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Thomas K Thomas

New Delhi, Dec.29 Despite the controversy over spectrum allocation and a slowing economy, the telecom sector continued to grow at a scorching pace this year. The number of telephone users in the country grew from 272 million in December 2007 to nearly 380 million at the end of 2008.

The growth has been fuelled primarily by the popularity of mobile phones. The wireless user base surged from 233 million in December 2007 to 340 million at the end of this year.

But at the same time the fixed line telephone usage continued to slump and the uptake of broadband has been disappointing. Broadband user base inched upwards of the 5 million mark with just about 2 million new subscribers this year.

The other big disappointment was the poor implementation of the much hyped mobile rural project by the Universal Services Obligation fund. The scheme, which had envisaged setting up 8,000 mobile towers in over 2 lakh villages by December, is not even 50 per cent complete.

For the consumers there was not much to cheer in 2008. There was no major reduction in local call tariffs this year nor were there any new interesting services or applications launched. The much hyped iPhone was launched at a price not many can afford. Tata Teleservices tried to create some buzz by partnering with the UK-based Virgin Mobile to offer mobile services to the youth segment.

The only relief came in the long distance telephony segment after the telecom regulator abolished the access deficit charge — a levy collected from private operators to fund rural phones run by BSNL.

Most of the year was spent anticipating the introduction of new mobile players and third generation services. But delay in getting the spectrum released from the defence forces has made sure that the launches will be pushed to the coming year.

There were lots of controversies too. The decision to allocate spectrum on a ‘first come first serve’ basis to new players, including Unitech, Videocon, Swan, Loop and STel, has brought the Communication Ministry under the scanner of the Central Vigilance Commission, the Parliamentary Standing Committee on IT and the High Court.

Vodafone got entangled with the tax authorities over payment of capital gains tax after acquiring Hutchison’s stake. The Canada-based Research in Motion got dragged into controversy after security agencies raised concern on Blackberry devices. Bharti Airtel and rival Reliance Communications were involved in a cut throat race to acquire South African telecom company MTN. At the end of a hard fought battle neither of them managed to get it.

Notwithstanding the controversies, foreign investments continued to flow into the sector. International players, including NTT DoCoMo, Telenor and Etisalat, have announced investments into Indian mobile companies. Nokia made additional investments into its telecom gear manufacturing unit in Tamil Nadu and Russian conglomerate Sistema bought 74 per cent stake in Shyam Telelink.

The year also saw some key policy initiatives outlined by the Government that could make 2009 very exciting. This includes the decision to bring in Mobile Number Portability, which will allow mobile users to change their operator without having to give up their phone number. The other big initiative is the policy on introducing third generation mobile services and high speed broadband wireless access technologies. Both 3G and BWA technologies will enhance Internet speeds and voice quality multiple times. Government has also announced its intentions of allowing virtual mobile operators (MVNO) next year. This will further intensify competition, thereby bringing lower tariffs and better services to the consumers.

The Communications Ministry can claim credit for bringing in a number of new mobile players, though the process followed in allocating spectrum to these companies turned out to be highly controversial. None of the new players have launched their services despite getting the licences in February due to delay in getting spectrum. They are expected to offer services over the next six months. That’s one another thing to look forward to in 2009.

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