reforms in telecom sector

 https://pib.gov.in/PressReleasePage.aspx?PRID=1755086

Nine structural reforms and Five procedural reforms plus relief measures for the Telecom Service Providers are as below:

Structural Reforms

1. Rationalization of Adjusted Gross Revenue:  Non-telecom revenue will be excluded on prospective basis from the definition of AGR.
2. Bank Guarantees (BGs) rationalized: Huge reduction in BG requirements (80%) against License Fee (LF) and other similar Levies. No requirements for multiple BGs in different Licenced Service Areas (LSAs) regions in the country. Instead, One BG will be enough.
3. Interest rates rationalized/ Penalties removed: From 1st October, 2021, Delayed payments of License Fee (LF)/Spectrum Usage Charge (SUC) will attract interest rate of SBI’s MCLR plus 2% instead of MCLR plus 4%; interest compounded annually instead of monthly; penalty and interest on penalty removed.
4. For Auctions held henceforth, no BGs will be required to secure instalment payments. Industry has matured and the past practice of BG is no longer required. 
5. Spectrum Tenure: In future Auctions, tenure of spectrum increased from 20 to 30 years.
6. Surrender of spectrum will be permitted after 10 years for spectrum acquired in the future auctions.
7. No Spectrum Usage Charge (SUC) for spectrum acquired in future spectrum auctions.
8. Spectrum sharing encouraged- additional SUC of 0.5% for spectrum sharing removed.
9. To encourage investment, 100% Foreign Direct Investment (FDI) under automatic route permitted in Telecom Sector. All safeguards will apply.

Procedural Reforms

1. Auction calendar fixed - Spectrum auctions to be normally held in the last quarter of every financial year.
2. Ease of doing business promoted - cumbersome requirement of licenses under 1953 Customs Notification for wireless equipment removed. Replaced with self-declaration.
3. Know Your Customers (KYC) reforms: Self-KYC (App based) permitted. E-KYC rate revised to only One Rupee. Shifting from Prepaid to Post-paid and vice-versa will not require fresh KYC.
4. Paper Customer Acquisition Forms (CAF) will be replaced by digital storage of data. Nearly 300-400 crore paper CAFs lying in various warehouses of TSPs will not be required. Warehouse audit of CAF will not be required.
5. SACFA clearance for telecom towers eased. DOT will accept data on a portal based on self-declaration basis. Portals of other Agencies (such as Civil Aviation) will be linked with DOT Portal.

Addressing Liquidity requirements of Telecom Service Providers

The Cabinet approved the following for all the Telecom Service Providers (TSPs):

1. Moratorium/Deferment of upto four years in annual payments of dues arising out of the AGR judgement, with however,  by protecting the Net Present Value (NPV) of the due amounts being protected.
2. Moratorium/Deferment on due payments of spectrum purchased in past auctions (excluding the auction of 2021) for upto four years with NPV protected at the interest rate stipulated in the respective auctions.
3. Option to the TSPs to pay the interest amount arising due to the said deferment of payment by way of equity.
4. At the option of the Government, to convert the due amount pertaining to the said deferred payment by way of equity at the end of the Moratorium/Deferment period, guidelines for which will be finalized by the Ministry of Finance.

The above will be applicable for all TSPs and will provide relief by easing liquidity and cash flow. This will also help various banks having substantial exposure to the Telecom sector.

national digital communications policy 2018

The Union Cabinet chaired by Prime Minister Shri Narendra Modi has  approved the National Digital Communications Policy-2018 (NDCP-2018) and re-designation of the Telecom Commission as the "Digital Communications Commission”.

Impact:

The NDCP-2018 envisions supporting India's transition to a digitally empowered economy and society by fulfilling the information and communications needs of citizens and enterprises by establishment of a ubiquitous, resilient and affordable digital communications infrastructure and services. 

The ‘Customer focused’ and ‘application driven’ NDCP-2018 shall lead to new ideas and innovations, after the launch of advanced technology such as 5G, IOT, M2M, etc. which shall govern the telecom sector of India.

Objectives:

The key objectives of the policy are:

1. Broadband for all;
2. Creating four million additional jobs in the Digital Communications sector;
3. Enhancing the contribution of the Digital Communications sector to 8% of India's GDP from ~ 6% in 2017;
4. Propelling India to the Top 50 Nations in the ICT Development Index of ITU from 134 in 2017;
5. Enhancing India's contribution to Global Value Chains; and
6. Ensuring Digital Sovereignty.

 These objectives are to be achieved by 2022.

Features:

The policy aims to

·         Provide universal broadband connectivity at 50 Mbps to every citizen;

·         Provide 1 Gbps connectivity to all Gram Panchayats by 2020 and 10 Gbps by 2022;

·         Ensure connectivity to all uncovered areas;

·         Attract investments of USD 100 billion in the Digital Communications Sector;

·         Train one million manpower for building New Age Skill;

·         Expand IoT ecosystem to 5 billion connected devices;

·         Establish a comprehensive data protection regime for digital communications that safeguards the privacy, autonomy and choice of individuals

·         Facilitate India's effective participation in the global digital economy;

·         Enforce accountability through appropriate institutional mechanisms to assure citizens of safe and

·         Secure digital communications infrastructure and services.

 Strategy:

The policy advocates:-

1. Establishment of a National Digital Grid by creating a National Fibre Authority;
2. Establishing Common Service Ducts and utility corridors in all new city and highway road projects;
3. Creating a collaborative institutional mechanism between Centre, States and Local Bodies for Common Rights of Way, standardization of costs and timelines;
4. Removal of barriers to approvals; and
5. Facilitating development of Open Access Next Generation Networks.

Background:

As the present world has entered the era of modern technological advancements in the Telecom Sector such as 5G, loT, M2M etc., a need was being felt to introduce a 'customer focused' and 'application driven' policy for the Indian Telecom Sector, which can form the main pillar of Digital India by addressing emerging opportunities for expanding not only the availability of telecom services but also telecom based services.

 Accordingly, the new National Digital Communications Policy - 2018 has been formulated, in place of the existing National Telecom Policy-2012, to cater to the modern needs of the digital communications sector of India.