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Telecom sector: The way ahead
Introduction
India is currently the world’s second-largest telecommunications market.
India has a subscriber base of 1.20 billion.
The Indian mobile economy is growing rapidly and contributing substantially to India’s Gross Domestic Product (GDP).
A brief history
In the early 1990s, India had merely seven million telephones.
To a news connection the waiting time was seven to eight years.
The cost of installing a landline telephone was too high and the required average revenue per user (ARPU) was ₹1,250 per month.
The first telecom auctions
The first telecom auctions for private players were started in 1995
The financial bids were high for international consultants.
The winners realised that the bids were economically unsustainable.
In 1999, Prime Minister (Atal Bihari Vajpayee), decided to cancel the licence fees due to the government and introduce the “revenue share” model.
What after the “revenue share” model
The revenue share model was one of the bold steps to boost the telecom sector.
The installation cost of wireless telephony was less than one-fourth of a landline telephone.
Low Average revenue per user (ARPU) was no longer a big concern.
By 2003, India had around 300 million telephone lines.
Airtel, Vodafone and Idea, with their GSM mobile-licence, were the leaders.
Government Initiatives
The government has fast-tracked reforms in the telecom sector.
The Government has approved the new National Telecom Policy 2018 in lieu of rapid technological advancement.
The policy has envisaged attracting investments worth US$ 100 billion in the sector by 2022.
The Department of Information Technology intends to set up over 1 million internet-enabled common service centres across India as per the National e-Governance Plan.
FDI in the telecom sector
FDI cap in the telecom sector has been increased to 100 per cent from 74 per cent
Out of 100 percent, 49 per cent will be done through automatic route and the rest will be done through the FIPB approval route.
FDI of up to 100 per cent is permitted for infrastructure providers offering dark fibre, electronic mail and voice mail.
The Government of India has introduced Digital India programme under which all the sectors such as healthcare, retail, etc. will be connected through the internet.
Issue of penalties
In October, the Supreme Court has ruled that telecoms companies are liable to pay revenue share not just on telecom revenue but all revenues of the company — sales proceeds on handsets, renting of their towers, infrastructure sharing, and even on dividend income from any investment.
The total late-fees and penalties is ₹1.3 lakh crore.
The industry is already burdened with debt of ₹7 lakh crore.
Way ahead
The government needs to take bold action to boost telecom sector.
It is time to relook the role of telecom in the country.
Today, in addition to corporate taxes, the government’s telecom revenue amounting to about 30% of customer bill.
The government should not look at the telecom sector primarily as a revenue-earner.
The money could be better spent by operators to improve today’s average service-quality.
This would help telecom reach the remotest parts of the country and the service needs to continue to be affordable.
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