Telecom Minister Kapil Sibal unveiled the government’s new draft telecom policy on Monday, which aims at one nation-one license. The key features of this policy are the recommendation to remove roaming charges, the exit and surrender policy and a vision to have broadband services on demand.
On this episode of CNBC-TV18’s India Tonight, Karan Thapar is joined by telecom analyst Mahesh Uppal, CNBC TV18’s economic policy editor Siddharth Zarabi, former member of TRAI and former chairman of BSNL Dr DPS Seth and telecom secretary R Chandrasekhar to decide if the NTP 2011 is visionary and impressive or limited and disappointing?
Below is an edited transcript of the interview.
Q: How do you respond to the government’s new draft telecom policy? Are you impressed or are you a little disappointed?
Seth: There are quite a few very good points here. Points such as the licensing area coverage, the way they have proposed to move in that direction, the way they are talking of their missions. So to that extent yes it’s very impressive. They have also made it very clear that direct revenue generation is not the task which is primary but it is only secondary. So these are very definite and positive statements.
Q: So you are giving the policy a thumps up?
Seth: There are negatives.
Q: But are the negatives overweighing the positives?
Seth: I would say that the negatives are with regard to the strategy that they have come out with in using a lot of English, but there there is a little problem.
Q: Using a lot of English, in other words they have used language to impress rather than explicitly express?
Seth: Only in the strategy part.
Q: The policy says that revenue generation will play a secondary role which per implication suggests that provision of service is the primary function. Is that loadable or in a country where you already have 800 million telephone subscribers, is it unnecessary?
Uppal: No I think it is loadable; I think its well worth repeating that revenue generation is not the goal. We must recall that the 800 million that we are talking is connections not users. In fact the number of users in this country is roughly 0.5 billion, even the TRAI has rough estimates of that. So I think we have a fair way to go.
In terms of what the policy is focusing on that is broadband, we have miles to go; we have barely started. So to suggest that we are not focused on revenue but service is a very good idea I think.
Q: The aim of this policy is to sketch out a road map for the next 10 years. Do you believe that this policy provides a credible basis for the next decade?
Zarabi: I think it does. Given all the legal constraints that the telecom environment and telecom policy makers face, I think it’s a very credible job. But one quick point on the issue of revenue generation. I was a but surprised yesterday that while this policy was released, there was another missive that came out from the government in which the DoT has rejected TRAI’s suggestion to reduce the annual revenue share for all operators to 6% in a graded manner and instead said it should be 8.5%. So I think that flies in the face of the objective of revenue generation being primary.
But there are two very important points - one that it acknowledges that all network licenses need to be clubbed together and secondly it provides, for the first time ever in the last 15 years, an amount of spectrum that the government plans to release.
Q: Most of what you have heard from the participants in studio must have been music to your ears, but there was a note of criticism from Dr. Seth when he suggested that you could have been clearer and you could have perhaps expressed yourself in simpler English when it comes to the strategy aspect. Do you want to respond to that?
Chandrasekhar: I am glad to hear that people feel that we are headed in the right direction. I am aware that some people feel that perhaps in some parts of the policy the specifics have not been spelt out in terms of exactly how each of these strategies will be articulated, the terms and conditions etc. But I would like to put this issue in perspective. The policy aims to set out a road map for the medium term and long term, lay out the objectives clearly, lay out the focus and the direction in which we are headed. The details will have to be worked out once the policy is approved.
Now there are a number of specific issues which the industry faces currently and those are being dealt with outside of the policy because they are immediate and short term and they are the specifics of today. Those are being addressed in the context of the TRAI recommendation of May2010 on which there were further clarifications till May 2011. That is also being made available to the public as to what the TRAI recommended and what are the specific suggestions of the DoT in that regard.
Just for example, one point which was mentioned was that while TRAI had recommended reduction to 6%, the DoT had suggested in its response that it should be 8.5% which is somewhat contradictory to the statement that revenue generation is not the primary goal. Again in this particular instance, we have a spread of different percentages at different levels and for different quantities of spectrum being held today. 8.5% was arrived at by nearly putting down the number which makes it revenue neutral, that is no increase in revenue, no reduction in revenue from where we are today. So I don’t think that that implies that there is any move in terms of adding to the revenues through that particular measure.
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On this episode of CNBC-TV18’s India Tonight, Karan Thapar is joined by telecom analyst Mahesh Uppal, CNBC TV18’s economic policy editor Siddharth Zarabi, former member of TRAI and former chairman of BSNL Dr DPS Seth and telecom secretary R Chandrasekhar to decide if the NTP 2011 is visionary and impressive or limited and disappointing?
Below is an edited transcript of the interview.
Q: How do you respond to the government’s new draft telecom policy? Are you impressed or are you a little disappointed?
Seth: There are quite a few very good points here. Points such as the licensing area coverage, the way they have proposed to move in that direction, the way they are talking of their missions. So to that extent yes it’s very impressive. They have also made it very clear that direct revenue generation is not the task which is primary but it is only secondary. So these are very definite and positive statements.
Q: So you are giving the policy a thumps up?
Seth: There are negatives.
Q: But are the negatives overweighing the positives?
Seth: I would say that the negatives are with regard to the strategy that they have come out with in using a lot of English, but there there is a little problem.
Q: Using a lot of English, in other words they have used language to impress rather than explicitly express?
Seth: Only in the strategy part.
Q: The policy says that revenue generation will play a secondary role which per implication suggests that provision of service is the primary function. Is that loadable or in a country where you already have 800 million telephone subscribers, is it unnecessary?
Uppal: No I think it is loadable; I think its well worth repeating that revenue generation is not the goal. We must recall that the 800 million that we are talking is connections not users. In fact the number of users in this country is roughly 0.5 billion, even the TRAI has rough estimates of that. So I think we have a fair way to go.
In terms of what the policy is focusing on that is broadband, we have miles to go; we have barely started. So to suggest that we are not focused on revenue but service is a very good idea I think.
Q: The aim of this policy is to sketch out a road map for the next 10 years. Do you believe that this policy provides a credible basis for the next decade?
Zarabi: I think it does. Given all the legal constraints that the telecom environment and telecom policy makers face, I think it’s a very credible job. But one quick point on the issue of revenue generation. I was a but surprised yesterday that while this policy was released, there was another missive that came out from the government in which the DoT has rejected TRAI’s suggestion to reduce the annual revenue share for all operators to 6% in a graded manner and instead said it should be 8.5%. So I think that flies in the face of the objective of revenue generation being primary.
But there are two very important points - one that it acknowledges that all network licenses need to be clubbed together and secondly it provides, for the first time ever in the last 15 years, an amount of spectrum that the government plans to release.
Q: Most of what you have heard from the participants in studio must have been music to your ears, but there was a note of criticism from Dr. Seth when he suggested that you could have been clearer and you could have perhaps expressed yourself in simpler English when it comes to the strategy aspect. Do you want to respond to that?
Chandrasekhar: I am glad to hear that people feel that we are headed in the right direction. I am aware that some people feel that perhaps in some parts of the policy the specifics have not been spelt out in terms of exactly how each of these strategies will be articulated, the terms and conditions etc. But I would like to put this issue in perspective. The policy aims to set out a road map for the medium term and long term, lay out the objectives clearly, lay out the focus and the direction in which we are headed. The details will have to be worked out once the policy is approved.
Now there are a number of specific issues which the industry faces currently and those are being dealt with outside of the policy because they are immediate and short term and they are the specifics of today. Those are being addressed in the context of the TRAI recommendation of May2010 on which there were further clarifications till May 2011. That is also being made available to the public as to what the TRAI recommended and what are the specific suggestions of the DoT in that regard.
Just for example, one point which was mentioned was that while TRAI had recommended reduction to 6%, the DoT had suggested in its response that it should be 8.5% which is somewhat contradictory to the statement that revenue generation is not the primary goal. Again in this particular instance, we have a spread of different percentages at different levels and for different quantities of spectrum being held today. 8.5% was arrived at by nearly putting down the number which makes it revenue neutral, that is no increase in revenue, no reduction in revenue from where we are today. So I don’t think that that implies that there is any move in terms of adding to the revenues through that particular measure.
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