The story of Indian telecom policy is of one crisis after another. Be it the cancellation of 122 licenses, the controversial Interconnect Usage Charge (IUC) judgement or the one about Adjusted Gross Revenue (AGR), which pushed the industry into massive debt, policymakers and regulators have fallen short in addressing the needs of the industry.

What really highlights the industry's sorry state is the inability of Vodafone Idea, India's third-largest service provider, to attract investors. More than 200 million subscribers (a significant percentage of whom are classed as high-spending customers), a nationwide telecom network and a market featuring 750 million yet-to-be connected Indians apparently hold insufficient appeal for prospective investors.

Massive uncertainty about the future telecom policy roadmap looks partly responsible for the apathy. What's more, several telcos, including Videocon, Tata Teleservices and Aircel, have been forced to shut down operations after investing heavily in setting up infrastructure. And Vodafone Idea is desperately in need of funds.

Long delays in addressing the policy issues have pushed the industry into debt even as it stares at the prospect of a duopoly.

Case of excessive greed?

India's exceedingly high levies, surcharges and duties are perhaps the biggest issue for the telecom industry today. They have added to the stress experienced by service providers, and the government has continued to collect a Spectrum Usage Charge (SUC) even when the telcos have bought spectrum during an auction process. High charges are especially painful in India because tariffs are among the lowest in the world.

Litigation stemming from this issue has led to further delays and no clear resolution. AGR was only resolved after legal proceedings had dragged on for 15 years.

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Sunil Bharti Mittal, Bharti Airtel's chairman, drew attention to the issue when he recently said: "For every INR100 [$1.36] of revenue, INR35 [$0.47] go in various forms of levies. We hope that as we step up and do our part, the government will also favorably look at some of the genuine demands of the industry, enabling a multiplier effect and positive outcome."

Similarly, there is a strong argument for bringing down the spectrum base prices, amplified by the critical role communications networks have played during the COVID-19 pandemic. High base prices, in addition, have prevented the discovery of market prices in the auctions.

Crippling uncertainty

The lack of a long-term policy roadmap has generated huge uncertainty and stopped operators from planning for the future. Vodafone Idea cannot blame its ongoing subscriber losses entirely on authorities, but the lackadaisical attitude of the government, and the favoritism it has shown toward Reliance Jio, now India's largest operator, have clearly been harmful.

The Indian telecom industry is now at a critical juncture. If operators and policymakers cannot resolve their differences, and put together a long-term and sustainable plan for growth, its prospects will only worsen.

— Gagandeep Kaur, contributing editor, special to Light Reading