Sunday, March 15, 2015

Telecommunication Services in India - Vision 2020

NTP-99 targeted complete rural coverage by the end of 2002 providing Village Public Telephones  in all the 0.6 million villages with emphasis on ‘availability, accessibility and affordability’ . By the end of January 2001, 0.4 million villages have been covered.

So far, the public sector incumbents have spearheaded expansion of rural telephony with very little contribution by the private sector. By the end of December 31, 2001, out of 0.4 million villages, the private operators covered only 718 villages and the rest was by the public sector.

Vision 2020 is a vision of information society and knowledge economy built on the edifice of ICT. In India, the aggressive expansion of public sector telecommunications infrastructure in hitherto uncharted territories of geographically remote locations would unleash latent economic energies and market forces, which will erode the very foundation of perceived lack of profitability of rural investment among the private investors. Once this is achieved, Vision 2020 will be a vision of wealthier and more equal society full of creativity, innovation and competition.

Thus, regulatory regime in 2020 will be overarching, based on convergence, which apart from paving the way to a full-grown information society will enhance growth and productivity of telecommunications and IT through exploitation of economies of scope and coverage.

By 2020, one would expect 3G to be within reach of wider section of Indian population.

There is need to develop deeper understanding of the evolution of new end-users in the market for the mobile multimedia services. Multimedia service providers will emerge as important shareholders in the network value chain. Countries should envision new partners, new entities, and new stakeholders in the business models. Multimedia portals will be important components of such business models.

If past trend were any guide, it would be reasonable to hope that by 2020 India would complete transition into digital switching and transmission, VoIP, broadband and 3G.

Future vision of telecom is a vision of IT. Telecom will be the springboard of future expansion of IT heralding in an information society.


Indian Telecom Sector: Recent Policies

1. All the villages shall be covered by telecom facility by the end of 2002.

1. All the villages shall be covered by telecom facility by the end of 2002.
2. The Communication Convergence Bill 2001introduced in the Parliament on August 31, 2001 is presently before the Standing Committee of Parliament on Telecom and IT.
3. National Long Distance Service (NLD) is opened for unrestricted entry.
4. The International Long Distance Services (ILDS) have been opened to competition.
5. The basic services are open to competition.
6. In addition to the existing three, fourth cellular operator, one each in four metros and thirteen circles, has been permitted. The cellular operators have been permitted to provide all types of mobile services including voice and non-voice messages, data services and PCOs utilizing any type of network equipment, including circuit and/or package switches that meet certain required standards.
7. Policies allowing private participation have been announced as per the New Telecom Policy (NTP), 1999 in several new services, which include Global Mobile Personal Communication by Satellite (GMPCS) Service, digital Public Mobile Radio Trunked Service (PMRTS), Voice Mail/ Audiotex/ Unified Messaging Service.
8. Wireless in Local Loop (WLL) has been introduced for providing telephone connections in urban, semi-urban and rural areas promptly.
9. Two telecom PSUs, VSNL and HTL have been disinvested.
10. Steps are being taken to fulfill Universal Service Obligation (USO), its funding and administration.
11. A decision to permit Mobile Community Phone Service has been announced.
12. Multiple Fixed Service Providers (FSPs) licensing guidelines were announced.
13. Internet Service Providers (ISPs) have been allowed to set up International Internet Gateways, both Satellite and Landing stations for submarine optical fiber cables.
14. Two categories of infrastructure providers have been allowed to provide end-to-end bandwidth and dark fiber, right of way, towers, duct space etc.
15. Guidelines have been issued by the Government to open up Internet telephony (IP).

Investment Policy Framework

1. Foreign Direct Investment of up to 100 percent permitted for the following:
- Manufacturing of telecom equipment
- Internet service (not providing international gateways)
- Infrastructure providers (Category I)
- E-mail service
- Voice mail service
- Call Centers and IT enabled services

2. Foreign Direct Investment of up to 74 percent permitted for the following:
- Internet service (providing international gateways)
- Infrastructure providers (Category II)
- Radio paging services

3. Foreign Direct Investment of up to 49 percent permitted for the following:
- National long distance service
- Basic telephone service
- Cellular mobile service
- Other value added service

4. Additional foreign investment through holding/investment company

5. Automatic approval for technology fee up to US$ 2 million, royalty up to 5 percent for domestic sales and 8 percent for exports in telecom manufacturing (higher amount through specific approvals)

6. Full repatriability of dividend income and capital invested in the telecom sector

7. Fiscal incentives and concessions for the telecom sector:
- Amortization of license fee
- Tax holiday
- Rebate on subscription to shares/debentures
- Scope for tax exemption on financing through venture capital
- Import duty rates reduced for various telecom equipment

Source: (i) Annual Report, 2001-2002 and (ii) Indian Telecommunication Statistics 2002 (Policy Framework, Status and Trends), both published by the Department of Telecommunications, Ministry of Communications & IT, Government of India.

Source: Background Paper submitted to the Committee on India: Vision 2020
Telecom Sector in India: Vision 2020
Manas Bhattacharya, IES (Deputy Director General (Finance), Department of Telecommunications, Ministry of Communications & IT, Government of India)

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