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This article has been written by Nehal Misra, a student at Nirma University, Ahmedabad. In this article, she discusses the insights related to the increasing scope of telecom infrastructure companies.

Introduction

“Telecommunication” has been derived from the combination of the Greek prefix “tele” which means ‘far off’, and the Latin word “communicare”, which means ‘to share’. It refers to the transmission of signals for communication over a distance. With time, telecommunications have emerged utilizing sophisticated high-speed, submarine optical cables laid on ocean floors and artificial satellites that circle the Earth in space. Most significantly, with the passage of time and increase in demand for telecommunications, the speed of transmission has also increased. The telecom industry is having an impact on every part of our lives. Telecommunications services are recognized as a gateway to a nation’s rapid growth and economic transformation and an essential instrument for socio-economic development. For India’s telecommunications industry, the last two decades have been seen as the golden period, with exponential growth and development in terms of technology, penetration, and policy. 

The modern system of communications came into effect with the establishment of telegraph networks. India had witnessed an increasing number of wired telephone connections in the initial period. It was not immediately accepted by the Indian masses as they were hesitant in accepting the wireless communication in cellular phones, due to the high price of cellular phones and high tariff structure which was prevalent. Gradually, the price of cellular handsets and mobile tariffs reduced leading to an increase in the adoption of wireless communications. In the current times, the Indian telecom industry witnesses the lowest telecom tariff globally due to the involvement of private players. The telecommunications industry is on a platform undergoing a transformative development phase to acclimatize itself with the new trends in technology and cloud. The focus on Communication Technology (CT) marked the first wave of the information era. The second phase- the internet phase starting around the year 2000. During this period, the industry realigned around horizontal solutions. E-commerce and portals came into the field. The cloud started to take shape after 2006 and this marked the third transition period in the telecommunication industry. 2019 marked the beginning of a new world of opportunities that have opened up for the carriers. 

However, telcos around the world are facing a lot of challenges in this era. New technologies such as the Internet of Things (IoT), Augmented Reality (AR), Virtual Reality (VR), microservices, telecommunications providers are forced to realign their business strategies and restructure themselves in operations, architecture, and networks according to the cloud era. Additionally, to gain a competitive edge, the focus must be on providing customized solutions and developing long-term relationships with the customers. Telcos are hitting revenue growth, however, only fewer companies in the current times have growth options through targeting untapped customer segments because penetration has reached saturation in most regions. Scale deals help telcos to generate the highest level of synergies and pursue market leadership by creating value from operating leverage. Scope helps to expand, capitalize existing assets, and create revenue synergies through higher customer loyalty and cross-selling. 

The purpose of the infrastructure is to construct new or integrated infrastructures to bring in new investors interested in more stable cash flows of infrastructure units and to generate synergies through better use of infrastructure. The emerging trends in the telecommunications department such as 5G Networks and increased secure and reliable services have created an enormous spark and increased sense of reliance on its customers. The addition of artificial intelligence has brought a significant shift in technology. Internet of Things connectivity service provider offers M2M (Machine to Machine) which can open new streams of revenue for the telecommunication companies. According to the Tata Consultancy Services (TCS) survey, the telecom sector stands fourth on IoT technology. It is utilized with remote monitoring and equipment management to improve operational efficiency. Thus, these emerging trends in the telecommunication department have led to the widening of the scope of telecommunications. 

Emerging trends in telecommunication

5G- The fifth-generation of wireless technology promises faster download speeds and a very high network reliability. 

IoT Advancement- Internet of Things, connects devices, endpoints, and assets that have never before been able to communicate with a network. It is becoming the blossoming source of revenue for the carriers.

Rise Of SD-WAN– As service providers focus on their core telecom and networking services, SD-WAN is being relied on for intelligent path control as well as traffic-steering. 

Artificial Intelligence- AI-based analytics provide telecom companies with the ability to use data and machine learning software to predict future trends in the industry and potential infrastructure snags and to continually evaluate their bug or potential pitfalls services.

Diversified Ecosystems- Industrial ecosystems are a network of cross-industry organizations to create a stronger and advanced industry. Telecom companies have the highest potential to come together and form alliances.

Current regulations

Departments that regulate the telecom industry in India are as follows:

  • Department of Telecommunications: The Indian Telegraph Act, 1885 and the Indian Wireless Telegraphy Act, 1933 grants exclusive privilege of establishing, maintaining, and working telegraph and wireless telegraphy equipment to the Central Government. The central government also has the authority to grant licenses for such activities. 
  • TRAI: It is an autonomous statutory body. It has been established under the Telecom Regulatory Authority of India Act, 1997. It is the sole authority that is empowered to make decisions regarding the fixation of tariffs for telecommunication services.
  • TDSAT: It was established in 2000 under an amendment to the Telecom Regulatory Authority of India Act, 1997. The Telecommunications Dispute Settlement and Appellate Tribunal has exclusive powers to adjudicate any dispute between the department of telecommunications and a licensee or various service providers or groups of customers.
  • Wireless Planning Commission (WPC): It is a wing of the Department of Telecommunications, established in the year 1952, responsible for Frequency Spectrum Management in India.
  • Standing Advisory Committee on Frequency Application (SACFA): It is a wing of the Department of Telecommunications that grants approval to telecom service providers for radio frequency (spectrum) as it is necessary to obtain a no-objection from SACFA.

Laws and regulations governing the telecom industry in India. 

  • The Indian Telegraph Act, 1885: The Indian Telegraph Act, 1885 inter alia authorizes the Government of India to grant telecom licenses to any person to establish, maintain a telegraph within any part of India. The telecom law of India is based on the Indian Telegraph Act, 1885. It empowers the government to regulate the use of telegraphs in the territory of India. 
  • The Indian Wireless Telegraphy Act, 1933: The Indian Wireless Telegraphy Act, 1933 regulates the possession of wireless telegraphic devices. Possession of wireless telegraphy apparatus can only be permitted if it is under the telecom authority license issued. In the absence of a valid license this Act levies penalty.
  • The Telecom Regulatory Authority of India Act, 1997: The Telecom Regulatory Act, 1997 led to the establishment of the TRAI. The act empowers TRAI with quasi-judicial authority to adjudicate telecom disputes. The Telecom Regulatory Authority of India (Amendment) Act, 2000 later amended this Act to bring clarification between TRAI’s regulatory and recommendatory roles. It also enabled the establishment of Telecommunications Dispute Settlement and Appellate Tribunal for completely differentiating the judicial functions of TRAI.
  • Information Technology Act, 2000: Other laws such as the Information Technology Act, 2000 also have an immense impact on the telecom industry in India. The act frames rules under which an intermediary may be exempt from liability concerning third party links and content. It has indirect application to telecom and internet-related issues, particularly surveillance rights of the Government. 
  • The Cable Television Networks (Regulation) Act, 1995 regulates cable television. The Government regulates the sector through regulations, such as the Anti Spamming Regulations. It aims to prohibit unsolicited commercial communications through SMS as well as poses a compulsion for all the telemarketers to register under the said regulations.

TRAI recommendations on an increasing scope of telecom infrastructure companies

The Telecom Regulatory Authority of India recommended the tower companies to share active infrastructure including Radio Access Network(RAN) (not licensed spectrum) to encourage the sharing of network resources that reduce Capex and Opex. It aims to facilitate active infrastructure sharing by enhancing the reach of the providers and promoting the deployment of sharable, passive, and active common equipment. In the current scenario, India allows for passive wireless equipment sharing. Active sharing refers to multiple operators sharing RAN gear at base stations, which leads to reductions in cost along with faster deployments. According to the recommendation tower, therefore, companies will own, set up, and maintain the infrastructure needed to build RANs, wireline access networks, and transmission connections. However, the deployment of core network elements is not allowed according to the TRAI rules.

TRAI also suggested that the tower companies be barred from giving access to their networks to non-telecoms firms. However, ‘Multi-operator radio access network (MORAN) sharing, a form of RAN sharing, is allowed under the proposed enhancement of Category-I registration infrastructure providers’ scope, where ‘only RAN equipment is shared and not a spectrum’. Telecom infrastructure’s extended scope does not include “use of licensed spectrum allocated to an authorized telco for wireless service provision.”

TRAI also recommended that tower infrastructure adhering to specifications required by the Telecom Engineering Center would comply with the requirements of global telecommunications agencies such as the International Telecommunications Organization (ITU), the European Telecommunications Standards Institute (ETSI), the Institute of Electrical and Electronics Engineers (IEEE) and the International Organization for Standardization (ISO). It also sought views on telecom companies to be allowed to provide telcos with end-to-end bandwidth via leased lines.

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Challenges for telecom infrastructure companies

Following are some challenges that are being faced by telecom companies:

  • Fixed-line penetration in India is lacking, whereas most developed countries have a very high penetration of fixed lines as only about 25% of towers in India are connected to fibre networks, whereas in developed countries it is over 70%.
  • Combined with falling income or losses, decreasing average revenue per consumer (ARPU) is leading the Indian telecom industry to look at consolidation as the only way to raise revenue.
  • The availability of the spectrum is less than 40% as compared to European nations and 50% as compared to China. Moreover, low broadband penetration in the country is a matter of concern as broadband penetration in India is only 7%.
  • Over the Top (OTT) applications hamper the revenue of telecommunication service providers. Moreover, huge fluctuations in the duties imposed on Telecom Equipment for connecting the entire system with the central server also create complications for telcos.
  • There is a lack of Telecom Infrastructure in Semi-rural and Rural areas due to the involvement of huge initial fixed costs to enter these areas.
  • There exists a need to decentralize the purchasing and decision power, due to the essential agile reconfiguration of the cloud, the telecommunications industry has to perform both internally and externally.
  • With the increasing availability of new technologies and diversification of the variety and quality of services from telecom companies, the profit margins are decreasing, and the lines have blurred between telecom companies and technology vendors. Due to which the telecommunication companies have to enhance their level of ICT innovation as well as to adapt to digital transformation through strong cross-functional interfaces and organizational flexibility.
  • With the increment in users, the cost of handling the telecommunications operations for requiring resources and tools has increased, thus burdening the financial overhead.
  • Advancement in IT of telcos, as well as connectivity infrastructure, is required to provide data and voice services of high quality which are reliable and affordable. However, the security of the networks is the major priority for the telcos. New threats and challenges have emerged due to new technologies. Thus, operational and technical innovations are required to meet customer expectations of security.
  • One of the major challenges for telcos is the impact of the Internet of Things ( IoT), which leads to explosive growth in connected devices. This growth generates trillions of new data sources which might push the data handled by networks to zettabytes per year. Thus, managing this data poses a great difficulty in the scenario of big data, where the stake of information is threatened.

Conclusion

Before liberalization, the telecom sector was under government monopoly, the sector was characterized by the low teledensity, high tariff rates, and a low level of customer satisfaction. However, New Telecom Policy 1999 brought significant improvements in the growth of the telecom sector in India with its liberal policy framework. Private sector players have played a major role through wireless and value-added services. After that, increasing the cap of FDI in the telecom sector sparked a phenomenal growth in wireline and wireless telephones. The quality and transparency of regulation played key factors in attracting investments. Reforms including increased quality of service and protection of consumer interest led to the growth of telecom services.

Mobile Internet and big data have created tremendous opportunities for telecom operators. The telecom companies are taking an informed approach to simplify business processes which helps to ride the digital transformation wave. TRAI is working immensely towards the growth of the telecommunications department in India. The recommendations of TRAI are working towards increasing the scope of telecom companies. The emergence of 5G Networks, Internet of Things, artificial intelligence, increased security of devices, and enhancement of customer services are responsible factors for the growth of telecommunications. Telecom companies have the maximum potential to form alliances and come together. The introduction of IoT networks, backed by 5G capabilities, allows companies to collaborate seamlessly to advance technology across the networks. The telecommunications industry is a vital centre for cutting-edge technology adoption and with the integration of IoT. AI technologies and the 5G networks, telecom organizations continue to be at the forefront of technological growth.

References

  • http://www.nishithdesai.com/fileadmin/user_upload/pdfs/Research%20Papers/The_Indian_Telecom_Sector.pdf
  • https://www.racknap.com/blog/top-5-challenges-trends-telecommunication-industry/
  • https://www.drishtiias.com/to-the-points/paper3/telecom-sector-issues-and-challenges
  • https://economictimes.indiatimes.com/industry/telecom/telecom-news/trai-broadens-   scope-of-telecom-infra-providers/articleshow/74616777.cms?from=mdr
  • https://www.netfortris.com/blog/telecommunication-trends-2020
  • https://www.bain.com/insights/the-new-age-of-scale-scope-and-infrastructure-in-telecom-ma

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