The telecom industry needs a level-playing field to take a giant leap towards exploring newer technologies
The telecom industry has undergone a fundamental change in recent times. Easy and ubiquitous access to voice and data services has transformed several industries, including the media. Yet, the controversy surrounding the Adjusted Gross Revenue (AGR) and the dues that the telecom industry owes to the Government is making matters financially difficult for it. In fact, the huge amount of losses incurred by the industry, thanks to India’s low cost voice and data services and the competitive telecom environment, have questioned its long-term viability. The Government’s demand of over Rs 1 lakh crore from telcos and the Supreme Court’s Valentine’s Day gift to it demanding instant payment of dues along with the defaulting oil and gas companies may help it improve its fiscal deficit. But this may have the unintended result of killing the golden goose and realising that the insides of the goose are hollow. So what next for the Indian telecom industry? As it is, there are only three private telecom players that dominate the scene. And with British telecom operator Vodafone already making it clear that it is seriously considering leaving India, we will be left with just two. The immensely negative message that such a move will send to foreign companies looking to invest in India should not be underestimated. The emergence of a duopoly market portends a bleak future for customers. In the absence of Vodafone, would the two be able to absorb its customers? Already, complaints about call quality and lack of network connectivity have become common. The need for investment in newer technologies has been starker today than before. However, the Government’s view that telcos avoided paying their fair share should not be ignored and the court has rightly ruled in its favour. But it would be prudent to consider an instalment scheme for telecom operators. Some experts have even suggested a policy fix like retrospective tax change. Some reassurance and practicality are needed because the Government will be auctioning a new spectrum for the fifth-generation (5G) mobile services. Without an auction with relatively healthy telecom companies in the fray, the process will hardly help realise a fair value. It is not without reason cynics of the judgments have suspected that this order and payment demand benefit one particular company and individual.
It is important that India progresses quickly into next-generation services. We have seen how easy and cheap access to mobile data has transformed the country. These new services will make the “Internet of Things” (IOT) a reality and offer a whole set of services to India’s large and young population. While India has among the most affordable data prices, it is important that the industry also profits with a degree of competition. India’s reputation as a low-cost market where jugaad rules the roost is not one it should be proud of. Its evolution as an economy will happen with increased consumption and affordability. Telcos have taken a positive move with increased prices recently and the Government has been supportive of this. It is in India’s interest that the telecom industry becomes competitive. This will lead to better services. To promote a single company at the risk of creating a monopoly is not the route we should take. The Supreme Court must take cognisance of this fact. The Narendra Modi Government has stopped “business as usual” and this was bound to lead to situations like this. But this should not be seen as a substitute for policy improvements. At the same time, it is vital that the industry remains viable. We have seen how the real estate sector has collapsed. We cannot afford the telecom sector to go the same way.
