Ringing in a new tune: Telecom policy priorities for Narendra Modi

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The NDA winning the Indian parliamentary elections with an overall majority provides an opportunity to ring in a new tune for the telecom industry. Just five years ago, Indian telecom was the darling of foreign investors and the poster child of economic growth. But from the moment the 3G auctions concluded in 2010, bit by bit the industry has huffed, puffed and crawled to a slowdown to match the economy itself. Corruption scandals, cancelled licences, tax disputes, debt crises, tariff hikes and failed auctions: you name it, we’ve seen it.

But thanks to “duality” (i.e individuals having more than one SIM card) and to the sheer hunger of most Indians to own and use smart phones, a significant chunk of the Indian telecom opportunity remains unconquered. Rural telecom penetration remains low, data services are just taking off, and mobile-enabled services such as money transfer have barely impacted people most of whom remain unbanked. With so much potential across the populace, much can be achieved in telecom that will help the economic revival Narendra Modi has promised. Ringing in new tunes for Indian telecom should be a priority, and to get things started here is a list of topics for consideration in the first 100 days of office:

1. Voice to the masses: With rural penetration well below 50%, the new Government could take a fresh look at how to encourage the industry to put more money into rural network expansion. Finding ways to allocate the thousands of crores of universal service funds that lie unused would be helpful.

2. Let mobile-enabled services bloom: 25% of Kenya’s GDP passes through m-pesa. Yet in India, a country with a similar proportion of unbanked to Kenya mobile money is yet to take off. Part of this is due to the RBI’s prudent regulatory stance, but it may be time to push-start policies to drive mobile money, as well as mobile health and education. The latter will help achieve more access with less public investment in bricks and mortar into rural areas.

3. Encourage local apps development: Indian software applications developers are prolific in building apps for the iOS and Android markets worldwide, but relatively few venture into creating apps for the local market. The reason is lack of money – writing for a linguistic audience other than an English-speaking one often turns developers off, and the result is relatively few Indians using a lot of apps. Government could consider how to change apps providers’ incentives (eg favourable tax treatment for apps revenue generated from localised services)

4. Take the lead in innovation: Indian telecom companies have led in innovative ways to track and analyse voice usage (customer analytics in India is way ahead of other markets), in pricing (eg “sachet” pricing for pre-paid, where users can top up even Rs.10  at a time), and ingenuity in using scarce spectrum allocations to provide mass services in congested cities. But overall, India lacks verve and achievement when it comes to the innovation that could serve a nation so in need of better communications. More consideration to science and education policies to consider what needs to be done to make Indian telecom industry, and indeed technology and IT, more innovative.

5. Re-energise foreign investors: Once the darling of telecom in emerging markets, India has fallen from grace over recent years. Even committed investors such as Maxis, Vodafone, Telenor and Sistema have seen a rupee decline which dilutes whatever returns they can muster in the lean-profitability Indian market. Moreover, the market has continued to dog investors with uncertainty over issues such as tax treatment of foreign investment.  Greater economic stability and a revival of the rupee will help, but this is also an opportunity for a new government to show it is serious about anti-corruption and determined to treat overseas investors fairly and transparently.

6. Remove regulatory uncertainties: Much has been achieved in the past twelve months to demystify Indian telecom regulations, especially in the field of spectrum pricing and allocation and the provision of 3G services. More is to be done to clarify M&A norms, which will remove final hurdles to more deals happening to lead to a much-needed in market consolidation.

7. Improve service quality: Dropped calls and dial-up-speed internet remain a bug bear for most of us. Oddly for such a regulated country, India is one of the few which doesn’t have a call quality regulatory system which penalises poor quality and rewards better call quality. Brazil’s telecom regulator, Anatel, monitors call quality and data speeds across the nation, fining operators who do not meet minimum standards. There is an opportunity to do more in India. Aligned with this would be moves to make more spectrum available for operators to use. After all, who wouldn’t expect low call quality when Mumbai runs on only 1/7th the spectrum of London?

The thoughts and opinions shared here are of the author.