We expect 2015 to bring about consolidation, as well as restore vitality within the sector

Rajan S Mathews, Director General, Cellular Operators Association of India (COAI), is upbeat about the sector in the years ahead but believes the government must do more to allay some misplaced fears about the radiation scare.

What are the two or three biggest challenges the Indian telecommunication industry is facing today?
The Indian mobile telephony industry currently has a cumulative debt of over Rs 300,000 crore with many operators even making negative returns on their investments. The industry, which has invested heavily in licence fee, spectrum, telecom equipment and security apparatus, is now on an unequal footing with unregulated Over-The-Top service providers (OTTs) that are offering voice services using technologies that are spectrum inefficient. These OTTs are not subject to any licence fee and do not conform to national security requirements.

Further, for achieving Digital India, facilitation of sufficient quantity of globally harmonized spectrum in a contiguous manner per operator is the key requirement for all mobile broadband technologies to be deployed effectively. In India, contiguous spectrum is available only on a limited basis with the operators today because spectrum has been allocated at various times in small chunks to the existing operators and hence, much of the current allocation is non-contiguous.

Further, mobile networks in cities like Chandigarh, Delhi NCR, Jaipur, Bhopal, Patna, Kolkata, Mumbai, Pune, Hyderabad, Bengaluru, Chennai and North-East are being impacted by limited and restricted network and infra¡structure presence. Roadblocks in installation of cell sites and arbitrary shutting down of operational ones is leading to network congestion and spotty coverage, further resulting in inconvenience for the customers.

Despite the DoT´s August 2013 guidelines, unabated disconnection of electricity supplies, sealing of premises, dismantling of towers by local authorities continues to hamper network connectivity.

According to TRAI estimates, there are around 5,85,000 towers currently, and approximately 1,00,000 more towers will be required by 2017.

The industry is faced with the following challenges which are leading to call drops:
a)State bodies initiate actions against the towers without any prior notices like disconnecting electricity supplies, sealing the premises and even dismantling of tower sites
b)Restrictions imposed by state governments and municipalities for wireless sites for erecting cell-sites in non-commercial areas
c)Issues pertaining to Right of Way (RoW); Due to no approval, operators are not even in position to put up sites. Frequent fiber cuts due to infrastructure projects are recurring phenomena in almost all circles
d)Site outages on account of long power failures and delay in restoration of power supply by electricity boards
e)Owner or legal issues: This is an important factor, because if the operator does not obtain the permission to set up the cell site, the call would be dropped f)Interference due to illegal wide band radio and coverage restrictions arising out of cross border spectrum interference
g)Shortage of Spectrum amid surging data traffic: Lack of availability of a sufficient quantum of globally harmonised spectrum in contiguous form is the biggest impediment to the deployment of wireless technologies.

To what extent can change in policies help to mitigate the pressures the industry is facing? What have been your recommendations to the government and to the regulator?
The M&A guidelines introduced by DoT in Feb 2014, were welcomed by the industry in that they afforded additional clarity on the subject so as to enhance the ability to undertake M&A activity. However, the lock in period, 50 per cent market share, 25 per cent spectrum cap, are all criteria which will disallow certain companies from merging. So, it appears that the larger operators will not be looking to merge with one another because of these restrictions. No major merger and acquisitions investment activity took place last year due to these restrictive M&A guidelines. The mandate for the merged entity to make payment of the differential between the market determined price and the administrative price for the administratively allocated spectrum (4.4 MHz for GSM) held by the acquired entity along with spectrum caps, is limiting any consolidation in the sector.

Additionally, government should consider lowering the debt burden on the industry by reducing License Fees of eight per cent and SUC Fees at approximately five-six per cent.

With another major network launch expected later this year, and more 4G launches by existing networks, how do you see the industry in the next few years?
Going forward, we expect 2015 to bring about consolidation, as well as restore vitality within the sector. The increasing affordability and uptake of smart-phones and applications will be one of the major shapers of future investments in the telecom sector. To cater to the increased data service requirements, the trend toward the use of new technologies such as 3G and 4G is already visible.

Mobile broadband will be one of the major drivers towards facilitating these services, and for overall proliferation of broadband in India. The emergence of robust mobile broadband will help accommodate the emerging breed of services such as Converged services, M2M communications, cloud services, over-the-top services, etc. Financial inclusion and direct transfer benefits will be driven by m-banking services, facilitated by mobile broadband. Rural inclusion will help bridge the urban-rural divide, developing the rural scenario, thereby presenting vast investment opportunities in the sector. According to ITU, mobile technology has the potential to significantly enhance governments´ capacity to produce benefits and deliver outcomes to consumers and businesses. The m-governance agenda, once implemented, will also open new investment avenues as the common man is empowered through connectivity. Increasing usage and demand for services from rural consumers will also drive investments towards network expansion and upgrade of services. Such expansion will be assisted by the new revenue generated from the rural consumers apart from investments from the operators.

Import substitution and indigenous value addition in manufacturing of telecom equipment also offers an investment opportunity in view of substantial imports. Even niche areas such as green telecom networks are offering investment opportunities. The emerging success story of indigenous value addition in the handset market is quite indicative. In addition, leveraging the size of the indigenous markets also provides opportunities for export manufacturing units.

What is the support the industry should receive from government so that it becomes a healthy, competitive and efficient industry model?
With the new government in place, the industry is looking hopefully towards efficient policy changes, along with effective implementation of the same, in order to sustain growth. The key areas for policy intervention from the new government would be:
1.Ensure adequate spectrum is made available to the industry for allocation through a fair and transparent auction
2.Review and modify the M&A guidelines to facilitate consolidation in the sector, and promote orderly growth of the sector. TRAI should initiate a suo-moto consultation on M&A policy so as to enable a comprehensive review of the guidelines with participation of all the stakeholders
3.Issue guidelines on spectrum trading at the earliest
4.Rationalize and simplify the tax structure
5.Accord benefits of infrastructure status already granted to telecom sector such as availability of assured grid power at industrial rates, tax holidays, preferential debt instruments, etc.
6.Incentivise roll-out beyond committed levels through further reduction in license fee
7.Permit active infrastructure sharing
8.Address RoW issues at the state and local levels

There is clearly a problem of understanding with respect to the perceived health hazards posed by cell site towers. What is the truth about this ´radiation scare´?

Several myths related to ´ill-effects´ of non-ionizing radiations from mobile towers have been making the rounds of late, with stories in the newspapers and internet adding fuel to the fire.

Firstly, it needs to be understood that Electromagnetic fields (EMF) have been around since the birth of the universe and are a part of everyday life. They are emitted both by natural sources like the sun as well as by man-made sources including antennae from mobile phone towers, broadcast towers and radar facilities. What is significant, however, is that the EMFs produced by the antennae on mobile towers and mobile phones are at the lower end of the electromagnetic emission spectrum and are ´non-ionizing radiations´, i.e., by the principles of physics, the energy carried by them is not enough to break the chemical bonds between molecules. In contrast, ionizing radiation, such as the X-rays, can strip electrons from atoms and molecules, producing changes that can lead to tissue damage and possibly cancer in living beings. However, as we all know, even these are used for benefit to humans based on specified standards and radiation norms that make them safe to use.

Several decades of extensive RF research undertaken by researchers of the highest integrity do not demonstrate any substantive link between human health risks and the use of digital mobile phones or living near a base station.

Internationally, the World Health Organization (WHO) has maintained in its latest update that: ´A large number of studies have been performed over the last two decades to assess whether mobile phones pose a potential health risk. To date, no adverse health effects have been established as being caused by mobile phone use.´ The Government of India has adopted one of the strictest global safety norms for EMF, which is one tenth of the emission levels (recommended by WHO) followed by most of the countries in the world. The guidelines are intended to protect all segments of society, from new-borns, to expectant mothers, schools, hospitals, etc. Further, four eminent high courts of India have substantiated the government´s position on the issue.