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Interview with J.S. Deepak, Secretary, Department of Telecommunications

February 23, 2017
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The government initiated some key policy reforms in 2016, which facilitated fresh investments in the telecom sector. However, more policy reforms are “work in progress” and need to be undertaken for ensuring continued growth. In an interview with tele.net, J.S. Deepak, secretary, Department of Telecommunications (DoT), talks about the progress in the sector in the past year, the key policy moves and his vision for the future…

How has the telecom sector evolved in the past few years? What have been the major milestones?

The past year has been a year of reforms, investments, and new services. We undertook a number of reforms including spectrum reforms. The first instances of both spectrum sharing and trading took place in May-June 2016, and we undertook spectrum harmonisation for the first time in July-August 2016. We also allowed the sharing of active infrastructure, an important requirement not only for spectrum sharing but also for increasing the efficiency of infrastructure. Importantly, we also abolished the procedure of obtaining wireless operating licences, a major step towards improving the ease of doing business in the sector. On an average, the government received 400,000 applications for wireless operations every year. With the abolition of this procedure, telecom service providers can begin operations as soon as infrastructure is deployed.

From the consumer’s point of view, we introduced Aadhar based e-KYC (know your customer) services for new customer acquisition. Besides, speeding up the process of acquiring new customers, it has helped reduce paperwork.

On the telecom infrastructure side, two major policy reforms were undertaken. The first was the notification of new right-of-way (RoW) rules for the establishment of tower and fibre infrastructure in a transparent and time-bound manner. Second, the government came up with a new strategy for the faster execution of the BharatNet programme. The speed of fibre roll-out has since increased from 40 km a day to 400 km per day. We have been able to achieve this by paying better attention to details and identifying bottlenecks such as RoW, equipment availability, fibre availability, as well as the timely release of money so that contractors have funds to get the work done.

We also have a strategy in place for Phase II, which will be executed in partnership with the state government and the private sector.

What are the policy issues under consideration for the next year?

We are working on two main areas. First, reforms in the area of backhaul spectrum. Since we do not have enough fibre for backhaul, the requirement of microwave is high. In the last auction, we made available huge amounts of spectrum on the access side to put an end to scarcity. Similarly, we want to come out with a policy that will enable us to give adequate quantum of spectrum for backhaul as well.

Second, we want to achieve the completion of the BharatNet project and enable actual provision of services to gram panchayats through Wi-Fi hotspots which will act as broadband PCOs.

The Indian telecom sector is propelled by private sector initiatives and investments. At the same time, there are business cases that do not allow the private sector to enter into some areas of service provisioning. The government must put in place policies and regulations encouraging investments. The governmant has largely been successful in achieving that.  During the past year, the telecom sector received about $10 billion of foreign direct investments. This is a quantum jump, compared to the $2 billion of investments that the sector received on an average in the previous years. We also want to increase investments from the Universal Service Obligation (USO) Fund for the roll-out of infrastructure in rural and remote regions. In 2015-16, the government had invested Rs 30 billion from the USO Fund. In 2016-17, the number is expected to reach Rs 78 billion. For 2017-18, we hope to reach Rs 140 billion.

What in your view are the key gaps in the regulatory environment that need to be filled?

As stated earlier, we have been able to address a big gap through the spectrum reforms undertaken in the past year. The ease of doing business has improved considerably through reforms in the licensing regime. However, a few more pain points need to be addressed in the coming year. We are evaluating whether we can abolish import licences for telecom service providers, and have an online and fully automated site clearance procedure. As far as regulations are concerned, my perception is that they should be light and facilitate the industry’s growth.

What are your views on the 4G service roll-out? Are you happy with the progress that has been achieved on this front?

Currently, 97 per cent of the country’s population is covered by 2G, 60 per cent by 3G and 38 per cent by 4G. We were 15 years behind the world in 2G, a decade behind in 3G and five years behind in 4G. We are catching up in terms of technology. There is a growing demand for 4G and with the price of smartphones going down, it is only likely to grow further.

What is your view on the increasing competition in the telecom sector?

Competition is fierce and it has been one of the key factors responsible for the success of the sector. It has given the consumer its due. Consumers can make a real choice in the sense that if they do not like the service of one operator, they can seamlessly switch over to another.

Another key driver of investments has been the fact that every quarter, the sector revenue has grown. While enabling policies and regulations are important, it is equally essential that investors are able to see the potential and promise of profit. This can happen only if the revenue is constantly growing. For the first time in 25 years, the telecom sector revenue has shown a decline in the quarter ended December 2016, which is worrisome. We would like the revenues to grow so that the sector continues to attract investments, and gets the best of technology and innovation.

How do you see the industry’s competitive landscape evolve in the next few years?

The Herfindahl Hirschman Index for the Indian telecom sector shows that competition in the industry goes up as the number of operators increases up to 5. With subsequent increase in the number of operators, competition flattens out. Ideally, we should have five operators in India to avoid spectrum fragmentation. Thus, there is still scope for consolidation. Having said that, competition has to be the bedrock, and we believe that it is fundamental to the growth and success of the sector and consumer protection.

What role do you foresee for BSNL? Will it be like any other player or have a deeper social objective?

Currently, the company is constrained because of its huge manpower costs, which equal 67 per cent of BSNL’s topline as compared to 3 per cent for Airtel. However, it is going to reduce significantly in the near future, with a huge portion of the workforce set to retire. The operating performance of BSNL has already improved last year and once the wage burden goes down, it will improve further.

How do you plan to ensure the utilisation of infrastructure set up under BharatNet?

The availability of broadband infrastructure will give a fillip to end-users as well. Our job is to get high-speed broadband infrastructure in place, especially in rural areas through BharatNet and expand the wireless telecom infrastructure, which is today the major provider of broadband.

What are the major announcements that the industry can expect from DoT in 2017?

In the past one year, we have done a dozen reforms. We would like to continue at that pace in the coming year as well. Going forward, our focus areas will be…

• decision on policy for backhaul spectrum

• Approval of Phase II of BharatNet

What is your long-term vision for the sector?

Telecom is one of the few infrastructure sectors that has been doing well. There are essentially three pillars that have contributed to the success of the sector: private investments, continued support to infrastructure in rural and remote areas by the government through USO Fund, and transparent policies in the areas of allocation of resources like spectrum as well as clearances and licences.

Overall, we want to reform the sector to an extent that the government will keep itself out of business. At the same time, it should develop as the most globally vibrant sector to invest in.

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