Telecom sector in india

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Introduction

The purpose of this paper is to construct a vision of Indian telecom sector for the year 2020, i.e., about two decades from now. Development being a continuous process, the choice of the year 2020 is just an arbitrary division of time, a pre-defined time horizon to take stock of what is likely to be achieved.

Pre-portrayal of a stage of development in future requires understanding of the process of change, the dynamics that set law of motion. In attempting to do so, the present paper deciphers the recent past.

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Process of change is often volatile and responsive to intervention and global circumstances impacting it. In such an inherently dynamic situation it is convenient to assume that cross-country experiences incubate the most recent seeds of change. This is because countries at various stages of development encapsulate developmental experiences that occur with the passage of time.

The present paper isolates the agents of change based on international experiences and situates India in this development continuum. The agents of change, as observed from international perspective, have been broadly categorized into economic structure, competition policy and technology. Economic reforms and liberalization have driven telecom sector through several transmission channels of which these three categories are of major significance.

The paper, as it unfolds, is divided into six sections. Section 1 gives a brief account of the era of competition that was heralded in Indian telecom sector and the results achieved. Analysis of the results, particularly comparison with other major countries intrigued further discussions on economic structure, synergy between telecom and IT, competition policy and technology in sections 2,3.4 and 5 respectively. Logical extension of the arguments, as they developed, extended to a vision for 2020 in each of these sections. The paper concludes in section 6.

The current policy configurations of India’s telecom sector have been listed in the Appendix.

1. Reforms and Performance

India, like many other countries of the world, have adopted a gradual approach to telecom sector reform through selective privatization and managed competition in different segments of the telecom market. To begin with, India introduced private competition in value-added services in 1992 followed by opening up of cellular and basic services for local area to private competition. The Telecom Regulatory Authority of India (TRAI) was constituted in 1997 as an independent regulator in this sector. Competition was also introduced in national long distance (NLD) and international long distance (ILD) telephony at the start of the current decade.

The current policy stance affecting telecom sector in India is presented in the Appendix. Two state-owned public sector incumbents with a large existing subscriber base dominate the fixed line service. As on December 31, 2001, the two Public Sector Enterprises (PSEs),

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