Need to restore telecom industry’s health: TLF India 2021

Voice&Data recently organised 20th edition Telecom Leadership Forum, a meeting of the telecom leaders and other key stake holders from India and across. It is a platform to meet, discuss, and explore new and emerging business models, technology options, revenue streams and changing customer expectations.

Over the years, the platform has also evolved as the confluence of policymakers, thinktank, and the executioners to come together and set the direction for the growth of the industry.

The session- Supporting the Digital India dream: How ready is the telecom sector (regulatory challenges, competition and the evolving customer needs) was joined by Akhil Gupta, Vice Chairman, Bharti Enterprises, Ankit Agarwal, CEO, Connectivity Solutions, STL, P Balaji, Chief Regulatory & Corporate Affairs Officer, Vodafone Idea Ltd, K Vikram, Senior Director, Industry Verticals, HPE India, and Saurabh Kumar Sahu, MD and Client Group Lead, communications, Media & Technology, Accenture India.

The session was moderated by Sukanta Dey, Director, Sdela Consulting (Moderator).

Dey said, mobile phones are the largest connectivity factor. Lot of consumption has taken place. People are watching different programs across households on their mobile phones. You have to be in tandem with the Indian government in every single step. 5G architecture is completely different from 4G. 5G uses mmWave, massive MIMO, etc.

Restoring industry’s health

Akhil Gupta, Bharti Enterprises, said the telecom industry is the most critical industry today. Everybody associated with the telecom industry has to be very proud. What we are doing is vital and critical for the survival of mankind today. There is nothing more credible and creative than having great telecom networks. Ultimately, broadband for everybody has to be the goal. The digital communications policy provides that.

The first and foremost ingredient for the telecom industry to prepare itself to provide broadband for everybody has to be the financial health of the industry. In this industry, we have to talk about 5G and taking broadband to everybody's door step or device. That can happen only with wireless. The financial health of the industry has to be absolutely top priority of the government, and those concerned, including, the regulator and DoT. This has to be the focus. Unfortunately, we are looking at other enablers. Lot of time is spent on that.

There has been lot of talk about restoring the health of the industry. This is a good time to debate whether the government and TRAI should intervene and fix some floor tariffs so that the health of the industry can be restored. Once, the health of the industry is good, money would also be available. Unless this is done, anything done on the policy front will not be of any use.

Dey said there are three vital points. Number one, the industry taxation of the telecom ecosystem is very high. You have to look at the taxation from all levels. There is spectrum, spectrum usage, ARR, etc. We should work with the government ofIndia for a GST-like taxation, instead of tax at every level.

Number two, the woes of the industry. There is a constant battle between the hyperscalers and the telcos. Since 2001, the telco owns the customer. Telcos have spent money for acquiring the customers. Telcos control the data of the customer. But, the hyperscalers take the lunch out of the lunch boxes.

Number three, payment of taxes has to be pay-as-you-go. There should be no advanced payment. If there are some situations where payment is difficult, the government has to understand this.

Towards Industry 4.0

Ankit Agarwal, STL, said it is a critical time for the sector. We have taken a target of $5 trillion for the economy by 2025. By far, the major sector responsible for making that happen will be telecom. There is also the move from 4G to 5G. 5G will clearly be a very heavy enterprise app. You will be looking at very strong low latency networks, enabling M2M and manufacturing sectors. If we can enable that to happen in a time- and cost-efficient way, that will significantly enable the Indian manufacturing and take it towards Industry 4.0. The government of India should look at this aspect. The government should look at how to make all of this viable.

So much of the industry investments are going towards paying for spectrum and taxation. There is very little left for the investments into networks -- wireless or wireline. In optic fiber, India has been significantly under investing than the rest of the world. Every year, India is investing just 1/12th of China for optic fiber. That's a massive shortage in the quality of a network. A large portion of our operators also want to deploy FTTH.

All of this will enable lot of converged networks. The government and the industry will also work on the right-of-way (RoW) and the other issues. We see 4G and 5G becoming critical enablers. 5G, in particular, can help on the enterprise side. We need to have freedom to invest in the networks. In fiber, we see a multi-fold investment is required over the next 5-10 years to enable the networks.

Growth and innovation is must

Saurabh Kumar Sahu, Accenture India, said there is the need for an accelerated involvement of the government of India to make telecom a price-sensitive industry in India. The telecom industry has come through some very severe challenges. Growth and innovation are the two mantras that industries have to follow. There needs to be the three Ts -- trust, technology, and transformation.

For trust, we did a survey. Most of those surveyed have posted their trust on the telecom service providers for anything related to connectivity. CSPs have earned the trust of the customers. The government should take notice, and provide the right impetus for the industry to flourish.

For technology, for this to happen in India, technology should reach the right devices, the right language, with the right connectivity. Broadband and wireless should be the essential technologies for the country. The government should look at public-private partnerships.

For transformation, we need to look at the use cases, and provide experience to the customers for transformation. At the end of the day, the tariffs and the revenues can be built for the customers. They can be end users and enterprises. A fourth T, taxation, is also there. The government should alleviate or reduce the burden for the telecom companies. We have a great opportunity now.

High innovative quotient

P Balaji, Vodafone Idea, said the network warriors of all the operators have really done a stupendous job. In case of Vodafone Idea, we saw traffic go up in a week than what we saw in a year. Traffic patterns also changed during the lockdown, and when the move happened from the office to the home environments. The fact that the operators were agile, and had partnerships in place, have proved that the industry still has the agility that it had, when it started over 25 years ago. We have demonstrated that in a time of crisis.

Each one of the operators have also done their transformation journeys. We could manage the world's largest integration of networks in two years. We concluded during the pandemic. We did a whole new grand launch during the pandemic. This shows the ability of the operator community to do a lot of work, no matter how stressful the environment is. The innovation quotient is also very high for the telcos, and the entire ecosystem.

Looking ahead, each one of the operators is focused on cloudification of the core, network virtualization, etc. The government has taken a call on keeping networks secure. We have done our bit. We are actively pushing open radio networks (Open RAN). The intent is creating innovation for deployments, and ensuring that we can continue to keep the cost of networks as low as possible.

The NDCP is a great document. The government has taken lots of inputs from the industry. There should be more ability to put more money in the hands of the operators. There should be room for other ecosystem players to invest in the sector. Today, we have 60 times more data, and three times more voice percolated through the networks, is a testimony to what we have done. The operators have made request to the regulator regarding pricing. It is a combination of pricing and NDCP levies in order to put more money in the hands of the operators.

Perhaps, the time has come for the Indian government to find a right model, perhaps, on temporary basis, and the journey from 2G to 4G is also complete. The investments for 5G are also made, and all the matters are handled well. Within that, whether it is spectrum pricing, availability of spectrum, backhaul spectrum being available to the operators, are all elements of the whole piece.

The last piece is about the fiberization of telecom towers. If we want 5G, we need to get to at least 85-90% fiberization. Any way that can be shared, or the USO (universal service obligation) funds are used for sub-urban and rural towers to be connected, that should be done. For urban areas, if there are partnerships with the local administration, and they don't look around for many rentals, that problem can be solved easily.

K Vikram, HPE India, said HPE is proud to be a co-provider to the three largest telcos. All of this has happened because of telcos. We have seen the unique creativity brought by each one of the telcos. For aggregating and disaggregating, India is one of the places where creativity brings things to fusion in various ways.

HPE offers consumption-based models. It is for the telco core and infrastructure. Sunil Mittal spoke about how we can get the ARPUs back on track. There is some anger among the providers. With the onset of 5G, much more creativity is possible. We can do much more, together.

Dey said the $2 can be increased to $2.50 or $3. The equation will completely change.

Need for floor price

Akhil Gupta said the best way to run an industry is to keep the pricing with the market. For many reasons, it has been created artificially. Perhaps, the time has come to intervene, and put a floor price. We have been able to connect everyone in this country, virtually. Regularly, there has to be some increase.

P Balaji said we can do multiple cuts. The focus can be on data. A certain amount of data may be made available, and continue to use that. Those who want larger bundles of data can also have it. There should be tiered pricing, focused on data. There are other ways it can be sliced and diced.

Ankit Agarwal added that generally there is a view prices will go up, sooner or later. We can keep that down. The government should also invest significantly in building the networks, and network pieces. USA has gone ahead with $20 billion fund to connect the rural America. There is a bill in proposal of $94 billion to further connect the rural parts of America. These are great examples of very large funds. We should try and do something similar. That would reduce the network operators’ costs. They can share this with the government.

Also, in Open RAN, India can take a lead. Some Indian players, including STL, has started to build solutions. We can also do the system integration. We see significant benefits in costs. That can further enable the profitability of the telecom providers.

Overall, we are very excited. The government will also start viewing this from the same lens. There should also be about 5-10X jump in fiber deployment in the country. This will enable the quality of our telecom networks and their profitability.

K Vikram added that we shall overcome all the challenges. Many industries had earlier started with partnerships from around the world. Perhaps, the next stage is what we can do more indigenously. That is going to reduce cost.

Saurah Kumar Sahu said this is the tip for the Digital India program. Telecom has the power to disrupt its own sector, and multiple other sectors. With the advent of 5G, telecom will lead transformation across all sectors of the country. Support from the government and innovation from the telcos will lead to a great story for India.