Slow work, hefty right-of-way fee hurdles for data revolution in India

The data revolution in the country is facing major hurdles in the form of slow fiberisation of towers and hefty right of way (RoW) fee.

Fiberisation is the process by which mobile towers are connected by underground fibres. The RoW fee is charged by local governments or municipalities for digging up roads to lay fibres cables.

Telecom firms might have to cough up Rs 100-150 billion as RoW fee only for fiberising existing towers in urban India. The total bill could go up to Rs 250 billion.

Till now, only 25-30 per cent of 471,000 mobile towers in the country are linked by fibre. The rest run on microwave linkage. Half of India’s telecom towers are in rural areas.

However, to sustain the huge increase in data as well as 4G — and later 5G — the telcos have to go for fiberisation. For last-mile connectivity, fibre-to-homes is the only way to go, and for that, too, RoW permission will be needed. Along with it, RoW fee will have to be paid.

Tilak Raj Dua, director-general, Tower and Infrastructure Providers Association (TAIPA), said, “States are charging exorbitant RoW fee, from Rs 1,000 to Rs 5,000 a metre (m), for laying fibre. Such a high fee affects the overall ease of doing business and flagship programmes such as Digital India, Smart City Mission, and 5G.”

The TAIPA claims anything between 250 m and 1 kilometre (km) fibre is needed per tower. Tower companies say the average cost to lay underground fibre is Rs 2 million per km. This does not include capital costs of fibre and ducts. If included, this brings up expenses to Rs 10 million per km.

Of this, the RoW fee comprises 68 per cent. This is the range in metropolitan, Tier-II, and –III cities.

In 2016, the Department of Telecommunications (DoT)had brought in a RoW policy. It had stated that administrative expenses shall not exceed Rs 1,000 per km.

However, only 10 states agreed to it; in all the others, it is under consideration or there is no RoW policy at all.

But, even in states that have agreed to it, local municipalities often charge more.

“The problem is that neither the DoT nor the states has the power or jurisdiction over roads. The land belongs to the municipalities and they do not care for such a policy,” said a senior executive of a telco who did not want to be named.

The Cellular Operators Association of India (COAI) has also raised the issue with the authorities.

Rajan Matthew, director-general of COAI, said: “The problem is that the states and the municipalities are looking at the RoW fee as a method of ‘revenue maximisation’ and overlooking that fact that digitisation brings in huge benefits to its residents and the municipality.”

The DoT has been nudging states to make changes but faces stiff challenges. “The problem is that unlike roads, which can be seen by citizens and used, fibre is invisible and does not offer political mileage,” said a senior official in the DoT.      

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel