comscore Union Budget 2017-18 evokes mixed reaction from the telecom industry
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Union Budget 2017-18 evokes mixed reaction from the telecom industry

Union Budget 2017-18 did not address telecom sector’s long pending demand of bringing down the spectrum pricing.

spectrum-auction

While sectors like agriculture, employment, infrastructure and education witnessed positive announcements in Finance Minister Arun Jaitley s Union Budget 2017-18, there was no major news for the telecom sector. The budget focused on facilitating digital transactions and bringing more connectivity to remote areas but failed to address one of the key demands related to spectrum pricing. On one hand, the budget drew applause for introducing optic-fibre based internet connectivity to gram panchayats across the country, it received mixed response from the telecom sector which expected the government to offer more clarity on the pricing and quality, deployment of spectrum. Also Read - India may soon announce its own ‘Atmanirbhar’ app store as alternative to Google, Apple

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Under building Digital India, the finance minister announced developments on existing projects and announced new initiatives. The National Optical Fibre Network, a project initiated in 2011, aims to provide internet connectivity to the remotest of locations in India. BharatNet, which is considered as the world s largest rural broadband connectivity project, has been allocated Rs 10,000 crore budget in the next fiscal. Under the program, the government has already laid down 150,000km optical fibre cable. While presenting the budget, Jaitley proposed optic-fibre based internet connectivity across 1.5 lakh gram panchayats where hotspots and access to digital services will be offered at low tariffs. Also Read - FASTag Update: How to recharge FASTag account for Electronic Toll Collection

One of the interesting bits in bringing the rural India up front is the newest initiative announced by Jaitley in his budget speech. He announced a new initiative called DigiGaon (Digital Gaaon or Digital Village). The program aims to put to use digital technology to offer tele-medicine, education, and employment skills to people living in rural areas. It is expected that digital connectivity to rural areas where diary and farming are prime sources of income, will in turn help SMEs create new jobs. ALSO READ: Union Budget 2017-18: 10 tech-related announcements made by Finance Minister Arun Jaitley

In wake of demonetization, there is a dire need to increase digital literacy and facilitate cashless economy to help those in the rural regions cope with the modern technology. Now what forms the core of the process is apps and services like Paytm and MobiKwik which have hailed the government s incessant focus on digitization. Tax benefits, incentives to use digital payments and extending loans based on a digital footprint will create a larger merchant ecosystem for digital payments. Incentives for labour intensive sectors including housing, farming and dairy will help SMEs to create new jobs, says Vijay Shekhar Sharma, Founder & CEO – Paytm.

However, simply moving to a digital infrastructure in rural areas is not enough. What technology companies expect is the government to promote startups in the digital payments and security areas. “We feel that the government must have also considered promoting startups in the digital payments and digital security areas. Secure digital transactions is the only way to sustain India’s habit of cashless payments, Bipin Preet Singh, Founder & CEO, MobiKwik.

Meanwhile, the telecom industry had expected that the government will address some of their key demands related to tax treatment of spectrum payments. In the budget speech, Jaitley halved revenue estimate from telecom to Rs 44,300 crore. The target of collecting the revenue as entry fees, telecom licence fees and spectrum charges rules out any spectrum auction in the coming financial year.

Jaitley stressed that there was no scarcity of spectrum in the country. In October last year, the spectrum auction witnessed no takers for the most premium airwaves. Back then, telecos blamed the unrealistic pricing for the lack of response to 700MHz band. Acquiring spectrum or airwaves in various bands and circles allows operators to ramp up their existing network infrastructure to maximize quality coverage in the country.

While the total spectrum sale was around 2,300 MHz, which was the highest-ever in a single auction and offered airwaves in seven bands 700MHz, 800MHz, 900MHz, 1800MHz, 2100MHz, 2300MHz, and 2500MHz. However, at the end of the auctions, the amount raised was only Rs 65,789 crore, missing the target by a significant range. Owing to the exuberant pricing of the airwaves by the government, the operators offered a lukewarm response. ALSO READ: Spectrum auction roundup: No takers for 700MHz band, unrealistic pricing blamed for moderate response

We agree that there is no scarcity of spectrum in the country. We support the allocation and harmonisation of spectrum. Through a fair, transparent and open auction process. The primary issue is not the quantity of spectrum, but its pricing, quality, deployment and how soon the bidders will be able to access the allocated spectrum. Availability of spectrum is no longer an issue and we agree with the Finance Minister on this, Rajan S Mathews, Director General, COAI, said following today s budget announcement.

The telecom industry had expected getting a waiver on 15 percent service tax on spectrum allocation. In case of spectrum bands over 1 Ghz–1800 Mhz, 2100 Mhz, 2300 Mhz, and 2500 Mhz–the successful bidder paid 50 percent of the bid amount upfront. In case of bands below 1 Ghz–700 Mhz, 800 Mhz and 900 Mhz 25 percent of the bid amount was paid up front. With the target for this financial year is set 44 percent lower than the earlier target of Rs 78,715 crore in 2016-17, thereby ruling out possibility of spectrum auction in the coming financial year.

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  • Published Date: February 1, 2017 8:00 PM IST



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