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Perfect 7 : an Introduction PERFECT 7 : AN INTRODUCTION 9990772422 Current Affairs : Perfect 7 SEVEN IMPORTANT ISSUES 1. TELECOM SECTOR IN INDIA : NEEDS REVIVAL Why in News? seen whether the industry, which is But despite this, the sector is reeling under a daunting debt of about currently facing its worst phase ever The government has constituted `4 lakh crore and is in dire financial and needs the government to step a Committee of Secretaries (CoS), straits, will be able to recover from this in. The sector is currently finding it headed by Cabinet Secretary Rajiv setback. The bench made it clear that increasingly difficult to manage its Gauba, to work out a relief package for there would no further litigation on the cumulative debt of almost `4 lakh the telecom sector, a move that may issue and it would fix a time frame for crore, with revenues of less than ` help mitigate the impact of the more calculation and payment of dues by the 1.8 lakh crore, and steadily falling, than `1.4 lakh crore that the telcos may telecom companies. due to intense competition. Currently, need to pay the exchequer following a the price of data for the customer at recent Supreme Court (SC) order. The Current Status of the Sector an average of `8 per GB is almost the CoS will also review various demands India is currently the world’s second- lowest in the world. Also, the average made by the industry, including largest telecommunications market revenue per user per month has deferment of spectrum auction with a subscriber base of 1.20 billion declined from `174 in 2014-15 to `113 payment due for the next two years, and has registered strong growth in in 2018-19. reduction in spectrum usage charges the past decade and half. With 604.21 and the Universal Service Obligation million internet subscribers, as of Challenges before Telecom Fund levy. December 2018, India ranks as the Sector A Brief Background world’s second largest market in terms ¡ Financial Health of the Sector: of total internet users. Moreover, in Gross revenue has dropped by In a setback to telecom service 2017, India surpassed USA to become 15% to 20% for the year 2017-18 providers, the SC recently allowed the the second largest market in terms over the preceding year for the Centre's plea to recover adjusted gross of number of app downloads. revenue of about Rs 92,000 crore from The country remained as the them. A three-judge bench, headed world’s fastest growing market by Justice Arun Mishra, upheld the for Google Play downloads in definition of adjusted gross revenue the -second and third quarter of formulated by the Department of 2018. Telecom. In July, the Centre had told the The Indian mobile economy apex court that leading private telecom is growing rapidly and will firms like Bharti Airtel, Vodafone and contribute substantially to state-owned MTNL and BSNL have India’s Gross Domestic Product pending licence fee outstanding of (GDP), according to report over Rs 92,000 crore till date. prepared by GSM Association Industry body Cellular Operators (GSMA) in collaboration with the Association of India (COAI) has Boston Consulting Group (BCG). expressed deep disappointment over As of January 2019, India has the SC ruling and termed it the last straw witnessed a 165 per cent growth in contributing to the sector's financial in app downloads in the past two distress. It added that it remains to be years. November 2019 A Issue-1 1 Current Affairs : Perfect 7 incumbents and overall sector ¡ High Right-of-Way (ROW) Cost: quantities of spectrum. Operators revenue has dropped. Also, there Sometimes, states governments have received in-principal approval is drop in voice and data revenue charge a huge amount for from the Reserve Bank of India (RBI) per user. permitting the laying of fibre etc. for Payments Bank license, which is expected to aide in customer ¡ Limited Spectrum Availability: ¡ License Fee: The license fee of eight Available spectrum is less thanper cent of the Adjusted Gross retention and enables them to build 40% as compared to EuropeanRevenue including five per cent as on their M-Payment services. Similarly Universal Service Levy (USL) is one nations and 50% as compared to introduction of the concept of mobile of the highest in the world. China. Hence, it is imperative that virtual network operators (MVNOs) by the regulator are expected to open up spectrum auctioning at sustainableGovernment Initiatives new opportunities for operators such prices is the need of the hour. Also, The liberal and reformist policies as wholesale revenue stream. government auction spectrum ofat the Government of India have Foreign Direct Investment (FDI) an exorbitant cost which makesbeen instrumental along with strong cap in the telecom sector has been it difficult for mobile operatorsconsumer demand in the rapid growth increased to 100 % from 74 %; out to provide services at reasonablein the Indian telecom sector. The of 100 %, 49 % will be done through speeds. government has enabled easy market automatic route and the rest will be ¡ High Competition and Tariff War: access to telecom equipment and a fair done through the FIPB approval route. Competition heating up post entry and proactive regulatory framework Also FDI of up to 100 % is permitted for of Reliance Jio. Other telecom that has ensured availability of telecom services to consumer at affordable infrastructure providers offering dark players have to drop in tariff rates fibre, electronic mail and voice mail. both for voice and data. prices. Some of the important measures are: ¡ Lack of Telecom Infrastructure How to Revive the Ailing in Semi-rural and Rural Areas: National Digital Communications Sector? Service providers have to incur Policy-2018 For the first time, the National Digital huge initial fixed cost to enter semi- The new telecom policy has been Communications Policy (NDCP) 2018 rural and rural areas. Key reasons formulated in place of the existing accorded telecom the status of “critical behind these costs are lack of National Telecom Policy-2012. It comes and essential infrastructure”. There basic infrastructure like power and with a view to cater to the modern have been many action items in the roads, resulting in delays in rolling needs of the digital communications policy including 'Fibre First Initiative', out the infrastructure. sector of India. The key objectives establishment of 'National Digital Grid' of the policy are: Broadband for all; ¡ Lack of Fixed Line Penetration: and so on. creating four million additional jobs in India has very little penetration of However, what this means for the Digital Communications sector. fixed line in its network whereas; telcos is far from clear. The telecom most of the developed countries The policy also aims to provide networks that support voice telephony have a very high penetration of universal broadband connectivity at and broadband data services are 50 Mbps to every citizen. It has kept a fixed lines (telephone line that critical infrastructure for the country target of providing 1 Gbps connectivity travelled through a metal wire or much like electricity, water, sewage to all Gram Panchayats by 2020 and optical fibre as part of a nationwide and road networks. However unlike 10 Gbps by 2022 (right now, average telephone network). Though India the other infrastructure sectors where broadband speeds in the country are government or state-owned enterprises has almost 1.2 billion connections 5-6 Mbps). the fixed line is around 18 million. provide services in a monopoly market Only around 25% of towers in India Other Initiatives environment, a major portion of the are connected with fibre networks, Ease in Merger & Acquisition telecom infrastructure in India is built whereas in developed nations, it guidelines helps the sector by private firms using their capital in a is in excess of 70%. 5G Network to consolidate. Today there is relatively competitive market. requires towers to be connected consolidation in the sector leading to Hence the policies, directives to with very high-speed systems. 4-5 operators in each of the service and support of the government for Those high speeds are not possible area, similar to the global average. improving the telecom infrastructure on the present radio systems, but There is also spectrum consolidation are quite different from that of other are possible on fibre system. with each operator holding reasonable utility infrastructure. One step the 2 November 2019 A Issue-1 Current Affairs : Perfect 7 government can do for enabling the the Capex is utilized for setting up and the financial health of the telecom private sector that has invested heavily managing the telecom infrastructure. industry has to be safeguarded. There in the sector is to reduce the burden By sharing infrastructure, operators is an urgent need for a regulatory of regulatory fees. For example, the can optimize their capex, and focus on environment which facilitates license fee of eight per cent of the providing new and innovative services innovation and investment, and Adjusted Gross Revenue including to their subscribers. addresses the financial woes of the five per cent as Universal Service Levy Availability of affordable smart sector. (USL) is one of the highest in the world. phones and lower tariff rates would After having slipped very badly in Telecom Regulatory Authority of India increase tele-penetration in rural building and maintaining good civic (TRAI) in 2015 proposed reduction areas. Also government should fix a infrastructure in the country including of the USL to three per cent, thus minimum price to save the industry roads, water, and electricity, let us not bringing down the license fee to six per from predatory pricing. slip in telecom and broadband infra as well.
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