As the dust settled on the fatigue inducing election for the 16th Lok Sabha and psephologists arrived at a reflective analysis of voting behaviour, the initial diagnosis was that the UPA paid a heavy price for overlooking the aspirations of Indias youth, whose affinity to telecommunications and the internet was cleverly exploited by the BJP campaign. Twitter and Facebook captured the imagination of the party and young voters alikeNarendra Modis official Facebook page has about 15 million likes. It also records the fastest-growing number of likes for anyone in the world, while 4.1 million people follow him on Twitter. Now, the new government must show urgency to reform the very sector that arguably played a significant and influential role in the electoral outcome.
The Indian telecom sector has been in stasis since 2008 while, in the decade before that, it was the darling of most stakeholders. Indias subscriber base grew at breakneck speed, adding 20 million per month at its peak during 2007-08. The institutional and regulatory apparatus was held as an example for other infrastructure sectors to emulate and broadband, although paltry in reach and density, was viewed as a solution to dismal public service delivery, especially in the service-deficit rural areas.
All this changed beginning 2008. The causes relate to the well-documented 2G scam and need not detain us here. Suffice it to say that the opprobrium that followed left a scar on the sector and showed up in slowing revenues, delayed decisions, excessive litigation and wearing investor confidence. Institutional credibility too took a beating. Growth dropped to near-zero in FY10, FDI took a hit and the 1800 and 800 MHz band auctions were delayed by two years to 2014.
The inevitable stagnation has meant little progress in connecting rural India, where teledensity is just 43% and an appallingly low rate of broadband (defined loosely as a download speed of 512 kbps or greater) penetrationat 5%exists. Other emerging market economies, in the meantime, have soared. Russia, Brazil, China and South Africa have broadband penetration rates of 67%, 46%, 30% and 27% respectively.
It is one thing to use telecom infrastructure for one-way communication in an election campaign and quite another to put the critical infrastructure to work for economic development and competitiveness. The potential, however, is immense, even at current levels. Telecom contributes $52 billion (roughly 3% of GDP) and provides productive employment to 2.8 million Indians, besides generating growth and productivity impacts.
The second telecom revolution (aka