Telecom Reforms in India
By Shyamal Ghosh, Chairman, Telecom Commission.
 

The Indian telecommunications sector has undergone a major process of transformation through significant policy reforms particularly beginning in the year 2000. Historically, while there was hardly any time lag between the invention of telephone in 1876 and the commencement of use of telecommunications in India, the process of expansion of the network was long, being managed and used primarily by the Government. In fact at the beginning of the twentieth century telecommunications was universally accepted as a "natural monopoly" - whether it be in the public or private sector. In India, as in many other countries in Europe and Asia, telecom services were operated by a Government Department. By the early 1990s this concept of "natural monopoly" was increasingly challenged in many countries by technological changes leading to reforms process for ushering in competition and greater consumer welfare, particularly in terms of lowering of tariffs and improvement in quality of service. This led to dismantling of both private and Government monopolies.

Three Phases of Reform Process 
The Eighties (1st phase) 
The process of telecom reforms in India had started in 1980s. Private manufacturing of customer premise equipment was allowed in 1984 and proliferation of individual STD/ISD PCO network undertaken on a large scale across the country through private individual franchisees. Two large corporate entities were spun of from the Department of Telecommunications, the Mahanagar Telephone Nigam Limited (MTNL) and Videsh Sanchar Nigam Limited (VSNL), heralding the era of corporatisation. A high-powered Telecom Commission was set up in 1989 with all the powers of the Government. 

The Early Nineties (2nd phase) 
The second phase of reform process in the Indian telecom sector commenced with the liberalisation of the economy in the early 1990s and announcement of New Economic Policy - 1991. Telecom equipment manufacturing was de-licensed in 1991 and value-added services were opened in 1992. Radio Paging, Cellular Mobile and Basic Telephony sectors were opened gradually thereafter, National Telecom Policy was announced in 1994, with a major thrust on Universal Service and qualitative improvement in telecom services. An independent statutory regulator was established in 1997. Internet services were opened in 1998 and progressively there was a major involvement of private sector in the growth of telecom services in the country. 

The Late Nineties (3rd Phase) 
The most important landmark in telecom reforms, however, came with the New Telecom policy 1999 which can be termed as the third generation reforms. NTP'99 allowed the existing operators to migrate from fixed licence fee regime to revenue sharing while the duopoly rights were discontinued to herald the era of unlimited competition. NTP'99 outlined further strengthening of the Regulator, opening up of the National Long Distance to private sector, opening up of International Long Distance telephony, corporatisation of telecom services, etc. The Government has undertaken the implementation of NTP'99 with utmost earnestness, in letter and spirit. The underlying theme of the reform process in the recent months has been to usher in full competition through unrestricted entry in almost all the service sectors unless restricted by spectrum availability. With all these measures, which have come one after another in quick succession, the various telecom reforms committed under NTP'99 are almost complete, some ahead of schedule. The first few years of the new millennium are expected to be a period of growth and consolidation. 

The Growth Process and Current Status 
Telecom network in the country has grown slowly during the first four decades after independence. During the last decade, the network has spread tremendously ~nd picked up a momentum of high growth rate. It can be seen that the growth pattern has been synchronous with the telecom reforms. The teledensity which was 0.03 in 1951, grew upto 0.31 in 1981 in three decades. It touched a level of 0.60 in 1991, 1.07 in 1995 and 2.80 in 2000. At present it is touching 4.0%. The growth rate in this sector has been consistently more than 20% from 1994-95 onwards. The investment by the public sector alone in the telecom services during the year 2000-01 has crossed US $ 4 billion. Foreign Direct Investment in this sector has been over US $ 1.8 billion and it has gone up steeply during the current financial year. 

Current status of Private Sector participation 
As a result of various reforms introduced, new trends of growth have started in the telecom sector of the country .Basic services sector has been opened for unlimited competition. 31 licences have been issued besides the 2 PSUs already providing services. Also private operators had started in 6 telecom circles. The telephones in 15 state capitals of the country are available on demand and teledensity has almost doubled during the last two years. All the exchanges in the country are now digital electronic. WLL has been allowed for faster roll-out of services. In Cellular Mobile, licenses have been awarded to 4 operators in each circle and services are being run in 18 telecom circles and 4 metro cities. State-owned MTNL in Delhi & Mumbai and BSNL in the rest of the country has started rolling out the services. The current subscriber base is about 5 million which is increasing at a rate of about two hundred and fifty thousand per month. Cellular mobile services are flourishing in the country and are likely to grow beyond the big cities due to participation of incumbent service provider and competition. About 460 ISP licenses have been granted and more than 110 of them have started providing services to about 3 million subscribers. More than 240 clearances have been given to ISP for setting up their own international data gateways. Access to Internet is available practically throughout the country on local call access basis. With better availability of bandwidth, IT - Enabled services like e-commerce, call-centre, tele-education, tele-medicine, tele-banking etc. are catching up with the Indian industry.

The emerging scenario and future convergence 
In a 10 year perspective of India's telecom sector, the tele-density will increase more than 5 folds and the traffic volume will increase many times than that. The data services are still in the nascent stage. The tremendous potential of I. T. Sector . in India and aspiration to become a world superpower in I. T., will have a direct bearing on the future telecom growth in the country. These two sectors will grow hand-in-hand in the era of convergence. Broad-casting sector will later slip into the continuously changing mould of digital clay. The private sector participation and investment is the key to realise these objectives. BSNL, with its dominant market share, will provide the best network reach. It will be able to face the competition by adapting to the competitive environment. The technological developments are likely to make the telecom services more and more affordable. Therefore, India is likely to emerge as a strong force in telecom and I. T. areas. 

Steps are also being taken for rapidly moving towards enacting a comprehensive Statute-Communications Convergence Bill 200l-to address the convergence of technologies and markets. The new Act will replace the Indian Telegraph Act 1885 and several other related Acts. It will cover the aspects of both carriage and content of transmitted information. This will be a  major step forward in the development of national infrastructure for an information based society and establish a licensing and regulatory framework in the context of convergence. 

Conclusion
To conclude, the telecom sector in India has reached a stage where the environment for private sector participation has. been maximized. The reform cycle is on the verge of completion. The time has come when the Indian Telecom Sector is ready to leap forward as the growth potential of the network is enormous. This is a huge opportunity for the industry and investors. It is expected that the new environment will catalyze the growth and provide the best telecom services across the world.