India: What To Expect From The New Telecom Policy

Last Updated: 4 August 2017
Article by Harsh Walia


The Department of Telecommunications (DoT) has kick-started the process of consultation with various stakeholders for formulating the New Telecom Policy (NTP) which is expected to be released by early 2018.

To provide background, the first Telecom Policy was released in 1994. This was followed by subsequent versions in 1999 and 2012. The Telecom Policies identify and define a high-level focus area for the government in the future and provide a direction to all stakeholders including the regulator, consumers, service providers, telecom experts in India and abroad and infrastructure providers.

We strongly believe that the entire digitisation of the nation relies on the health of information and communication technology (ICT) and related infrastructure in the country. In fact, while developing its 2030 agenda for Sustainable Development with 17 Sustainable Development Goals (SDGs), the United Nations Organisation (UNO) has recognised investment in infrastructure such as ICT as crucial in achieving the SDGs. One of the UNO's targets is to "significantly increase access to information and communication technology and strive to provide universal and affordable access to the internet in least developed countries by 2020".

Another important area is the evolution and development of technology. Due to rapid technological advancements in the recent past, it has become imperative to modernise the legal and regulatory framework as well and to remain agile on this front.

We have therefore identified some of the crucial areas which the NTP is expected to deal with, in view of the current status of the telecom sector.

Expected NTP Target Areas

Building A Digital and Connected India: Taking a cue from SDG, the foremost objective in the NTP is expected to be "Internet for All". There is a strong and positive relationship between internet penetration and growth of a country. The penetration of internet, especially broadband, has been dismal so far. Overall, internet penetration in India is pegged at around 31%. To achieve a higher penetration, the government will have to step up projects like BharatNet, which will lay down fibre and connect various villages in India. Also, there has to be a resolve to streamline Right of Way (RoW) issues which will encourage effective participation from private players. The NTP will have to be an "enabling" policy and not just a "permissive" policy. The earlier policies and licenses permitted certain activities and services which is why a paradigm shift is required in policy-making so as to enable entrepreneurs to innovate and prosper.

Investment Flow and Return on Investment: The NTP will most likely look at building an environment in the industry to attract investments for creating robust infrastructure. For this to happen, return on investment will play an important role. Currently the gross revenue of mobile telecom service providers is declining and the industry is experiencing unsustainable debt levels. Consequently, the EBITDA is not enough to sustain the debts. It is contemplated that the NTP may have an objective related to the rationalisation of levies and regulatory charges. This would include License Fee, Spectrum Usage Charges, Universal Service Obligation as well as other indirect taxes. Further, the payment liability under spectrum auctions will also need to be rationalised, considering the health of the industry. Ideally, the NTP may deliberate an economic analysis to recognise the cost of regulating the sector and harmonise the levies and regulatory charges, accordingly.

De Novo Drafting of Telecom Legislation and Licence Agreements: While the Indian Telegraph Act, 1885 (Telegraph Act) is a statute that is more than a hundred years old, the entire licensing regime has evolved pursuant to section 4 of the Telegraph Act. Besides a handful of provisions in the Telegraph Act, most of the sections do not conform to the present requirements. A more dynamic statute which is in line with the present requirements is the need of the hour and we expect that NTP will delve into this matter.

The telecom licenses were first written in 1990s and many of its operative provisions still factor in the new Unified Licensing regime rolled out in 2013. Further, many of the services listed in the scope of license agreements granted today, are not relevant. An example could be Voicemail / Audiotex / Unified Messaging Services license which deals with services which are extraneous. Therefore, it is expected that NTP will examine obsolete clauses with an aim to incorporate more relevant and technologically neutral language in license agreements.


In our view, the wish list for NTP can be endless and therefore we found it essential to restrict our analysis to the 3 (three) most critical elements. The NTP's overall objective should be in line with the first goal of SDG which is to "end poverty in all its forms and everywhere". To achieve it, ICT will play an important role and it is imperative for the DoT to get it right for India's advancement and prosperity.

The content of this document do not necessarily reflect the views/position of Khaitan & Co but remain solely those of the author(s). For any further queries or follow up please contact Khaitan & Co at

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