Lessons of Telecom Sector Reforms

for Other Infrastructure Sectors

Rekha Jain
G Raghuram
 Outline
• Review of the current status: Where we are
• How did we reach here
• Where have we got stuck
• What helped us reach here
• Lessons for other Infrastructure sectors
• Evaluating Regulatory Institutions
 Current Status
March 2022 March 2023
Overall Subscribers 1167 1172
Overall Tele-density 84.88 84.51
Urban Subscribers 647 654
Urban Tele-density 134.94 133.81
Rural Subscribers 520 519
Rural Tele-density 58.07 57.71
Internet Subscribers 824 881
ARPU per month 116 139
ARPU per month (Prepaid) 111 135
ARPU per month (Postpaid) 185 177
Average MOUs 879 919
Average MOUs (Prepaid) 900 953
Average MOUs (Postpaid) 588 532
ARPU - Average Revenue Per User
MOUs - Minutes of Usage
 Rural-Urban Tele-density
Gap
Years
Internet Users
(%) by March
M’14
2019
101.8
M’15 100.2
M’16 102.6
M’17 Rural:
114.9
227 mn
Urban:
M’18 106.8409.7 mn
M’19 102.5
M'20 83.52
M'21 83.52

4
 Rural-Urban Tele-density

Source: TRAI Report – 2022-23, as on 12 th March 2024 https://www.trai.gov.in/sites/default/files/PR_No.12of2024.pdf

5
 Top Telecom Service Providers
(Rs ‘000 Cr)

Revenue (Standalone)
Service
Providers
2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24

1 Bharti Airtel 62.5 53.9 52.2 56.6 66.7 71.4 87.4 95.5

Vodafone
2 35.5 28.4 37.9 45.8 41.9 38.3 42.2 42.4
Idea Ltd.

3 BSNL 31.5 25.1 19.3 18.9 18.6 19.1 20.7 21.3

4 Reliance Jio 40.7 54.4 70.4 77.2 91.1 100.1

(Source: Company Annual Reports)

 Top Telecom Service Providers
(Rs ‘000 Cr)

Profit/Loss Before Tax

Service
Providers
2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24

1 Bharti Airtel (8.5) (0.7) (5.2) (51.0) (18.5) (42.6) 12.7 71.2

Vodafone
2 (1.4) (7.0) (17.7) (62.3) (46.3) (28.2) (29.3) (30.4)
Idea Ltd.

3 BSNL 3.2 1.1 1.3 (15.5) (7.4) (7.0) (6.7) (5.4)

4 Reliance Jio 4.6 7.5 16.1 19.9 24.4 27.5

(Source: Company Annual Reports)

 Where We Are – Telecom Parameters
• QOS (Coverage, Mobility, Reliability)
• Creation of Several Large Companies (Last 20 Years):
– Revenue Share and Tax Revenues for the Government
– Wealth for Shareholders
– Employment
• The Current Health of the Sector:
– Rs 1.02 lakh crore dues (AGR)
– Debt Burden (high reserve prices in auctions), Jio
– VIL: Net debt to earnings before interest, tax, depreciation &
amortization (Ebitda) of over 25x, Bharti: 4.2x, Jio: 6.9x
• Government takes 35.3 stake in VIL
 Where We Are
• Multiple Players (Presence of Foreign Players)
• Regulator (Review and Restructuring)
• Appellate Tribunal
• Corporatized Government Incumbent
• Privatized Government Incumbent
• Indian Players Going Abroad
• USOF Administrator
• Indian Telecom Service Cadre Stopped
• Infrastructure as a Separate Business
 Asectoral Regulation Competition Judicial System

Commission Supreme Court

Ministry of Communications and IT, Department Regulators

of Telecom, (Telecom Commission) Telecom Dispute Resolution Settlement Appellate
Tribunal (TDSAT)

Telecom Regulatory Authority of India

Subscribers

Government / Partially Government Service Providers Private Operators

Bharti-Airtel Fixed, Cellular, NLD, ILD,
Fixed, Cellular, ISP, NLD, VSAT, and ISP
BSNL ILD (All India other than
(Corporatized) Mumbai and Delhi) Vodafone Cellular
)
Idea Cellular
VSNL now TATA International/National
Communications Others Fixed, Cellular, NLD, ILD,
Private Line Services
(Privatized Incumbent) VSAT, and ISP

MTNL (Corporatized and Fixed, Cellular, ISP, NLD,

Partially Privatized) ILD services in Delhi and Tower Companies
Mumbai Indus Towers Limited

Bharti Infratel Limited

Reliance Infratel Limited

Others
10
 Where We Were
• The primary need of the people is food, water and
shelter.
Telephone development can wait.
• In place of doing any good, development of the
telecommunication infrastructure has tended to
intensify the migration of population from rural to
urban areas. There is a need to curb growth of
telecom infrastructure particularly in the urban areas.
(Approach Paper to the Sixth Plan (1980-85), quoted in Balashankar, 1998, p.
30)

Source: Telecommunications Reform in India, Edited by Rafiq Dossani, Paragraph 3, p. 3.

 Outline
• Review of the current status: Where we are
• How did we reach here
• Where have we got stuck
• What helped us reach here
• Lessons for other Infrastructure sectors
• Evaluating Regulatory Institutions
 How Did We Reach Here - 1
• Private Participation/Cellular Metros (1992)
(‘Supplementary Services’), Duopoly, Auction
• NTP 94 (Private Participation/Cellular All States + Fixed)
(Local Competition)
• Telecom Regulatory Authority of India (1997)
• National Telecom Policy 99 (Revenue sharing, USOF,
Convergence), (Implications now!!) Opening up of NLD
• Corporatization of DoT - BSNL (2000)
• TRAI Act (2000) –splitting into TRAI and Telecom Dispute
Settlement and Appellate Tribunal

13
 How Did We Reach Here – 2
• Fourth Cellular Operator (Auction) (2001)
• WLL Controversy (2001)
• Unified Access Service License (2003)
• USOF (2002/04)
• Additional 2G Licenses (2007-08) (???)
• 3G Auctions (2010)
• Supreme Court Judgement (2012)
• 2G Auctions (2012 -2016)
• Jio’s entry
• Several failed spectrum auctions
14
 Outline
• Review of the current status: Where we are
• How did we reach here
• Where have we got stuck
• What helped us reach here
• Lessons for other Infrastructure sectors
• Evaluating Regulatory Institutions
 Where Have We Got Stuck? - 1
• BSNL and MTNL: Corporate
Restructuring/Privatization….??
• Spectrum Availability: Strategic Review of
Spectrum (licensed and unlicensed)
• Rural Roll Outs
• Manufacturing
– R&D
– Developing Telecom Entrepreneurs
 Where Have We Got Stuck? - 2
TRAI and TDSAT
• Review of Functioning
– Consultation process has been established, however its quality
can be improved
– Should use its position to get data on a wider number of
parameters
• Broader Questions
– Interface to Competition Act
• Includes Disputes between Licensor and Licensee
– Role of Tribunal in Competition Issues Precluded
– But what is not a Competition Issue?
• Option: Concurrent Regulator (Oftel and Competition
Commission)
• Linkages with Competition Commission?
 Outline
• Review of the current status: Where we are
• How did we reach here
• Where have we got stuck
• What helped us reach here
• Lessons for other Infrastructure sectors
• Evaluating Regulatory Institutions
 What Helped Us Reach Here - 1
• Competitive Bidding: Appropriate and Sophisticated
Auction Design
• Leveraging a Wider Base of Expertise (Foreign Players)
• Willingness to Restructure Contracts
• ITS IAS : Technical Generalist
• Technology Neutral (?)
• Unbundling
– Policy, Regulation, Operations
– Commercial and Social (Sourcing Funds from the
Sector)
– Infrastructure and Services
 What Helped Us Reach Here - 2
• Political Will
• Missionary Approach (C-DOT, PCO)
• New Technology Introduction (Fresh Start)
• Rise Above Scams
 Outline
• Review of the current status: Where we are
• How did we reach here
• Where have we got stuck
• What helped us reach here
• Lessons for other Infrastructure sectors
• Evaluating Regulatory Institutions
 Lessons for Other
Infrastructure Sectors - 1
• Competitive Bidding
– All Sectors (Railways)
• Leveraging a Wider Base of Expertise (Foreign
Players)
– Road, Air, Ports
• Willingness to Restructure Contracts
– Airports, Ports
• Technical Generalist Open
Professionals
– Railways
 Lessons for Other
Infrastructure Sectors - 2
• Unbundling
– Policy, Regulation, Operations
• Railways, Road
– Commercial and Social (Sourcing Funds from the
Sector)
• Road, Air, Rail
– Infrastructure and Services
• Road, Air, Ports, Rail
• Technology Neutral (?)
– Power
• Regulation
 Outline
• Review of the current status: Where we are
• How did we reach here
• Where have we got stuck
• What helped us reach here
• Lessons for other Infrastructure sectors
• Evaluating Regulatory Institutions
Framework for Assessing Regulatory
Institutions and Instruments - 1
• Autonomy
• Accountability
• Powers
Framework for Assessing Regulatory
Institutions and Instruments - 2
• Autonomy
– Finances
– Selection of Chair and Members
– Internal Staffing
– Salary
– Relationship with the Government
Framework for Assessing Regulatory
Institutions and Instruments - 3
• Accountability
– Transparency
– External Scrutiny
– Audit
– Appellate Bodies
– Removal Process
Framework for Assessing Regulatory
Institutions and Instruments - 4

• Powers
– Penal Provisions for Contravention of Order
– Penal Provisions for Contravention of Directions
– Offences by Government Departments
– Power to Make Regulations
Thank You