India’s telecom industry has been through a paradigm shift over the last three decades. The industry has also undergone significant policy and regulatory changes through the years, in essence, leading to a control of market share of services by a few players. Despite its considerable place in the Indian economy, the telecom sector is under stress due to mounting debt and other issues.

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The challenges facing Indian telecom sector are:

• Financial Health of the Sector: Gross revenue has dropped by 15% to 20% for the year 2017-18 over the preceding year for the incumbents and overall sector revenue has dropped. Also, there is drop in voice and data revenue per user
• Limited Spectrum Availability: Available spectrum is less than 40% as compared to European nations and 50% as compared to China. Hence, it is imperative that spectrum auctioning at sustainable prices is the need of the hour. Also, government auction spectrum at an exorbitant cost which makes it difficult for mobile operators to provide services at reasonable speeds.
• High competition and tariff war: Competition heating up post entry of Reliance Jio. Other telecom players have to drop in tariff rates both for voice and data
• Lack of Telecom Infrastructure in Semi-rural and Rural areas: Service providers have to incur huge initial fixed cost to enter semi-rural and rural areas. Key reasons behind these costs are lack of basic infrastructure like power and roads, resulting in delays in rolling out the infrastructure.
• Poor fixed line penetration: India has very little penetration of fixed line in its network whereas, most of the developed countries have a very high penetration of fixed lines
• High Right-of-Way (ROW) cost: Sometimes, states governments charge a huge amount for permitting the laying of fibre etc.
• Lack of trained personnel to operate and maintain the cellular infrastructure.
• Delays in Roll Out of Innovative Products and Services: Substantial delays in roll out of data-based products and services are hampering the progress of telecom sectors. This is primarily due to the non-conducive environment resulting out of government policies and regulations.
• Low Broad Band Penetration: Low broadband penetration in the country is a matter of concern and the government needs to do a lot more work in the field to go up in the global ladder.
• Over the top services: Over the Top (OTT) applications such as WhatsApp, OLA, Viber and so on do not need permission or a pact with a telecommunications company. This hampers the revenue of telecommunication service provider.
• License fee: The license fee of eight per cent of the Adjusted Gross Revenue including five per cent as Universal Service Levy (USL) is one of the highest in the world.

Measures needed:

• Infrastructure Sharing: Since telecom business is heavy on capex and as much as 40%– 60% of the Capex is utilized for setting up and managing the Telecom infrastructure. By sharing infrastructure, operators can optimize their capex, and focus on providing new and innovative services to their subscribers.
• Availability of Affordable Smart Phones and Lower Tariff Rates: This would increase tele penetration in rural areas.
• Curb on predatory pricing: government should fix a minimum price to save the industry from price war
• Lower License fee: The license fee of eight per cent of the Adjusted Gross Revenue including five per cent as Universal Service Levy (USL) is one of the highest in the world.
• Reduce reserve price for spectrum auction: In the past, some of the operators participated recklessly in these auctions leading to exaggerated prices — much above their true valuations. Reasonable reserve prices for the market mechanisms induce “truthful bidding”, and not leading to “winners’ curse” as witnessed in some of the previous auctions.
• The government should increase the network area through optical fibre instead of copper which is expensive. This is necessary to ensure last mile connectivity.
• The government needs to prepare a ground for easy right-of-way permissions and lower cost of right-of-ways
• The government should spend large on R&D and create an environment that makes India capable of manufacturing and even exporting hardware components like mobile handsets, CCTV Cameras, touch screen monitors etc.

Conclusion:

Digital India Initiative of government including digital identification and authentication, e-KYC, digital finance depends heavily on the telecom and broadband infrastructure.  Economic survey 2017-18 also underlined that the ‘crisis’ being faced by telecom sector. Survey added that it has also deeply impacted their investors, lenders, partners and vendors. A long term vision plan should be made accordingly. For the time being, the government needs to provide an easy and soothing environment for telecom operators.