Lower telecom running costs led to good 5G auctions: DoT secretary
The telecom sector has seen two unprecedented developments in the past week, with private operators offering nearly ₹1.5 crore for 5G spectrum. And at the same time, the Center announced support of 1.64 lakh crore to the public sector company BSNL to help it rapidly launch 4G and 5G services. Activity area spoke to K Rajaraman, Secretary of the Department of Telecommunications and Chairman of the Digital Communications Commissions, on the sidelines of an industry event in Mumbai to get his thoughts on the developments. Extracts.
What are the reasons for the higher than expected bids in this spectrum auction round?
It’s a combination of good spectrum pricing and the reforms we announced in September. In the past, auctions resulted in aggressive bidding, which resulted in a huge burden when operators were faced with falling ARPU. Declining ARPU and high spectrum costs cannot go together. Although ARPUs are based on market dynamics, we need to ensure that services remain affordable. So the TRAI’s recommendation to lower the price of spectrum by an average of 40% — compared to the previous auction — helped us a lot. In addition, the government has taken a long-term view of reducing spectrum usage fees, which once weighed heavily on operators and have now been reduced to zero. We also removed many other costs, such as bank guarantees. While we worked on making it easier to do business by making compliance easier and eliminating layers of approvals, we are now working on reducing the cost of doing business.
But the spectrum auction saw no counterbids; it was sold at reserve price…
The government’s job is to ensure that a transparent, fair, non-arbitrary and non-discriminatory process is put in place for a national resource. It is up to the market to find out the price. The market is dynamic. The industry is not rooted in a static market. There are global factors, macroeconomic factors and the state of the industry. All of this dictates the price at which telecom service providers are willing to buy. So let the market decide. Our job is to ensure a level playing field and remove operating costs so they can deliver services at affordable levels.
Only two operators, Reliance Jio and Airtel, have purchased pan-India spectrum. Doesn’t this raise fears that the telecommunications market will become a duopoly?
We believe that the market must be dynamic and competitive. Otherwise, the quality of customer service will suffer. Duopoly or monopoly is not the way to go. In the past, telecommunications services were a DoT monopoly, but we dismantled that structure because we wanted market competition to benefit consumers. Our job is to compete, that’s why we supported BSNL. Consumers should always be king.
But with rising prices, are consumers still kings?
Again, ARPU (average revenue per user) is determined by the market. Fares are under forbearance, and it is under TRAI. We want to create the conditions for ARPU to remain affordable.
The Center has announced a massive package for BSNL. But previous packages did not lead to a significant change in the operation of the PSU. How confident are you that the new package will help you?
There will be qualitative and quantitative deliverables. When it comes to quantitative deliverables, the focus is on revenue. For example, the government is focusing on fixed broadband to the home. Currently, there are 1.5 to 2 crore connections available, including copper. Now fiber is the way to go. BSNL is moving at a breakneck pace on this despite capex issues. They add almost 1 lakh of connections per month. Private actors are largely concentrated in urban areas, while BSNL is the one that connects rural areas. We believe BSNL is the vehicle to bring digital to rural homes. Thus, there will be a number of deliverables in terms of reaching customers and revenue targets. We will sign a Memorandum of Understanding with BSNL shortly within a week. Qualitatively, there needs to be a transformation of staff behavior. In this regard, BSNL has already engaged a training service provider, which will train around 30,000 staff across all verticals to give them a customer-centric approach. Customers are looking for a certain level of experience, so if BSNL wants to be a business entity, it will have to change in that direction. There will be an overall framework within which BSNL will have to deliver.
BSNL is already lagging behind private players in terms of 4G. How soon will it launch 4G?
It’s in progress. The TCS-Tejas-CDoT combine provided an indigenous solution. The concept of proof has been done. Now the commercial orders will have to be decided. Once done, it will be a full-scale rollout. All of BSNL’s 4G stack will be Indian. C-Dot did the core, TCS did the billing and software, and Tejas did the radio. We want to make up for lost ground. We’ve lost 2G and 3G, but at least we’re there on 4G, which still has about eight years of life cycle.
In terms of encouraging domestic providers of telecom network solutions, the biggest issue is market access. How are you going to solve this problem?
Market access is the biggest challenge for any start-up, which is why the government plays the role of facilitator. Although BSNL has established partnerships with local start-ups and private operators, this is where possible. We try to connect them. Now we have decided to step it up not only for Indian market but also for export market. For example, TCIL does many projects in other countries, so we asked them to do a workshop on evaluating local start-ups and their products, which can be organized for clients abroad as well as locally. Internally too, we have set up a synergy group. They work with other departments and see what telecommunications products they need, then see how our own companies can develop solutions for them. We increasingly play the role of matchmaker, but there is still work to be done in this area
How confident are you that this time Indian telecom products and solutions will succeed globally?
If we don’t support the start-up ecosystem in R&D, financing and purchasing, it will be difficult for them. Many tech companies die because even if they have a good product, they may not have the ability to find buyers. This is where the government must intervene strongly. For example, we have a program where we have supported around 40 start-ups with small grants. We also provide larger grants to more technologically mature companies. Additionally, we also donate ₹500 crore from the USO fund per year to start-ups. We asked the C-DoT to involve the private sector in its projects from day one. Private players bring market knowledge that can be combined with C-DoT’s R&D capabilities. Thus, they brought in several start-ups in 4G and 5G. On August 15, C-DoT will launch the core of 5G NSA (non-standalone architecture). We also sponsored four start-ups to build and supply a radio network to be tested on the BSNL network. This process has just begun. Once they comply with the requirements of the standards, they will receive certification. After that, these four players can participate in global tenders.