Airtel's Mittal Begs Indian Government to Moderate Spectrum Prices
NEW DELHI -- GSMA Mobile 360 Series -- Sunil Bharti Mittal, the founder and chairman of India's Bharti Enterprises, has implored the Indian government to "moderate" the prices it charges telcos for the use of spectrum, highlighting the growing importance of the telecom industry to the country's economy.
"The industry is happy that India is today transformed from a spectrum-sparse to a spectrum-abundant nation, but we hope that spectrum prices are moderated," said Mittal -- whose business empire includes Bharti Airtel Ltd. (Mumbai: BHARTIARTL), India's biggest operator -- during an address at the GSMA's Mobile 360 Series in New Delhi earlier this week. "We hope that spectrum prices are moderated. This vital resource is better utilized on the basestations than staying with the government because it has a multiplier effect. It can move the economy, it can create momentum in the economy."
The remarks come after Indian authorities managed to sell just 40% of the spectrum up for sale during a recent auction, with operators complaining about high reserve prices. Airwaves in the 700MHz band remained unsold because of these reserve rates. (See India's Auction Raises $9.8B, 700MHz Remains Unsold.)
Mittal hopes that, besides moderating spectrum prices, the government will take action on issues regarding rights of way (RoW) and radiation. RoW is a particular concern for India's operators. Telcos usually end up dealing with a number of government agencies to get permission to lay fiber. Recently, there has also been a backlash against the installation of towers in residential areas because of radiation fears, even while service providers are under pressure to improve their quality of service.
"We need more and easier RoW, we need to dispel the radiation issue and we need more spectrum at affordable prices, so that the industry can go on to the next level of technology innovation," said Mittal.
As he indicated, India's telecom industry is thought to contribute about 6.1% to the country's GDP, and that figure is expected to rise to about 8.2% by 2020. As it grows in importance, India's telecom industry has also been closing the gap with Western markets when it comes to the adoption of new technologies.
"Nearly 94% of India's population has radio signals and it is increasingly moving from 2G to 3G and then very rapidly on to 4G," said Mittal. "In spite of the huge amount that we spend on spectrum, fiber, submarine, networks, IT infrastructure … tariffs in India are among the lowest in the world."
"That to my mind is a point to be noted by the operators across the world," emphasized Mittal. "If you have scale you can put very high quality and affordable services in the hands of customers."
Affordability is one thing, but Airtel has clearly come under even greater pressure from the recent market entry of Reliance Jio , a 4G upstart owned by billionaire Mukesh Ambani. RJio has promised to offer customers free voice services for life and free data until December this year, causing a headache for existing operators that still depend on voice services for the bulk of their revenues.
Despite his concerns about the regulation of the market, Mittal is excited about the future prospects for India's telecom industry. The next ten years are going to be very different from the last ten years," he said. "The Internet of Things and 5G are knocking on the doors and we have already started working on smart cities in India and also moving toward the world of virtual reality and autonomous cars. The telecom industry has the responsibility to take this forward, to ensure that the benefits of technology are passed to society in the fittest way."
— Gagandeep Kaur, contributing editor, special to Light Reading