UPSC CSE Mains Syllabus: GS-3- Effects of liberalization on the economy, changes in industrial policy and their effects on industrial
Telecom sector – challenges and prospects
- Following years of breathtaking subscriber growth, tele-density is showing signs of strain.
- Some telecom players are facing an existential crisis due to brutal competition and the government demanding unpaid dues.
- At the same time, investors of different hues are lining up to invest in the space, signalling a belief that the industry still holds prospects of ample returns.
- Tele-density has been increasing since the early 2000s.
- The trigger point was in 1999 when India moved away from upfront licence fee payments to a pay-as-you-go regime.
- Over time, India has seen subscribers with multiple SIM cards who want a feel of which service provider is better.
- In the lower rung of consumers, movement is higher as well as temperamental.
- The Telecom Regulatory Authority of India (TRAI) itself admitted that the actual numbers are 30% lower than the numbers being bandied about.
- This could be a COVID-19 effect where mass movement of migrant labour and joblessness could have resulted in surrendered SIM cards.
AGR and Tariff Issue:
- AGR comprises the regulatory fees that are broadly categorised into two areas.
- One is the licence fee which is 5% universal service obligation fee (USOF) plus 3% as licence fee. So that is 8%.
- Second comes the spectrum usage charges that range from 1% for 2,300 MHz up to 7-8%, depending upon whether the telcos are holding liberalised spectrum or unliberalised spectrum.
What experts say on this,
- This is huge and not an appropriate policy.
- In any country, the licence fee is not more than 3%, including the USOF.
- There is no reason why the government should levy a spectrum usage when the spectrum is auctioned.
- In the last auction in 2016, telcos gave ₹60,000 crore on buying spectrum.
- Spectrum is not something that will deteriorate. It doesn’t have depreciation or management costs associated with it. Hence, judicious amounts have to be fixed.
- The court ordered to include all revenues, except for termination fee and roaming charges, as a part of the AGR.
- There is a need to revise the AGR due, excluding the penalty.
Why 5G is different:
- India has moved from 1G to 2G, for both of which the operators were in full control and realising revenue.
- With 3G and 4G, we have seen Internet companies providing over-the-top services, and they have appropriated much value and relegated telcos to normal bandwidth providers.
- 5G is going to be very different.
- 5G is not about connectivity and high speed only; it is about creating an ecosystem.
- For example, in the case of healthcare, it is an ecosystem that would comprise telecom operators, healthcare providers, hospitals, governments, system integrators that provide Internet of Things and machine-to-machine communication.
- India needs spectrum so that high bandwidth-intensive applications can be provided to end users.
- India is poor in allocating spectrum. There are specific spectrum bands which have been pending auction for a while now due to various reasons.
- India doesn’t have enough spectrums for operators despite the consolidation that has taken place.
- Operators need adequate spectrum to provide low latency, high coverage, highly reliable communication services.
- Accessibility to 5G is necessary. In this regard, a mix of fibre and Wi-Fi hotspots could be used.
- 5G is a bandwidth that has to be used by consumers and consumers must have devices to use that bandwidth. There is also this debate using E and V bands for dense urban areas.
- There were consultations to use satellites to create points of presence, and distribution tributaries to users or connectivity to consumers directly like the new OneWeb satellite system.
- Analysis of the pros and cons is necessary before deploying the equipment’s.
- Big corporates:
- It is Facebook, Google and other Internet firms that are putting in money.
- Because the value proposition is more on the content, and applications are abundant.
- India’s 650 million mobile broadband subscriber base is a huge potential base for any Internet firm to tap into.
- Because it will include the synergic operation of e-commerce along with this digital cloud offering as well as connectivity.
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