Network Policy:

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.

Growth profile:

Electronics and IT is at present the fastest growing industry and achieved an annual growth rate of 25.5 % and 43% respectively during 1994-1998. Total electronics and IT earnings increased from $470 million to $8500 million, of which software alone contributed a growth from $651 million to $4,900. Imports in software increased from $375 to $ 3,500 million. The Foreign direct Investment increased slowly over 5 years almost doubling by 1999 where 242 cases had been approved by the Government. Thus FDI inflow was $11 billion by December 1998. Telecommunications and Electronics sector contributed 24.19% and IT had a share of 4%. Increasing number of Fortune 500 companies including Microsoft have already invested in India. The total Market Capital of listed IT companies by 2001 was $99 billion.

Though most communications in the country are still based on copper wires, 123,000 kilometers of optic fiber network is in place and is fast growing especially in states such as Andhra, Tamil Nadu, Karnataka, Kerala and Delhi where IT related commerce is being promoted. VSATs have been the main stay for communicating to district level offices and these are now more than 8000.

Networking:

Various organizations are concurrently involved in networking various sectors within the countries. Government funded National Informatics Ministry connects all Governmental agencies including the Parliament with district level offices. This is through VSATs, telephone lines and wire loop local connections. It is also being used for telemedicine which is at present at a low entrance level. Other organizations such CSIR, ISRO and atomic Energy have linked their own organizations scattered through out the country. Universities and research and teaching institutions have been linked by the Department of Electronics through ERNET. The networking of Biotechnology institutes has been mentioned above. Internet access is mainly through Telecom sectors both private and public funded. The cyber cafes run by private organizations have become very popular with decrease in costs over time. These are scattered in cities as well as in smaller towns, being most dense in the southern towns of India.

PRESENT STATUS OF TELECOM NETWORK

The basic telecom services network has expanded from about 84 thousand connections at the time of independence to about 385.95 lakh working connections as on March 31 2002. Basic services network constitutes the bulk of the phones accounting for about 86 per cent of the total telecom network. The main features of the present telecom network are given in the table given below:

Status of Telephone Network – As on 31.03.2002

• Total number of exchanges - 35,023

• Number of rural exchanges – 26,953

• Total Fixed Telephone connections – 385.95 lakh

• Number of Cellular mobile phones – 64.31 lakh

• Trunk Auto Exchange Lines (TAX) – 34.27 lakh

• Tele Density - All India - 4.4

• Number of Village Public Telephones – 4.68 lakh

• Internet Connections – 38 lakh (as on January 31, 2002)

PHYSICAL TARGETS AND ACHIEVEMENTS- Telecommunications:

TELECOM DEVELOPMENT – INTERNATIONAL COMPARISON

(As on Dec. 2001)

Source: World Telecom Development Report 2002

OBJECTIVES AND TARGETS OF THE TENTH PLAN

The Tenth plan policies and programs are guided by the basic goal of creating a world class telecom infrastructure in order to meet the requirements of IT based sector and needs of a modernizing economy on the least cost basis. Ensuring value for money to the consumers and easy and affordable access to basic telecom services to everyone and everywhere would be the other goal of policies to be pursued in Tenth Plan. The major objectives envisaged for the Tenth Plan are:

1- ) Affordable and effective communication facilities to all citizens.

2- ) Provision of universal service to all uncovered areas, including rural areas.

3- ) Building a modern and efficient telecommunications infrastructure to meet the convergence of telecom, IT and the media.

4- ) Transformation of the telecommunications sector to a greater competitive environment providing equal opportunities and level playing field for all the players.

5- ) Increase R&D efforts in the country.

6- ) Achieving efficiency and transparency in spectrum management

7- ) Protecting the defense and security interests of the country.

8-) Enabling Indian telecom companies to become truly global players.

CHALLENGES FOR THE TENTH PLAN

With the introduction of competition in the market, the focus of planning needs to shift from the overall expansion of DELs and network to providing requisite policy framework for the sector/ market to grow as required and consistent with the overall policy objectives. In determining the appropriate policy initiatives and the relevant regulatory framework for this purpose, we need to bear certain factors in mind. The major factors/trends that merit consideration in this regard are given below.

Factors and Trends Relevant for Future Policy Initiatives:

• Based on global trends and Indian experience, the rate of growth of cellular mobile services would continue to be higher for a number of years. Its two important implications are further lowering of average cost per line and cellular mobile/WLL-M becoming a major tool of expansion in rural areas.

• The capital requirement for investments in the next five years are expected to be lower than the present cost due to continuing decline in equipment cost as well as lower network costs due to competition resulting from entry of infrastructure providers Railways, Power Grid Corporation, etc. and huge capacity addition by other players.

• A small portion of the subscriber base provides a large share of call revenue. High revenue subscriber category would form the core of competition among operators which may lead to a fall in the tariffs applicable to this type i.e. long distance calls. As a result, long distance tariffs may be even lower than those specified by the regulator.

• Margin of surplus will decline over time due to competition. However, the break-even revenue per subscriber will also be lower due to decline in costs.

• Data services are expected to grow much faster than voice telephony. This underlines the need in due course to focus on broad-band linkages to enable the provision of these services at the required rate.

• Due to large uncovered areas in rural and remote regions of the country which are also expected to be low paying as well, the commitments on account of USO are likely to be large.

• The trend towards convergence of services may lead to major changes in the structure of industry and markets.