Govt proposes revamp of telecom rules to keep pace with modernisation

Source: Financial Express, 24 July 2022

The Department of Telecom has floated a consultation paper on the revamp of telecom rules mainly to keep pace with the change in technology like 5G, simplify laws and promote investments, according to an official document.

The new rules will not be applicable with retrospective effect to cause any adverse impact on the relevant entity, according to the consultation paper.
“A new law on telecommunication needs to aim at establishing an enabling future-ready framework for the development of telecommunication sector and deployment of new technologies. Such a law needs to consolidate the existing laws governing telecommunication sector, while keeping in view global best practices,” the consultation paper dated July 23 said.

The government has proposed that the new framework should be drafted in a plain and simple language so that any citizen is able to understand the rules.
The proposed law is envisaged to provide adequate provisions to ensure regulatory certainty and promote investment.

“This would mean continuity of licenses and authorizations under the old regime. To minimize policy disruption, such a law needs to provide for continuation of rules, guidelines, administrative orders issued under the existing regime until superseded by new rules. Furthermore, a new law needs to ensure that the terms and conditions will not be modified with retrospective effect to the detriment of the relevant entity,” the paper said.
The proposal has come at a time when the country is gearing up to start a spectrum auction for rolling out 5G services.
Along with existing players like Bharti Airtel, Reliance Jio, and Vodafone Idea, Adani Group has applied to bid for the airwaves and enter the wireless telecom services business.
The government has proposed to come up with rules for the surrender of the spectrum that has been missing under the existing framework and entities that have shut business or are under the process of liquidation have not been able to gain from their spectrum holding.
Under the new framework, the government plans to relax penal provisions and make them proportionate to offences.
The DoT officials at present impose the highest permissible penalty of Rs 50 crore per offence to avoid alleged biasedness in their work and save their neck from any subjective interpretation of law enforcement agencies or the auditors.
The government is looking to expand the funding scope of the Universal Services Obligation Fund (USOF) from just rural telecom projects to urban areas as well including research and development projects, training activities etc.
The DoT has fixed August 25 as the last date for comment on the consultation paper.

India’s own 5G stack to be ready by Sept-Oct: Communications Minister Ashwini Vaishnaw

Source: Economic Times, 18 May 2022

India own 5G stack will be ready around September-October, Communications Minister Ashwini Vaishnaw said on Wednesday as he urged nations to look actively at these indigenous telecom stacks for cost and quality advantage. Speaking at an event organised by the Telecom Regulatory Authority of India (TRAI), the minister said India’s indigenous telecom stacks mark “big fundamental technological advancements”.

The Minister also noted that bridging the digital divide has become even more crucial in a world where technology is playing a key role in economic development, and added the Government is directing all its efforts to ensure inclusive growth.

“5G stack is also very much in good, advanced stage…by somewhere in September-October India’s own 5G stack will be ready,” Vaishnaw said.

He exhorted the international delegates — who were attending the high-level ministerial session organised by the telecom regulator — to look actively at Indian 4G and 5G technology stacks, and assured that these will be “good on cost, and on quality”.

“It will be really a great contribution to your telecom consumers in your countries. I am talking about big fundamental technological advancement which is in the Indian 4G stack. Please use it,” the minister said. The Centre is making all-out efforts for inclusive development, so that government programmes and schemes benefit the marginalised sections of society and those living in far-flung areas.

“In today’s world where technology has taken a primary role in the economy, in this world, if the digital gap is not filled up by conscious effort, then the digital divide is going to accelerate significantly and we will not be able to fulfil or bridge that divide,” he said adding that the government is persistently working to bridge the digital divide through various measures.

Vaishnaw went on to cite significant initiatives in this regard including enhancing connectivity in far-flung areas via USO support (Universal Service Obligation Fund), the creation of open public digital platforms in areas such as payments, healthcare, logistics and education, and the PM GatiShakti National Master Plan for integrated planning and development of infrastructure.

Speaking on the occasion, Telecom Secretary K Rajaraman said that the quality of service is an important “moving target” and observed that as technology evolves, the quality “expectations also go up”.

“Consumer expectation in terms of download speeds, in terms of latency of the system remains an important target for the Government. This is a good opportunity for all of us to look back at what we have done, to try and see how we can push the quality of service to the next level,” Rajaraman said.

The roll-out of 5G services, expected in the later part of the year, will enable a new realm in the quality of services as well as new types of services, he said. TRAI Chairman, PD Vaghela said that digital technology is changing service delivery in education, healthcare, agriculture, energy, and other sectors. In this context, he called for an enabling, collaborative approach among various sectors for framing of policies and regulations.

Airtel CTO urges regulator for affordable 5G spectrum pricing

Source: Business Standards, 27 March 2022

Ahead of sector regulator Trai’s recommendations on spectrum auctions, telecom operator Bharti Airtel’s Chief Technology Officer Randeep Sekhon has made an emphatic appeal for “affordable” pricing of 5G radiowaves.

Sekhon told PTI that the 5G will have a mass appeal, and not be confined to a niche or premium segment, as more cheaper devices become available in a market prepping for the next generation of services.


While 5G will open up immersive entertainment, industrial use cases, unlock new avenues in education and other areas, its biggest upside will be super-fast mobile connectivity.

“Spectrum pricing will play a very important role. If operators are made to buy a very expensive spectrum, naturally their cash flows will be limited, they will have to pay. But, if it is very reasonable, then it is very possible that the operator will bring the same money on increasing footprint faster,” Sekhon said.

Amid wide anticipation that Trai will finalise its views on 5G auction modalities and spectrum pricing any day now, Sekhon urged the regulator to “make it affordable”.

“Some bands have been going unsold for multiple auctions because they are so expensive. For every frequency, we buy, it doesn’t mean I can go and light it up tomorrow. I will have to put radio, especially for 5G. So, there will be a capex on both sides,” Sekhon explained.

He, however, did not comment on what pricing will be seen as viable or affordable.

The fifth-generation services won’t end up being a premium product but will appeal to the mass market, and device makers will, in fact, rush to line up phone models closer to date as 5G networks get ready.

“Today 5G phone starts from Rs 15,000, and there are so many 5G phones in our network. This is when there is no 5G network. No one is bringing in those models now because everyone will go for it when 5G network is available,” he said.

The broader range of low-cost 5G phones has not come into the market yet, since 5G networks are yet to go live. “And we know that phone models change every 5-6 months. So, I would imagine that the moment auctions gets announced, the dates get announced…you will see a rush to launch devices,” he said.

Once new services come up, 5G proliferation will gain full speed, and so would the device ecosystem, pushing overall costs down.

“The coverage will be available to all places where data is getting consumed. So, my view is soon 5G phones will be in the same range as 4G. It is at about Rs 15,000 now…maybe a year later (it will come to) about Rs 5,000-9,000 levels, assuming chip prices come back,” Sekhon said.

Faster speeds, powered by 5G, will spur new possibilities in India, which is the world’s second-largest telecommunications market.

“Amid COVID, people moved to the remote area, but they could not connect education use case smoothly. 5G allows you to do that. The aspect of faster mobile connectivity is underplayed…5G will enable new possibilities in areas like education, industrial use case, entertainment, cloud gaming, and others,” he said.

The Indian market is gearing up for the rollout of 5G services, that will usher in ultra high-speeds and spawn new-age services and business models. Telecom regulator’s recommendations on spectrum pricing and other modalities are expected very soon. The spectrum auctions are slated to be conducted in 2022 to facilitate the rollout of 5G mobile services within 2022-23 by private telecom providers.

Telecom service providers are conducting 5G trials in Delhi, Mumbai, Jamnagar, Ahmedabad, Kolkata, Chennai, Hyderabad, Bengaluru, Lucknow, Gurugram, Gandhinagar, Chandigarh, Pune and Varanasi, including urban, semi-urban and rural areas.

Bharti Airtel recently showcased the possibilities of the 5G era, as it harnessed immersive video technology over the next-generation network, to recreate the in-stadia experience of Kapil Dev’s legendary 175 run innings from the 1983 cricket World Cup. Airtel has said it is fully prepared for 5G in the emerging digital world and is building a robust pipeline of innovative use cases for India.

India’s ultra premium smartphone market witnessing intensified competition; 60-80% growth likely driven by Apple

Source: Economic Times, 03 October 2021

NEW DELHI: The ultra-premium smartphone segment is witnessing intensified competition with established players Apple, Samsung and OnePlus vying with new entrants like Vivo for a greater share of consumer wallets in the festive season.

The over $700 segment is expected to surge 60-80% on-year in 2021 on pent-up demand, market trackers said, as consumers who did not upgrade their smartphone in 2020 due to the Covid-19 pandemic que up to buy expensive devices.

“The significant growth in these segments can be attributed to increased consumer spending on luxury/costly product segments, re-allocating spends from holidays, shopping, travel, dine out etc,” Navkendar Singh, research director at market insights firm IDC, told ET. “We expect this momentum to only grow further in the upcoming festive season, driven by upgraders within premium and from the $500-$700 segment.”

Counterpoint Research has forecast that Apple, Samsung, OnePlus, and Vivo will drive the ultra-premium market, which is expected to witness more than 60% on-year growth in 2021.

“Competition will be very high in this segment, with Apple likely to corner the lion’s share of around 40% in Q3. We have seen high shipments of iPhone 11 and 12 in August, and it will continue coupled with the iPhone 13 series,” Prachir Singh, senior research analyst at Counterpoint, said. “Apple is filling channels.”

IDC data for the April-June period showed that the $700-$1,000 segment grew 80% compared to 2019, while the $1,000 segment surged over 200%, with 2020 being a washout year owing to the pandemic.

Handset brandsQ2 2021
Apple49%
OnePlus32%
Samsung9%
Vivo4%
Others5%
Ultra-premium segment: $700 and above  Source: Counterpoint Research                                                 

“Almost 97% of the India market is under $500. However, there is a strong uptake in the $700-$1,000 price segment over the past few quarters,” Singh said.

The $700+ segment has gone up from 1% share in 2019 to 2.3% in 2021, he added.

Due to supply constraints impacting the entire mobile phone ecosystem, premium players have tried to push in adequate stocks, including of older models, ahead of the festive season, market trackers said. They are also offering upfront discounts and cashbacks besides financing schemes and trade-in programs to attract buyers. The premium segment – over Rs 30,000 – contributes 7% by volumes, but 23% by value in the overall smartphones space.

Netflix, Amazon, Hotstar ought to be first casualty in India’s telecom tariffs hike

Source: LiveMint.com, Dec 23, 2019

Netflix Inc. and its rivals are facing a price war in India as a jump in the cost of watching video on mobile phones threatens to slow demand in what is shaping up as a key growth market globally for streaming.

The country’s three wireless carriers hiked data tariffs by as much as 41% earlier this month, leaving some customers in India, where most streaming is done on phones, with less to spend on entertainment services like Netflix, Apple Inc.’s TV+ service — which debuted there last month — and those of local competitors.

Cheap broadband, a well-established film culture and a vast English-speaking population have helped make India a lucrative streaming battleground, with Netflix targeting 100 million subscribers in the country, almost 25 times the customer base as of this year. But an increase in data costs, coupled with a wider slowdown in the economy, could make customers more sensitive to how much they pay for content, just as players like Apple and Amazon.com Inc.’s Prime try to dig a foothold in the market.

“This is a challenge that will affect growth, as the mobile data boom has been a big factor driving adoption in India,” said Utkarsh Sinha, managing director of Bexley Advisors, a boutique investment bank focused early-stage deals in tech and media. “The Indian user has largely used data like running water without thought.”

Netflix is already trying to get ahead of the move, slashing prices by as much as half for subscribers that commit to at least three months. Most of the country’s streaming services, including Apple TV+, Amazon Prime and Walt Disney Co.’s Hotstar have also offered discount deals this year and subscriptions at prices well below those in other markets.

Apple’s new TV+ service, for example, sells for about $1.40 a month in India, compared with about $5 in the U.S. and Japan.

Spokespeople for Netflix, Amazon, Apple and Hotstar in India declined to comment.

“As all platforms become equally competitive on content, pricing will be a key lever to pull to draw in customers and encourage churn,” said Sinha. “Netflix has introduced an India-only price, and Amazon is already subsidizing its Prime offering through a package deal.”

The price pressures add to what is already a cutthroat streaming market, with some 30 operators hawking online video services in the country of 1.3 billion people. Viu, a smaller streaming player run by Hong Kong-based PCCW Ltd.’s media arm, recently decided to exit the market because it lacks the cash to challenge bigger rivals, India’s Economic Times reported Dec. 16, citing an executive it didn’t name at Viu.

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Telecom revenue falls 7% in 2018-19, says government

Source: LiveMint.com, Dec 12, 2019

NEW DELHI : The revenue from the telecom sector to the government has seen a 7% drop in fiscal 2019, Rajya Sabha was told on Thursday.

The Communications Ministry said in a written reply in the Rajya Sabha: “As per the information available with the Telecom Regulatory Authority of India (TRAI), the Adjusted Gross Revenue for the telecom service sector stood at ₹1,44,681 crore in 2018-19 as against ₹1,55,680 crore in 2017-18, thereby showing a decrease of 7.06%.

“The decline in the Adjusted Gross Revenue (AGR) is not sufficient to conclude below cost pricing by the telecom service providers.” Read the rest of this entry »

Notices to telcos likely this month: AGR dues may rise 10%, delay spectrum sale

Source: The Economic Times, Nov 08, 2019

NEW DELHI | MUMBAI: India’s mobile phone companies may be liable to pay around 10% more in dues to the government than previously estimated, following the Supreme Court verdict on adjusted gross revenue (AGR), said government officials with knowledge of the matter. The total dues, pegged at Rs 1.3 lakh crore by the telecom department, could rise further on account of changes to the definition of AGR and the levies having to be calculated for the entire period till date.

20191108-2That could delay auctions of spectrum even further, considering the precarious financial situation of the sector, people familiar with the matter said, perhaps until late next year. The sale of airwaves, including 5G spectrum, will be conducted this financial year, the government had said earlier. This timeline may be reconsidered, said people with knowledge of the matter.

DoT is recalculating the dues that telcos owe to the government as per the Supreme Court order, which has clarified that all revenue accrued to the licence holder will have to be included while arriving at gross revenue. As per this definition, “the licence fee and spectrum usage charges could rise by 10%,” one of the officials said. This will result in a proportionate rise in the dues of each telco, the official added.

Spectrum Sale unlikely in FY20
The Supreme Court order of October 24 meant that the telcos faced licence fee demands of nearly Rs 92,642 crore, including penalties and interest, as per DoT’s submissions in court in mid-July. Spectrum usage charge (SUC) demands totalled nearly Rs 41,000 crore, also including interest and penalties. The Supreme Court has given a three-month deadline for the payments to be made.

Vodafone Idea and Bharti Airtel are the worst hit, facing demands of more than Rs 39,000 crore and Rs 41,000 crore, respectively, in licence fees and SUC. A10% increase could potentially see this rising to Rs 42,900 crore and Rs 45,100 crore, respectively. Reliance Communications, undergoing bankruptcy resolution, faces a demand of Rs 20,000 crore. Tata Teleservices, which has sold its consumer mobility business to Bharti Airtel, owes Rs 13,000 crore to the government. Reliance Jio Infocomm, which launched services in September 2016, owes around Rs 41 crore.

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Fewer levies, cheaper spectrum may help untangle telecom mess

Source: LiveMint.com, Nov 06, 2019

NEW DELHI : India’s telecom sector needs a fresh impetus, ranging from cutting the plethora of levies the sector is burdened with, to lowering the reserve price for spectrum in forthcoming auctions, according to experts.20191106-3

“Rather than taxing the performance of the operators at a fixed rate in perpetuity, the government should look at a variable rate which would leave more investible surplus in the hands of the operators. This will cut borrowings, save interest costs, resulting in some sort of revenue-neutral rate which could be indexed to inflation with another 1% for exigencies,” said B.K. Syngal, senior principal at Delhi-based Dua Consulting.

The government has generated lower revenue from telecom in each of the past three years. It got a total of ₹12,100 crore as licence fee and spectrum charges in the year ended 31 March, a 13% decline from ₹13,700 crore it received in the previous year. It had collected ₹18,400 crore in FY17.

Telecom services currently attract a goods and services tax of 18%. Companies also pay a licence fee of 8% and spectrum user charges of 3-5%, besides paying corporate tax.

To tide over the immediate crisis, Syngal suggests waiving interest charges from the ₹92,000 crore in dues that the Supreme Court has directed telecom companies to pay in the adjusted gross revenue (AGR) case two weeks ago. Syngal said companies should be allowed to pay only the principal amount.

Jaideep Ghosh, partner at KPMG, suggests that telecom companies should be allowed to make the payments later.

Industry stakeholders are also worried about the impact the current crisis could have on the proposed auction of 5G spectrum. The companies are already burdened with massive debt.

At the end of March 2019, Bharti Airtel, the ‘healthiest’ of the remaining legacy operators, had a net debt of ₹1.08 trillion. The company’s annualized FY20 revenue is seen 22.5% lower from 2015-16. Vodafone Idea is expected to fare worse, with revenue likely to decline by 43.4% during the same period.

“5G isn’t an extension of 4G. It’s a different ecosystem altogether. China has already raced ahead in 5G. The government could look at incentivizing users. This will help its Digital India goals as well as improve the health of the companies,” said Harsh Gupta, chief investment officer at Ashika Group, a financial services firm

Gupta suggests a monthly ₹30 ‘Digital Literacy Voucher’ for every mobile user for a year.

“You have JAM (Jan Dhan-Aadhar-Mobile) in place. Every mobile user could be given `30 as a monthly recharge with any telecom service provider. That will improve the ARPUs too,” he said. ARPUs in India are currently the lowest in the world, ranging between ₹110 and ₹130 per month for the companies, a clear reflection of the intense competition in the sector.

The industry has for long complained that governments, short of options to raise revenues to finance their social welfare schemes, have used it as a cash cow to make up for their deficits. Their grouse has been that governments haven’t looked at the sector in a holistic manner.

“Many of the problems would be solved if it looked at it holistically and not just as a telecom services provider. All telecom operators are now enablers of digital literacy in some way.

They are content providers. What impacts telecom companies also impacts network element providers, logistics providers, tower companies and so on,” KPMG’s Ghosh said.

He is also not against the idea of deferring the spectrum auction but cautions it shouldn’t be for too long. Ghosh said the auction could be deferred by a few months but added a caveat:

“China has moved ahead in 5G. It would not be prudent to delay it for too long,” he said.

Syngal favours redefining the concept of AGR which currently also includes dividend income, interest and revenues from sale of handsets bundled with services. “The current definition leaves a lot of grey area on what comprises telecom services. A revenue neutral mechanism will eliminate that ambiguity,” he said.

Refurbished smartphone market enjoys a boost this festive season

Source: ETRetail.com, Oct 09, 2019

Chennai: As smartphones emerge as the flavour of this festive season, more refurbished phones are hitting the market through the exchange offers run by Flipkart and Amazon in parallel to their flagship sales.

Thanks to these exchange schemes, more number of used phones are coming into the system, and are being bought by refurbished phone companies such as Cashify, Budli, and others.

An estimate from tech consulting firm techaARC finds that in 2019, the contribution of refurbished phones is 8.1% of the total smartphone sales compared to 7.3% in 2018.

“Around 20%-25% of smartphone purchases on e-commerce platforms used to happen through exchange offers, and this festive season this ratio is definitely much higher given the upgrade mindset of consumers,” Faisal Kawoosa, founder and analyst, techARC, said.

Walmart-owned Flipkart told TOI that their flagship Big Billion Days sale 2019 saw a 2.5X increase in adoption of product exchange in mobile phone purchases. “The Complete Mobile Protection scheme, which includes our buyback guarantee of 40% exchange value, has witnessed an exponential growth, wherein we sold 2X the monthly average in just the first two days of our sale,” Aditya Soni, senior director — Mobiles, Flipkart, said.

Globally, India continues to see the highest year-on-year (y-o-y) growth in consumption of secondary market devices, as per Counterpoint Research. The report adds that despite a global drop in sale of secondary market devices, India is seeing a 9% growth.

Refurbished and used products platform Cashify has seen a 150% growth in numbers starting September 29 (coinciding with the sale season). “The buyback via e-commerce sites during the festive season sales is 10x the normal daily buyback volume.We have partnered with Flipkart, Amazon, Paytm Mall, Mi.com.

Refurbished phones, that are available at 25% to 45% discount to new devices, are seeing a 15% month-on-month growth,” said Mandeep Manocha, co-founder and CEO, Cashify. Rohit Pagaria of Budli.in adds this festive season has brought a 20%-25% jump in arrival of used phones this year.

“While the phones from the e-commerce platforms are yet to come in, since the sale season is just done, individuals are selling their used phones on our platform to plan for new purchases,” he added.

Discount curbs, loss of exclusivity to hit online smartphone sales


Source: ETRetail.com, Feb 12, 2019

Online sales of smartphones are expected to fall sharply in the January-March quarter after restrictions on discounts, among other curbs, kicked in on February 1, leading handset companies to increase their focus on forming more tie-ups with brick-and-mortar stores.


The share of online smartphone sales may drop to 26-27% in the current quarter as norms prescribed in the rules on foreign direct investment in ecommerce take effect, according to research firms IDC and Counterpoint Technology Market Research.

“There is already an impact…Typically, e-commerce contribution goes as high as 38-40% (of overall sales which includes offline) during the festive season, but in Q1-Q2, it hovers around 30-31%. This time, it might fall by up to 4% because of the policy change,” said Tarun Pathak, associate director at Counterpoint. Pathak said the FDI rules will impact model exclusivity for brands on online channels. “…a lot of companies have agreements in place. This can also delay time-to-market,” he said.

The hit won’t only be on account of exclusive sales, but also due to offers and discounts, which are barred, said Faisal Kawoosa, founder and chief analyst at TechArc. “We estimate that around 35% of online sales are triggered due to offers/promotions and discounts,” he said. The most hurt would be vendors of Honor, Asus and Realme, which are online-only or online-heavy brands, said Prabhu Ram, head, industry intelligence group at market research firm CyberMedia Research. These companies have now started forming partnerships with stores such as Reliance Digital and Croma.

Realme started its offline journey with 10 cities across the country in January and will add 50 cities every quarter. It intends to establish 20,000 outlets throughout the country, the company said in a statement. According to Navkendar Singh, associate research director with client devices at IDC, handset makers will face challenges in offline channels over the next six months because it’s difficult to spread wide and deep very quickly. “To manage operations, brands need a different mindset, different teams because that’s a kind of different animal,” Singh said.

However, even after the expected decline in Q1, etailers will remain sales drivers in 2019, said Upasana Joshi, associate research manager, client devices, IDC India. She said Flipkart and Amazon are finding ways to adhere to the policy. Singh said large format retailers such as Reliance Digital and Croma are in a better position now as they can command better margins from handset companies seeking to form new partnerships.