India's 'Self-Goal' in Telecom

And urgent steps to avert a cascading crisis.

Shyam Ponappa   |   March 5, 2020

The government apparently cannot resolve the problems in telecommunications. Why? Because the
authorities are trying to balance the Supreme Court order on Adjusted Gross Revenue  (AGR), with
keeping the telecom sector healthy, while safeguarding consumer interest. These irreconcilable
differences have arisen because both the United Progressive Alliance and the National Democratic
Alliance governments prosecuted unreasonable claims for 15 years, despite adverse rulings! This
imagined “impossible trinity” is an entirely self-created conflation.
If only the authorities focused on what they can do for India’s real needs instead of tilting at windmills,
we’d fare better. Now, we are close to a collapse in communications that would impede many sectors,
compound the problem of non-performing assets (NPAs), demoralise bankers, increase unemployment,
and reduce investment, adding to our economic and social problems.
Is resolving the telecom crisis central to the public interest? Yes, because people need good
infrastructure to use time, money, material, and mindshare effectively and efficiently, with minimal
degradation of their environment, whether for productive purposes or for leisure. Systems that deliver
water, sanitation, energy, transport and communications support all these activities. Nothing matches the
transformation brought about by communications in India from 2004 to 2011 in our complex socio-
economic terrain and demography. Its potential is still vast, limited only by our imagination and capacity
for convergent action. Yet, the government’s dysfunctional approach to communications is in stark
contrast to the constructive approach to make rail operations viable for private operators.
India’s interests are best served if people get the services they need for productivity and wellbeing with
ease, at reasonable prices. This is why it is important for government and people to understand and work
towards establishing good infrastructure.

What the Government Can Do

An absolute prerequisite is for all branches of government (legislative, executive, and judicial), the
press and media, and society, to recognise that all of us must strive together to conceptualise and
achieve good infrastructure. It is not “somebody else’s job”, and certainly not just the Department of
Telecommunications’ (DoT’s). The latter cannot do it alone, or even take the lead, because the steps
required far exceed its ambit.

Act Quickly

These actions are needed immediately:

 First, annul the AGR demand using whatever legal means are available. For instance,
the operators could file an appeal, and the government could settle out of court, renouncing
the suit, accepting the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) ruling
of 2015 on AGR.
 Second, issue an appropriate ordinance that rescinds all extended claims. Follow up
with the requisite legislation, working across political lines for consensus in the national
interest.
 Third, take action to organise and deliver communications services effectively and
efficiently to as many people as possible. The following steps will help build and maintain
more extensive networks with good services, reasonable prices, and more government
revenues.

1. Enable Spectrum Usage on Feasible Terms

a. Wireless regulations

It is infeasible for fibre or cable to reach most people in India, compared with wireless
alternatives. Realistically, the extension of connectivity beyond the nearest fibre termination
point is through wireless middle-mile connections, and Wi-Fi for most last-mile links. The
technology is available, and administrative decisions together with appropriate legislation
can enable the use of spectrum immediately in 60GHz, 70-80GHz, and below 700MHz bands
to be used by authorised operators for wireless connectivity. The first two bands are useful
for high-capacity short and medium distance hops, while the third is for up to 10 km hops.
The DoT can follow its own precedent set in October 2018 for 5GHz for Wi-Fi, i.e., use the
US Federal Communications Commission regulations as a model.1 The one change needed
is an adaptation to our circumstances that restricts their use to authorised operators for the
middle-mile instead of open access, because of the spectrum payments made by operators.
Policies in the public interest allowing spectrum use without auctions do not contravene
Supreme Court orders.
b. Policies: Revenue sharing for spectrum

A second requirement is for all licensed spectrum to be paid for as a share of revenues
based on usage as for licence fees, in lieu of auction payments. Legislation to this effect can
ensure that spectrum for communications is either paid through revenue sharing for actual
use, or is open access for all Wi-Fi bands. The restricted middle-mile use mentioned above
can be charged at minimal administrative costs for management through geo-location
databases to avoid interference. In the past, revenue-sharing has earned much more than
up-front fees in India, and rejuvenated communications.2 There are two additional reasons
for revenue sharing. One is the need to manufacture a significant proportion of equipment
with Indian IPR or value-added, to not have to rely as much as we do on imports. This is
critical for achieving a better balance-of-payments, and for strategic considerations. The
second is to enable local talent to design and develop solutions for devices for local as well
as global markets, which is denied because it is virtually impossible for them to access
spectrum, no matter what the stated policies might claim.

2. Policies and Organisation for Infrastructure Sharing

Further, the government needs to actively facilitate shared infrastructure with policies and
legislation. One way is through consortiums for network development and management,
charging for usage by authorised operators. At least two consortiums that provide access for
a fee, with government’s minority participation in both for security and the public interest,
can ensure competition for quality and pricing. Authorised service providers could pay
according to usage.
Press reports of a consortium approach to 5G where operators pay as before and the
government “contributes” spectrum reflect seriously flawed thinking.3 Such extractive
payments with no funds left for network development and service provision only support an
illusion that genuine efforts are being made to the ill-informed, who simultaneously rejoice
in the idea of free services while acclaiming high government charges (the two are
obviously not compatible).
Instead of tilting at windmills that do not serve people’s needs while beggaring their
prospects, commitment to our collective interests requires implementing what can be done
with competence and integrity.

Shyam (no space) Ponappa at gmail dot com

1.  https://dot.gov.in/sites/default/files/2018_10_29%20DCC.pdf
2.  http://organizing-india.blogspot.in/2016/04/ breakthroughs- needed-for-digital-india.html
3.  https://www.business-standard.com/article/economy-policy/govt-considering-spv-with-5g-
sweetener-as-solution-to-telecom-crisis-120012300302_1.html

Comments & Responses-2020-03-06

ASIT
Facilitate - that's anathema. Technology has moved too fast and will continue to
outpace the convolutions of the bureaucracy. First, they need find who wrote the Rule
related to AGR, who signed off on it - it must all be on the record - and let the country
know who thought Revenue was all that was important, nothing else. Rescind the
definition retrospectively, we love doing that , why not here where it significantly
impacts the aam admi ? That may be tantamount to admitting guilt in some form in
bad rule writing, but then as the world loves to say, we can all move on - where to, no
one knows.

Response re Facilitation:
Two instances where our governments have done well are in IT enabled services pre-
2000, and in the automotive sector: “the Automotive Mission Plan (AMP) 2006-2016 was
a programme across government agencies, industry participants, and academics, to
make India a global hub for the automotive industry. It was successful despite the
slumps of 2008 and 2013-14, and employment increased from 10 million to 32 million
by 2016. The next phase is under way through AMP 2016-2026(http://www.siamindia.-
com/cpage.aspx), aiming to more than double exports to 35-40 per cent of output, and
increase employment by 65 million. Momentum has declined in the last year[this was
written in Augsut 2019, therefore now two years, and facilitation has faltered],
however, because of a number of adverse factors. These include confusion and
uncertainty regarding policies on diesel and electric vehicles, trade tensions, slowing
gross domestic product (GDP) growth here and abroad, higher costs from mitigation
strategies and taxes, and funding constraints arising from problems in the financial
sector.”
From: https://organizing-india.blogspot.com/2019/08/the-automotive-slump-industrial-
policy.html

NARENDRA M.APTE
1. This is an interesting view on the current scenario in the telecom services sector. 2. I
am a very small customer of telecom services, one among the millions. I say that so
long as quality of service provided to me is good and so long as service is provided at a
reasonable price, I have no reason to favour this or that provider of telecom services. 3.
Question is this: should I be really concerned about financial health of telecom
companies? 4. It is desirable that there are proper discussions between the telecom
companies and the Department of Telecommunications (DoT) as regards final liability
of telecomm companies towards AGR dues. These discussions should be held with a
simple objective- to end the uncertainty about AGR dues. 5. One wonders what kind of
relief our Central government can grant to three telecom companies, particularly to
Vodafone Idea, the merged venture of Vodafone and Idea Cellular. In case the govt.
grants such relief, who would be the beneficiary? Would we, as telecom services
customers, benefit in the long run? Once an amicable solution is found to current
problems of telecom companies, DoT should advise the telecom companies to pay the
dues as per the solution. If this does not happen, then customer like will face many a
problem and there may be unintended ramifications.

Response to #2-4: Should citizens be concerned about the state / health of industry
sectors (and telecom in particular)? 
Answer: If the product or service is in the category of Fast Moving Consumer Goods,
competition among many providers is generally sufficient to ensure quality and price,
provided the market can support a reasonable/realistic price that allows maintaining
certain levels of standards.  What’s a reasonable/realistic price?  One that yields a
reasonable profit.  What are adequate levels of standards?  Safe, healthy, hygienic and
aesthetically pleasing, for instance, for inexpensive biscuits or food items, or soap, in
terms of ingredients, cleanliness, attractive presentation or packaging, and waste
management.  For infrastructure services, scale of organisation, production and
delivery determine the market structure.  Sectors such as electricity, water, telecom,
railways, airlines, and fossil fuels are network industries driven by scale.  The structure
tends to have no more than a few large players, and these industries usually require
regulation to prevent monopolistic exploitation, or are managed as regulated
utilities.  For such products and services, the state of the industry determines the
availability, quality and price.  This is why it behoves citizens to take an informed view
that supports sustainable models for the long term, in order to have stable supply of
services or products of good quality at reasonable prices.  Otherwise, they are likely to
get shoddy, overpriced, or unreliable services, or as in rural broadband for many
people, it may not be available at all.
[e.g., see https://www.sciencedirect.com/topics/social-sciences/network-industry]

#5:
We in India often expect governments or enterprises to provide for our needs without
having to think about them.  Whereas as citizens in a democracy, self-government
implies the obligation – the flip side of citizens’ rights – to contribute to the
maintenance of standards and governance in our communities, including through
exercising consumer choice and advocacy.  The objective of any problem resolution
should be the sustained common good or public interest, although we have typically
not applied such clarity and forethought in our approach.  But having had a democratic
franchise thrust upon us without having learned the duties of citizens, we haven’t got
there yet.