New Telecom policy: Industry unhappy over no cut in levies and fees

Timely implementation will be the key to the accomplishment of various proposals set out in the New Digital Communications Policy (NDCP), according to experts. However, the telecom industry is not enthused with the policy document as it has not clearly specified the way forward for the reduction in various levies and fees imposed on the industry. For experts, the new policy has been a mixed bag. While some have called it a forward-looking policy, others have mentioned it just as a wishlist and not a realistic document.

Except for setting of an ombudsman and a centralised complaint system, the policy does not address the issue of quality of services/call drops which have become a big problem.

“It’s a good policy but the real test will be on implementation. The financial health of the industry is a function of two things — first, if the sector is attractive for investments and secondly, people who are investing — whether they are investing enough,” Ashish Sharma, PwC, told DNA Money.

The new policy was approved by the Cabinet on Wednesday. The key objectives of the policy include Broadband for all, creating 4 million additional jobs in the digital communications sector, to provide universal broadband connectivity at 50Mbps, provide 1 Gbps connectivity to all Gram Panchayats of India by 2020 and 10 Gbps by 2022. It also aims to attract investment of $100 Billion in the sector and expand IoT ecosystem to 5 billion connected devices. It also talks about a review of levies and fees including license fee, spectrum usage charges, the definition of AGR and rationalisation of universal service levy. There is also a plan to rationalize license fees on fixed line revenues to incentivise digital communications.

Harsh Jagnani from ICRA said, “The industry has been facing a double whammy of deteriorating profitability metrics under intense competition and burgeoning debt levels. Improvement in broadband penetration, as well as an emphasis on emerging technologies such as 5G and Internet of Things, would add new revenue streams over long-term and can assist in improvement in the return on capital which has been subdued for some time now. Overall, the key would be the implementation.”

However, a senior executive from a telecom player says there will not be any immediate support to the industry from the new policy which should have been there. “It talks about future technologies and WiFi and other aspects including attracting $100 billion investment but the real issues currently are of financial constraints being faced by the incumbents. From where will the investment come if the financial health of the industry doesn’t improve? The policy is not realistic. It should have given a clear way out on reduction of levies and fees which are highest among the world”

Jagnani adds a rationalisation of levies and taxes will lead to cost savings for the telcos. “With growing data consumption, spectrum requirements would remain high...the policy  talks about optimal pricing of the spectrum which also bodes well for the industry.”

Many experts also said there could have been a focus on infrastructure creation for existing networks at a time when call drops have become rampant and there are patchy areas in networks.

Sharma said it’s not the domain of the policy to look into what kind of levy/fees should be there on the sector. “The sector is attractive and has huge potential. There is a huge demand for digital communications globally and in India. We have a big market, companies can come and invest in R&D and make new technologies not just 5-G but telecom equipment and manufacturing as well.”

Source: DNA Money