As P Chidambaram gears up for his annual classroom session in Parliament, eyes are riveted on the FM. Will there be any changes in the telecom policy?
What can one expect to be the future course of action in the spectrum issue? Will cellular rates be slashed or will they see a hike post-Budget?
IBNLive.com organised a chat with B B Bhatia, Regional Director, Motorola Global Government Affairs & Public Policy in order to get the answers to the above.
Sudhir: Will there be changes in the telecom policy? Do you expect tariffs to come down this Budget?
Mr. BB Bhatia: Telecom policy is in the domain of the communications ministry and as such it may not be changed in the Budget. However, we do expect that excise tariffs on telecom equipment manufacturers to be reduced.
Amrita Deo: The telecom sector is booming. Would it be the right time for the govt to impose new taxes on it because I think the sector can afford to pay?
Mr. BB Bhatia: It will not be right for the government to impose any new taxes on this sector because this is already subjected to the highest level of taxation. Today the total incidence of taxation on the sector is over 30 pc - excluding the corporate taxes. The tax burden on the sector needs to reduced. Further India only has negligible share of the telecom equipment market. A reduction in the excise duty will make India a manufacturing hub.
Pallav: How do you project mobile industry's future in India? Do you think more and more international brands will come to India in coming years; if so what’s the reason behind it? Also how is the Indian government going to project it?
Mr. BB Bhatia: The mobile industry is expected to grow from 243 million now to over 500 million by the end of 2010. 3G and Wimax-based mobile services will also be launched shortly providing wireless broadband video and data services. With the market growing so fast it is natural for global players to come to India. This will lead to better technologies and services and will benefit the common man.
Samit: I want to buy a 3G mobile, but the price is so high. Is there any hope in the Budget for a decrease in the high-end mobiles?
Mr. BB Bhatia: 3G services are expected to be introduced in the country by the end of this year. High-end handsets will also be cheaper if the operators start bundling with the services as it is done in many countries. This can be done if the Budget permits revision of the AGR definition.
Sanjay: Will the common man get any tariff reduction this Budget keeping in view so many mobile vendors coming to India?
Mr. BB Bhatia: The increased competition will certainly bring benefits to the common man. However, if the Budget can revise the AGR definition to remove the sale of cell phones by operators, then the operators may start subsidising the handsets which will be great for the common man.
Suman: What’s the prospect of Indian big players in telecom in foreign market?
Mr. BB Bhatia: many Indian players such as Bharti, MTNL, BSNL, Reliance etc. are bidding for projects in foreign markets. These players will have major prospect not only in India but also in foreign markets.
PAGE_BREAK
Suman: What will be the scenario for foreign investment or share in Indian telecom market?
Mr. BB Bhatia: Already 74 pc FDI is permitted in the telecom sector. 100 pc FDI is also allowed in manufacturing. These are not expected to be changed.
Rahul: What can the telecom sector expect from this year’s Budget in terms of tax burden?
Mr. BB Bhatia: The excise duty is one such burden that can be reduced from 16 pc to 8 pc. The license fee is another area that needs to be cut.
Dev: What's your thought on the Spectrum issue? Do you think this Budget will bring some good news?
Mr. BB Bhatia: Spectrum management is a complex issue that involves not only the domestic views but also has to take note of international radio regulations which are reviewed every 3-4 years by the ITU by world radio conferences ( WRC-07 was the last such conference). The issue has to be resolved by the Ministry of Communications and the Budget is not expected to play any role in that.
Smruti: What is the plan for telecom in this Budget?
Mr. BB Bhatia: Budget 2008 is expected to reduce the overall tax burden on the telecom sector.
Pavan Sankar: The war for spectrum between the two technologies(GSM and CDMA) is one of the major recent issues. How is the telecom policy going to affect the spectrum war? Will there be any decisions like dividing the spectrum equally between the two?
Mr. BB Bhatia: The frequency spectrum is a limited natural resource which gets wasted if not used. The WPC wing, which regulates the use of spectrum, has to ensure efficient spectrum management.
Sreenivas: Will it be profitable for new players such as the AT&T in the present telecom market?
Mr. BB Bhatia: A large number of new players are expected to enter the telecom sector. While some may be profitable, others may have to find suitable niches to be profitable.
Geeta: Will there be any benefit so that telecom reaches even remotest areas?
Mr. BB Bhatia: India has 70 pc people living in rural and remote areas. While ARPU from such areas is lower, the investment needed to reach there is much higher compared to the cities. Therefore, the government needs to provide fiscal benefits to the operators to roll out services in these areas. This can be done by exempting the 6 pc license fees for revenues from such areas. Also, equipment duties need to be exempted for these areas.
Anurag: Do you see the cellular war hotting up? Also, will the entry of more private players lead to better quality services?
Mr. BB Bhatia: Certainly there will be more competition which will benefit the customer. However, M&As will ensure a healthy balance between consumer benefits and oversupply that may lead to sickness in the industry. The quality of service will improve as more spectrum is cleared and allocated by the WPC.
PAGE_BREAK
Balbeer Tiwari: Will it be negative or positive Budget for telecom sector?
Mr. BB Bhatia: The Budget is expected to be positive for the telecom sector.
Srinivas: When can we expect 3G services in India? Why is there so much delay in allocating spectrum?
Mr. BB Bhatia: The spectrum auctions for 3G and Wimax is expected around the middle of this year. The delay in auction of 3G spectrum is because the 3G spectrum needs to be cleared from defence users for which alternate media is being provided by BSNL.
G K Kashyap: What can the telecom service providers expect from the expected populist Budget this year? Will it clear the air over spectrum allocation, number portability et al?
Mr. BB Bhatia: Spectrum allocation and number portability are issues for the communications ministry and may not get resolved in the Budget. However the service providers do expect a positive signal from the budget particularly on reduction of the overall tax as well as removing items like cell phone sales from the definition of AGR
Valli: What are future trends in telecom?
Mr. BB Bhatia: The telecom services will continue to expand with broadband wireless technologies such as Wimax and LTE getting implemented so that the users can have seamless mobility services and a true life experience wherever he or she is.
Karthick Ganesh: Are there any new policies added in this Budget regarding IT industry?
Mr. BB Bhatia: The thinking is that STPI exemption may be further extended and manufacturing may be given a boost by reducing the ED from 16 pc to 8 pc
Vikram Gupta: What are the expectations for the India telecom sector from Union Budget 2008-09?
Mr. BB Bhatia: The Budget 2008 is expected to reduce the overall tax burden on the telecom sector, which currently includes 16 pc CED, 4-12 pc VAT, 12.5 pc service tax, 6 pc license fees and spectrum charges varying depending on the amount of spectrum.
Comments
0 comment