Telecommunication Sector

Telecommunications is one of the prime support services needed for rapid growth and modernization of various sectors of the economy. It has become especially important in recent years because of enormous growth of Information Technology (IT) and its significant impact on the rest of the economy. India is perceived to have a special comparative advantage in IT and in IT-enabled services. However, sustaining this advantage depends critically on high quality telecommunication infrastructure. Keeping this in view, the focus of policy is vision of world class telecommunication facilities at reasonable rates. Provision of telecom services in rural areas would be another thrust area to attain the goal of accelerated economic development and social change. Although the telecom network has grown rapidly in recent years, its growth needs to be accelerated further in the Tenth Plan.

The telecom sector in India has been witnessing a continuous process of reforms since 1991. With the opening of international long distance services and internet telephony from April, 2002, the process of liberalization and opening up the sector for competition is complete. Convergence of services is a major new emerging area and the telecom sector will have to address this in the Tenth Plan.
The major reforms carried out in the telecom sector so far are given below:-

Performance Indicators of Telecom Services for QE Jun 2005

Growth of Fixed & Mobile Services:-

Source: Telecom Regulatory Authority of India

Telecom Statistics (in millions)

Source: TRAI, Indiainfoline

The performance of the Public sector units, i.e. Bharat Sanchar Nigam Ltd. (BSNL) and Mahanagar Telephone Nigam Ltd. (MTNL), has been impressive. Against the target of installing 185 lakh new connections in the original Plan (which was revised to 222.7 lakh in Mid-Term appraisal for BSNL and MTNL) and 237 lakh for the whole sector including private sector the achievement during the Ninth Plan is 240.55 lakh connections including contribution of private sector i.e. more than the target envisaged in the Ninth Plan Document. Ninth Plan also witnessed the beginning of cellular services by the public sector. MTNL launched its mobile services in Delhi and Mumbai as the third operator. Details of targets and achievements of the public sector during the Ninth Plan are given in Annexure-8.5.5.

The performance of the private sector during the Ninth Plan has been a mixed one. While it did very well in the expansion of cellular network, the performance was not encouraging in the fixed line segment. Only about 5.9 lakh DELs have been installed against the target of 52 lakhs (original) and the revised target of 14.3 lakh. Constraints like licensing agreements, unrealistically higher licence fees, revenue share, right of way etc. have been basically responsible for the slow progress for the private sector.


Major Policy Initiatives in Telecom Sector

• Broadband Policy announced on October 14, 2004.
• Indoor use of low power equipments in 2.4 GHz band de-licensed from August 2004.
• In April 2004, license fee for UAS reduced by 2% is in the range of 6-10% while that for CMTs is in the range of 8-12%.
• Performance Bank Guarantee in respect of NLDS license reduced in June 2004 from Rs. 100 crore to Rs. 50 crore for each phase.
• License for Infrastructure Provider-II reduced in June 2004 from 15% to 6% of the AGR.
• ISPs permitted to use underground copper cable for establishing their own last mile linkages .. In Budget 2004-05 —
  — Benefits under Section 80-IA provided for companies starting after May 31, 2005
  — Customs duty exemptions provided on mobile switching centres for Unified Access Service Providers, optical fibre cable and raw materials required for optical fibre.
• Bank Guarantee for IP-II category reduced in March 2004 from Rs. 100 crore to Rs. 5 crore.
• The operation of Automated spectrum management system has commenced.
• National Internet Exchanges set up during September 2003 – February 2004.
• Guidelines issued for intra-circle mergers of licenses in January 2004.
• After the introduction of Unified Access Service regime, all the Basic Service licensees have migrated to UASL.

Rural telephony

As on November 30, 2004, more than 5,20,000 villages were connected using a Village Public Telephone (VPT). The remaining 66,822 villages, excluding around 2,000 villages with population less than 100, in insurgency - prone areas or thick forests will be covered in a phased manner in the next three years. More than 2 lakh Public Call Offices (PCOs) are also providing community access in the rural areas. So far, 129 lakh phones have been provided in the rural areas. A pilot program using mobile phones to run a mobile PCO with 2,592 “Gramin Sanchar Sewaks” serving 11,013 villages, was in operation on November 30, 2004.

Source: India Budget