highly leveraged telecom companies. Now telcos have to prepare for the auction of 700 MHz band, but operators do not want the auction to happen for two years. The American FCC raised $45 billion this year from the auction of AWS-3 spectrum between the 1700 MHz and 2100 MHz band. In comparison, Indian operators have spent close to $30 billion for spectrum in the last two years. But the fact is that ARPU in India is a mere $3, compared to $57 in the US.
During the consultation on spectrum auction 2012, the 700 MHz issue was covered. But Sharma needs to come up with a recommendation on 700 MHz pricing after a due consultation process. He also needs to ensure that the spectrum is not too expensive for operators.
Reducing call drops
Call drops is something that every Indian experiences on a daily basis. Calls drop due to a variety of factors—not enough spectrum, lack of telecom towers and rising opposition to setting up towers in many areas due to radiation fears. An Indian operator has on an average 13-14 MHz of spectrum as opposed to a global average of 40 MHz. That can increase only once consolidation happens.
As far as telecom towers are concerned, the government needs to ensure that municipal bodies do not create hurdles in installing towers. In the top six cities of India alone, there is a shortage of 800 towers. That needs to be addressed quickly. But the problem is accentuated by the tough radiation norms in the country—10 times more stringent than global norms. One way out would be building solutions that provide better coverage within buildings.
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