Industry Leaders Warn Government’s Plan to Regulate Fiber-Based Broadband Tech Could Raise Costs and Lower Quality

Industry Leaders

In a bid to boost local manufacturing and reduce import dependence in the telecom sector, the Indian government is considering the inclusion of tech products used in fiber-based home broadband networks under a new import licensing regime, similar to recent initiatives in the IT hardware sector. However, senior executives from the telecom industry have cautioned that this move may lead to higher costs for home broadband services, a decrease in overall quality, and potential supply chain disruptions, impacting the expansion plans of major players like Reliance Jio and Bharti Airtel.

The Department of Telecommunications (DoT) is currently evaluating a proposal to introduce a licensing system for importing critical telecom finished products, including gigabit passive optical network (GPON) OLT/ONT systems, Wi-Fi access points, ethernet switches, and wireless radio links. These devices play a crucial role in transmitting voice, data, and video signals over wired broadband networks at high speeds.

If approved, the Directorate General of Foreign Trade (DGFT) would implement this import licensing regime, obligating telecom companies to obtain relevant permits and government approval for importing such network equipment.

The government’s motivation behind this move is rooted in national security concerns, and it follows the recent inclusion of specific IT hardware products, such as laptops, tablets, PCs, and servers, in the restricted category that requires licenses. However, this decision faced strong opposition from the IT hardware manufacturing industry, which raised concerns about supply chain issues and rising prices.

Recognizing the industry’s apprehensions, the government has taken steps to alleviate their worries. In a recent development, the government is contemplating a registration mechanism for imports in the current fiscal year, without imposing quotas or licensing requirements, offering respite to IT hardware manufacturers like Apple, Dell, HP, and Samsung.

Telecom industry leaders have emphasized that any restrictions on the import of essential telecom products could lead to increased network deployment costs and potentially jeopardize the government’s ambitious goals of expanding national home broadband penetration.

A senior executive from one of the major telecom giants expressed concerns, stating, “Implementing an import licensing regime for these critical telecom devices would be a regressive move, driving up costs for home broadband network expansion and rendering the services more expensive.”

While the government’s intentions to foster self-reliance in the tech sector are commendable, industry insiders are urging a balanced approach. They argue that stringent import regulations could hinder the timely and cost-effective deployment of fiber-based home broadband networks, ultimately impacting consumers and the country’s digital growth.

Furthermore, experts believe that the move may not necessarily boost local manufacturing as intended, but rather lead to an increase in the production costs of these critical telecom components. This could result in consumers bearing the brunt of these additional expenses in the form of higher subscription charges for home broadband services.

Industry leaders have also pointed out that import restrictions could disrupt the supply chain, causing delays in network expansion projects. This, in turn, could hinder the achievement of the government’s ambitious targets for national home broadband coverage.

In light of these concerns, it is imperative that the government collaborates closely with industry stakeholders to strike a balance between promoting domestic manufacturing and ensuring the affordability and quality of home broadband services. Finding a middle ground that accommodates both national security interests and the growth of the telecom sector is essential for India’s digital future.

In conclusion, the government’s plan to bring fiber-based broadband technology under a new import licensing regime is met with apprehension from telecom industry leaders. While the government’s desire to bolster domestic manufacturing and address national security concerns is laudable, there is a growing consensus that a more nuanced approach is required. Striking the right balance between promoting self-reliance and ensuring accessibility and affordability for consumers is crucial for the sustainable growth of India’s telecom sector and digital ecosystem. Collaboration between the government and industry stakeholders is key to achieving these objectives without compromising on quality or raising costs for end-users.

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