The Hindu Business Line : Decade of telecom reforms

THE telecom revolution in India is 10 years old, to the month. The National Telecom Policy (NTP) was announced in May 1994. Before thatthere was tentative and "case-by-case" determination on which telecom service should be opened up to private telephone companies. The NTP-1994 made a beginning with the systematic de-monopolisation of telecom by opening up certain services to private telephone companies. The Department of Telecom (DoT) acted as the policy-maker, licence-giver and regulator.

The independent statutory regulator, the Telecom Regulatory Authority of India, came into being only in March 1997 by which time many licences for cellular mobile telephony and basic telephone services had been given. There were a number of difficulties in the implementation of the licences.

In 1998, the BJP-led NDA Government announced the Internet Policy — the most liberal of its kind anywhere in the world, much in contrast to the NTP-1994. However, the private telephone companies were on the brink of financial disaster. Citing the Internet Policy, they pleaded for more liberal the private telecom licences. The new government migrated the licencees from the upfront, fixed licence fee payment regime to one of revenue sharing. This came as a great relief.

There were a number of cases before the TRAI between the licensor-operator DoT and the private telephone companies. This litigation led to an impasse. The Government, therefore, had to restructure the regulation by creating a two-tier structure in which TRAI would concern itself only with disputes among licensed companies, and a Telecom Disputes Settlement and Appellate Tribunal (TDSAT) with disputes between the licensor and the licensed companies.

The Government also came out with the New Telecom Policy (NTP-1999) which envisaged ending the monopoly on national long distance and international telecoms and a number of other liberal conditions for the existing licencees as also the corporatisation of the telecom operations of the government.

A revolutionary situation in the provision of telephones came about with the large-scale deployment of wireless in local loop (WLL) using CDMA technology. This enabled the basic telephone companies to offer mobile services in their licensed areas. By using the CDMA-WLL technology, they were able to provide even all-India mobility, just like the GSM cellular mobile telephony, but only with a basic telephone service licence. This led to a spate of litigations between the basic telephone operators and the GSM cellular mobile service providers.

This situation was resolved in 2003 by introducing unified licences and migrating all telephone companies to it. The basic telephone service companies providing "limited mobility" were required to pay some additional entry and other fees and allowed to become full mobile service providers. An exercise is on by TRAI to include national long distance, international and Internet services in the unified licence.

Though subjected to so many distortions and obstructions by the incumbent in the last decade, the entry of private companies into the telecom sector has made a tremendous difference:

There are no waiting lists for telephones.

Long-distance telephone charges had come down by some 80 per cent.

Mobile telephony has become so cheap that even daily wage earners, farmers, plumbers, electricians, carpenters, drivers and students are using it in preference to fixed telephones.

The 7 per cent teledensity envisaged to be attained by the end of the Tenth Plan has been attained 18 months in advance.

As of January 2004, between 15-18 million mobile telephone are being added every year. The offtake of fixed telephones is going down.

It appears that there will be lots of mergers and acquisitions and every financially sound telephone company will become an all-India, all-service outfit. There does not appear to be room for more than three private telephone companies and the state-owned BSNL/ MTNL, that is, in all four companies.

In regard to telecom equipment manufacture, the general disadvantage that India has in of hardware applies here also. The traditional telephone switches will give way to totally computer-based, multi-service network such as the Internet on which every information service — telephony, video, facsimile, data and broadcasting can be provided. Most connections will be by wireless. The volumes of equipment required are such that production can be undertaken in India.

There is a flip side too:

Precious little on the R&D front. The C-DOT, which made India proud and confident is not nourished; private companies (producers of equipment as well as service-providers) are putting little in R&D. Can India become a knowledge power without R&D?

Consumer protection has not been as much a concern as dispute settlement for TRAI. Issues such as number portability, quality of service and penalties per infractions of prescribed quality, consumer participation in policy and regulation have not been adequately addressed.

Also unaddressed are: Whether BSNL could be an all-India company while the private telephone companies in competition with the BSNL can only be state-wide companies; what of disinvestment in BSNL/MTNL; how best the objective of universal access to every type of information and telecom service all over country can be achieved; and how the benefit of the Internet can be reached to every village.

(The author is Information Technology Advisor to Government of Andhra Pradesh.)

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