Reforms in the telecommunications industry and further directions of development of this industry

Author: Rajesh Kaushal

India’s telecom sector has undergone a profound transformation in recent years, driven by technological advancements, policy reforms and changing consumer demands. As a leading telecom infrastructure solutions provider, Delta Electronics India is playing a leading role in this revolution, driving change and shaping the future trajectory of the industry.

Telecom landscape in India

India’s telecommunications development has been marked by significant regulatory reforms aimed at fostering competition, improving connectivity and promoting digital inclusion. India’s telecom industry is the second largest in the world, with a subscriber base of 1.084 billion as of February 2024 (wireless and wireline subscribers). India has an overall ICT density of 85.64%, of which the ICT density in the rural market which is largely untapped is 58.92% while the ICT density in the urban market is 134.13%. This phenomenal growth means the nation is hungry for reliable and fast connectivity. This is driven by factors such as increasing internet penetration, growing e-commerce sector and increasing use of cloud services. This exponential growth highlights the urgent need for a robust and future-proof telecommunications infrastructure.

Reforms: supporting a sustainable ecosystem

The government’s recent initiatives, including the Telecom Bill 2023, hold great promise of creating a more enabling environment for telecom companies. The proposed reforms address several key challenges:

Spectrum availability and management: The bill emphasizes mechanisms for spectrum refarming, harmonization and spectrum trading/leasing/sharing. This will ensure efficient use of this valuable resource, paving the way for wider 5G deployment.

Simplifying the right of way (RoW).: Streamlining the RoW approval process, especially for fiber optic cable laying, will significantly speed up infrastructure deployment. This will be crucial in bridging the digital divide and extending connectivity to regions with less developed network access.

Rationalization of penalties: Restructuring the penalty framework will provide much-needed predictability and reduce the financial burden on telecommunications operators, enabling them to invest more in network expansion and modernization.

AGR relief: The four-year moratorium on adjusted gross revenue (AGR) charges provides telecom operators with much-needed financial relief, enabling them to invest in network expansion and modernization.

Increasing FDI: Raising the foreign direct investment (FDI) relief in the telecommunications sector to 100% will attract much-needed foreign capital and technological expertise.

Challenges and opportunities in the telecommunications sector

Although the telecom industry in India has seen remarkable growth, it still faces several challenges:

Infrastructure deficit: Bridging the divide between urban and rural areas remains a major challenge. Limited fiber penetration, especially in remote areas, limits internet speeds and hinders wider connectivity. Additionally, tower density, especially to support the ever-increasing data demand, requires significant expansion.

Financial burden: The telecommunications sector is struggling with high debt and a complex tax structure. These financial stresses discourage investment in network modernization, making it difficult to deploy new technologies such as 5G. Improving the financial landscape is crucial to supporting a healthy and innovative ecosystem.

Lack of skilled labor: The rapid evolution of the telecommunications sector requires a highly skilled workforce to manage and maintain advanced infrastructure and implement cutting-edge technologies. A shortage of skilled personnel, especially in areas such as fiber deployment and 5G network management, can hinder the efficient operation and optimization of networks.

Changing regulatory environment: Keeping pace with the dynamic regulatory environment can be a challenge for telecommunications operators. Navigating complex licensing procedures and adapting to changing regulations requires flexibility and effective compliance mechanisms.

Opportunities: the way forward

5G Revolution: The implementation of 5G technology is a game changer. It delivers ultra-fast speeds, massive network capacity and low latency, paving the way for innovative applications in areas such as manufacturing, healthcare and education. As a telecommunications infrastructure provider, we are committed to developing solutions to support the seamless implementation of 5G.

Digital Divide Bridge: Expanding fiber optic networks and deploying innovative solutions such as broadband networks in rural areas can connect underserved communities and ensure inclusive access to the digital world. This not only promotes social equality, but also unlocks the economic potential of these regions.

Smart infrastructure solutions: Advances in telecommunications infrastructure solutions create exciting opportunities. We focus on developing high-performance power electronics, smart cooling systems and smart grid management tools. These solutions optimize energy consumption, reduce operators’ operating costs and improve network performance, contributing to a sustainable telecommunications ecosystem.

Looking to the future

The Indian telecom sector is on the cusp of an exciting transformation. With proactive government reforms, adoption of 5G technology and concerted efforts of all stakeholders, India is poised to become a global leader in the digital era. Delta Electronics, through its advanced telecommunications infrastructure solutions, will continue to be the driving force behind this journey, enabling the nation to connect, innovate and grow.

(The author is Rajesh Kaushal, Vice President, Delta Electronics India and the views expressed in this article are his own)