‘Draft telecom policy is consumer-centric, aims to ensure that all citizens have equitable access to next-gen tech’

The draft National Digital Communications Policy put up by DoT is a consumer-centric policy with the basic aim of ensuring that the advantages of new technologies are accessible to all citizens equitably and affordably, while securing them against existing and emerging threats. These include ‘Broadband for All’, public Wi-Fi Hotspots and appointment of an Ombudsman.

While the BharatNet and GramNet initiatives focus on proliferation of broadband to rural areas through the establishment of a ‘National Broadband Mission – Rashtriya Broadband Abhiyan’, NagarNet aims to do the same in urban areas. For ensuring customer satisfaction, quality of service and effective grievance redressal, the government is considering appointing a ‘Telecom Ombudsman’ to protect consumers’ interests. Public health and safety has been extensively covered under the policy.

Other than these direct benefits, there are a lot of indirect benefits that will flow from initiatives such as optimal spectrum pricing, rationalisation of taxes and levies, enabling rollout of 5G and next-generation services. In our view, it would not be incorrect to say that most of the recommendations proposed by the policy have been drafted keeping in view the objectives of accessibility, affordability, consumer interest, awareness and protection.

The policy proposes establishing a ‘National Broadband Mission – Rashtriya Broadband Abhiyan’, which will be a game-changer for USOF. The focus will be on the rollout of services in uncovered, remote and rural areas. It will also cover economically and socially weaker sections in urban pockets. This has all been done keeping in view that progress has in the past been slow, but there is a need to catch up fast so that India does not miss the 5G and next-gen services bus.

Investment will flow to a sector when the business models are viable/profitable and make commercial sense. There are a lot of initiatives under the policy that will foster investments into the sector, the first and foremost being allowing input line credit. High licence fee and spectrum usage charge way above what was required to cover the cost of administration and regulation has remained a major roadblock to investments. The proposed policy suggests reviewing levies and fees, including licence fee, USOF levy, and the concept of pass-through revenues in line with principles of input line credit is very constructive and will go a long way in attracting investments.

The policy proposes to accord telecom infrastructure the status of ‘Critical and Essential Infrastructure’, which will help raise low-cost funds similar to other connectivity infrastructure such as roadways, railways, waterways, airlines. The policy also proposes several initiatives for ease of doing business, which will remove roadblocks for investors.

There is a formal consultative process in place to review spectrum reserve prices. Generally, the DoT makes a reference to TRAI to review spectrum prices for the next round of auctions, TRAI starts a consultative process and comes out with a consultation paper and holds open houses on the subject, seeking input from the stakeholders. Then TRAI submits its response to the DoT and the Telecom Commission, and decisions are taken in this regard. The proposed policy suggests optimal pricing of spectrum to ensure affordable access to digital communications and offers a good opportunity to review the auction rules for reserve prices, which are out of line with international norms and result in non-discovery of market prices.

Reserve prices should be set at levels that are high enough to keep non-serious bidders at bay, but low enough to achieve vibrant price discovery. In the past, reserve prices were mostly linked to the most current auctions. This resulted in its exponential increase, as it was hardly ever corrected for market distortions. This led to spectrum remaining unsold, and whatever was sold, in most cases the clearing price was equal to or marginally above the reserve price.

There is obviously much to be done to improve the effectiveness of our auctions and the auction design has to change significantly to meet public policy objectives. Hence, well-defined formulae based on sound assumptions will not only increase transparency in the system, but will also empower government officials to take the right decision. The formula for calculating the reserve price must be declared in advance to avoid/minimise bidding distortions, promote responsible bidding and ensure optimal prices. There is a need to correct past reserve prices to correct market distortions and also align them with the revenue-generating potential of the circle.

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