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Video Summary

[RSTV The Big Picture] Challenges in Telecom Sector

One of the major challenge in the telecom sector is lot of duties creating lot of unemployment which has given birth to a lot of dissatisfaction.
By IT's Video Summary Team
March 19, 2019

Contents

  • Introduction
  • Limitation in the current Telecom network
  • Challenges in telecom sector
  • What is the need of the hour?
  • GST and Telecommunication challenges
  • Recommendations of TRAI for GST Relief
  • Way forward

[RSTV The Big Picture] Challenges in Telecom Sector

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Introduction:

  • The Department of Telecommunications has asked the Finance Ministry to offer some GST related relief to telecom companies and to bring down import duties of network equipment, but the Ministry is not considering any other company’s specific relief measures.
  • Cellular Operators Association of India wrote to telecom minister urging that the 35,000 crore rupees input tax credit due to telecom companies from the government be adjusted against spectrum payments and levies as a measure to help carriers oversee financial distress.
  • The industry had also called for a rollback of the basic customs duty increased on a several telecom equipment in October 2018 and the duty is imposed on printed circuit boards used in them in a bid to curb non-essential imports and address its current account deficit as well as encourage the make in India initiative.

Limitation in the current Telecom network:

  • India has very little penetration of fixed-line in telecom network while most of the developed countries had very high penetration of fixed-line and hence are much ahead of India in terms of download speeds.
  • India’s download speed is 512 kbps compared to some of the nations who have gone to hundred Mbps speed.
  • The major limitation during telecom network rise is deployment, by the private service providers, of the networks using cellular technology which has limitation of download speeds as a result internet speeds have not increased.
  • Though, India has almost 1.2 billion connections but the fixed line is almost 18 million and that broadband connectivity is extremely poor.
  • Roughly 25% of towers in India are connected with fibre whereas in developed nations it is in excess of 70%.
  • India is not ready for 5G because the BTS (base transceiver station) have to be connected with very high speed systems (with fibres) which are not possible on the present radio systems.
  • India’s major telecom operators is proving that current model of providing mobile services at cheap rates are not going to be sustainable as most of them are reporting losses.
  • India sometimes ranks much lower than even some of the smaller neighbours in the ‘broadband ready index readiness index’.

Challenges in telecom sector:

  • One of the biggest challenge in telecom sector is the equipment, right from the centre server to the consumer, through which the delivery is happening.
  • Another road block is timeframe of policy execution. Government have withdrawn a lot of things to benefit telecom sector but by the time it gets executed to the market, it becomes too late.
  • One of the major challenge in the telecom sector is lot of duties creating lot of unemployment which has given birth to a lot of dissatisfaction.

What is the need of the hour?

Infrastructure:

  • According to The National Digital Communications Policy (NDCP), (earlier it was named Telecom policy), there should be an enhanced limit of 50 Mbps download to every citizen in the country by 2022.
  • In order to achieve that, Central government is convincing state governments to create adequate Telecom infrastructure to fulfil the NDCP mission.
  • Also, New Players/Private companies have to enter the market and should start building infrastructure on shareable basis.
  • In all the cities and towns, there is requirement of ‘duct construction’ for laying of optical fibres.
  • India needs to have the in-house development and manufacturing capability.

Policies and Planning:

  • Originally, the fixed-line was operating on copper cables which is very expensive compared to optical fibre which is cheap.
  • The current requirement is increased fibre penetration and prepare ground for easy and cheap right-of-way permissions.
  • The download speed needs to improve and IT penetration has to increase thereupon reflecting on the GDP of India.
  • India needs more synergies in terms of the executions of planning in telecom sector.
  • It will be detrimental in future if the fibres are not laid on time as India won’t be able exploit the full potential of 4G system.
  • Providing 5G to each village in India via optical fibre by doing ‘Generational shift’ is the need of the hour.
  • Also, India need to ensure that the components which is bridging the gap between the service providers and the consumers’ needs to be cost effective, consumed well and futuristic.
  • The policies need to be executed and aligned well at all respective levels including states and at central levels.
  • In spite of having large pool of talent, economic market, and sound policies, the only thing that India need is to rightly align the production channel which can deliver to the last mile.

What more needs to be done?

  • India have got huge capacity for production of optical fibre cables however there has to be enough capacity and technical know-how and skill, for that the industry requires certain sorts such as reduction in duty, promotions, R&D organizations and export of telecom instruments.
  • Some rebates and benefits to the investors and the corporate houses should be given to increase the investment in telecom sector.

GST and Telecommunication challenges:

  • Local Telecom hardware production inspired from GST has significant impact on employment but at the same time government has to forego some revenue while importing hardwares.
  • The increased revenue generating from GST will direct government to tackle telecom issues effectively.
  • The reach of Vision of telecom policies should be widen to the investors so that they will come forward to commit their money.
  • Because of lot of changes that happen very frequently in policies, a lot of uncertainty arises in investing in telecoms sector. Instead, Policies needs to be flexible.
  • If India need to align policies with the investor’s view in a longer term, a good lending rates over the period of time is a prominent solution.
  • Also, there needs to be a long term commitment even from the corporate houses that they are not for short term vision.
  • When the cost of other component such as electricity and infrastructure add in to the final product, market becomes uncompetitive.
  • This arises the need of importing goods to get better subsidies benefits causing the distraction between policies and current situation which restricts the ‘make in India’ movement for which, GST is an inspiration.
  • Also, the agreement of all the states are needed as the GST Council members are all from different states.

Recommendations of TRAI for GST Relief:

  • To reduce duties on import of components.
  • Measures to promote domestic manufacturing of telecom equipment.
  • There has to be enough capacity and technical know-how and skill to produce other telecom in the country so that we not only consume but also export the equipment.
  • There should be lot of reduction in duty.
  • There should be promotion.
  • There should be R&D.

Way forward:

  • Proper implementation of the government’s stated policy is necessary.
  • The telecom sector needs hand holding from the government during the challenging period. The government will reap the benefit in future.
  • Telecom will be more than just communication in a few years. CCTV cameras network and voice /face recognition will be merge in to telecom sector.
  • Indian will need the efficient telecom infrastructure for efficient working of operators and move to future technologies.
[Ref: Rajya Sabha TV]

 

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