As the telecom industry in India prepares for the next level of growth through new digital initiatives, let us look at the challenges that prevented the implementation of an effective broadband network in India in the past.
Just months after India watched the grand unveiling
of the ambitious Digital India and Smart Cities 100
initiatives, an industry report ranked Indian telecom
industry the worst in Asia Pacific in terms of
broadband speed. "Will high-speed broadband remain
a myth in my lifetime?" asks an average Indian who
has been frustrated with the 3G/4G services available
on his mobile network. If we compare the broadband
subscriber figure between India and its peers, it
becomes clear that rural broadband will remain a
dream for India at least for the next 5 years. With just
120.88 million subscribers, which include wireless and
wireline services, India's broadband customer base
comprises just 26% of 3G and 4G subscriber base of
China Mobile alone. As per ‘Measuring the
Information Society Report' of 2015 published by ITU,
India is ranked 135 in both the access sub index and
use sub-index, which are basically measures for
Telecom Infra & penetration indicators.
As the telecom industry in India prepares for the next
level of growth through new digital initiatives, let us
look at the challenges that prevented the
implementation of an effective broadband network in
India in the past.
"In order to achieve GDP growth levels of 10%, the
telecom industry will have to revolutionise the current
state of ICT services. For this to happen, participation
is required from various stakeholders, both
government and private."
Regulatory hurdles: Over the last decade since the
advent of broadband, the regulatory authority in India
missed several opportunities to formulate a proactive
broadband strategy that could help address the digital
divide and boost the country's economic growth.
World Bank estimates that a 10% increase in
broadband penetration accelerates economic growth
by 1.38% in developing countries. Regulatory hurdles
apart, Indian telecom sector was hard hit by the
onslaught of multiple issues and procedural delays
typically associated with public offices. Telcos who got
their fingers burnt in 2G taught the industry that
investment in India's telecom sector is a risky affair.
Also, the reactionary policies that immediately follow
As the telecom industry in India prepares for the next level of growth through new digital initiatives, let us look at the challenges that prevented the implementation of an effective broadband network in India in the past.
such delays and implemented without
having a futuristic outlook, make the
scenario worse for the investors.
Striking a balance between transparent
measures that prevent such
malfeasance and an economically
viable model that facilitates a
level-playing field for the participants
is integral for the health of the Indian
economy. A single regulatory
framework that facilitates swift
decision-making and transparency
among the stakeholders could address
the challenges in rolling out a
broadband infrastructure.
Lack of fibre infrastructure: The poor
quality of service (QoS) and call drop
issues are primarily attributed to the
country's low investment in fibre and
backhaul infrastructure. It is a well
understood fact that fibre networks are
the most viable medium to deliver
increased data capacity and improve the
quality of voice calling. The fact that less
than 20% of the towers in India are
backhauled compared with an average of
80% in countries like the US, China, and
Korea emphasises the need for an
effective policy that gives due
importance to fibre deployments.
Industry reports reveal that India currently
deploys an average of 15 million kilometres
of fibre every year whereas current demands
indicate it needs to increase to at least 50
million kilometres per year. As telcos lock
horns with regulators on call drop issues,
there is an underlying issue that seeks the
attention of all: Where should the
investments come from? Apart from the
state owned MTNL/BSNL, leading private
telcos like Reliance Communications,
Reliance Jio, Bharti Airtel and Tata
Teleservices have come forward to connect
their base stations with fibre; however, their
investments are logically fit into existing
lucrative circles, so rural deployment is not
likely to happen in the current scenario
among these participants. The disparity in
broadband penetration between urban and
rural India continues to haunt Indian
economy. TRAI's September 2015 report
reveals that India's rural teledensity is less
than 50% whereas the urban figure comes to
about 150%.
By the end of June 2015, China Mobile's 4G
customer base reached 190 million,
accounting for 23% of its customers. By
effectively utilising the policy push from the
government, these companies consistently
grew their networks.
Right of Way issues: India's telecom sector
was plagued with Right of Way (RoW) issues
since the beginning creating roadblocks for
the development of the country's backhaul
infrastructure. Currently RoW charges vary
from a few lakhs to Rs 1.5 crore per km across
different states. With different states having
different RoW policies, telcos are losing out
significant amount of their infrastructure
investment to municipal bodies across
different states. As the industry evolves to
the next level of growth through 4G and LTE
that demands 30 to 120 Mbps of backhaul
capacity, operators are likely to face the
brunt of RoW issue more severely. While
Section 7 of the Indian Telegraph Act calls for
consistency in the conduct of any such work
done by the government or the licensed
parties, no such notification has been issued
by the government on RoW.
Last mile connectivity: Lack of fibre optic
infrastructure to provide last mile
connectivity has affected the performance of
broadband especially in rural India. The
NOFN project was launched to bring optic
fibre as close to the end-user as possible so
that high-speed broadband can be made
available to the customers. The NOFN had
envisaged laying OFC connecting all the 2,50,000 Gram Panchayats of the country.
The work for laying the cable was allotted to
three CPSUs—BSNL, RailTel and PGCIL—in
the ratio of 70:15:15 respectively. Also,
non-discriminatory access to the NOFN was
to be provided to all service providers. The
network was supposed to be commissioned
in two years; however as per the information
available from BBNL, as on November 2015
only limited Gram Panchayats have been
connected despite best efforts. Recently TRAI
has invited various industry sectors asking
for suggestions on implementation models
with an objective to improve overall
Bharatnet delivery. Discussions are on to
bring best implementation model for the
state led program with an increased
participation from private sector including
emphasis on network utilisation.
Capital-intensive affair: Indian telcos are
financially stretched not only due to the
rising spectrum prices but also due to the heterogeneity of the networks they operate
on. The hasty transition from 2G to 3G and
now to 4G/LTE demands huge investments
in spectrum and supporting technologies.
Additionally, the ongoing FTTH investments
in India are highly capital-intensive especially
in rural areas where penetration is far below
the national average. As regulators play
wait-and-watch game on infrastructure
expansion, operators are facing pressure on
multiple fronts to expand network and
ensure QoS. This chicken-egg dilemma can
be addressed only through a clear directive
and incentivisation of telecom investments.
This apart, telcos are facing competition
from Wi-Fi providers, OTT players, cable
companies—all of which force telcos to
rethink strategies so that they can increase
broadband ARPU. In this context, telcos are
left with an option either to forego
near-term returns from their investments or
indirectly pass them on to end customers.
Conclusion
The telecom industry has been a major contributor for economic growth. In order to achieve
GDP growth levels of 10%, the telecom industry will have to revolutionise the current state of
ICT services. For this to happen, participation is required from various stakeholders, both
government and private. The government thrust should be on increasing rural connectivity/
penetration by addressing hurdles by facilitating various policies and improve investment
climate through fast tracking reforms, whereas the private players will need to invest in
improving the capabilities for the rollout of Telecom infrastructure.
KS Rao
Chief Operating Office
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