Home >Politics >Policy >Reducing levies seen as key to success of new telecom policy
The government will review levies and fees, including licence fee and spectrum usage charges, says draft policy.
The government will review levies and fees, including licence fee and spectrum usage charges, says draft policy.

Reducing levies seen as key to success of new telecom policy

Addressing financial stress in the sector is vital for attracting investments and creating jobs, say analysts

New Delhi: The coming National Communications Policy must address the financial stress in the telecom sector and reduce levies so that the sector can attract investments and create jobs, industry experts said.

The department of telecommunications (DoT) on Tuesday floated the policy draft for public consultation, with a target of attracting investments of $100 billion in digital communications.

Its goals include universal broadband, creating 4 million jobs in digital communications, and raising the share of digital communications in India’s gross domestic product to 8% from less than 6% in 2017.

However, raising $100 billion is not easy since domestic banks are not lending to telcos, Rajan Mathews, director general of telecom lobby Cellular Operators Association of India (COAI) said.

“We are depending on foreign sources and when they look at the present health of the industry, they will not put money either from a financial or strategic perspective," Mathews said, adding DoT needs to cut the taxes and levies on telcos.

Currently, telecom service providers pay 3-6% and 8% of their adjusted gross revenue as spectrum usage charges and licence fee respectively.

After consultations, the policy will be sent to the cabinet and then tabled in Parliament.

“The policy is ambitious and aspirational but the real challenge will be in its implementation as many changes that it aspires to bring have implications for the licensing regime. We will need to see if the government has the appetite to reduce the levies substantially, at the risk of a dent in its own collections. If not, then the changes will be just token. The sector needs massive investments and with stress on tariffs and revenues in the telecom sector, investor confidence is low," Mahesh Uppal, director at communications consulting firm ComFirst India said.

The government will review levies and fees including licence fee, universal service obligation fund (USOF) levy and concept of pass-through revenues in line with principles of input line credit, the draft states, apart from looking at rationalising spectrum usage charges.

“In the last policy also, it talked about everything under the sun. No money will come on the table unless more spectrum is made available and spectrum charges and licence fee is cut," a sector expert said, requesting anonymity.

In the wake of the Facebook-Cambridge Analytics data scandal, the government also aims to establish a comprehensive data protection regime for digital communications that safeguards the privacy, autonomy and choice of individuals.

This, the draft policy states, will be done by amending various licences and terms and conditions, wherever necessary, to incorporate provisions with respect to privacy and data protection and by formulating a policy on encryption and data retention, by harmonizing the legal and regulatory regime in India pertaining to cryptography with global standards, as applicable to communication networks and services.

“We need to focus on getting a privacy Act passed; only after an Act is passed can you know what is legal or not. One of the critical components the Act would be what constitutes personal data. Even that fundamental issue has not been locked up yet," COAI’s Mathews said.

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