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Updated: December 30, 2009 20:59 IST

Action-packed year ahead for telecom

D. Murali
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Mr. Romal Shetty, Head of Telecom Practice, KPMG
Mr. Romal Shetty, Head of Telecom Practice, KPMG

To Romal Shetty, Head of Telecom Practice, KPMG, year 2010 promises a lot of action. “With impending auctions of 3G licences and expected mid-year implementation of MNP (mobile number portability), we can see an ‘action-packed’ year for the operators,” he begins, when contacted by Business Line for year-end reactions.

Excerpts from the email interview.

At the start of the century, or even mid-decade, what were the policy expectations to be fulfilled by the end of the first decade?

NTP (the New Telecom Policy) 99 set up specific targets for the telecom sector, segregating the targets between urban and rural India. The policy was set up to achieve “Make available telephone on demand by the year 2002 and sustain it thereafter so as to achieve a teledensity of 7 by the year 2005, and 15 by the year 2010.” Rural teledensity was expected to be 4 by 2010.

There were other objectives regarding the global scale of telecom companies, strengthening telecom research and development, and building a telecom manufacturing structure in India.

A key part of NTP 99 was stated as “Transform, in a time-bound manner, the telecommunications sector to a greater competitive environment in both urban and rural areas providing equal opportunities and level-playing field for all players.” Spectrum management was highlighted as a key objective in NTP 99. Clearly, policymakers were very prescient in their thinking on spectrum.

At the close of 2009, where are we?

With 565 million subscribers and lowest tariffs in the world, both teledensity and affordability criteria have been achieved, more or less. Though most of the geographical land mass has been covered in cell phone, overall achievement of the telecom sector is commendable and would take the place of the top achiever of this decade.

The continuing decline in wireline services and lack of adequate penetration of rural telephony are some of the concerns in the broader telecom industry.

Policymakers seemed to have over-achieved the competition-related objectives. Nobody could have imagined that consumers would have the comfortable headache of scanning nearly a dozen operators to select a cell phone service.

Though customers have benefited significantly from low tariffs, customer servicing levels have remained stagnant. A few of the larger operators are focusing on improving customer services; however, there seems to be a lack of urgency in this area.

Spectrum management seems to be treading a severely potholed road. Spectrum may be termed as a scarce national resource which can be milked unendingly, but it also requires lot of policy-level thinking. Transparency in spectrum allocation and management has a long way to go.

Broadband penetration and level of Internet use are also areas where much needs to be achieved. Hopefully, the broadband wireless access licence auctions will set the tone for the oncoming decade.

For 2010, what should be the agenda?

With the impending auctions of 3G licences and expected mid-year implementation of MNP, we can see an ‘action packed’ year for the operators. Though the operators had a relatively spectacular 2008 and 2009, in the midst of the worst financial crisis, 2010 could see them move closer towards the median range of financial health that the other industries suffered.

Clearly, maintaining a healthy operating environment will be the agenda of all the smaller and new operators, whereas the big boys will be looking to defend their territory as well as clinching one of the 3G licence spots.

For the policymakers, the urgency to clear up the current policy structure across all matters, from M&A to spectrum, cannot be highlighted enough. 2010 may give enough breathing space to at least set the policy tone for the coming decade. With rather large amounts of money being thrown into the industry, it is time to set a level of transparency in all aspects of policymaking.

There needs to be additional regulatory guidance or thought into customer servicing to ensure considerable increase in various customer servicing parameters. In the past, we have seen that whenever the regulator sets an appropriate tone or benchmark for the operators, they tend to move fast in achieving the specified benchmarks.

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