Year 2016: A look back at the telecom sector

Industry body COAI highlighted and commented major development happened in the telecom industry in 2016

GN Bureau | December 23, 2016


#COAI   #Cellular Operators of India   #TRAI   #4G   #Telecom Industry   #Reliance Jio  

From call drops to spectrum auction and the dramatic entry of Reliance Jio in the 4G data market, 2016 was an engaging year for the industry.

“For a sector reeling under severe debt the industry through our members at COAI the industry contributed to grow and make substantial investments in spectrum acquisition, towers, infrastructure, human resource, research and development,” said Rajan Mathews, director general, cellular operators of India (COAI), a body representing the telecommunication industry.

The year also witnessed a tiff between telecom regulatory authority of India (TRAI) and the operators over compensating users for each dropped call.  The operators challenged TRAI’s notification on compensating users in the Supreme Court, where the decision came in the Industry’s favour. Matthews maintained the SC judgement allowed “the operators to focus on the root causes” of the call drop issue.

Welcoming the entry of Mukesh Ambani’s Reliance Jio in the market, Mathews said that their entry has “finally commenced commercial service introducing an innovative package of services including free voice for life.” He added, “Free voice service from RJIL lead to competitors adjusting their tariffs to stay competitive.”

On the controversy over Reliance Jio blaming existing operators for not sharing point-of-connection (POI) to its network, Mathews said, “The entry of RJIL led to major confrontation with other operators over POIs which finally got addressed by TRAI. Recommendations of TRAI are being reviewed by DoT.”

COAI commented on the other major developments that took place in the telecom industry in 2016. Here is the list:

Call Drops

About Rs 9,27,000 crores have been invested so far by TSPs in building world class Telecom Infrastructure which is second largest private sector investment in infrastructure among all the sectors in the country. To support the orderly growth of the Telecom Sector, TSPs have invested around Rs 3,27,000 crores in Spectrum Auctions alone since 2010.

To address the problem of call drops, there is an addition of about 3.51 lakh BTSs in last 12 months.

The RoW guidelines were cleared by the government, which will fast-forward India into the digital world by ensuring rollout of optical fibre cables and over-ground telecom infrastructure, ensuring success of Digital India Mission.

The industry has made consistent and significant efforts to optimize networks and which have largely been completed, with more than 2 Lakh sites being installed in last 15 months for 2G and 3G services across the country since Jan 1, 2015. COAI believes that these efforts will augment further conformity with TRAI and QoS requirements.

Spectrum Auction


The spectrum auction took place successfully in the month of (700 MHz spectrum remained unsold due to an unrealistic reserve price) The industry has asked that the prices be aligned with market forces and the spectrum be put up for auction again in two years’ time.
6.26% telephone subscriber’s year-on-year. Total no of active wireless subscribers is 930.57 million as on 31st August 2016.

The industry is now looking forward to obtaining the spectrum and rolling out the networks speedily, so that consumer experience can be made seamless and an ambitious and robust blue-print for transforming the digital identity of the country that will be completed on the additional spectrum that has been sold in what has been a successful auction.

E-KYC

Another big achievement was the government’s release of e-KYC norms. COAI supported and welcomed the decision of the DoT to allow the use of Aadhar e-KYC service of the UIDAI, for issuing connections to mobile subscribers in India.

E-KYC will address the problem of fraudulent elements getting telephone connections on forged or fake documents.

An Aadhar-based activation process will also bring in process efficiency by supporting the mammoth infrastructure otherwise required for connecting millions of verified citizens. 

It will give a big boost to the Digital India, mission of the Government of India apart from saving lakhs of trees and addressing the extremely important issue of national security.

This system will benefit everyone — consumers, service providers and also TERM Cells and LEAs.
 
Internet of Things (IoT)

India is yet to witness breakthrough of interconnected devices. A connected ecosystem will act as a catalyst in changing the future of mobile devices and enhancing their utility. More people will move to 4G network in order to benefit from the services that IoT has to offer, making life convenient.

By 2020, Internet-connected devices are expected to number between 26 billion and 50 billion globally. IoT through interplay of software, telecom and hardware promises to offer tremendous opportunities for many industries.

Fed by sensors soon to number in the trillions, working with intelligent systems in the billions, and involving millions of applications, the IoT will drive new consumer and business behaviour that will demand increasingly intelligent industry solutions such as virtual reality, autonomous vehicles, artificial intelligence and robots, etc.
 
M2M


Machine-to-machine technology has huge potential to disrupt communications in the upcoming years. Telcos will invest huge sums on M2M communications, which is predicted to grow at a staggering rate of 40% annually by the end of the decade.
M2M technology offers a variety of benefits, including low power consumption, low cost and effective connection.
A forward looking global approach is required with inputs from the private sector to create a conducive regulatory environment for both IoT and M2M to fully achieve their potential as the internet is united, universal, interoperable and global.
 
GST Bill

COAI supported the passing of the GST Bill as this is a significant step towards simplified goods and service taxation, ease in compliance, achieving transparency and improving ease of doing business with the passage of the Constitutional Amendment Bill on GST.

Top three demands

Lower rate of tax and Uniform rate of tax for telecom services:  Telecom service is an infrastructure service designated as an essential service under the Essential Services Maintenance Act, 1968 and is availed by masses.  At present, service tax at the rate of 15 percent is payable on telecom services. Any further increase in the rate of tax under GST regime would have a direct impact on increase in costs for the subscribers and would be crippling for the telecom industry as well. Telecom is an essential service and any rates should be decided as such.

Single pan-India registration: Model GST law envisages every service provider to obtain registration in each State/ UT from which it provides services.  Telecom services are highly regulated and provided in a seamless manner across States/ UT to over a billion customers including B2B and B2C.

Concerns around determination of tax liability under GST: The place of supply rules and location of service provider are integral for determining the tax liability.  The policy makers have crafted a specific place of supply rule for telecom services, which is step in the right direction and is well appreciated by the industry players. However, the present drafting of provisions pertaining to location of service provider and the place of supply rules for telecommunication services lead to certain amount of ambiguity leading into increased tax uncertainty and disputes.
 
Spectrum Usage Charge (SUC)


Recommendation by the Telecom Regulatory Authority of India (TRAI) and lauded the efforts of the Department of Telecommunication (DoT) and the Telecom Commission to implement a flat SUC charge for the industry. Currently, different SUC rates are applicable for spectrum assigned at different points of time. The new norms are expected to bring      uniformity and introduce a level-playing field.
 
The decision will not only bring simplification, but will also eliminate the possibility of arbitrage and help reduce the heavy financial burden levied on the industry. Varied SUC rates can cause a lot of ambiguities while entering into transactions pertaining to mergers & acquisition deals, spectrum sharing and spectrum trading. Disparate rates can lead to disputes and create a non-level playing field and arbitrage.
 
EMF Emissions

Delhi High Court dismissed multiple petitions against mobile towers, making it clear that fears of harmful radiation from mobile towers are not based on any scientific evidence. The court upheld the EMF safety norms implemented by the central government, which are one of the most stringent in the world and based on peer reviewed scientific studies approved by such bodies as the World Health Organisation (WHO) and health agencies of many countries, including the UK and Sweden. The court was clear in its judgement that the petitioner was not able to produce any data whatsoever showing any such harmful effects on the health of human beings.
 
Increased customer base

·         Customer base continues to grow for voice and data services. Telephone subscribers rose from 1,036.41 million at end December 2015 to 1,074.24 million as on 30th September 2016 with a monthly growth rate of 1.98%.  The yearly growth rate in telephone subscribers in wireless segment is 5.33%

·         Overall tele-density increased from 81.83 on 31 December 2015 to 84.09 million as on 30th September 2016. The share of rural subscribers is 41.88% and urban subscribers is 58.12%

·         Broadband subscribers has reached to a figure of 192.30 million as on September 2016, highlighting the growth rate of 11.99%. Total internet subscribers were 350 million as on 30th June 2016 with quarterly growth of 2.28%

 

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