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Budget 09 Demands: CII On Broadband, Indic Languages, Telemedicine, USO Fund, Spectrum & Taxes

cii-logoConfederation of Indian Industries (CII) has submitted a five point agenda to A Raja, the Communications and IT Minister, before the Budget is announced on July 6th. The industry body has brought it to the notice of the minister that there are various issues related to tower construction approvals, increasing broadband connectivity, spectrum and taxes, that need to be addressed in the upcoming budget. It has also supplied that reduction in levies and fees on operators’ revenues could make in possible for the minister to achieve his call for a 10 to 20 paise tariff.

Entertainment & Indic Languages On Net

CII has suggested that the government ensure digitisation of music, video and film industry content in different Indian languages so there are more options of entertainment over the Internet. So when there is connectivity, a larger section of people are able to access entertainment.

Our Take: Digitisation is already happening in the industry, and does not require the government’s involvement. However, a thrust on Indic languages and encouraging more regional content on the web is necessary. It is being noted in the mobile sector that regional language services are very popular, but the web still has a dearth of content in Indian languages. Check our special focus on Indic Languages on Medianama.

Single Window Clearance; Online Application

A single-window clearance has been suggested to enable operators to gain permissions and payments for digging and setting up towers. CII has also suggested an online portal be offered to accelerate and standardise the application processes. It has asked central and state governments to work in closer co-operation to allow right of way.

Our Take: Definitely a project to include under e-governance.

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USO Responsibility; Idling Funds

CII has asked the government to grant autonomy to Universal Services Obligation (USO)  Fund administrator, so the funds can be used to enhance broadband infrastructure, specifically Fiber To The Kerb lines. It has also voiced the industry’s opinion that the fund should have a sunset provision over the next three years. According to CII, around Rs. 20,000 crore is lying idle in the USO kitty. The fund was set up by the Department of Telecom to increase telecom coverage and broadband connectivity in rural areas.

PCs On Rent; Free Broadband Trials

To encourage micro small and medium enterprises, CII has asked the government to offer tax-free PC rental and free broadband trials for three months at an investment of Rs. 8 billion. A 100% depreciation on all IT hardware investments has been suggested.

Our Take: It is time startups and smaller enterprises which form the backbone of the economy get a helping hand from the government. The body that lobbies with the government, Indian Internet and Mobile Association’s spokesperson told Medianama that the government currently does not have policies specifically to aid smaller companies.

eLearning; Telemedicine

CII has asked the government to launch a slew of broadband-enabled services by 2014, when it expects the country to be connected to a broadband network. It has asked that 1.72 million schools and all colleges be brought under a broadband net by 2014 so each institute has a computer lab and there is at least 1 computing device per 40 students. It has also suggested the government provide 7 million government school teachers with a laptop and a broadband connection. CII has also stressed the need for a strategy to bring broadband connectivity to the 600,000 villages of India.

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Another broadband enabled service Telemedicine could be incorporated into the National Rural Health Mission (NHRM) and connect public and community health centres by 2014.

Our Take: There will need to be many changes before such vital programs can be launched – firstly, Internet connectivity in India is suffering from sluggish growth and more private ISPs need to be encouraged and prices reduced to make it more affordable.The other issue is – there may be connectivity in these schools, but is there power?

Transparency In Allocating Spectrum

CII has noted that internationally, telecom operators are allocated on an average 2x20MHz whereas in India, they hold an average of 6-7MHz. Expressing concern that the future growth of wireless services will receive a set back unless spectrum issues are addressed on emergency basis, CII suggested that maximum possible spectrum should be allotted in 2.1 GHz, 2.3 GHz, 2.5 GHz bands’. It called for predictability and transparency in spectrum management so investors are not turned off.

On Taxes & Levies In Telecom; Rolls Outs

CII has requested for reduction of taxes on cellular service providers in two phases; in the first it is reduced to 22% from the current 24-34% of AGR and in phase 2, it becomes 13-15% . Also suggested is a single central tax and another single state level tax, which could be later merged. The body has also asked that stamp duty on transfer of tower assets from one company to another be negated.

CII has also suggested that instead of making roll outs mandatory, it could provide incentives in the form of regulatory concessions.

Our Take: We disagree with this suggestion on going soft on roll outs. India needs more players, more towers and more connectivity. The telecom regulator TRAI has rounded up some new telcos, who, having bought spectrum, have not rolled out and are doubling their equity. There must be some obligations to ensure that everybody plays their part in the bigger picture.

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It may be worthwhile to look at CII’s review of last year’s budget – the CEOs opinion poll.


Budget Demands 2009: Duty Cuts, Tax Holidays; DTH, Cable, TV; Past Budgets

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