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Issues around telecom industry's health even more relevant now; viability a must: COAI

·4-min read

New Delhi, June 3 (PTI) The industry's long-term viability is a must to ensure robust, ubiquitous telecom services, and issues related to financial health are now even more relevant for the sector that has kept the nation connected amid the pandemic, COAI has said.

Industry association COAI - which represents telcos like Bharti Airtel, Reliance Jio and Vodafone Idea - said that the price discovery formula for 5G spectrum needs to be given a thorough consideration, in the context of positive rub-off effect the new-age technology will have on all other sectors.

The government must, therefore, look at 'primary revenue from telecom' in perspective of 'secondary revenue' that would accrue from other industries that harness the benefits of next-generation technology, it said.

'Financial health of the telecom industry is not good, everyone knows about it. Not much has been done to help improve the fiscal health and industry has its back to the wall in trying to cope up. And now if they have to shell out huge amounts of money for 5G auctions then it will be very difficult for the industry to find the money for that,' S P Kochhar, Director General, Cellular Operators' Association of India (COAI), told PTI.

The industry's demand relating to removal of legacy levies, taxes, rationalisation of USOF (universal service obligation fund levy), and other measures for long-term viability, are now more crucial than ever, Kochhar said.

'If anything they have become more relevant...Telcos are very clear, that they want to roll out networks and services for the benefit of citizens...Obviously, the input cost has to decrease, that is a very logical,' Kochhar said.

The government is aware of the situation and the demands of the industry, he noted.

According to the COAI, the advent of 5G will open up tremendous possibilities and fuel growth for other industries as well, and hence the consideration and criteria for 5G auctions cannot not be the same as one adopted for 4G.

'What we had so far was clear business use cases, where it was only subscriber talking to a subscriber. With 5G, the vistas are large but it will take time to build up...With 5G coming, all industries, without an exception, will get empowered and their revenues streams will increase manifold because of 5G... it will improve their production capabilities, efficiencies...the revenue which accrues to the government from such industries, riding on 5G, is going to be manifold,' Kochhar said.

Thus, if the primary revenue is reduced, and robust, next-generation network is rolled out, the secondary revenue accruing from beneficiary industries would be far more. This approach would compensate many times for any shortfall on account of primary revenue, he argued.

Moreover, the industry must be at a level-playing-field with newer Over-The-Top (OTT) players who offer similar services but are not subject to same rules. As such, the telecom industry remains 'highly taxed' with almost 38 per cent of revenue going into taxes.

Telecom services had moved from being seen as a status symbols at one time, to being a lifeline for the economy and society, amid the pandemic.

'The recognition has to come that telecom is indeed as an essential service and must be treated as one. If telecom is an essential service it has to be maintained and to maintain it, the provisioning has to be done at a cost which is viable. If you have to ubiquitous telecom service across the country then input costs have to go down and it has to be made a viable sector, in which telcos can invest and provide networks of requisite grade,' he said.

It is pertinent to mention that Department of Telecom (DoT) has set the ball in motion for 5G trials. The DoT recently allocated spectrum to operators to start 5G trials, in the country. The trials will be conducted at various locations, including Delhi, Mumbai, Kolkata, Bengaluru, Gujarat, Hyderabad, among others, say industry sources.

Telecom operators have been allocated spectrum in 700 Mhz bands, 3.3-3.6 gigahertz (Ghz) band and 24.25-28.5 Ghz band across various locations.

The trial spectrum allocation came after the DoT, on May 4, had approved applications from Reliance Jio, Bharti Airtel, Vodafone Idea and MTNL for conducting 5G trials without using technologies from Chinese companies. PTI MBI MKJ

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