It cannot be denied that India is a success story in voice telephony. However, when it comes to data services, India continues to lag far behind globally, despite sale of mobile phone and other wireless devises witnessing a consistent rise. This could be largely attributable to lack of infrastructure and low levels of skills among the population.  This  explains why uptake of data is still low in spite of the fact that affordability has long been one of the strengths of the Indian ICT ecosystem. There continues to be a deep divide between well-connected metropolitan hubs and remote rural areas, where even the most basic infrastructure is insufficient.  To bridge this divide what is required is massive investments into ICT infrastructure by both Government and private sector. 

Success of an economy in leveraging investments largely depends on two key factors, namely,:

*Efficient governance directed at creating conducive environment for industry to flourish;

*Robust regulatory framework that effectively & continuously reconciles various conflicting interests to create most efficient mix of regulations fostering overall growth.

The year 2012 saw the industry live through regulatory uncertainty with respect to reserve price for spectrum, excess spectrum, re-farming, one time spectrum charges, 3G ICR, M & A, cross holding restrictions etc.  While since then some clarity has emerged, what has been left unaddressed is ever increasing regulatory costs (most importantly high spectrum price) adversely impacting the balance sheets of the operators. Most of the issues continue to be still pending before the courts and with this several thousand crores of money stuck in litigation.  All this aggregates to huge financial burden over the industry that is already reeling under the burden of servicing huge debt and purchase of expensive air waves. As if the woes are not enough, the pricing war has further complicated the scene. It’s not the investors who are at risk but also the banks who have lend large monies to the industry are exposed.

Currently, huge debt aggregated by telecom companies compounded with regulatory disconnect with market realities are two issues that need to be addressed cogently to prevent investments from turning into NPAs.

As the Indian economy grows even at the rate of 6-7%  there is still enough stimulus for investments. Salvaging point being the growth in the market for smart phones, tablets and other high end devices, a clear indication of existence of growing demand in the market for data usage. Existence of growing demand is vital for investment in the sector.  What is required is leveraging investments, which in wake of adverse economic conditions and high regulatory costs can only be achieved by concerted effort of  Government, Regulator and Industry, who need to complement one another.  It’s high time that all the three come together and sort out their difference and start talking growth.

Steps @ Policy Level

Policy level the emphasis clearly has to be on facilitating investments, building infrastructure and easing debt burden. This will require concrete measures aimed at: 

*reduction in spectrum reserve price. This is important since cost of providing broadband through wire is very high and may not be cost effective and also it may not be possible to connect everybody through wire. Leaving airwaves as the only available via media for the industry; 

*reduction in infrastructure deployment costs by allowing infrastructure sharing, which includes spectrum sharing. Since spectrum is a scarce resource optimal utilization becomes indispensible;

*rationalization of tax structure with particular focus on easing of taxes on internet and broadband. Telecom industry in India continues to attract highest tax rates;

*infrastructure status for the telecom industry. This will facilitate funding and reduction in costs. While infrastructure status to telecom tower business has been positive but there is a need to extend the status to entire industry specially when the telecom industry in reeling under huge debt. 

Steps @ Regulatory Level

At regulatory level, the regulator needs to ensure that:

*regulations are aligned with the existing market dynamics. This of course cannot be achieved overlooking the financial health of the telecom operators, on whom the success of digital india rests and not to forget they are direct contributors to national exchequer in the form of license fee and taxes. Constant review of the regulations so as to respond to variations in the market is  key to ensuring growth and stability of the sector.  While ensuring  that competition in the market is sustained and there is level playing field for all the operators to compete freely, the Regulator should not compromise on financial health of the existing players. With constant erosion of conventional revenue streams of telecom operators by technological innovation (eg. Skype, Watsapp, WeChat, Facetime etc); any further downward pressure caused by regulations not only risks thousands of corers of investments turning into NPA but also negatively affecting the GDP.

Steps @ Industry & Individual Operators

Individual operators and the Industry also have a pivotal role to play.

@ individual operator level the focus clearly has to be on reduction in costs and optimisation of existing resources;

@ industry level:

*network sharing needs to be given more prominence as also development of innovation and skills.

*Industry also needs to put an end to intra industry/ inter-operator fights.

• lessons from the past, only show that such fights (eg. GSM versus CDMA) only harm the industry. Telecom operators have lot to fear from ever inventing tech industry that increasingly seeks to squeeze telecom revenue than fight amongst themselves. Today, number of web-based applications such as Skype, gtalk, facetime, viber etc. are increasingly being used today by people as a substitute to phone call; similar is the case with messaging. Clearly, incessant technological innovation is slated to wipe out conventional mobile telephony completely just as mobile telephony spelled doomsday for wire line telephone. Indicia of this change are already visible in US and Europe, where revenues for mobile data are beginning to eclipse voice revenues. This exodus is only going to increase exponentially in years to come. As per some market research ‘Skype’ is costing the telecom industry more than $100 million per day and a staggering $36 billion per year in revenue. With this shift there is considerable build-up of increased downward pressure on wholesale and retail prices which is choking growth and profitability among the telecom companies, hindering them from meeting their investment challenge. There is a pressing need for the telecom industry to re-invent to meet the challenge from web based technologies.  Convergence of technology has only made the competition more complex. Today major threat to the telecom industry comes from tech companies, which are actively foraying into communications sectors. Tech companies today are deliver enormous amounts of video online, for which they are increasingly spending on undersea cables that link their data centers, and also buying fiber optic and other infrastructure. They have also started foraying into high-speed Internet service – (tech companies are increasingly becoming internet service providers – there are examples of tech companies acquiring internet/internet related licenses – eg. amazon in india has a mobile payment license and is venturing into internet services in Europe). Thus, more than ever before there is an increasing need for telecom industry to unite and face the challenge.

As things stand today, we have Government that is increasingly looking at revenue maximization by imposing tax and penalties on the telecom operators regardless of whether the same would hold good in court of law. We have Industry which is divided and Regulator that is struggling to reconcile conflicting interest to find a right regulatory mix. Its high time that the Government, Regulator and Industry come together and work towards greater good of the telecom sector. There is no reason why the same success as has been achieved in voice cannot be replicated in case of data. Only concerted effort on part of Government, Regulator, and Industry can realize the dream of DIGITAL INDIA.