Business Law Project Report on

TELECOM INDUSTRY

Submitted in the partial fulfilment of the requirements for the award of the Post Graduate
Diploma in Management (2015-17)

Submitted By-

Submitted To-

Abhinav Chaudhry-15DM002

Dr. Jagdish Shettigar

Abhinav Thakur-15DM004
Akanksha-15DM014
Akshay Baxi-15DM018
Ashish Mishra-15DM036

TABLE OF CONTENTS

1.0 Introduction03
1.1 Trends in Indian Telecom Sector.......04
2.0 Telecom sector in current news.06
2.1 Net neutrality.06
2.2 Call drop....06
2.3 Interconnect regulation..06
2.4 Speed issues...07
2.5 Financial issues..07
3.0 Regulatory hurdles.09
3.1 Current structure of airwave auction..09
3.2 Piecemeal release of spectrum...09
4.0 Government policies in telecom10
4.1 Pre liberalisation scenario..10
4.2 Liberalisation Policy 1991.10
4.3 National Telecom Policy 1994...11
4.4 Establishment of TRAI...11
4.5 Developments after 2000....12
4.6 National Telecom Policy 2012...13
5.0 Indian Telecom in 2016..14
6.0 Suggestions.15
References...17

TELECOM SECTOR

1.0 INRODUCTION
India is a growing economy and telecom industry of India is one of the fastest growing in the
world. The government policies and regulatory framework implemented by Telecom
Regulatory Authority of India have provided such an environment for service providers that it
stands more competitive and accessible at affordable prices.
The subscriber base of telecom network in India was nearly 1022.61 million by the end of
September 2015, which is second largest telecom network in the world. India stood third
highest in terms of total internet users in 2015, with 375 million internet subscriptions in
October 2015. Seven out of eight internet users are accessing internet from their mobile phones.
Urban teledensity stood at 152.76 per cent and rural teledensity at 48.66 per cent as on
September 2015.
The growing population, government policies and changing consumer taste provides immense
opportunities to service providers in telecom sector in India. With 70 per cent of population
staying in rural areas, the rural market would be a key growth driver in the coming years.
Telecom penetration in the nations rural market is expected to increase to 70 per cent by 2017
from 48.66 per cent as of September 2015.the government of India has introduced Digital India
program under which all the sectors such as healthcare, retail, etc. will be connected through
internet.
The telecom market split into three segments: (Source: Telecom Regulatory Authority of
India, TechSci Research)

Mobile (wireless)
Comprises establishments operating and maintaining switching and transmission
facilities to provide direct communications via airwaves.
Fixed-line (wire line)
Consists of companies that operate and maintain switching and transmission facilities
to provide direct communications through landlines, microwave or a combination of
landlines and satellite link-ups
Internet services
Include Internet Service Providers (ISPs) that offer broadband internet connections
through consumer and corporate channels.

Indian telecom sector has seen a notable growth in the last decade and the subscriber base
expanded at a CAGR of 19.5 per cent to 1022.61 million over FY07-16. Teledensity (defined
as the number of telephone connections for every hundred individuals) increased from 17.9 in
FY07 to 80.98 in FY16. In September 2015, total telephone subscription stood at 1022.61
million, while teledensity was at 80.98 per cent. Indian telecom sectors revenue grew 10.7 per
cent to USD 71.2 billion in FY14 as compared to USD 64.3 billion in FY13. Wireless and wire
line revenue increased at a CAGR of 8.91 per cent to USD 38.8 billion over FY06-14. Revenue
3

from the telecom equipment is expected to be USD 19 billion in FY15, which is further
expected to touch USD30 billion in FY20.
The wireless segment (97.46 percent of total telecom subscriptions) dominates the market,
while the wire line segment accounts for the rest. Urban regions account for 58.58 percent of
telecom subscriptions while rural areas constitute the remaining. During FY07-16, wireless
subscriptions increased at a CAGR of 22.1 per cent to 969.89 million in FY15 and reached
996.66 million subscribers till September, 2015. In FY16, urban wireless teledensity stood at
147.35 while rural wireless teledensity stood at 48.11. The mobile segments teledensity surged
5 times from 14.6 percent in FY07 to 77.27 per cent in FY15, while coming at 78.93 per cent
in September 2015. GSM services continue to dominate the wireless market with a 94.91 per
cent share (June 2015); CDMA accounts for the remaining 5.09 percent.
Bharti Airtel is the market leader, with a 23.60 percent share of total subscription, followed by
Vodafone (18.88 percent share). The top five players- Bharti Airtel, Vodafone, Idea, Reliance,
and BSNL-accounts for 78.27 percent of the total subscribers.
Total fixed-line subscription stood at 25.95 million, while teledensity reached 2.06 per cent
due to wide usability of the wireless segment in FY16. BSNL is the market leader with a 60.28
percent share, followed by MTNL (13.60 per cent). BSNL, MTNL, and Bharti together account
for 87.46 percent of the total fixed-line market.
The number of Internet subscribers increased at a CAGR of 52.11 per cent to 375 million in
2015 from 8.6 million in 2006. By December 2015, the number of internet users is anticipated
to reach 402 million. This will reach 462 million by the end of June 2016 with the increasing
number of subscribers coming online especially through mobile devices.
Broadband subscription increased at a CAGR of 20.11 per cent during FY07-16 (till September
2015). Bharti has the largest share (23.3 per cent) of the total broadband market. Vodafone has
the second-largest share (19.7 per cent) of the broadband market.

1.1 NOTABLE TRENDS IN INDIAN TELECOM SECTOR

Green Telecom
+ The green telecom concept is aimed at reducing carbon footprint of the
telecom industry through lower energy consumption
+ Tata has invested around USD16.38 million to convert its 10,000 base stations
from
Indoor to outdoor to reduce energy consumption and carbon footprint across
its 20
Telecom circles in India so far.
Expansion to Rural Markets
+ There are over 62,443 uncovered villages in India; these would be provided
with village telephone facility with subsidy support from the governments
Universal Service Obligation Fund (thereby increasing rural teledensity)
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+ In September 2015, the rural subscriber base accounted for 41.42 per cent of
the total subscriber base, thereby fuelling the sectors growth
+
Emergence of BWA Technologies
+ The most significant recent developments in wireless communication include
BWA technologies such as WiMAX and LTE
+ In 2015, Airtel launched its 4G services in 296 cities across the India
+ In 2015, BSNL started its first 4G Wireless Broadband Internet ServiceWiMax
+ Reliance Jio, has launched 4G services across pan- India as on December
2015
Telecom Finance Commission
+ Department of Telecommunication is planning to issue a global tender for
inviting applications for setting up a Telecom Finance Corporation (TFC).
The government has fixed a deadline according to which TFC is expected to
be operational by March 31, 2017
Rising Investment
+ Vodafone one of the leading players in the telecom sector in India, has
disclosed its plans to invest USD1310 million to upgrade and expand
Vodafone India network coverage and USD655 million to upgrade its
technology centre
Outsourcing non-core activities
+ As part of the recent outsourcing trend, operators have outsourced functions
such as network maintenance, IT operations, and customer service
Mobile banking
+ In May 2015, 340 million mobile banking transactions were reported, up 75
per cent from a year ago
+ Availability of affordable smartphones, along with a rise in the security level
of mobile transactions, is expected to boost growth of transactions conducted
via phones, with the overall transaction value being tripled in 2014 from last
year

Rising income fuels demand for telecom services (Source IMF)

Incomes have risen at a brisk pace in India and will continue rising given the
countrys strong economic growth prospects.
Nominal per capita income have recorded a CAGR of 8.87 per cent over 200015
Increasing income has been a key determinant of demand growth in the
telecommunication sector in India
The IMF estimates nominal per capita income to expand at a CAGR of 5.43 per cent
over 201019
Per capita income is expected to expand at a CAGR of 7.8 per cent for the period
2015-19
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2.0 TELECOM SECTOR IN CURRENT NEWS

2.1 NET NEUTRALITY
Telecom regulator on Feb 8, 2016 prohibited discriminatory tariffs for data services on the
basis of content. The move is a big blow to Facebook's highly-controversial 'Free Basics
platform.
In an order, 'Prohibition of Discriminatory Tariffs for Data Services Regulation', Trai said, "no
service provider shall offer or charge discriminatory tariffs for data services on the basis of
content."
The regulator further said that "no service provider shall enter into any arrangement, agreement
or contract, by whatever name called, with any person... that has the effect of discriminatory
tariffs for data services being offered or charged to the consumer on the basis of content."
TRAI has made the provision to fine Rs 50,000 per day in case any telecom violates the rule to
a maximum of Rs 50 lac.

2.2 CALL DROP

Telecom regulator TRAI has written to operators to ensure compliance with call drop
regulations, effective January 1, 2016 even as service providers remain defiant and say
compensation to subscribers will be paid only after court orders them to do so. ( Source- The
Indian Express, January 4, 2016)
TRAI has written to all telecom operators reminding them about call drop regulations with
expectations that they have put all mechanisms in place to comply with them.
The Telecom Regulatory Authority of India (TRAI) issued amendment in Telecom Consumers
Protection Regulations on October 16, 2015 in which it added a rule mandating mobile service
providers to compensate their subscribers for call dropped or automatically disconnected due
to technical glitches in their network.
The rules mandate telecom operators to provider Re 1 compensation for each call dropped,
with a compensation cap of Rs 3 per day.

2.3 INTERCONNECT REGULATION

Delhi High Court sought TRAI's response on Bharti Airtel's plea challenging the regulator's
Interconnect Usage Charges Regulations fixing termination charges for landline to wireless
as zero paise and wireless to wireless at 14 paise per minute. (Source- Economic Times,
February 12, 2016)

Interconnection Usage Charges (IUC) or termination charges are payable by one telecom,
whose subscriber makes a call, to another whose subscriber receives the call. The charge is
payable by the first for using the second's network.
A bench of Chief Justice G Rohini and Justice Jayant Nath issued notice to the Telecom
Regulatory Authority of India (TRAI) and sought its reply by the next date of hearing on
March 1.

2.4 SPEED ISSUES IN BROADBAND

Telecom regulator TRAI on January 21, 2016 issued draft guidelines for broadband service
providers to ensure that they are providing a minimum download speed of 512 kbps to both
fixed line and mobile customers.
The Telecom Regulatory Authority of India has come up with the draft guidelines superseding
its similar direction issued in 2012 following an amendment in definition of broadband by the
government in 2013. As per the amendment, the broadband service should have "capability of
the minimum download speed of 512 kbps to an individual subscriber from the point of
presence (POP) of the service provider intending to provide Broadband service".
The draft says that telecom operators should provide on their website and also in all
advertisements published through any media data usage limit, speed of connection both up to
and beyond limit set in the plan. (Source- Business Today, January 23, 2016).
As per the proposal, telecom operators should "ensure that download speed of broadband
service provided to the fixed broadband subscriber is not reduced below 512 kbps in any
broadband tariff plan".
In the draft, TRAI has reiterated direction to service providers that they should provide alert to
the subscriber when the data usage reaches 80 per cent of the data usage limit under his plan.

2.5 FINANCIAL ISSUES

India's ambitious Digital India programme could get derailed due to the financial challenges
faced by telcos, apart from the low quantities of spectrum deployed for commercial use and the
absence of a road map for releasing more airwaves, telcos and experts say.
Mobile phone operators in India face multiple challenges lowest spectrum holdings in the
world and that too fragmented as it's divided among 7-13 operators in a circle, apart from being
non-continuous, which is a basic necessity for high-speed data services. Additionally, the cost
of bandwidth in India is almost the same as that for global operators, but the average revenue
per user is far less as data and voice tariffs are far lower, thus hurting the rate of returns on
investments, say analysts.
7

"The current regulatory regime of higher spectrum cost with the expectation of lower tariffs is
not sustainable and has deteriorated the financial health of the industry," said Rajan Mathews,
director general of the GSM industry body, COAI said. The body represents top mobile phone
operators Bharti Airtel, Vodafone India and Idea Cellular, among others.
The telecom industry's cumulative debt burden has surged increased to over Rs 3,00,000 crore
in FY 2014-15, from Rs 82,726 crore in 2008-09. The debt-to-equity ratio of a majority of the
carriers has doubled since 2010-11 and the average return on the investment made by an
investor for the industry as a whole is at Rs 1 for every Rs 100 invested, say analysts. (SourceEconomic Times 25May, 2015).
These factors could leave the industry struggling to invest more into rolling out broadband
networks, which would eventually hurt Narendra Modi-led government's Digital India
initiative. The project is aimed at building a robust information network or information
highways across the country and use these highways to deliver key services of e-governance,
e-health and e-education to the remotest corners of India.
The Prime Minister has set a vision of 650 million internet connections and broadband speeds
of up to 2 Mbps by 2020. At present the country has close to 200 million internet connections
and broadband speeds of 512 Kbps. "Given the ambitious targets of Digital India, operators
need to beef up their spectrum holdings," Mathews said.
However, unlike US President Barack Obama, who has promised free 500 MHz of airwaves
for private use in the next few years, the Indian government is yet to come out with a welldefined plan, leaving the industry sceptical about the success of Digital India. Newly-appointed
Vodafone India CEO Sunil Sood said that the government should give long-term clarity on the
amount of spectrum and the kind of airwaves to be auctioned, besides clarity of merger and
acquisition norms and spectrum sharing & trading guidelines.
The quantum of spectrum held by Indian carriers on average about 13 MHz is about a
fourth of the next largest 45 MHz held by Japan's NTT DoCoMo. China Mobile, the largest
telco in the world by subscribers, holds some 100 MHz of airwaves

3.0 REGULATORY HURDLES IN THE INDIAN TELECOM SECTOR:

3.1 CURRENT STRUCTURE FOR AIR WAVES AUCTION

In India, the Department of Telecommunications (DoT) conducts auctions of licenses

for electromagnetic spectrum. India was among the early adopters of spectrum auctions
beginning auctions in 1991. Despite the early start, services were slow to roll out caused
by unforeseen problems with the design and rules of the auction. Potential service
providers were required to seek foreign partners, as the DoT felt that no Indian company
alone had the financial means to enter the industry. Bidding for all licenses required a
two-stage screening process.
Vodafone CEO says India represents an excellent long-term investment opportunity,
but the present regulatory challenges are hampering economic development.
The current structure for air wave auction in the country are creating capital constraints
for operators looking to provide quality service for subscribers.
Industry body COAI Director General Rajan Mathews had said the auction was
designed to ensure maximum revenue for the government.

3.2 PIECEMEAL RELEASE OF NEW SPECTRUM

Frequencies are scarce; with only limited prospects for this decade, while demand for
them increases massively as mobile broadband grows rapidly.
In an internal communication, the government has urged ITU to identify airwaves
across a clutch of key frequency bands in the 1427-1518 MHz, the 3300-3400 MHz,
and 3400-3600 ranges, which are ideal for boosting 3G and 4G data download speeds
and also sprucing up mobile broadband coverage in congested zones

The ministries of Telecom and Information and Broadcasting have agreed to use over
200 MHz spectrum earmarked for broadcasting services, the majority of which is with
Doordarshan, for advance mobile services. Doordarshan may not need entire spectrum
between 470698 MHz. Once ITU decides it to be allocated for mobile services in the
Asian region, DoT will pitch for it to be deployed for wireless broadband services.

Indications are the telecom department (DoT) may also urge the ITU to identify the
largely unused television broadcasting airwaves in the 470-698 MHz range, popularly
known as white space spectrum, for mobile and broadband services, especially due to
the paucity of spectrum across conventional mobile bands such as 800 MHz, 900 MHz,
1800 MHz and 2100 MHz.

The stakes are high since US software giant Microsoft would also require access to such
TV broadcast airwaves or 'white space spectrum' to deploy its low-cost broadband
connectivity technology across rural India. Microsoft has already tested its TV white
space technology in Srikakulam in Andhra Pradesh, which, it says, will pave the way

for creating an economic model that would allow affordable WiFi services to be
delivered successfully.

4.0 GOVERNMENT POLICIES ON TELECOM SECTOR

The Indian telecom industry has been one of the best performing industry groups in the recent
years. In order to facilitate the sector several reforms have been introduced in the sector during
the past decade. The National Telecom Policy of 1994 and the New Telecom Policy of 1999
(NTP-99) has been the driving force of the development and liberalisation in this sector. Since
its inception, Department of Telecommunication (DoT) is formulating developmental policies
for driving the growth of the telecom sector.
4.1 Pre-Liberalisation Scenario
In the 1880s telephone services were merged with the postal system and the telecom services
came under the monopoly of the Department of Post and Telegraph. The Indian telecom sector
was entirely under government ownership till the 1980s. In 1984, the private sector was
allowed only in telecommunication equipment manufacturing. As a part of the early reforms,
the government set up an autonomous body, the Centre for Development of Telematics (CDOT) in 1984, to develop the R&D activity in the telecom sector. It was set up to develop the
state-of-the-art telecommunication technology to meet the needs of the Indian
telecommunication network.
The government separated the Department of Post and Telegraph in 1985 by setting up the
Department of Post and the Department of Telecommunication (DoT). The DoT was
established as a wholly-owned government operator for the entire telecom service operation
in India. The responsibility for managing the planning, engineering, installation, maintenance,
management, and operations of telecom services lay with the DoT.
In order to ease out DoT operations, the government set up two new public sector corporations,
MTNL and VSNL, under the DoT in 1986, however, the government retained policy
formulation and regulation decisions with the DoT. While MTNL was established to look after
the operation of basic telephony services in metros such as Mumbai and New Delhi, VSNL
was set up to operate, develop and accelerate international telecom services in India. The
Telecom Commission was set up in 1989 as an executive body to assist the DoT in policy
regulation, licensing, wireless spectrum management, administrative monitoring of PSUs,
research and development and standardisation/validation of equipment etc.
4.2 Liberalisation Policy 1991
In 1991, India adopted the new economic policy of liberalisation. The policy aimed at
improving viability, competitiveness and efficiency of the Indian economy in the international
10

market and also for enhancement and growth of international trade. To attain the objectives of
new economic policy a telecom service of world class quality was essential. Thus thrust in
reforms in the telecommunication sector was witnessed during the 1990s along with the
liberalisation of the economy. Liberalisation in telecommunication services began in 1992
when the telecom sector was deregulated with the Government unbundling the domestic basic
services and the domestic value-added services (VAS)1 and allowing private sector
participation in provision of value added system(VAS) such as cellular and paging services.
The government paved the path for the entry of the private sector in telephone services by
adopting the National Telecom Policy in 1994. This policy aimed at bringing about universal
service and qualitative improvement in telecom services.
4.3 National Telecom Policy 1994 (NTP-94)
The National Telecom Policy was announced in 1994 which aimed at improving India's
competitiveness in the global market and provide a base for a rapid growth in exports. This
policy eventually facilitated the emergence of Internet services in India on the back of
established basic telephony communication network. This policy also paved way for the entry
of the private sector in telephone services.
The main objectives of the policy were:

To ensure telecommunication is within the reach of all, that is, to ensure availability of
telephone on demand as early as possible
To achieve universal service covering all villages, that is, enable all people to access
certain basic telecom services at affordable and reasonable prices
To ensure world-class telecom services. Remove consumer complaints, resolve
disputes and encourage public interface and provide a wide permissible range of
services to meet the demand at reasonable prices
To ensure that India emerges as a major manufacturing base and major exporter of
telecom equipment
To protect the defence and security interests of the nation.

The policy also announced a series of specific targets to be achieved by 1997 and further
recognised that to achieve these targets the private sector association and investment would
be required to bridge the resource gap.
Thus, to meet the telecom needs of the nation and to achieve international comparable
standards, the sector for manufacture of telecom equipment had been progressively relicensed
and the sub-sector for value-added services was opened up to private investment (July 1992)
for electronic mail, voice mail, data services, audio text services, video text services, video
conferencing, radio paging and cellular mobile telephone. The private sector participation in
the sector was carried out in a phased manner. Initially the private sector was allowed in the
value added services, and thereafter, it was allowed in the fixed telephone services.

11

Subsequently, VSAT services were liberalised for private sector participation to provide data
services to closed user groups.
4.4 Establishment of TRAI
The entry of private players necessitated independent regulation in the sector; therefore, the
TRAI was established in 1997 to regulate telecom services, for fixation/revision of tariffs, and
also to fulfil the commitments made when India joined the World Trade Organisation (WTO)
in 1995. The establishment of TRAI was a positive step as it separated the regulatory function
from policy-making and operation, which continued to be under the purview of the DoT2.
The functions allotted to the TRAI included:
a.
b.
c.
d.
e.

To recommend the need and timing for introduction of new service provider
To protect the interest of customers of telecom services
To settle disputes between service providers
To recommend the terms and conditions of license to a service provider.
To render advice to the Central government on matters relating to the development of
telecommunication technology and any other matter applicable to the
telecommunication industry in general.

4.5 Developments After 2000

There were major developments on the policy front post year 2000. Establishment of Bharat
Sanchar Nigam Ltd (BSNL) (2000), privatisation of VSNL (2002), termination of monopoly
of VSNL in International Long Distance, opening up of National Long Distance (NLD) and
International Long Distance (ILD) services to competition (2000), introduction of Unified
Access Licensing (UASL) regime (2003), implementation of calling party pays (CPP) (2003),
increase in FDI limits from 49% to 74% (2005) and now its 100% (2015) and proposal for
mobile number portability (2006) which paved way for the remarkable growth in the sector.
Foreign Direct Investment (FDI)
One of the important sources of the substantial financial investment required for the growth
of tele-density has been FDI. In 2005, the government permitted 74% foreign investment in
telecom companies from the earlier limit of 49% which resulted in unprecedented entry of
foreign investment in the sector. The table below enumerates the FDI policy related to the
telecom sector:

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4.6 NATIONAL TELECOM POLICY - 2012

Telecommunication has emerged as a key driver of economic and social development in an
increasingly knowledge intensive global scenario, in which India needs to play a leadership
role. National Telecom Policy-2012 is designed to ensure that India plays this role effectively
and transforms the socio-economic scenario through accelerated equitable and inclusive
economic growth by laying special emphasis on providing affordable and quality
telecommunication services in rural and remote areas. Thrust of this policy is to underscore the
imperative that sustained adoption of technology would offer viable options in overcoming
developmental challenges in education, health, employment generation, financial inclusion and
much else. NTP-2012 is an initiative to create a conducive policy framework to address these
issues and to touch lives of all citizens and transform India. By formulating a clear policy
regime, NTP-2012 endeavors to create an investor friendly environment for attracting
additional investments in the sector apart from generating manifold employment opportunities
in various segments of the sector. Availability of affordable and effective communications for
the citizens is at the core of the vision and goal of the National Telecom Policy 2012.

13

7.0 INDIAN TELECOM IN 2016 (Source:PWC)

Trends and Discussions

LTE remained a key discussion topic throughout the year with one significant launch,
multiple handset launches and year-end spectrum deals and 2016 launch
announcements by major telcos. Although the LTE subscriber base is not being
reported, PWC feels that their forecast of 10 million LTE subscribers by the end of
2015 has turned out to be optimistic.
The year 2015 saw multiple announcements of public Wi-Fi projects, including
announcements from the Delhi government, Pune municipality and Prime Minister
Narendra Modis announcement of the Indian Railways Wi-Fi project in partnership
with Google. Also two leading telcos coming together and forming a JV to jointly rollout Wi-Fi hotspots was seen.
Wearables in the healthy lifestyle space became commonplace this year with the
adoption of fitness tracker bands by health-conscious executives and urban individuals.
Smart watches have also started flooding the market. Smartphone security uptake has
not been commensurate with increased smartphone penetration even though cyber
security in a connected world was a widely discussed topic this year.
The first unconventional monetisation options appeared in the form of major Indian
telcos being associated with payment bank licenses that will help leverage their existing
ecosystem. It is believed many more such options will appear, though they may be
discovered by vertical players or other savvy third-party innovators.
BharatNet (NOFN) project to make meaningful progress in 2016)
Consolidation towards 5+1 network market: Consolidation driven by expensive
spectrum and depleting voice revenue share will result in the market consolidating to
five private networks and one public sector player market by the end of 2016. The
consolidation can be an outright MTS-Reliance like merger or via spectrum
trading/sharing deals like Idea-Videocon announced recently.
Network experience to prevail over customer service experience as selection criteria:
In 2016, telcos will continue to remain focussed on providing a basic high-speed
network experience and customers will therefore choose accordingly. Differentiated
customer service experience to be a dominant criterion for operator selection by
customers is not expected.
Fulcrum of data monetisation to shift away from telcos: Building on our 2015 prediction
of unconventional data monetisation options, telcos associating with other entities to
launch payment banks is the first in that trend. However, with accelerating smartphone
penetration, government-mandated GPS capability in basic handsets and app-based
payment options, telcos will lose their hold over customers to the larger ecosystem.
OEMs to go up the value chain: Original equipment manufacturers (OEMs) are
expected to leverage their network proximity to go beyond plain vanilla network
services to offer customer network usage-based analytics, packet probing,
advertisement content-based offerings, etc., to protect their revenues.

14

Enhanced regulator focus and scrutiny on network quality: Regulator to push for higher
levels of transparency and accountability in ensuring network quality through demands
for disaggregated network data reporting by licensees and related mandatory
requirements is expected. Compensation to customers for call drops mandated in 2015
is one of the several regulator initiatives expected in 2016 in this regard.

6.0 SUGGESTIONS
Grappling with margin pressure and policy paralysis, India's telecom industry is having huge
expectations from the new government led by Narendra Modi. Not only revival of the existing
structure of the telecommunications is expected but the industry is hoping for more and longer
term investments and confidence building as well. How can the new government make it
happen? We take a look at the key factors/challenges:
1. LONG TERM POLICY
As said above, the telecom industry is hoping for more clarity on policies, especially on the
spectrum, SEZ and M&A. So far, we haven't seen the industry moving much ahead as a lot of
decisions were left for the new government. However, it's highly unlikely quick decisions will
be made.
Based on positive government focus, the Indian telecom & ITeS sector is all set to achieve
greater success in the coming times. With market oriented policy measures like simplified
investment, IPO & taxation policies, positive M&A policies, outlook driven spectrum policies
and forward looking SEZ policies, the industry can reach out to its full potential in the next
five years, says Mr. Sumit Goswami, CEO, Key Point Technologies.
The Mergers & Acquisitions policy still needs through tightening which will allow for
transparent development in the sector.
2. REGULATING POLICY MAKERS
Continuous back and forth between the Department of Telecommunications (DoT) and
Telecom Regulatory Authority of India (TRAI) has apparently slowed down the decision
making process. With the new government, we can expect a better coordination between the
bodies, which will ultimately help bring more clarity in the segment.

3. SPECTRUM ALLOCATION AND PRICING

Looking at the trend, spectrum allocation has been a major bone of contention for the industry.
The industry has long demanded freeing up the unused spectrum.
Another important issue is the pricing. Following 2G scam, the BJP then opposition had
taken a firm stance on the pricing of the spectrum. That said, we have seen the spectrum
biddings failing flat due to steep pricing. The industry would hope a better pricing strategy is
implemented that does not hurt already struggling service providers.

15

While the positives are many, a few challenges also create certain impediments to the growth
of the sector. The Supreme Courts ruling of 2012 cancelling a total of 122 licenses still has a
deep impact on the policy making in the sector.
There are several licences ending in FY16. There must be a roadmap for that and a one-year
advance notice should be given to the industry on how much spectrum will be available and
when, Indian Express quotes a source familiar with regulatory developments.

4. FOCUS ON LOCAL PLAYERS

In his campaigns, Narendra Modi has stressed on encouraging the local manufacturing and
companies. It can be implemented in telecom sector as well.
The new government should also create a value system that encourages young businesses and
offers them critical tax sops and sectorial incentives for greater acceleration. While it is
understood that the incoming government has a deep focus on the IT industry, it should also
help incubate local players and nurture them to expand their existing markets and help them
build upon newer markets. By providing a streamlined and market friendly investment, IPO
and taxation policy, the government can help local players compete with international players
and create their space in the market.
On the basis of the above mentioned recommendations, it can be pointed out that the indigenous
players are looking for critical governmental support to compete with international players.
This impetus if formulated properly will help create a healthy competition where the local
players will be empowered by the government to compete for greater share-of-consumers.

5. IMPROVED BROADBAND COVERAGE AND QUALITY

A confident industry is very important for end users as well. Not only can they now expect
more aggressively priced plans and packages, but better coverage and quality of service as well.
To achieve this, the new government has to re-look into the deployment of networks.
The industry can expect significant improvement in broadband coverage & quality by having
a re-look by the new government into the tower technology operations. Today Tower
Technology operations are at a critical stage as they have been seriously hampered by the
license cancellations during the UPA-II regime. Thus the new government by facilitating lowcost loans, tax holidays and other benefits for tower operators can help them regain more
domestic and international funding. Once the operators are allowed to invest more, and gain
more traction we can expect significant improvement in broadband coverage and network
quality.

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REFERENCES

1. Leading newspapers Business Today, The Indian Express, Economic Times.

2. TRAI website.
3. Business Monitor International report, TechSci Research.
4. India Brand Equity Foundation.
5. PwC view on five trends to watch in 2016.
6. Report on Telecom sector by corporate catalyst pvt. Ltd.
7. Telecom Sector: Vision 2020 by Manas Bhattacharya.

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