Service charge

5G telecom services will be available from October, says communications minister

Prices will be reasonable, BSNL will balance the market, regulatory framework will be overhauled, says Ashwini Vaishnaw

Prices will be reasonable, BSNL will balance the market, regulatory framework will be overhauled, says Ashwini Vaishnaw

5G telecom services will be available in India from October 2022 and the industry will decide the pricing structure, Union Communications Minister Ashwini Vaishnaw said on Saturday.

“As soon as the spectrum auctions are over, in a few days, we will split the auctions. We expect the rollout to take place from October, and within a year or so we should have a good rollout of 5G in the country,” he told a press conference after hearing spoke at an investor summit.

Stating that the rollout of 5G around the world has been slow, he said: “We believe we will likely buck the trend to a much faster rollout of 5G compared to many other geographies, as our other costs are well under control.

Read | Auction of 5G spectrum bands

He said that in the event of high prices for 5G services, the government would step in and state-owned BSNL, which will roll out 5G “very quickly”, will act as a market balancer.

“Regarding the pricing of 5G services, on average in the world, the cost of telecom services is ₹2,400 [per month] while it is around ₹200 per month in India, the cost of data is the lowest in the world in India,” he said without giving a specific figure.

He said that on Saturday, the government recovered ₹1.49 lakh crore from the 5G spectrum auction and expressed confidence that it would exceed ₹1.5 lakh crore.

“Almost ₹1.49 lakh crore has been committed by the industry for purchasing spectrum. This shows how the industry is maturing in a very nice way,” he said.

“The 5G spectrum auction is going well, shows the industry is taking off, the results are very good,” he said.

“The industry has moved out of the old phase, entering a sunrise phase, where a new injection of capital investment can occur,” Vaishnaw added.

Read | What are the challenges of fiber before the deployment of 5G in India?

Responding to a question that the telecommunications market was heading towards a duopoly given the precarious financial health of Vodafone India Limited (VIL), in which the government recently acquired a stake of around 33%, he said that this wouldn’t happen.

“The duopoly will not happen. The reforms of September [in the telecom sector] resulted in good stability in the industry. We are looking for new players to enter the segment. There is going to be good healthy competition in the industry. BSNL will emerge as a good market balancer,” he said.

Asked about the government’s strategy for VIL, Mr Vaishnaw said: “We don’t want to be on the board of any company. Equity accruing to the government will be held in an entity that has no day-to-day relationship with company management. The business will remain a professionally run business.

“We believe there will be further investment in Vodafone Idea. The very fact that they are participating in the 5G auction shows that the business should be in a position to embark on a growth path. We believe this will be a growth phase for the entire industry,” he said.

Mr Vaishnaw said that since the volumes are huge in the telecommunications industry, he was able to support a higher level of debt. He said most of the issues, such as balance sheet liabilities arising from Adjusted Gross Revenues (AGR) and spectrum issues, had been resolved by the 2021 reforms.

“If anything else needs to be done to make the industry sound, we will do it, so that we can also reach remote places, in remote villages as well,” he said.

He said the PLI (Production Linked Incentive) program for the telecommunications sector had been very well received. “Nearly 31 companies have received clearance under the PLI, nearly 1 lakh crore of additional production is underway under the scheme,” Mr Vaishnaw said.

“Over the next two to three years, we hope to achieve similar success in telecommunications equipment manufacturing, like our success in electronics manufacturing. We hope that many of these companies will become exporters and make their mark in the world,” he added.

The Minister said that a new legal structure for the telecommunications sector was being put in place to make it easier to conduct business. “A legal structure must be in tune with the times. This type of industry needs a very stable and forward looking, futuristic and digital born type of law. This is what will drive the next cycle of growth,” he said, adding that the three archaic laws that currently govern the industry will disappear.

“We are changing the entire legal structure. We are still governed by an act from 1885, an act from 1933 and an act from 1950. The Prime Minister abolished approximately 1,500 acts. We will clean up the legal framework for telecoms so that there is no disruption to the industry,” he said, adding that a new legal framework would apply from August 2023.

“We must ensure that our public policy ensures the continuity of services, even when companies may face insolvency; there should be aggravation and decriminalization if a company comes forward and admits wrongdoing and imposes a penalty,” Mr Vaishnaw said.

He said the Prime Minister’s clear mandate was that “India’s telecommunications sector must be reformed and benchmarked globally. And now, the whole regulatory set-up must become a reference for the world”.