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R Jai Krishna
The Indian telecom sector continued to maintain its growth during in the services as well as the manufacturing areas, and yet setting a trend in the global economy in 2006.
The telecom sector crossed the 100 million GSM subscribers mark and became the fifth country to achieve the benchmark after China, USA, Japan and Russia. The sector recorded 50 per cent growth over 2005, due to the various polices and programs of the Union Government, as well as the active participation by the private telecom companies.
India saw a new trend of international telecom equipment manufacturers entering the market, both for the domestic and international markets. The focus was more on manufacturing and job creation, strengthening the public sector; technological advancement, public-private partnership and R&D have been the areas of focus.
Major policy initiatives during the Congress-led UPA Government’s 30 months in office were licence fee reduction from 15 per cent of revenue to six per cent for NLD/ILD licences, sharing of infrastructure to optimise efficiency, launching of “One India Plan” to allow calls at rupee one per minute and amendment to Indian Telegraph Act to enable the Universal Service Obligation (USO) Fund to support mobile telephony and broadband services in rural and remote areas of the country had put the sectors growth on a very high trajectory.
Increase in teledensity
Growth of Wireless played a dominant role in taking the teledensity to 16 per cent in the current year and the government aims to achieve 25 per cent in 2007. The total number of telephones has increased to 183.46 million in November from 125.79 million in December 2005.
The wireless subscribers are much higher than the fixed subscribers in the country. The share of wireless phones has increased from 68 per cent in December 2005 to 78 per cent in November 2006. The teledensity had its direct impact on increasing the number of Internet subscribers to 25 per cent while broadband subscribers grew from a meager 0.18 million to 1.32 million during the year. The PSUs had a share of more than 56 per cent of the Internet Subscribers as on March 2006.
Private sector participation
Though the government initiated the growth of telecommunications in 2006, it was equally followed-up with the private sector, be it the One-India Plan or the launch of the lifetime-prepaid schemes. The government, especially the department of communications took several steps to encourage private sector participation to create a competitive environment in the sector, thus making the sector growth in an inclusive manner. The share of private sector has risen from 54.54 per cent in December 2005 to 64.14 per cent in November 2006.
The PSUs, viz., BSNL and MTNL had also shown impressive growth in the mobile sector.
India joins elite club
During the year, India joined the world’s 100 million mobile club. India thus became the fifth country to join the elite club – the others being China, the USA, Japan and Russia.
One of the key factors contributing to the growth of mobile subscribers has been, among others, the continuously declining tariffs and improving affordability of service and handsets. India has also joined the world’s 100 million GSM club recently. It may be worth mentioning that nearly seven million subscribers are added to the network every month. This is the highest growth rate in the world, for the first time surpassing China.
The Department of Telecommunications (DoT) has set a target of 250 million phones (25 crores) by December 2007, which will take the teledensity to 22 per cent.
Rural connectivity – Bharat Nirman
Under Bharat Nirman Programme, Village Public Telephones (VPTs) were provided to 36,014 villages out of the 66,822 villages as of October 2006. The government plans to cover rest of the villages well ahead of November 2007.
Out of the total 66,822 villages, 14,183 villages that cannot be covered by terrestrial technology would be provided with Digital Satellite Phone Terminals (DSPTs) using Indian satellite in KU band frequency. The procurement of DSPT equipment is under process.
USO fund’s ambit widened
Keeping in view the difficulty in extending telecommunication facilities in rural and remote areas only through landlines, the government and the telecom ministry considered it necessary to explore the possibilities of supporting mobile telephony in the rural and remote areas through the Universal Service Obligation Fund (USOF). In view of this, during the winter session, the Parliament, passed the Indian Telegraph Amendment Bill, thus enabling to provide support from USO Fund for mobile telephony as well as broadband services in the rural and remote areas of the country. To achieve the objective of connecting rural India, which president Dr A P J Abdul Kalam had also stressed during the India Telecom 2006 conference in Delhi, the government plans to set up about 8000 towers in the uncovered rural and remote areas.
The year of broadband
Similarly, to connect the unconnected, the Year 2007 has been declared as the Year of Broadband in India. With the USO scheme for coverage of rural areas through new disruptive wireless broadband technologies it is expected that more than one million broadband connections a month would be added before the end of 2007.
To trigger this growth of broadband in the country, Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) have come out with an aggressive plan to provide broadband connections with minimum download speed of up to 2 Mbps from January 2007.
Tariff reduction
One of the primary concerns of the Government had been for providing telecom services at an affordable price to the common man. From March 2006, BSNL and MTNL launched the “One India” Plan in the mobile and the fixed line telephone. With the introduction of “One India,” it was made possible to call across the country at the cost of rupee one per minute, any where, any time and to any phone. Thus had done away with the TSD (Time-Space-Distance) format the telecom companies were adopting earlier.
Emerging manufacturing hub
Rising demand for a wide range of telecom equipment, particularly in the area of mobile telecommunication, saw global telecom companies invest in new facilities given the excellent opportunities in the manufacturing sector.
Production of telecom equipment has been increased from Rs. 16,090 crore in 2004-`05 to Rs. 17,833 crore in 2005-`06. The last two years saw many telecom companies setting up their manufacturing base in India. Ericsson has set up GSM Radio Base Station Manufacturing facility in Jaipur. Elcoteq has set up handset manufacturing facilities in Bangalore. Nokia set up its manufacturing plant in Chennai. LG Electronics set up plant of manufacturing GSM mobile phones near Pune. Ericsson recently launched their R&D Centre in Chennai. Flextronics has set up an SEZ in Chennai. Motorola is likely to go into production in the first quarter of 2007.
Other major companies like Foxconn, Aspcomp, and Solectron have decided to set up their manufacturing bases in India. In telecom manufacturing itself, there has been a commitment of more than more than $1.5 billion. It is also expected that fresh commitments of about $2 billion in the next one year or so in the telecom manufacturing.
The proposal for setting up Telecom Equipment and Services Export Promotion Council and Telecom Testing and Security Certification Centre (TETC) is in pipeline. A large number of companies like Alcatel, Cisco have also shown interest in setting up their R&D centers in India. With more and more companies entering India for manufacturing, the country is already becoming a manufacturing hub for the telecom equipment.
Vision 2010 – 10 point programme
For the first time, telecom majors from across the world came together on a single platform at the recently held India Telecom 2006, a three-day international exhibition-cum-conference organised by the Department of Telecommunications (DoT), in association with Ficci and Telecom Equipment Manufacturers Association. During the event, Dayanidhi Maran, minister of communications and information technology, set out a 10 point charter titled “Vision 2010” concerning telecom sector, focused on network expansion, connecting the unconnected, broadband coverage, infrastructure sharing, third generation mobile services, the introduction and spread of IPTV, and mobile TV & WiMAX, manufacturing, R&D, international bandwidth and competition.
India re-elected to ITU
India was re-elected to the Council of International Telecommunication Union (ITU) during the elections held at the 17th ITU Plenipotentiary Conference, at Antalya, Turkey. The conference is the top policy-making body of the ITU held once in every four years.
Challenges and future ahead
With convergence set to rule the market in the coming years and the demand for hardware also increasing, the challenge the government faces is to decide on a comprehensive policy for the next-generation-networks such as the 3G and IPTV.
Similarly, the semiconductor policy is also long pending and with the market situation ripe, the government should also ensure that the policy is released soon, or else India will not only miss the bus on the technological front but also in providing to millions of technically-skilled diploma holders across the country.
India Telecom 2006
Government policy highlights:
Ø MTNL launched its own NLD service between Delhi and Mumbai, and reduced the charges for all calls on the MTNL landline between Delhi and Mumbai to Re 1.20 for three minutes (equal to the local call charges).
Ø Project MOST (Mobile Operators Shared Towers) was successfully launched, with a view to save significant resources to fund further roll out, enhance aesthetics of the environment and lower the capital as well as the operative costs per operator.
Ø The SACFA site clearance procedure was further simplified; by exempting antenna towers/masts located beyond 7 kilometres from the nearest airport and having up to 40 metres above MSL (Mean Sea Level) of the Airport Reference Point of the concerned airport from the detailed sitting clearance procedure. The service providers need only register online on the WPC/SACFA website for such a site.
Ø Efforts are being made to introduce newly emerging radio-communication technologies, without unduly constraining the other existing operations. There has been an ongoing process of addressing bottlenecks in spectrum availability as and when they are encountered. Automated spectrum management system has been functioning smoothly since January 2005.
Ø BSNL has taken several initiatives, specifically for the expansion of the communication network in remote, rural and tribal areas, including relaxation of norms and conversion of the small exchanges into Remote Switch Units.
Ø The FALCON Submarine Cable Link was launched between India and five Middle-East countries, namely, Egypt, Kuwait, Bahrain, Oman and Saudi Arabia.
Ø Submarine cable systems connecting India with Sri Lanka and South-East Asia are to be launched soon.
Ø The Indian Telegraph (Amendment) Rules, 2006 has been accepted by the Parliament in order to enable support under the USO Fund for setting up and managing infrastructure sites and provision of mobile and broadband services (also) in specified rural and remote areas. Based on the recommendations received from TRAI, draft tender document for the above has been issued for comments/ suggestions of the stakeholders.
Ø A comprehensive 3G Policy is being formulated on the basis of the recommendations received from Trai.
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