BackTelecom misses out on budget boost prior to 5G launch
The government did not deliver on any of the demands of the sector such as a reduction of licence fee and spectrum usage chargeThe Cellular Operators Association of India (COAI) had urged the finance ministry to scrap the basic customs duty on imports of 5G equipment
PremiumNEW DELHI : The Union Budget left the telecom sector disappointed with no announcements for an industry whose services were declared essential during the pandemic, even as equipment sellers and operators prepare for the roll-out of 5G later this year.
The government did not deliver on any of the demands of the sector such as a reduction of licence fee and spectrum usage charge (SUC), waiver of goods and services tax (GST) on certain levies, and lower import duty on equipment crucial to building the back-end infrastructure for 5G wireless network.
The Cellular Operators Association of India (COAI) had urged the finance ministry to scrap the basic customs duty on imports of 5G equipment and network-related products as long as India is unable to offer “good-quality" indigenous equipment at affordable prices. Currently, India imports 85% of its wireless telecom equipment.
However, none of the demands of the industry body, which has Reliance Jio Infocomm Ltd, Bharti Airtel Ltd and Vodafone Idea Ltd as members, were met with in the budget.
“We are a bit disappointed that concerns of the telecom sector, which is the backbone of digital India, remained unaddressed. As the operators are going to launch 5G services in the country, it is imperative that 5G-enabled equipment is available to them at a reasonable price. Thus, there was the need for a reduction in customs duties on telecom equipment," said SP Kochhar, director general, COAI.
The high reserve price for spectrum is another issue. Of the three largest telecom players in the country, two are of the view that the cost of spectrum for 5G, as recommended by the telecom regulator, is unaffordable.
The Telecom Regulatory Authority of India says ₹492 crore should be set as the base price for per MHz of spectrum in the 3,300-3,600MHz bands, ideal for 5G.
Though the Centre has not included the 5G bands in the upcoming spectrum auction in March, it is expected that demand would remain low whenever they are put up for sale. The telecom department will conduct spectrum auction only for 4G bands this time. The auction could see limited participation by Airtel and Vodafone Idea, industry experts believe.
“The government will need to ease the financial burden of the industry to achieve its own objectives: to make 5G spectrum available for users and for generation of industry revenues, of which it gets a share," said Mahesh Uppal, a senior telecom expert.
“The players have said that the reserve price recommended by Trai for the auction of 5G spectrum is unaffordable. Not lowering it will eventually compromise the government’s objectives too," he said.
The telecom vendor industry had also expected relief on import duties of certain parts essential for building technology for 5G. Besides, it sought a fund that would support growth of India’s digital infrastructure crucial to launch the next generation wireless service, said Anand Agarwal, group chief executive officer, Sterlite Technologies Ltd.
“The digital technologies are set to become the primary platform for all sectors as India braces for 5G that will enable use cases like e-education, e-healthcare, artificial intelligence and much more. All these require gigabit speeds and ultra-low latency that can be achieved through a solid digital infrastructure backed by dense fiberisation," he said.
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