A promising telecom stack, but India must address sector's health, duopoly

The indigenous 4G stack and the digital revolution in India have emerged as some of the standout features of the ongoing telecom summit in New Delhi. Listing the achievements of the telecom sector in the country while inaugurating the “India Mobile Congress”, Prime Minister Narendra Modi brought out the timeliness of investing, manufacturing, and innovating in India. Telecom has indeed been a success story for India, leaving aside the rough patches such as the alleged scam linked to 2G spectrum allocation more than 15 years ago, retrospective tax on Vodafone’s 2007 acquisition of Hutchison Essar, and the longstanding government versus industry dispute around charges linked to adjusted gross revenue (AGR) of telcos. While many of the policies and rulings, with an adverse impact on the industry, were either eased or reversed subsequently, newer pain points have surfaced more recently. For instance, top industry representatives have underscored the need for a regulatory reset to combat digital fraud. Telecom regulations in the country should be in step with the ever-evolving digital risks. However, there’s no consensus yet on who should be held responsible for spam calls and messages, with the government, the regulator, and the industry holding different views on the matter.    

Despite the challenges, the telecom sector in India has scored well on tech advancements. The indigenous 4G technology stack, figuring among the elite five, is an example. For the stack, the Centre for Development of Telematics developed the core network, Tejas Networks provided the radio access network (RAN), and Tata Consultancy Services served as the systems integrator. Besides India, four countries — China, South Korea, Denmark, and Sweden — have developed a 4G mobile technology stack. For users, a 4G stack would mean faster and reliable mobile internet services, and for the country the indigenous technology is expected to offer the benefits of national security and digital sovereignty. Another advantage of the 4G stack is a possible upgrade to the 5G infrastructure in future because of the software-first design of the platform. The homegrown 4G stack, deployed for Bharat Sanchar Nigam Ltd, is being readied for export as well. 

Even as the 4G stack stands out for its tech innovation, India has hit the ground running on 5G, which, according to the government data, has reached every district of the country.  India’s 5G subscriber base stands at 365 million as of September, showing significant growth within three years of its launch. The overall telecom teledensity in the country is also a positive indicator, at 86.4 per cent, with sufficient room for growth still, unlike in many saturated economies. The growth is expected mostly from rural India, with rural teledensity at 59.3 per cent, against 134.5 per cent in urban parts of the country.  

The domestic manufacturing of telecom devices and also record exports from India, with a boost from the production-linked incentive scheme, have added to the sector’s success story. Mobile-phone production has grown 28 times and exports 127 times since 2014, estimates suggest. But, for the telecom sector to remain a leader, service providers must be financially healthy. In that context, the growing concern over India’s private telecom sector becoming a duopoly needs to be addressed. Telcos have to put their house in order in terms of rationalisation of tariffs, which are among the lowest globally. One GB of wireless data costs less than a cup of tea, Mr Modi said at the telecom summit. That may not be sustainable for the industry in the long run.