Propelling India to a trillion dollar digital economy - Implementation roadmap to NDCP 2018 - EY
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Propelling India to a trillion dollar digital economy Implementation roadmap to NDCP 2018
About the report Data is redefining the norms of connectivity and transforming the lives of 1.3 billion Indians. Internet has changed the way people communicate, socialise, create, sell, shop and work. India’s digital consumption patterns highlights this evolution. By integrating data and connectivity into daily operations, communities can automate many functions to create efficiencies and maximize their resources. Today, 460 million Indians are online, but around 65% of the population still remain offline – outlining the untapped opportunity of digital economy. The National Digital Communication Policy (NDCP) 2018 articulates three critical missions to power growth and connectivity by 2022 under the pillars of Connect, Propel and Secure India. The path for digital has been laid. It is now a matter of “how fast”, and not “when”, the country achieves what the policy has envisioned for India by 2022. EY, in collaboration with ASSOCHAM, has developed the report titled “Propelling India to a trillion dollar digital economy: Implementation roadmap to NDCP 2018”. The report outlines immediate interventions and medium to long term endeavours required to implement the vision and strategy of this transformative policy. The report assesses the need for future ready infrastructure and collaborative efforts required to expedite digitally secure universal connectivity to the citizens of India. With the right mix of accelerators - including regulatory framework, government incentives and industry collaboration; India has the potential to unlock a trillion dollar digital economy by 2022. Methodology Members of the ASSOCHAM National Council on Telecom and Convergence provided key inputs on the current scenario and requirements to meet the NDCP 2022 objectives. The inputs have been backed by extensive secondary research, analysis and insights by EY. Acknowledgements Members of ASSOCHAM National Council on Telecom and Convergence EY report development team Jasmeet Joshi, Kanika Kakar, Kaustav Bandyopadhyay, Manish Tyagi, Parul Malhotra, Sunay Jain
Shri Manoj Sinha Hon’ble Minister of State, Ministry of Communications (I/C) and Ministry of Railways, Government of India The telecom sector has been a pivotal force behind The focus is on accelerating digital delivery of services India’s digital transformation. Surge in data consumption including e-education, e-health, e-governance etc. and rapid adoption of new technologies continue to re- through rapid rollout of optic fiber network that will define connectivity and engagement dynamics in India. provide connectivity to all gram panchayats. Ubiquitous, As the largest data consumer and the second largest robust and high speed broadband connectivity will be smartphone market, India is carving out a new digital the foundation for the success of this app driven identity globally. economy. A series of pro-growth reforms have steered the digital In this context, I am happy to note that ASSOCHAM is economy on an upward trajectory. Reform oriented organizing the 11th Telecom India Summit with the government initiatives continue to transform the lives of theme, “Propelling India to a Trillion Dollar Economy: 1.3 billion Indians. Whether it was the introduction of Roadmap to NDCP implementation” which will provide “Pradhan Mantri Jan Dhan Yojana”, the world’s largest an impetus to the digital ecosystem, thereby fast- financial inclusion programme, the promotion of “Mudra forwarding our march towards Digital India vision. Bank” to provide housing for all, or targeting citizen centric initiatives with “My Gov Online”, these initiatives I wish this event great success. have greatly aided in promoting the vision of a connected India. Concentrated efforts have been made towards developing a robust infrastructure through accelerated fiber deployment, universal Right-of-Way (RoW) policy, allowing 605 MHz of spectrum for Wi-Fi services, establishing framework for public data office (PDO) and removal of cascading taxation from VNO (virtual network operator) regime. Foreword
Smt. Aruna
Sundararajan
Chairperson, DCC & Secretary (T),
Department of Telecommunications,
Government of India
I am very happy to be a part of the ASSOCHAM 11th including doubling of infrastructure (fiber and base
Telecom India Summit on “Propelling India to a Trillion transreceiver stations), lifting of spectrum caps,
Dollar Economy: Roadmap to NDCP Implementation” with declaring a universal RoW policy, delicensing around
the active participation of industry associations like COAI, 650 MHz of spectrum for Wi-Fi services, removal of
TAIPA, ISPAI and ICEA. cascading taxation from VNO regime, etc.
The newly announced NDCP 2018 seeks to propel India to We need to continue with this momentum to deliver on
digital leadership and support India’s transition to a the NDCP 2018 objectives. This is possible with the
digitally empowered economy and society by fulfilling the continued collaboration and support of all stakeholders.
information and communication needs of citizens and
enterprises by establishing a ubiquitous, resilient and I am happy to note that key government officials are
affordable digital communications infrastructure that will participating, along with industry leaders, in this summit
help India become a trillion dollar economy. which shall help accelerate implementation of the
objectives and pave the way forward for further growth
The policy seeks to attract US$100 billion in investments of the telecom industry in the country.
over the next four years and to create four million
additional jobs, enhancing the contribution of the digital This is a great platform enabled by ASSOCHAM creating
communications sector to 8% of India’s GDP and propel an opportunity for the industry and the government to
India to the Top 50 Nations in the ITU ICT Development contribute collaboratively towards digital growth.
Index.
I wish this initiative all the success.
The department has already taken several steps initiating
key reforms in the digital communications sector,Shri R S Sharma
Chairman, Telecom Regulatory
Authority of India
I am very pleased to hear that ASSOCHAM along with With the mobile subscriber base having crossed the
COAI, ICEA and TAIPA are organizing the 11th Telecom billion mark, the next big opportunity is to accelerate
India Summit on “Propelling India to a Trillion Dollar this power in the hands of the masses to boost the
Economy: Roadmap to NDCP implementation” on 16th country’s GDP. The NDCP 2018 lays down the roadmap
November 2018. to leverage this opportunity. Focused time bound
implementation will be the key to success.
The NDCP 2018 is yet another progressive initiative by
the government to usher in an era of digital The ASSOCHAM Telecom Summit on “Propelling India to
empowerment for the country. a Trillion Dollar Economy: Roadmap to NDCP
Implementation” is indeed most timely and opportune as
India has already begun this journey of digital it is the first initiative that brings all stakeholders on a
transformation and is soon expected to become one of common platform to lay down the implementation
the leading internet markets in the world. The growing roadmap for this visionary policy.
penetration of smartphones, fueled by increased
affordability and availability has provided a fantastic I convey my best wishes for the success of the
platform to propel India into the next technology ASSOCHAM 11th Telecom Summit.
revolution and accelerate its progress to Industry 4.0.
Robust telecom and broadband networks will play a key
role in seamless connectivity, which is the essence of true
digitization. In fact, digital simplicity will demand even
higher standards of connectivity.
ForewordShri Ajay Sawhney
Secretary, Ministry of Electronics
& Information Technology (MeitY),
Government of India
I am pleased to note that the 11Th telecom India summit Connectivity has given rise to entirely new ways of
is being organized by ASSOCHAM along with COAl, ICEA delivering services to consumers. Industries like ed-tech,
and TAlPA on 16th November at New Delhi. m-health, agritech, ecommerce and public transport are
shining examples of this. Students in rural areas now
The telecom industry plays an important role in making have access to online course material and tuitions over
‘Digital India’ vision a reality, by proving telecom services digital devices, bridging the gap with their city
to various sectors of economy such as banking and counterparts. The market for online education is
financial services, manufacturing, agriculture and public expected to grow to USD 1.96 billion by 2021.
services.
I congratulate ASSOCHAM and other organizations
Today, India is the largest consumer of data globally, involved in organizing the workshop and extend my best
surpassing China, USA and Japan. Together, we consume wishes to the participants.
over 2,360 Petabytes of data via mobile telephony every
year, equivalent to data stored in 526 million DVDs!
Nearly 82% of this data consumption is on 4G technology.
4G data has shown 135% growth and 3G data has shown
286% growth in CY17 vs CY16. India has also become the
second largest market for smartphones in the world, with
over 456 million smart phone users. LTE capable devices
have touched 218 million. Last year 9 out of 10
smartphones sold were 4G capable. Over 100 major
global smartphone brands are present in the Indian
market. Commercial 5G launch targeting M2M/ IoTis
expected in India by 2020.Shri Uday Kumar
Varma
Secretary General, ASSOCHAM
The telecommunications sector is a critical enabler for Mounted on the three Pillars of Connect India, Propel
Digital India as it will fuel and drive the growth of all India and Secure India, the policy aims to propel India to
sectors of the economy. digital leadership and support India’s transition to a
digitally empowered economy and society.
India is currently the world’s second-largest
telecommunications market with a subscriber base of 1.2 A focused implementation of the various strategies
billion and has registered strong growth in the past outlined in the Policy will help establish a ubiquitous,
decade and half. In the last 18-24 months, there has resilient and affordable digital communications
been a slowdown in this growth and the sector is beset infrastructure, fulfil the ever growing and enhanced
with several structural challenges. information and communication needs of citizens and
enterprises and take India forward in becoming a trillion
The NDCP 2018 recognizes theses challenges and seeks dollar digital economy from the present level of
to address the underlying issues. The Policy is designed approximately US$360 billion.
to empower the Indian telecom sector to fulfil this
designated role to achieve the government’s vision of a ASSOCHAM had submitted its suggestions on the Draft
Digital India. The Policy will provide the platform for the Policy and now wishes to contribute in the process of
much-needed impetus for light-touch, technology friendly taking the policy document and converting it into
framework, which is required to further propel innovation actionable items to achieve the stated Policy objectives.
and efficiency via a robust communications industry.
The 11th Edition of its Annual Telecom India Summit is
The policy is holistic, progressive and forward looking as the first workshop that will kick-start the process of
it rightly considers all aspects vital for the development policy implementation through a collaborative process
and growth of the sector to deliver state of the art of interaction of the decision makers with all the
connectivity for all in both urban and rural areas across concerned stakeholders. I hope that the Summit will
the country. provide the government with a clear implementation
plan that will help achieve the national policy objectives
The policy captures eloquently the needs of this sector in a focused and time bound manner.
amidst an evolving landscape of convergence across
technologies and platforms and lays down the roadmap I would like to offer my best wishes on this occasion for
that will pave the way for development of telecom and the success of the Summit.
Foreword
digital services in the country.Shri P. Balaji
Chairman, ASSOCHAM National
Council on Telecommunications
and Convergence
At the outset, we at ASSOCHAM would like to It may be appreciated that the success of any policy lies
congratulate the Department of Telecommunications in its focused and time bound implementation to achieve
(DoT) on coming out with the NDCP 2018, an excellent desired end objectives. The ASSOCHAM 11th Telecom
policy document that eloquently captures the three Summit is an effort in this direction.
foundational pillars for the success of Digital India, the
policy goals under each pillar and the strategies to This report seeks to identify the building blocks to
achieve these goals. achieve the end policy goals so that the various
strategies enunciated in the policy can be implemented
ASSOCHAM as a knowledge chamber has played a pivotal in a time bound and structured manner, with the
role through its Annual Telecom Summits in driving ease measures being classified as short term, medium term
of doing business and creating the platform for all and long term on the basis of the implementation
stakeholders to come together for providing the schedules.
government with the necessary inputs for the formulation
of the 2018 Policy. We hope that this summit will be the first of such
collaborative efforts and that the decision makers, the
We are gratified that many of the industry concerns have industry, the experts, the academicians will continue to
been recognized by the government and the National participate whole-heartedly in this important nation
Digital Communications policy 2018 has not only laid building initiative.
down the vision and objectives for a Digital India, but has
articulated clear strategies required to achieve the policy
objectives.Prashant Singhal
Emerging Markets TMT Leader, EY
Over 460 million Indians are online and nearly 40% of Developing a robust and future proof infrastructure is a
them are from rural areas. For many Indians, definite. With that, balancing fixed and wireless
smartphone is the internet. 70% of India’s internet users technologies is important to achieve the digital goals.
bypass desktops for smartphones. In 2017, we Fiber will be critical for accelerating Fibre-to-the-Home
downloaded over 12.1 billion apps, surpassing the US. (FTTH) deployment and strengthening backhaul. Fast-
An Indian spends 8 hours and 28 minutes watching tracking approvals and rationalising costs for RoW will
videos online every week, which is 20 minutes more promote ease of installing telecom infrastructure.
than the time spent in front of a TV. Indians continue to
consume massive data, showing no sign of abating, with The Government has unveiled a roadmap for India’s
usage picking up in rural areas. On an average, 2 in 3 digital future. The NDCP 2018 is a progressive policy
online searches are outside the top 6 metros, and 28% that embeds broadband in the fabric of India’s digital
of queries on search apps are made by voice. The way economy. The time is right to push the pedal on digital,
English speaking voice commands and assistants are and focus on implementation to connect the
evolving to adopt many Indian languages and dialects, unconnected, propel investments and build digital trust
one can imagine them breaking all linguistic and literacy to secure the future.
barriers.
Fast forward to India 2022, 5 new mobile connections
Connectivity continues to change the narrative of how per second are estimated to join the power of internet.
we shop, eat, stay healthy, live, use technology, play, Nearly 50% of the households are likely to be
work and move. An Indian spends over 200 minutes on connected through fixed broadband. The future is
the smartphone daily and this on-screen experience is gigabit speed and 5G will power new waves of
shaping consumer behaviour. At the back of this, online transformation. Connectivity will move beyond people
consumer spending is estimated to grow 2.5x to to connect billion of devices, vehicles, household
US$100 billion by 2020 led by e-commerce, travel, appliances and machines. In a hyper-connected India,
financial services and digital media. the Internet of Things has the potential to reach 2
billion connections, and unlock revenues of US$11.1
A lot happens in an online minute and a lot lost in case of billion by 2022.
shutdown. As per estimates, 16,315 hours of Internet
shutdown in India cost the economy US$3.04 billion The real opportunity is to look beyond technology, and
between 2012 and 2017, averaging to an hourly loss of find ways to give people the ability to positively impact
US$186,332. Imagine the opportunity cost of over 650 their families, organisations and communities. At the
million offline Indians! back of this, India has the potential to unlock a trillion
dollar digital economy by 2022 and lead the Fourth
Telecoms is the backbone for Digital India and Smart City Industrial revolution.
visions. 5G deployments are likely to entail massive
investments to the tune of US$60 billion in the next five- I thank Members of ASSOCHAM National Council on
six years. For a sector in distress, reassessing spectrum Telecom and Convergence for their involvement and
strategy and rationalization of taxes and levies will be valuable inputs. I hope this report helps us in shaping
encouraging for building future networks. the dialogue for accelerating Hon’ble Prime Minister’s
vision of a Digital India.11
Executive
summary
It is not just the number of people using the internet that has Millions of new users in India join the power of internet every
increased, the amount of time that people spend on the year, and not just from the metros, but increasingly from
internet has also gone up significantly over the past 12 rural areas as well. Rural India constitutes nearly 40% of
months. An average user spends around 6 hours each day internet users, and account for over 65% of video
using internet devices and services – that’s roughly one-third consumption in the country. India has come a long way in
of their waking lives. Adding this together, for all 4 billion of realizing the socio-economic benefits of the digital
the world’s internet users, we spend a staggering 1 billion ecosystem. However, over 65% of Indians are still offline,
years online in 2018. More than 3 billion people around the outlining the untapped potential to transform the larger
world now use social media each month, and 9 in 10 of those populace and unleash the benefits of being connected to the
users access it with their mobile devices1. information society.
India is leading data consumption globally Nearly 15 million Indian rural women became digitally
literate through a real-time mobile data training
campaign - bridging digital gender divide from 1:10 in
Over a billion of Indians are connected wirelessly, and nearly
2015 (female to male) to 3:10 in 2017
460 million people are online. Together, we consumed over
2,360 PB of data past year – highest globally. India is clearly
a mobile-first economy with nearly 96% of internet Accelerating the digital transformation – NDCP 2018
subscribers connecting through mobile, much higher than The government has been a pivotal force behind India’s
the average for emerging markets at 80%. Increased digital makeover. A series of pro-growth reforms and
affordability of service has enabled almost one third of the progressive policies laid the right foundation for growth.
Indians to pick mobile as their first and often preferred
means of going online.
In 2014, the government unveiled a bold new vision for a
Digital India. An aspiration to transition toward 100 Smart
Data usage per subscriber per month (2017)
Cities and taking electronic manufacturing to a new
dimension with the “Make in India” endeavour. The economy
3.6x witnessed a wind of change with “Start-up India”, led by
emergence of new generation of tech-based Indian start-
ups. All of these have been instrumental in embedding a
culture of digital In India.
11GB
320MB 3GB Making in India Enabling Fiber Connectivity
2G 3G 4G 225m 60m 2.81 358
Lakh Kms Kms
8.6 GB 2017 2014 2018 2014
Average
Source: Nokia 3.7x rise in handset manufactured
and 115 new plants set up 117,319 GPs connected with Fiber
The pace with which India has adopted 4G has been Towards a less cash economy
Enabling a smarter city
phenomenal. India took seven months to reach milestone of
100 million 4G subscribers, against eight years for 250 92 US$69.7b 9m 190m
million connections on 3G. At the back of growing SPVs formed Cost for 1,333 projects Active users Monthly transactions
BHIM-UPI BHIM-UPI
smartphone adoption and mobile data usage, consumer
US$1.1b outlay for US$3.9b worth monthly
behaviour continues to change dramatically. 2018-19; 1.5X rise transactions via BHIM-UPI
1 “Digital in 2018 Global Overview”, Hootsuite, January 201812
Continuing this momentum, the government’s latest ► RoW charges to cover restoration cost only; costs to be
roadmap – the National Digital Communications Policy 2018, rationalized for all RoW, not just FTTH
is a strategic aspiration to connect, propel, and secure
India’s digital economy. The transformative policy is a step The government has emphasised importance of fibre for
change that goes beyond the paradigm of telecoms to fixed broadband (to serve homes and enterprises) and next
embrace the opportunities across India’s thriving digital generation mobile technology (4G/5G) transitions.
ecosystem.
According telecom the status of critical and essential
NDCP 2018 envisions to propel India towards a infrastructure will encourage building the future network.
There is a need to extend all benefits that are provided to
US$1 trillion digital economy by 2025
critical infrastructure (e.g. union budgetary allocation,
priority lending, priority electricity connections at
An aspiration to connect the unconnected, propel preferential tariffs, extension of VGF, efficient deployment
investments in digital and secure a culture of practices and security of the network). Efforts need to be
digital trust by 2022 channelized toward accelerating infrastructure deployment,
with focus on:
2022 Goals
► Providing incentives (tax rationalization, easy
50 Mbps 50% investment etc.) for roll-out and sharing of telecom
infrastructure (fibre/ telecom towers)
Universal broadband Households with fixed ► Enhancing the scope of IP-I players on a priority basis
connectivity broadband access ► Creating a state-wise network/ broadband readiness
index
65% 10 million ► Amending National Building Code to include common
telecom infrastructure and create a common duct policy
Unique mobile Public Wi-Fi hotspots
► Providing uninterrupted power supply at industrial rates
subscriber density
Incentivizing tower deployment and encouraging using of
60% 5 billion government land and buildings as potential cell sites will
Telecom tower Connected IoT expedite tower deployment.
fiberization ecosystem
Massive investments required to achieve 2022 goals
India’s digital construct exhibits underlying potential for its India is expected to roll out 5G by 2020, in tune with the
1.3 billion people to rapidly embrace digital. Collaborative world. 5G will be supporting a host of applications and use
efforts are needed to fast-track implementation and cases in India, and is poised to play a huge role in socio-
accelerate growth for the Digital economy. economic uplift. Effective planning will be critical to unleash
5G potential. Collaborative efforts should be made toward
Delivering the future-fit digital infrastructure fine-tuning use cases to build an effective ecosystem.
The Government intends to implement a ‘Fibre First With that, there is a need to upgrade backhaul networks
Initiative’ through the NDCP 2018. Emergence of new and fiberize minimum of 60% of mobile towers to support
technologies is set to multiply the consumption of data, 5G ecosystem. Critical considerations to be given towards:
necessitating the need for installing more towersA single
window clearance for fast-tracking approvals and ► Early allocation of adequate backhaul spectrum in the
rationalising costs for RoW will go a long way in easing E and V bands for supporting high-bandwidth
installation of crucial telecom infrastructure. Efforts should requirement (e.g. 5G); Rationalization of microwave
be directed towards simplifying and easing RoW by: charges
► Defining roadmap for spectrum use and availability
► Aligning state RoW policies with RoW rules as per ► Optimally pricing spectrum for auctions
Gazette notification of 2016 ► Enhancing scope of active infrastructure sharing to
► Encouraging an online portal for time bound approvals of include backhaul
RoW
► Simplifying SACFA processes - Consider one SACFA
► Expediting RoW payment clearance with defined
timelines clearance within stipulated time per physical location
► Regularizing all existing infrastructure as per the state ► No delicensing of spectrum within any band which has
telecom policy and aligning with RoW rule within a already been identified for use by IMT or being
stipulated period of time considered to be used for IMT13
Significant investments will be needed to support 5G ► Encouraging penalty provisions to be proportionate to
rollouts due to network densification and increase in base quantum of violation or shortcoming
stations. As per estimates, US$60 billion of capital ► Rationalizing interest rates and penalties for delayed
expenditure over the next five to six years is required to payment of License Fee/ SUC
deploy services. India should aim for a gigabit society, and ► Simplifying existing mechanism and procedures for grant of
an interplay of fixed and mobile technologies will be critical licenses and specifying timelines within which permissions
to meet the goals of 2022. and clearances are to be provided.
Improving financial health of the sector for a digital Building digital trust for a secure India
future
Technology is creating new opportunities. As more products and
services are digitally delivered, robust data privacy and security
Financial distress of the telecoms sector is a critical measures will be needed to uphold consumer trust in the digital
concern. Telecoms is one of the highest taxed sectors ecosystem.
globally, with multiple taxes and levies accounting for nearly
32% of the total revenues. Sector debt is escalating, and is
The government is committed towards establishing a robust
nearly ~2x sector’s annual revenues.
framework to secure the digital future. A concentrated push is
required to develop and strengthen a future-fit framework.
There is a dire need to ease the financial burden to
strengthen viability. Urgent interventions are required to
Efforts needs to be directed towards:
rationalize levies:
► Striking a balance between data protection and innovation,
while keeping citizens data secure and protected
► Suspending USOF contribution till the entire amount of
corpus gets fully disbursed; alternatively, lowering USOF ► Permitting cross-border data flows subject to necessary
contribution to 3% safeguards. All critical personal data and data pertaining to
► Reducing remaining License Fee from 3% to 1% of AGR national interest/ security of States should be located in
► No SUC for spectrum acquired through auctions; only a servers in India
fixed fee administrative cost can be considered ► Ensuring protection of critical telecom infrastructure
► Rescheduling spectrum payment from 16 to 18 years – through relevant clauses in the state government policies
with a two year moratorium; realign interest rates with ► Setting-up sector specific nodal bodies to manage and
market realities govern overall cyber-security aspects
► Settling long pending AGR related disputes
► Promoting ‘security by design’ approach for communication
► Simplifying and automation of AGR verification process
devices
► License fee deducted at Source (LfDS) should be adopted
as per TRAI Recommendations on AGR dated January
2015 Moving beyond technology to power growth
Additionally, the government needs to address tax-related The policy lays emphasis on becoming self-sustainable from
concerns, including: being self-sufficient. With the right kind of approach, India has
the capability to “Make in India” for the world and establish itself
► Reducing GST on telecom services from 18% to 12%
as a world class telecom equipment manufacturing hub.
► Receive refund of unutilized input tax credit under GST
to ease cash flow issues of service providers Encouraging local production of handsets, routers and modems
► Adopting principle of input line credit: TSPs should be and other related equipment in the value chain should be
allowed to claim deductions on account of charges paid encouraged. Efforts must be directed towards:
to other TSPs
► Customs duty on 4G/5G related network products to be ► Defining roadmap for in-country / global testing and
brought down from 20% to 0% certifications for telecom equipment
► Clarity on specific tax issues to reduce litigation and ► Developing programs to enhance local R&D for creating
uncertainties on withholding tax in telecom
world-class manufacturing enterprises
► 200% tax benefit on R&D expenditure to be extended for
the next 5 years for R&D and IPR design based end-to- ► Incentivizing R&D for India-specific fiber and cables through
end complex manufacturing special grants
► Increase export incentives (MEIS) to 7% and All Industry ► Encouraging set up of fabrication units for chipsets to
Rate (AIR) duty drawback by 2% from current support local electronics manufacturing
► Goods and services in complete supply chain of optic
fibre be taxed at 12% or lower All these enablers have the potential to accelerate the ability to
achieve Digital India vision. Attracting US$100 billion
Adopting a light-touch regulatory regime to simplify
investments for the sector to fuel growth requires a
compliance and streamline processes, including:
collaborative effort by all stakeholders.14
Growth in data is fueling India’s mobile-first
digital economy
98
53m #1 China
4
16m #2 India
6m #3 Indonesia billion 802m #1 China
million 23m Rest of World 000000000 460m #2 India
Net additions to global mobile subscriptions Online population globally
(1Q18) (2018)
20.5
Emergence of mobile-first digital
economies
users per second
Indonesia
India net adds to
global mobile
subscriptions in
97.6%
1Q18
India
13.7x
faster to reach 100m 4G users
95.9%
Brazil
India took 7 months to
reach milestone, against
8 years for 250m
87.7%
connections on 3G
China
74.7%
Mobile as % of broadband users (2018)15
Data
76PB consumed
per day
India #1 globally
69PB
1.1x China
53PB
1.7x USA
175billion
Global app downloads
(2017)
79%
65billion 12billion Web traffic via mobile
India #1 | Nigeria #2
#1 China #2 India
Top smartphone markets globally
Smartphone traffic/month (2017) Steep rise in smartphone adoption
#1 China
5.7EB
Smartphone adoption (%)
India Region 2017 % change
#2 India
India 45% 12 pps
MENA 57% 11 pps
#3 USA 2.3EB 7.2EB Latin America 62% 7 pps
2.5x China 0.8x USA
Africa 33% 5 pps
Sources: EY analysis, Ericsson Mobility Report, GSMA Mobile Economy 2018, Cisco VNI, TRAI, press and media reports, App Annie16
Enabling and transforming the lives of 1.3 billion
Indians with a click and tick
Agriculture
• India #6 globally on agri-tech investments
• 53 Indian start-ups raised US$313 million (10%
of global investment) in 2016
• 16.9 million tons of farm produce worth US$6 billion
sold through 585 agri-mandis (e-NAM platform) in past
two years
Railways
• 20,000 e-tickets/ minute
20% to Potential improvement in yield of booked on IRCTC; 10x increase
from 2014
30% major broad-acre crops using digital
platforms for farming • 675 Wi-Fi enabled station; 45x
increase since 2016
• Target of 8,500 Wi-Fi
stations by 2019
Education US$ Savings targeted
• 15 million women trained under Internet Saathi – 8.3 billion by Indian railways
digital literacy programme through use of ERP
systems for
• Bridging digital gender divide in rural bringing all rail
India from 1:10 (2015) to 3:10 (2017)
operations online
US$ Estimated size of India’s online
1.9 billion education market by 2021; 7.8x
rise from 2016
Travel
• 1.29m e-Visas granted till 2017; 2.5x
increase since 2015
• E-Visa services available to
nationals of 162 countries
US$ Estimated sales of online
39.1 billion travel by 2021; 1.8x rise
from 201717
E-commerce
• B2C e-commerce accounted for 18.8%
of the US$629 billion overall retail sales
in 2017
• Current e-commerce penetration at
28%; expected to increase at CAGR of
23% till 2021
Entertainment
• In 2017, 250 million people watched
US$ 2.5x increase in online online videos, 1.6x increase in a year
100 billion spending by 2020 • 177 million people accessed news
digitally in 2017, generating 14 billion
minutes of usage across the top 15
news medium
2x projected rise in online
500 video audience by 2020;
million
India to be #2 globally
Healthcare
• US$ 15 million size of telemedicine
market, 2x rise since 2012
• e-pharmacy industry estimated at
US$142 million. To account for ~15% of
overall healthcare market in three-five
years
US$3 Expected size of e-pharmacy
billion
industry by 2024; growing at
CAGR of 20%
Financial services
• M-wallet transactions reached US$13.2
billion in 2017; 40x increase since 2013
US$ Expected size of digital
1 trillion payments by 2023; 5x rise
from 201818
National Digital Communication Policy 2018 is a
robust framework in tune with the times
Strategic objectives by 2022
Enhance
contribution to
Provisioning global value chains
broadband for all
Creating 4 million
additional jobs
Ensure digital
sovereignty
Top 50 Nations in
ICT Development
Index from #137 8%
Contribution to GDP
from 6% in 2017
Unlocking a
trillion dollar
digital economy
by 202519
Building a better digital future – 2022 goals
Attract US$100 billion in investments
Efforts to connect, propel and secure India
2018 Connect India
“Broadband for All” to foster socio-economic
development, service quality and encourage
environmental sustainability
50
Mbps
Universal
broadband
connectivity
Fixed ► Provide 1 Gbps connectivity to all Gram
broadband 25 Panchayats by 2020 and 10 Gbps by 2022
speed Mbps ► Enable 100 Mbps broadband on demand to Households
all key development institutions with fixed
► Ensure connectivity to all uncovered areas 50% broadband
Households access
with fixed
broadband
8.1%
access Propel India
Enable next generation technologies and
Unique mobile
services through investments, innovation and
IPR generation 65% subscriber
Unique mobile density
subscriber 53% ► Attract investments of US$100 billion in
density the digital communications sector
► Expand IoT ecosystem to 5 billion
connected devices
► Accelerate transition to Industry 4.0
10 Public Wi-Fi
Public Wi-Fi 0.04 ► Increase India’s contribution to global hotspots
hotspots million value chains million
► Creation of globally recognized IPRs
► Train/ re-skill 1 million manpower for
building new age skills
Telecom tower
fiberization 25% Telecom tower
60% fiberisation
Secure India
Ensure digital sovereignty, safety and security
of digital ecosystem
Connected 0.87 ► Establish a comprehensive data protection
devices billion regime for digital communications
5 Connected IoT
► Develop and deploy robust digital ecosystem
communication network security billion
frameworks
2022
► Address security issues relating to
encryption and security clearances
Sources: EY Analysis, EY CII Report, #Broadband 2022 – unlocking trillion dollar economy, GSMA Mobile Economy 2018, press and
media reports, National Digital Communications Policy 2018 - Department of Telecommunications20
Mission 1 Connect India toward a Gigabit society
With the power of internet and smartphones, one can now Significant progress has been made on connectivity. It took
connect with anyone, at anytime and anywhere. seven months to reach milestone of 100 million 4G
Technological innovation and broadband connectivity is subscriptions, against eight years for 250 million
considered as a major stimulus for economic growth. The connections on 3G. 4G is the key driver behind increasing
impact of the internet on society continues to be far users’ appetite towards data consumption, capturing 82%
reaching at multiple levels. share of total data traffic in 2017. Data usage on mobile
devices reached the levels of some of the developed
Currently, there are nearly 7.8 billion mobile subscribers – markets in 2017.
driving the global mobile penetration to 103%. 67% of total
mobile subscribers are connected to mobile broadband, There is need for a combination of fixed and wireless
growing 15x faster than fixed broadband in 2017. technologies to meet the goals of Connected India. This is
important because it is the use of digital assets that drives
In 1Q18, one in every four new mobile connections globally productivity gains and economic growth.
were added in India. By 2025, even though the rate of
mobile addition will pace down, 1.7 billion new mobile High speed internet is a basic right
connections will be added globally. Out of that one in five
are likely to be from India, positioning it as the fastest In 2017, the Supreme Court declared internet access as a
growing telecoms market after China. basic fundamental right for all Indians – one that cannot be
curtailed and blocked at any cost. While this was a step in
Data is charting a new growth story in India. In the past two the right direction, nearly 65% of Indians are still offline,
years, India’s mobile economy has reached major outlining the potential of connecting the underserved.
milestones, carving a unique digital identity globally. Currently, India lags in average internet speed globally –
2.3x and 2.5x lower than global averages for fixed and
Mobile broadband has been a pivotal force behind the mobile broadband, respectively. The NDCP 2018 envisages
digital transformation in India. In 2017, nearly 2.5 50 Mbps universal broadband access to every citizen.
connections were added every second, crossing the Ensuring pervasive connectivity for a country of our size is
milestone mark of 500 million internet subscribers. a complex and daunting task.
Collectively, India consumed over 76 PB data per day -
propelling India to become the largest consumer of data Fixed broadband average Mobile broadband
globally, outpacing major economies like China (69 PB/day) speed average speed
and USA (53 PB/day).
India: 25.02 Mbps India: 8.85 Mbps
Global: 49.26 Mbps Global: 23.6 Mbps
Data usage on mobile device per subscriber Source: Ookla
11,095
10,029
9,599
8,859
8,275
1 20 00
7,060
6,315
1 00 00
5,750
5,434
5,011
Mb/month
8 00 0
3,351
2,507
6 00 0
4 00 0
2 00 0
0
Italy
South Korea
Thailand
Japan
Indonesia
Singapore
Spain
France
India 2017
India 2016
Malaysia
UK
Mobile device usage on Wi-Fi network Mobile device usage on mobile network
Source: Nokia21
Bridging the digital divide The economic potential of digital technologies is enormous,
but to reap the benefits for the digital economy, the
Developing ICT infrastructure initiates a chain reaction to ecosystem will need to come together to maximize
growth. The Global Connectivity Index (GCI) 2017 outlines productivity benefits and work toward:
the impact of early digital adoption on inequality and
economic growth. As illustrated in the image, digital ► Getting more people online and promoting digital
“Frontrunners”, who embraced digital earlier have entrepreneurship
accumulated an advantage over time. “Frontrunners” had a ► Establishing supportive infrastructure for the ecosystem
far greater impact on nominal GDP per capita, compared to to thrive
“Adopters” and “Starters”. The widening of the “S-Curve” ► Creating an enabling environment for benefits to
indicates deepening socio-economic inequality1. cascade across sectors
► Investing smartly and quickly in digital technologies
Frontrunners Towering demand for building digital infrastructure
Nominal GDP per capital US$’000
+4.7
60,6 65.2 The emergence of new technologies is set to multiply the
consumption of data, necessitating the need for installing
more towers. Additionally, 100,000 telecom towers will be
Adopters required to meet the growing demand for data across the
+4.5 country.
Starters 44.3
39.7 According telecom infrastructure the status of Critical and
+2.4 GCI 2017 S-curve
30.2 GCI 2017 S-curve Essential Infrastructure will go a long way in delivering the
27.8 Score change digital infrastructure. Moreover, incentivizing tower
Average scores deployment and availability of land and buildings as
potential cell sites in government facilities, will expedite
tower deployment.
Source: GCI 2017 score, Digital Spillover by Huawei
Towards a fiber first agenda
Countries GCI Score
Currently, fixed broadband has a minuscule play in India’s
Frontrunners connectivity scenario, accounting for only 4.1% of India’s
USA 77 internet access. Fixed line infrastructure is being actively
developed, with the government driving rural connectivity
Singapore 75
agenda through BharatNet and GramNet. Telecom
Adopters operators are committed to and investing in fiber in the
country. Increasing need for high-speed fixed broadband
UAE 52
access is likely to be the primary driver for FTTH adoption in
Italy 49 India. Going forward, FTTH is expected to account for a
majority of the fixed broadband connections by 2022,
Starters helping to realise the Government’s target of covering 50%
Indonesia 33 of households. The NDCP 2018 recognizes need for
establishing a National Fiber Grid.
India 32
Source: Global Connectivity Index 2017
1. “Digital Spillover – Measuring the true impact of digital economy, Huawei and Oxford Economics, 201722
Global trends suggest there is a direct link between fiber The Gazette Notification on RoW issued by the Government
consumption with evolution of technologies. A study noted in 2016, is an effort to expedite the deployment of
that the capex spent by top 15 telcos globally rose 1.6x underground (e.g. fibre) and over-ground (e.g. towers)
during 2011-17 (period of 3G to 4G transition), while fiber infrastructure. However, these new rules are yet to bring
consumption grew 3x faster. This establishes the role of benefits to the Indian telecom sector due to lack of clarity
fiber in supporting the digital economy endeavours. With 5G and implementation delays2. Renewed focus on accelerated
on the anvil, developing a best in class infrastructure will be RoW permissions for telecom towers in government
critical. premises is encouraging.
Fiberization of towers is critical in India. Nearly 60% of the By focusing on the right mix of accelerators, RoW
towers will need to be fiberized by 2022, as outlined in the permissions can be expedited to promote timely rollouts.
NDCP 2018. As demand for 4G and then 5G grows,
networks will become denser and deeper – making
fiberization an imperative.
Key RoW considerations
Global fiber deployment (million fiber km) • Simplifying norms to promote single window
5,362 clearance mechanism for time–bound approvals and
facilitating online portals to expedite processes
2X times fiber is likely
to be deployed due to • Enhancing the ease of rolling out telecoms
2,681 5G infrastructure by facilitating uniform guidelines
across states aligned with RoW rules
4.5X fiber deployed
607 due to shift from 3G • Accelerated RoW permissions for telecom towers in
to 4G+FTTH government premises
3G (2002 to 2008) - 4G (2009 to 2017) - 5G (2018 to 2026) - • Rationalizing RoW costs on fiber-to-the-home
cumulative cumulative cumulative (FTTH), which still remains expensive compared to
deployment deployment deployment other countries
Source: Sterlite
• Creating a collaborative institutional mechanism
between centre, states and local bodies for Common
Expediting RoW RoW, standardization of costs and timelines and
removal of barriers for approvals
RoW challenges in India largely stem from fragmented and
non-uniform policies adopted by various states and local
bodies. Moreover, FTTH construction cost per subscriber is
higher in India as compared to other countries. Civil work is a
major contributor to RoW costs in deploying FTTH.
Tower fiberization Deployment Optical fiber rollout,
fkm per capita
In India, 25% of telecom towers Fiberizing 70% of the towers will
carry fiber optics; the average require an estimated 600,000 China: 0.9x
in the US, China and Korea is fKm; (excluding small cell India: 0.1x
65%-80% deployment) US: 1.4x
Source: EY #Broadband2022 – Unlicking a trillion dollar digital economy
2. “Right of Way rules: The effects of implementation delay on India's telecom industry,” The Economic Times,
https://telecom.economictimes.indiatimes.com/news/right-of-way-rules-the-effects-of-implementation-delay-on-india-telecom-industry/59855964, accessed 5
November 2018.23
Strengthening wireless backhaul Powering ease of doing business
Allocation of E (71-86 GHz) and V (57-71 GHz) band In November 2017, TRAI issued recommendations on the
spectrum is crucial for supporting high-bandwidth wireless “Ease of Doing Telecom Business”. This is a welcome move
backhaul networks. The exponential increase in data by the regulator that will go a long way in supporting the
consumption in India has significantly strained the existing growth of the telecom sector. To achieve the goal of
backhaul capacity based on Microwave. High quality breaking into the top 50 rankings on Ease of doing Business
backhaul through E and V bands is becoming increasingly by 2022, immediate simplification of clearance processes
critical, especially as the fiberization process is being especially for broadband infrastructure deployment is
completed. The E and V bands can be used for providing required. Currently, TSPs have to approach multiple
rapid and economical backhaul deployment in dense urban agencies for the “No Objection Certificates” for installation
routes as last mile solutions and can be an alternative to of towers on government land and buildings. A time-bound
fibre backhaul. single window clearance for approval and installation of
towers will be greatly beneficial.
It is imperative that a policy for sharing backhaul, simplifying
SACFA processes, publishing spectrum use and availability
roadmap be put in place at the earliest. IMT identified
spectrum not to be de-licensed.
From passive sharing to active sharing
Passive network sharing was the hallmark of the Indian
telecom sector, allowing operators to rapidly expand
network coverage in a cost effective manner. As a
progressive step, the DoT approved active infrastructure
sharing in February 2016, helping to reduce telecom
operator capex and operational costs.
For 5G, operators may look at creating net-cos or network
companies by segregating their networks from operations,
pooling their active networks together. A netco model would
lead to efficiencies in operation and lead to prudent use of
resources, especially with the high cost of 5G rollout.
FTTH construction cost per subscriber (US$)
$1,611 $1,580
$1,108
$810 $745
$450 $432
$334 $307
$200
South India UK Germany Sri Lanka Spain Malaysia Indonesia Thailand China
Africa
Source: ITU, EY analysis24
Innovative model for fiber deployment
Leading operators are now mulling ways to reduce the capex public private partnership (PPP) model for BharatNet project
associated with fiber deployments. Infrastructure sharing and adopted last year are two timely steps to boost the
leasing are gaining popularity among mobile and cable infrastructure sharing efforts. Combined with this, a
operators in developing markets. In India, the DoT’s consensus on RoW will further expedite the efforts.
amendment of unified license scheme for active infrastructure
sharing and the revised
Fiber deployment models
Telco FiberCo TowerCo Utilities
The telecom operator Any independent fiber Indian TowerCos Utilities use their
lays the fiber and company can take up under the current existing infrastructure
operates it as part of the role of a FiberCo license conditions, can and RoW permissions
the network where they offer dark offer dark fiber and for laying out dark
or lit fiber, based on lease it out to service fiber and lease it out
Telcos can off-load their license conditions providers to service providers
fiber assets and form a
FiberCo
Acquire additional licenses to move from dark fiber to lit fiber leasing
Opex based deployment methods
Fiber-grid Build-operate-transfer
A fiber-grid model can be explored Sell a portion or the entirety of a fiber
where the fiber assets of all owners are network to a third party or asset manager
aggregated to build a one-stop shop for
dark fiber on a pan-India basis
Monetizing prior investments in a fiber
network through a build-operate-transfer
The owners together can operate and model would provide liquidity for
maintain the entire pool of fiber assets independent players and utilities in the
and drive planned expansions fiber business
Utility as a wholesale operator, with government ownership or under government initiative
► Modelled around a joint-venture with the government or funding based relationship with the government
► Utility leads fiber roll-outs backed by government funding, specially for driving rural broadband
Utility as a wholesale operator with telco partnership
► The utility offers wholesale services to telecom operators
► Telcos use the fiber network for rendering servicesIndustry inputs to
Connect India
Building the road ahead require collaborative efforts. Industry calls for interventions have been categorized under three critical
agendas – RoW, spectrum management, and infrastructure deployment and sharing. These have been bucketed under short and
medium term considerations defined by implementation timeline.
Short term (0-3 months) Medium term (3-9 months) Long term (9 months and beyond)
Requires an executive order Require multi-stakeholder and Considerations that endorse the
or already under regulatory consultation for national vision and need significant
consideration implementation effort
Right of Way
Single window clearance or single point of contact for approval and installation of telecom
infrastructure (e.g., fiber, towers)
► All state RoW policies to be aligned with RoW rules as per Gazette notification of 2016
► Online portal RoW facilitating single window for time bound approvals
► RoW payment clearance with defined timelines to enhance payment predictability Short term
► All existing infrastructure should be regularized as per the state telecom policy aligned with RoW
rule within a stipulated period of time
► RoW charges should cover restoration cost only; costs to be rationalized for all RoW, not just
FTTH
Spectrum management
Ensure early allocation of adequate backhaul spectrum (E and V bands) for addressing growing
broadband requirements as well as rationalization of microwave charges
► Roadmap for spectrum use and availability
► Optimal reserve prices for spectrum auctions
Short term
Simplifying Standing Advisory Committee on Radio Frequency Allocation (SACFA) processes
► Consider one SACFA clearance within stipulated time per physical location
No delicensing of spectrum within any band which has already been identified for use by IMT or
being considered to be used for IMT
Ensure availability of harmonized and contiguous spectrum in the 3.3 GHz to 3.6 GHz (mobility
Long term
applications) and 26/28 GHz (nomadic and fixed wireless access) bands for 5G technology26
Infrastructure deployment and sharing
Enhance the scope of Infrastructure Providers (IP-Is) on a priority basis to accelerate the
proliferation of various digital services such as Public Wi-Fi hotspots, etc.
► IBS (In Building Solution) active sharing through IP-Is to be allowed
Urgently create a network/ broadband readiness index that will map the states in terms of Ease of Short term
Doing Telecom Business
Provide incentives (tax rationalization, easy investment, etc.) for roll-out and sharing of telecom
infrastructure (fiber/ telecom towers)
Amend National Building Code (NBC) to ensure buildings are not accorded approvals till necessary
Common Telecom Infrastructure (CTI) is in place
► Include fiber along with water, electricity and gas pipelines in NBC
A common duct policy to be formed and should cover provisions for deploying Common Telecom
Infrastructure (CTI) during construction of new highways, roads and civil infrastructure
National Fiber Authority to consider both underground and over ground telecom infrastructure
Medium term
Create guidelines and policies for FTTH
Scope of active infrastructure sharing can be enhanced to include backhaul
Create policy for deployment of towers on government lands and buildings
Issue guidelines on release of street furniture (lamp posts and utility poles, etc.) for mounting
infrastructure elements to IP-Is27
Mission 2 Propel India to lead in a digital era
A couple of decades ago, a 3.5 inch floppy disk could store M2M and IoT use cases span industries
1.4 MB of data. Today, the improvised versions of HD drives
stores nearly 8TB of data, equivalent to data stored in 12 Healthcare Agriculture
billion floppy disks.
Era of digitalization is rewriting the ways of connectivity. ► Remote monitoring ► Monitoring crop yields,
The world has come a long way from the dot com revolution rainfall, pesticide, soil,
► Telemedicine etc.
and the era of desktop computers. By 2021, India's internet
traffic will be equivalent to 1 billion DVDs per month, or 2 ► Remote surgery ► Environmental control
million DVDs per hour 3.
Everything that can connect, will be connected Public safety Power and utilities
Connectivity is bringing businesses together – creating new ► Women and child ► Smart meter, smart
markets and opportunities for companies and governments safety grid
to grow and compete in a connected world. Various ► Alarms and ► Facilities management
industries are riding on the telecom wave to tap on a new surveillance
breed of digital consumers and unlocking an era of ► Equipment
“industrial mash-ups”. We are looking at a future of limitless ► Connected cameras management
possibilities. From “Mobile Now” to “Consumer Now”, we’ll
see digital shaping new behaviours in every sphere of life - Education Logistics
from how we shop, eat, stay healthy, live to how we use
technology, play, work and move. ► Track objects, ► Fleet management
students, staff and optimization
With digital at the core, everything that can connect, will be
► Instructional Navigation and fuel
connected. Emergence of new technologies – Internet-of- ►
design management
Things (IoT) and Machine-to-Machine (M2M) – are set to
catalyse connectivity beyond recognition.
IoT will see seamless connectivity move beyond Financial service Automotive
smartphones and gadgets - to connect billions of devices,
vehicles, household appliances, monitors and sensors. ► Remote sales ► Infotainment and
Smart and intelligent automation will redefine life in the management positioning services
hyper-connected world. This new system of sensors and In-car emergency
► Mobile point of ►
networks is emerging as a major innovation that will be systems
sales
deeply embedded in all aspects of the city, its functions and
society at large. ► Remote diagnostics
NDCP 2018 lays thrust on driving IoT and growth of Adoption of massive mobile type communication (mMTC)
emerging technologies in India and critical mobile type communication (cMTC) will see
robotic manufacturing, autonomous vehicles, remote
• Expand IoT ecosystem to 5 billion connected devices medical surgery and smart shop floors become a reality. It
will help to improve efficiency, increase business value,
• Accelerate transition to Industry 4.0 provide better insights for decision making and enable
• Roadmap for emerging technologies and its use in the remote management.
communications sector, such as 5G, AI, Robotics,
IoT, Cloud Computing and M2M Endorsing a purpose led growth agenda
• Simplifying licensing and regulatory frameworks Propelling India to thrive in a digital era will require
whilst ensuring appropriate security frameworks for governments and organizations to work toward a purpose-
IoT / M2M / future services and network elements led digital growth. Forging a successful digital future will
• Earmarking adequate licensed and unlicensed mean enhancing and building capabilities in-house and
spectrum for IoT/ M2M services creating a regulatory environment conducive to growth.
Thrust should be towards:
Preparing for the change to Industry 4.0
► Providing a balanced framework with light touch
regulations for licensing
Industry 4.0 is the digital transformation of industrial
► Introducing a Pan-India unified license
markets – representing the fourth industrial revolution on
► Simplifying and harmonizing licensing norms to equalize
the road to end-to-end value chain with Industrial IoT and
policies for competing technologies
decentralized intelligence in manufacturing, production,
► Encouraging future-fit regulation for all players offering
logistics and the industry.
same or similar services
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