Info-tech

Telecom is caught in an ‘inverted pricing logjam’: Ravi Sharma

Rajesh Kurup Mumbai | Updated on September 23, 2020 Published on September 23, 2020

Ravi Sharma

Main reasons are financial distress of the sector are high spectrum charges, high taxes and levies on telecom services

A telecom veteran with over 30 years of experience, Ravi Sharma has recently been appointed Chairman of Telecom Equipment Manufacturers’ Association of India (TEMA), the oldest telecom body in the country.

Sharma, who was the South Asia Chief Executive Officer of telecom giant Alcatel and later of its merged entity Alcatel-Lucent, was also the founder-CEO of Videocon Telecom and later CEO of Adani Power. He was also credited for starting of GSM infrastructure manufacturing in India. In an interview with BusinessLine, Sharma talks on myriad topics, ranging from Adjusted Gross Revenue (AGR), 5G, and ban on Chinese equipment, among others. Edited excerpts:

TEMA is sprucing up its leadership team with a number of high-profile appointments. What are the big initiatives?

We want to have a 360-degree perspective on the telecom sector because each part of the telecom ecosystem is important and inter-dependent. Many leaders from the government and private sectors have agreed to lead various councils of TEMA. We have already set up a Start-up Council, 6G Council and Council of Industrial Policy. We shall be announcing the Chairmen of other councils soon.

Telecom companies are still banking on 2G and 3G services for revenues, as 4G is yet to take off as expected, and 5G might not be rolled out for another two years. Are we in a time warp on the technology front?

We must appreciate that 4G is primarily for data services and it has done well too. Its performance will continue to become better with the proliferation of smartphones in rural India, while the rise in data consumption is indicative that data tariffs are affordable. There is no technology challenge per se.

TEMA believes that India should not go for 5G for mobility but use the same for industrial applications only with in-building and enterprise-wide coverage. The 4G coupled with WiFi is a great solution for the proliferation of broadband in India. TEMA is all geared up to contribute towards the Prime Minister’s vision of Atmanirbhar Bharat by being a catalyst for the Indian telecom manufacturing sector.

The industry had sought AGR payment over a 15-year period, while the Supreme Court permitted only 10 years. How do you think this will impact the sector?

The judgment is basically adverse for telecom operators as it does not prescribe any remedy to the AGR issue and offers only a band-aid for the ailing industry. TEMA is of the view that the income from non-telecom services should not be included as revenues of an operator. This judgment will definitely hamper the growth of the telecom sector and the level playing field. TEMA requests the government to reconsider the AGR issue all over again.

The infrastructure roll-out in the telecom sector is still not keeping up with the demand, especially on the tower front. What are TEMA’s suggestions to improve the situation?

The slow telecom tower roll-out in the country is due to delay in getting Right of Way clearances, while high charges for it add to the problem. The government has tried to make the process simpler but it needs more consistent efforts and stricter monitoring while creating simpler norms for automatic time-bound clearances. Until then, the operators and ultimately the public will continue to suffer from degraded mobile coverage.

Is AGR the main culprit for the financial stress in the sector?

The main reasons are high spectrum charges, and high taxes and levies on telecom services, while the AGR made it untenable. While competition has played its role in bringing down the prices of services resulting in low ARPU, it’s the spectrum prices that have played havoc. Actually, telecom is caught in an “inverted pricing logjam” where the government expects to fetch the highest prices for spectrum but expects lowest prices for finished products of telecom services.

This model has harmed the industry not only in India but in many other countries. It’s not surprising that there are only three private players left and two of them are badly wounded.

The government needs to rethink the overall spectrum policy. It should either be reasonably priced or offered at negligible prices to operators but ask them to bid for revenue share. That way the real growth of telecom will emerge and the competition will become fairer.

The ban on Chinese equipment comes at a time when the country is on the verge of 5G launch, and sourcing network infrastructure from other countries would increase infrastructure costs. What are TEMA’s recommendations to salvage this situation?

Ban on Chinese technologies has created an opportunity with the challenge to come up with our own technologies. We must keep in mind that newer technologies are more driven by software than hardware and India is a leader in software development. All global telecom companies have their largest overseas software development facilities in India, which means as a country, we are supporting technology development for all the telecom vendors in the world.

TEMA has requested the government to extend ‘Make in India Purchase Preference’ policy to the private sector purchases also to encourage Indian companies to invest in the development of indigenous technologies.

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Published on September 23, 2020
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