The telecommunications infrastructure industry has played a vital role in providing communications services to every nook and corner of the country that have transformed social and economic life in India. The increase in tele-density also has a direct correlation with a country’s GDP and India’s unprecedented growth in recent years is a case in point. The extent to which India can realize the remaining untapped potential of telecoms will depend critically on whether it can improve the economies of creating telecom infrastructure and conditions for its optimal use.More...
Budget expectations – Mr. Arun Kapur, CEO, Viom Networks (formerly Tata-Quippo)
ReplyDeleteThe telecommunications infrastructure industry has played a vital role in providing communications services to every nook and corner of the country that have transformed social and economic life in India. The increase in tele-density also has a direct correlation with a country’s GDP and India’s unprecedented growth in recent years is a case in point. The extent to which India can realize the remaining untapped potential of telecoms will depend critically on whether it can improve the economies of creating telecom infrastructure and conditions for its optimal use.
A key priority is to reduce the costs of telecom operators so as to further reduce prices paid by customers resulting in enhanced telecom access across the country. This can be achieved through actively promoting and incentivizing infrastructure sharing among telecom operators. This also prevents duplication of telecom resources and infrastructure thus minimizing any adverse impact on the environment.
Infrastructure development has played and will continue to play a crucial role in the development of the wireless sector. The high level of growth in the sector will continue to drive huge investment in infrastructure as well as a speedy rollout of networks into new areas. Today, millions of people are dependent on telecom services on a 24X7 basis, and therefore, the criticality of telecom infrastructure should be considered at par with other “infrastructure sectors” such as power, ports, natural gas distribution, etc. This warrants that telecom Infrastructure companies should be provided similar incentives, as provided to other infrastructure companies in India.
Given the substantial capital investment required in building infrastructure, it is imperative to invite private sector participation in infrastructure development. Tax incentives play a significant role in attracting private sector investments. Currently, the Government provides a tax holiday to infrastructure companies such as those in the power sector, ports, natural gas distribution etc. A similar tax holiday should be extended to telecom infrastructure companies offering towers and other telecom infrastructure to the operators, which are critical for offering services to the end consumers. Such a step will provide further impetus to the sector and bolster the overall development of the telecom sector with increased telecom penetration in rural parts of the country.
The telecom infrastructure is a highly capital intensive sector. The advent of newer technologies, such as IBS, DAS, use of Green Solutions, etc. would further amount to a significant increase in the overall capital investments. As an incentive to the industry to promote innovative and newer technologies, the Government needs to provide accelerated depreciation of equipment to the tele-infra companies, further addressing the current infrastructure deficiency such as low rural tele-density and the adoption of newer technologies.
Rural tele-density and broadband penetration still remain the Achilles heel for the Government. According to World Bank a 10% increase in broadband penetration increases the GDP of a developing country by 1.38%. With the launch of 3G and wireless broadband services, the stage is set for the next round of telecom revolution, which will be led by broadband services taking education, healthcare, banking and other services to rural India. The above-mentioned proposals will go a long way to ensuring that benefits of telecom reach all irrespective of their income or location. It is, therefore, imperative that the telecom infrastructure sector, which will play the pivotal role of a facilitator in this revolution, is accorded the high priority it rightly deserves.