Reviving Telecom Sector: What do we need to do?

The purpose of this article is to list out the simple steps that we need to do in order to revive the health of the telecom sector.

Step 1: Demolish License and Spectrum Fee.

1. The License does not guarantee access to "free" spectrum (unlike in the past).
2. Charging License Fees is unknown in most developed countries including China.
3. Charging License Fees leads to double taxation as pass-through is not allowed.
4. Charging Spectrum Fee is double dipping since spectrum is sold through auctions.
5. Charging such fees discourages rural deployment as it increases operational cost.

Step 2: Reduce Spectrum Prices

1. Spectrum Prices in India is the highest in the world (Indian 700 is 4x of US 600).
2. High Spectrum Prices keep spectrum fallow (No takers of 700 in the last auction).
3. High Spectrum Prices discourages rural deployment (Decreases ROI ).

Step 3: Rationalize Spectrum Price Across Bands & Circles

1. Spectrum Prices in India is distorted across bands (900 MHz is 1.5x 800 MHz).
2. Spectrum Prices in India is distorted across circles (900 MHz UPW, UPE > DL, MU).

Step 4: Improve the Design of Spectrum Auctions

1. Reserve Prices of Spectrum in India is in general linked to past auction price.
2. Reserve Prices of Spectrum in India has created a "holdout" situation.
3. Operators are forced to buy spectrum at raised prices as it keeps increasing.
4. Operators buy spectrum at raised prices to ensure continuity of business.

Step 5: Increase transparency of spectrum usage

1. India does not map spectrum usage dynamically in a website (global practice).
2. Increased transparency enhances operational efficiency (planning & coordination).

Step 6: Reduce the complexity of telecom licenses

1. Indian license documents and lengthy and complex (UL has 176 pages)
2. India has too many licenses with onerous/vague clauses (UL, ISP, NLD, ILD, VNO).
3. India has the highest number of court cases between the licensee and licensor.

Step 7: Regulate by exception than by rule

1. India has many rules for some but none for many (we regulate operator but not OTT)
2. Regulating some by leaving many increases cost by decreasing competitiveness.

Step 8: Reduce barrier to entry for a new operator

1. India has the highest barrier to entry for a new player (high price and complex license).
2. Barrier to entry decreases competition and prevents expansion, quality and affordability.
3. India has greatly reduced competition in the telecom sector (exit of many players).

In nutshell, the real problem in the Indian telecom sector is the "increased cost of service deployment" triggered by a high cost of license/spectrum and complex rules. Also, the purpose of the same is defeated when these aren't applicable to many (offering similar services) who are impossible to regulate (OTT players).

(Views expressed are of my own and do not reflect that of the employer)

PS: Find the list of other relevant articles in the embedded link.