The telecom sector has witnessed major policy and regulatory developments during the past year. Key among these was the approval of procedural and structural reforms to address some of the persistent issues in the sector. Post this, the government fast-tracked the launch of 5G and held the country’s first-ever 5G spectrum auction. The rapid spectrum allocation post the auction also remained a notable highlight. In addition, the government set up an indigenous 5G test bed to support the country’s telecom industry and start-ups.
On the infrastructure front, the Gati Shakti Sanchar portal, a central right-of-way (RoW) portal, was launched to accelerate the roll-out of digital infrastructure for 5G services. Further, the SARAL Sanchar portal was launched to simplify the application process for registration and licences to be obtained from the Department of Telecommunications (DoT).
On the manufacturing front, the government approved investment proposals of 31 companies amounting to Rs 33.45 billion under the production-linked incentive (PLI) scheme for telecom and networking equipment, and extended the scheme by another year. A PLI scheme for semiconductor and display board production was also approved during the year.
Several measures were taken on the regulatory front, with the Telecom Regulatory Authority of India (TRAI) releasing its recommendations and consultation papers on pertinent issues. Key among those were the regulator’s suggestions for creating a licensing framework for satellite-based connectivity for low-bit-rate applications.
A look at the key policy and regulatory developments in the telecom sector…
Telecom reform package
In September 2021, the government launched a reform package for the sector. As part of the package, the much-awaited policy decision to exclude non-telecom revenue from the definition of adjusted gross revenue (AGR) was announced, although on a prospective basis. Also, the government reduced the performance and financial bank guarantee requirement of telecom operators by 80 per cent, thereby unblocking the cash that operators earlier needed to keep with banks to furnish bank guarantees.
Several measures were also announced to enable operators to increase their spectrum footprint. For instance, operators will not be required to furnish bank guarantees to secure instalment payments for auctions to be held henceforth. Further, the government abolished the spectrum usage charge (SUC), increased spectrum tenure from 20 years to 30 years, and permitted operators to surrender spectrum after 10 years for the airwaves to be acquired in future auctions.
The reform package also sought to help operators improve their liquidity position by enabling them to clear their past dues over an extended period. To this end, the government offered a four-year moratorium on past dues related to AGR and spectrum acquisitions, with an option to convert the due amount on these deferred payments to equity at the end of the moratorium period.
5G spectrum auctions
The 5G spectrum auctions concluded on the seventh day of the sale with the government netting a record amount of over Rs 1.5 trillion. Reliance Jio emerged as the most aggressive bidder, followed by Bharti Airtel and Vodafone Idea Limited (Vi). Besides, the auctions saw participation from a new entity, Adani Data Networks, which is said to have bid for 5G airwaves in the 26 GHz band to be used for its captive private networks. Jio acquired spectrum in the 700 MHz, 800 MHz, 1800 MHz, 3300 MHz and 26 GHz bands; Airtel acquired 19,800 MHz spectrum by securing a pan-India footprint of 3.5 GHz and 26 GHz bands, while Vi acquired spectrum in the 3300 MHz and 26 GHz 5G bands. Further, Adani Data Networks bought 400 MHz of the 26 GHz band across six circles.
Post the auction process, DoT received over Rs 178.73 billion from telcos towards 5G spectrum dues. DoT has now issued spectrum assignment letters to telcos, paving the way for the launch of 5G services.
Launch of the Gati Shakti Sanchar and SARAL Sanchar portals
A key development on the RoW front remained the launch of a centralised RoW portal called the Gati Shakti Sanchar portal. The portal aims to provide a collaborative institutional mechanism for all stakeholders including central and state/UT government(s), central landowning authorities (railways, defence, etc.), local bodies and service providers to facilitate RoW applications and permissions for the deployment of digital infrastructure like mobile towers and optical fibre cable in the country. As per the central RoW dashboard data, 36 states and UTs have been onboarded to the portal.
The SARAL Sanchar portal is a web-based portal launched for issuing various types of licences and registration certificates as part of various digital initiatives being taken by DoT. In its present form, the portal covers the receipt of applications for the issue of new unified licences and PM-WANI registrations.
Modification of PLI scheme for telecom
In October 2021, the government granted approval to about 31 companies, including 16 MSMEs and 15 non-MSMEs, under the PLI scheme for telecom and networking equipment. The companies selected under the scheme included Flextronics, Foxconn, Jabil (an Ericsson Group firm), Nokia, Rising Star, Dixon Technologies, VVDN Technologies, Tejas Networks, HFCL, ITI, Coral Telecom and Lekha Wireless.
The Union Budget 2022-23 amended the scheme and added the concept of design-led manufacturing in order to encourage research and development, with a focus on building the 5G ecosystem. Recently, in July 2022, DoT decided to extend the PLI scheme for the sector by another year, and also cleared a new set of 11 telecom and networking products, which will be brought under the scheme, with additional incentives of about Rs 40 billion under design-led manufacturing.
DoT received 32 applications for the PLI scheme for telecom equipment and design. Of these, 22 companies were MSMEs, five were non-MSME domestic entities and the remaining five applicants were global entities. In September 2022, the government approved 32 beneficiaries under the scheme, of which 10 were approved for mobile manufacturing.
Boost to semiconductor manufacturing
In December 2021, the union cabinet approved the PLI scheme for semiconductor and display board production. The scheme envisages an investment of Rs 760 billion in semiconductor production over the next five to six years. It aims to provide attractive incentive support to companies that are engaged in silicon semiconductor fabs, display fabs, compound semiconductors/silicon photonics/sensors (including MEMS) fabs, semiconductor packaging (ATMP/ OSAT) and semiconductor design.
Through this scheme, the government is expected to usher in a new era in electronics manufacturing by providing a globally competitive incentive package to companies in semiconductors and display manufacturing as well as design.
Key regulatory initiatives
On the regulatory side, TRAI reaffirmed its recommendation for creating a licensing framework for satellite-based connectivity for low-bit rate applications. In August 2021, the regulator recommended replacing the existing formula-based mechanism and levying SUC of 1 per cent of AGR for using satellite frequencies under the national long-distance service licence. To this end, TRAI suggested excluding the revenue from the licensed services other than satellite-based services from AGR while computing the charges.
Recently, TRAI reiterated its recommendation for the creation of a separate category of licence for access network providers (ANPs). In August 2020, the regulator suggested enabling unbundling of different layers with differential licensing through the creation of ANPs. However, DoT rejected the proposal, citing a lack of market demand for the same. In a separate move, TRAI has eliminated tariffs for unstructured supplementary service data-based mobile banking and payment services to boost digital financial inclusion and protect the interests of ordinary feature phone users.
TRAI also released a series of consultation papers. A key focus was the rationalisation of the entry fee for telecom licences and merging of financial and performance bank guarantees. Another consultation initiated by TRAI was aimed at promoting networking and telecom equipment manufacturing in India. With this, the regulator sought to examine the measures required to meet the growing market demand and transform the telecommunication manufacturing landscape.
Further, in June 2022, TRAI issued a consultation paper titled “Spectrum Requirements of National Capital Region Transport Corporation (NCRTC) for Train Control System for Regional Rapid Transit System Corridors”, following DoT’s request for recommendation on the administrative assignment of spectrum to the NCRTC and the quantum and pricing/charging thereof, for separate spectrum requirements of the NCRTC in the 700 MHz band.
Other consultation papers focused on the deployment of embedded universal integrated circuit card in the sector, the potential of small cell and aerial fibre deployment on street furniture, and the adoption of AI and big data in the sector to improve telecom services and enhance network security and spectrum management.