Telecom reforms

Over six years after the launch of the Digital India programme, aimed at transforming the country into a ‘digitally empowered society and knowledge economy’, the Union Government has approved a major relief package for the debt-burdened telecom sector. Such a bailout plan was long overdue, considering that one of the major players, Vodafone Idea, was on the brink of bankruptcy. In all, Vodafone and other telecom firms owed about Rs 92,000 crore to the Centre as licence fee and Rs 41,000 crore as spectrum usage fees. The confidence-building measures include a four-year break for companies from paying statutory dues, the scrapping of the Spectrum Usage Charge for airwaves acquired in future spectrum auctions, and 100 per cent FDI (foreign direct investment) in the sector under the automatic route. The breather should hopefully spur the firms to overcome their financial woes and provide affordable and improved services.

The government has claimed that the reforms package is adequate for the survival of the existing players and will ensure robust competition, besides paving the way for the entry of new players. This is easier said than done as a duopoly has become well-entrenched in the industry in recent years. What’s needed is a level playing field that can attract new firms and encourage investment, along with a sustainable tariff regime. From the consumer’s point of view, the more choices he has the merrier.

India’s telecom sector has the potential to spearhead an economic turnaround. The nation accounts for the world’s second-largest telecommunication market (after China) with a subscriber base of over 115 crore. It is estimated that over the next five years, the rise in mobile phone penetration and the drop in data costs will add 50 crore new Internet users. The disruptions caused by the Covid-19 pandemic over the past year and a half have driven more people towards digital platforms. Still, the digital divide persists and the government has a key role to play in making digital resources universally accessible. Much will depend on how transparently and effectively the reforms are implemented.