Why do we need a new communications policy?

A lot has changed since India’s last telecom policy in 2012. The country now has the world’s second largest internet subscriber base and is seeing technological shifts in digital communications. With the advent of 5G, artificial intelligence and the Internet of Things, India needs a vision document on how to use these digital tools for the growth and development of the country and what laws need to be drafted or amended. Moreover, given the capital-intensive nature of the sector, ease of doing business needs to be improved to attract investments.

What are the goals of the policy?

The department of telecommunications (DoT) on 1 May floated a draft policy, with a target of attracting investments of $100 billion in digital communications. The DoT plans to send it to the cabinet in four weeks. The policy’s objectives include broadband for all, with a thrust on fibre-to-home connections, creating 4 million jobs in digital communications and raising the share of digital communications in India’s gross domestic product to 8% from less than 6% in 2017. The government also aims to enable infrastructure convergence of IT, telecom and broadcasting sectors.

How will it impact the economy?

India’s mobile data consumption is already the highest in the world. At the current pace of digitization, it is estimated that India’s digital economy has the potential to reach $1 trillion by 2025. It is also estimated that a 10% increase in broadband penetration could potentially lead to an over 1% increase in GDP. Currently, India has approximately 1.5 million kilometres of optical fibre cable, and less than a fourth of the towers are fibre-connected. The government plans to grant optical fibre cables the status of public utility and promote collaboration models involving state, local bodies and private sector.

What are the key challenges?

The industry believes raising $100 billion is not easy since domestic banks are not lending to telcos and the industry’s revenue has taken a hit after the entry of Reliance Jio which brought down tariffs. The government is aware of the stress. The sector needs massive investments but investor confidence is low. It remains to be seen if the government can reduce levies on the sector.

What can telecom companies expect?

The draft policy states that government will review levies and fees including licence fee, universal service obligation fund levy and concept of pass-through revenues in line with principles of input line credit apart from looking at rationalising spectrum usage charges. The government also aims to establish a comprehensive data protection regime for digital communications that safeguards the privacy, autonomy and choice of individuals.