25 Years On, Indian Mobile Telephony Finds Itself At A Crossroads

With telecom consolidation comes the challenge of ensuring competition & consumer choice.
A man stands in front of posters and banners advertising the services of various mobile networks in New Delhi, India on  May 30, 2017. (Photographer: Sanjit Das/Bloomberg)
A man stands in front of posters and banners advertising the services of various mobile networks in New Delhi, India on May 30, 2017. (Photographer: Sanjit Das/Bloomberg)

The telecom sector in particular, and the information and communications technology (ICT) sector in general, have in many ways transformed India, its economy, and people’s lives. The year 2018 will mark the 25-year anniversary of the first private sector cellular licences being signed.

Predictably for those like me who were involved in those early pioneering days of Indian telecom, a look back over the past 25 years is mixed with nostalgia and satisfaction, both good and bad memories. Telecom and ICT, apart from connecting and transforming lives of over a billion Indians, continues and could continue to be a growth engine for the economy — in terms of billions of dollars of investments, millions of jobs created and revenues to the government accounting 6.5 percent of GDP. But most importantly, there is yet much to be learned from the history of Indian telecom and the mistakes that continue to be repeated.

In more recent days, to my great satisfaction, there have been consolidations that are rich in their symbolism and irony. Airtel acquiring a struggling Tata Teleservices and Reliance Communications struggling to be relevant.

The colossal failures of these two large Indian companies — Reliance and Tata — in their CDMA business and their controversial entry into telecom that started in 2001, marks the last chapter of a battle of big corporates, using their regulatory and policy proximity, against entrepreneurship that I had fought back against determinedly in 2001, predicting that they would lose. And they have.

The Wireless Local Loop dispute showcased an undue influence on regulation by powerful corporates, that was later only decided by the judicial system of this country. Again, the consolidation of Idea and Vodafone represents another old-style Indian corporate merging with a global telco.

This consolidation, of course, represents major challenges of ensuring competition and consumer choice for customers.

Prices are bound to rise as competition reduces.

It is here that the lessons unlearnt from the last 25 years of telecom become vital.

India’s ICT and technology sector is at a critical crossroad. While innovation, entrepreneurship and consumer needs are growing vibrantly, the overarching architecture of government regulation and policy in the country lags significantly — characterised by rigid, bureaucratic ‘command and control’ regulation that is far lagging the reality of the technology space. India, in the next decade, can become a global powerhouse for technology and innovation, and telecom and ICT can drive India’s future like no other sector — but these unlearnt lessons must be addressed — global standard policies and institutions need to be built.

Rebuild TRAI Into A Global-Standard Regulator

The Telecom Regulatory Authority of India (TRAI), the Ministry of Communications (MoC) and the Ministry of Electronics and Information Technology (MEITY) are three institutions that are currently responsible for regulating and making policies. There is much to be done to transform the culture, organisation and capabilities of all three.

There is no logic for the internet and the telecom sectors to be administered in two different ministries.

The IT and telecom ministries must be merged. If anything, electronics manufacturing can be separated if there is a need for another ministry. Apart from that, there is, even today, a major blurring of roles of the independent regulator and the executive policy-making, as can be seen by bizarre examples of the regulator consulting the ministry on issues like foreign direct investment, privacy, etc.

Even on issues related to competition, this triumvirate is struggling. In a previous article in BloombergQuint, I had said that new competition is the only way to ensure consumers benefit — through pricing and product/service innovation. Take the example of the entry of Reliance Jio. First, there was the controversy of a trial launch. Post-launch, the mobile data usage has jumped 6.5-fold from 154 MB in June 2016 to 2000 MB in March 2017. Price per GB has fallen from Rs 121 to Rs 17. As expected, the entry of Reliance Jio, even though disruptive to incumbents, has been a net positive for consumers because it dramatically reduced prices and increased access to data.

But what has been indeed disappointing is the controversy and noise around this new entry.

Even after 25 years, regulatory capability and capacity don’t exist to ensure a smooth introduction of competition.

This puts the spotlight on an embarrassing lack of capacity/powers within the ministry and the TRAI to create a credible, transparent set of rules and framework for new competition. This, by the way, is regulatory basics. Introducing competition and ensuring consumers benefit are the basic capabilities of any regulator or government ministry that is overseeing or enabling the most innovative and disruptive sector. The oversight of these big multi-billion dollar incumbents going running to Prime Minister’s Office raises the possible absence of due process and regulation to the global investment community — not a good thing for a sector that should be a showpiece to global investors.

TRAI’s intentions seem to be totally inconsistent with its capacity. It has had the Supreme Court come down heavily on its order on call drops. I am nothing but bemused at how it has courted controversy even on a basic issue of Interconnect Usage Charge (IUC) regulations. This was first done by Justice Sodhi as the chairman of TRAI almost two decades back with far less controversy, despite serious opposition by then incumbents BSNL and MTNL.

While I am not in disagreement with TRAI’s final outcome, the process has been allowed to be compromised by the incumbent cellular operators’ effective public relations and advocacy campaign — raising further question marks on TRAI’s credibility.

Global investors seek and will invest based on credible regulatory capability.

The next phase of communication technology needs, without doubt, a global standard regulator and ministry. As one of the world’s largest technology economies in the coming years, we need regulators comparable to western peers like the Federal Communications Commission of the United States and Ofcom in the United Kingdom. The TRAI, in its current avatar and powers, is far behind. It needs capacity and capability building and needs to stop becoming a parking spot for retired bureaucrats. The TRAI can't be known more for highly opinionated command and control regulation, rather than reasoned, high quality, consultative economic and technology regulation. Building such institutions with powers, capability, and talent within the government sector is not easy but it’s a must.

National Telecom And Technology Policy 2018

The last time the Government of India actually put together a comprehensive telecom policy was in 1999. The technology world and internet are very different today from the days of 1999. A world that was seen through the eyes of circuit switched to a world seen through the eyes of telecom. Today the internet and all its allied technologies like video-on-demand, internet of things, machine intelligence, artificial intelligence, etc. are principal technologies with telecom companies and internet service providers being platforms to deliver these innovations and services to consumers in the country and around the world.

So, to start with, the new policy should be a ‘National Technology and Telecom Policy’.

It should address the need to take the internet to every Indian and provide an enabling environment and policy ecosystem that allows for all these cutting-edge technologies and entrepreneurship to grow and thrive.

  • Internet for every Indian
  • Enable all emerging technologies and innovation: Go beyond licensing and spectrum allocation and focus on all emerging issues in telecom and technology, such as IoT, cybersecurity, machine intelligence, etc. Investments and entrepreneurship in new technologies should thrive unhindered by regulation or policies.
  • A global standard institution for a global standard sector
  • Consumer protection should be embedded in law: Define clear consumer rights on net neutrality, privacy, quality of service, expression, cybersecurity, etc. — creating reciprocal obligations on service providers. The government has successfully done this in the real estate sector through the RERA Act — and this model needs to be brought to the technology space. In recent times, governments have gained the perception of intruding on citizens’ rights rather than protecting them. That can and must change.
  • Governments must be online more and break down silos for transparency and efficiency: Finally, there is a need to embed more technology into the functioning of the government. Governments still function as silos — sometimes deliberately — to create fiefdoms lack of transparency, many times because of the legacy architecture of government. Only technology and large intranets can break down these silos and ensure transparency. It is time for the structure to improve. Prime Minister to citizen interactivity is expanded into a myGovOS that binds all government ministries to enable more transparency, collaboration, and data-led decision and policy making.

As a proud witness and participant to India’s technology and telecom growth in the last two and a half decades, I believe that India can be one of the world’s foremost technology powers in the next decade. But that destiny is neither automatic nor pre-ordained. It will need real and decisive steps by the government to build and layout the enabling framework and policies for it. It can be done and I hope Prime Minister Narendra Modi and his government will build, as his legacy, a new telecom and technology plan in 2018 to make Digital India, New India, and Transforming India real goals.

Rajeev Chandrasekhar is a Member of Parliament, currently Vice Chairman of the NDA in Kerala; the founder of BPL Mobile; and a technology entrepreneur.

The views expressed here are those of the author’s and do not necessarily represent the views of Bloomberg Quint or its editorial team.


<p> Member of Parliament &amp; Technology Entrepreneur...more
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