Telecoms, Internet, Broadband - Hope and Despair By DR T.H. CHOWDARY Director: Center for Telecom Management and Studies Fellow: Tata Consultancy Services Chairman: Pragna Bharati (intellect India ) Former: Chairman & Managing Director Videsh Sanchar Nigam Limited & Information Technology Advisor, Government of Andhra Pradesh T: +91(40) (O) & ® F: +91 (40) Talk at IETE, Hyd: 17 May 2014 * Unless otherwise specified data as of 30 Sept 2013 * Source: COAI & TRAI

Telephones as of March 2014 Total: 933 mln ( 0.11% increase over Feb) Mobiles: mln Wire line: mln Urban (wireless): 58.90% Rural (wireless): 41.10% Wireless Teledensity: 72.94% Wired Teledensity : 2.29% Composite Teledensity: 75.23% thc_ctmsS710_May20142

Internet & Broad Band Internet subscribers : mln Broadband : mln Subscribers who access Internet thro’ mobiles: mln thc_ctms3S710_May2014

Gainers & Losers Gainers CompanyIdeaVodafoneBharati Nos (mln) Losers CompanyRComBSNLTataTele Loss7 mln185,491147,736 CompanyMTNLLoop Loss134,91440,294 thc_ctmsS710_May20144

We are adding per month m10 m16m19m9m Intense competition Raja Licences Supreme Court cancelled 144 licences thc_ctms5S710_May2014

Speeds of Data Transmission 2G3G4G5G* 256 KBPS1MBPS10MBPS1GBPS thc_ctms6S710_May2014

% of mobile connections according to generation CountryS.KoreaMalaysiaChinaIndia 2G47%48%73%88 3G53%48%27%12% 4GNil4%Nil India ‘s 3G subs. are a mere 12% ; India’s 4G – zero; DOT has to be pro-active thc_ctms7S710_May2014

Price/MHZ/Pop of 1800 MHZ CountryGermany ItalyPortugal US$ CountrySweden UKIndia US$ The price of spectrum in India is 120 times more than in Germany, 30 times that in UK, 23 times that in Sweden, 12 times more than in Italy & 6 times more than in Portugal *This high cost for spectrum is a gift (?) of the UPA government to aam admis in India! thc_ctms8S710_May2014

No of GSM operators in different countries CountryFranceSpainUKHolland No3345 CountryGermanyChinaIndia No * More licences, more money-making permit-licence-quota in DNA of Nehruvian “Socialism” thc_ctms9S710_May2014

GSM spectrum licenced to operators CountryIndiaDenmarkEU AverageFrance MHZ CountryGermanyItalySpainSweden MHZ CountryUKUSA MHZ * India gives lowest spectrum for the largest number of Telcos! thc_ctms10S710_May2014

The total industry profit/ Loss over the last 7 years ( Rs. Crores) Year (Loss)/Profit(3745)(10,958)414012,575 Year (Loss)/Profit 17,72215, 7519,965 1)Figures exclude BSNL & MTNL losses of about Rs. 12,000 cr for each of the last 3 years 2)Note the declining profits thc_ctms11S710_May2014

Debt of Telcos (in crores) Rs. 82,7261,23,7751,59,9551,85,7202,50,000 Banks are shy of further exposure thc_ctms12S710_May2014

12 th Plan ( ) Investment In the 12 th Plan period to , telecoms would require an investment of Rs.9,43,899 crores! When industry as a whole is making losses and when their debt is already Rs. 2,50,000 cr where will the investments come from? thc_ctms13S710_May2014

Universal Service Fund ( Levied as 5% of Telco revenues) Year Levy7,3387,6807,960 Used2,2603,1804,140 The unused Rs. 13,398 crores could be used to fund R&D put broadband Internet in universities & colleges. It will fund the Rs. 20,000 cr broadband optical fiber connecting over 250,000 panchayats thc_ctms14S710_May2014

Contribution of Telecom sector to GDP % The contribution of the IT sector is 8% together ICTs information sector contribute 12% to India’s GDP In the developed OECD countries, it is 10! thc_ctms15S710_May2014

Friend or Foe Govt. Against ( Companies & users) CountryChinaMalaysiaIndia Service Tax3%5%12.36 Licence feeNil0.5%8% Spectrum usage charge * 0.5%Nil(2 to 6)% USFNil1%5% Total3.5%6.5%30%+ + including octroi, stamp duty & levies on Towers * This is atrocious because Telcos paid outright huge amounts in spectrum auctions (eg. Rs. 60,000 cr for 3G in 2010) thc_ctms16S710_May2014

Prohibitions 3G Inter circle Roaming VOIP for long ISP (1998) NLD & ISD (2000) (year when prohibition lifted) thc_ctms17S710_May2014

Penalties (on roll-out/provision default) Rural telephones 3G & 4G Roll out Tax claims ( Vodafone, Uninor, Bharti) Retrospective excess spectrum holding charges at currently determined rates ( after auctions) thc_ctms18S710_May2014

Impositions Refarming ( on renewal) ( move from 900MHZ to 1800 MHZ) thc_ctms19S710_May2014

Witholding Universal Service Fund Broadband to Panchayat (OF connectivity work given to PSUs only) Application of Telegraph Act to BTS locations thc_ctms20S710_May2014

DOT’s Duty Raise & increase revenue to Government? Or Nurse Health of Telcos & Reduce price for service & Increase Affordability thc_ctms21S710_May2014

Dhanyawad: Thank You thc_ctms22S710_May2014