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Questionnaire For Stress Management in an Organization is as follows: Q1. Is work culture supportive in your organization? a. Mostly . !arely c.

Sometimes ". #ot at all Q$. %ow often you face stress Situation in your organization.? a. Mostly . !arely c. Sometimes ". #ot at all Q&. Most of your Stress are relate" to : a. 'ork (nvironment . Supervision c. 'orkgroup ". Social In)ustice Q*. %ow "o you feel w+ile working in t+e organization? a. ,reat . Satisfie" c. -na le to concentrate ". Frustrate" e. .epresse" Q/. %ave you taken leave in t+e past 1$ mont+s "ue to work relate" stress? a. 0es . #o Q1. 2lease estimate t+e average num er of +ours per week t+at you work 3 ot+ on an" off site4 "uring term time. a. *5 6 /5 . /5 6 15 c. 15 6 7 ove Q8. 2lease in"icate total workloa" +as c+ange" "uring last t+ree years? a. 'orkloa" +as "ecrease" . !emaine" t+e c. Same ". 'orkloa" increase" Q9 Stress is relate" to .eman"? a. .ealing wit+ :ustomers; :olleagues . 7"ministration c. #ee" to +it targets;"ea"lines ". <ong working +ours

Q= Stress relate" to Support ? a. Feeling work not value" . <ack of management support c. Over competitive; confrontational institutional culture ". Incentive 2olicy Q15. '+om "oes you report ; s+are if you +ave any pro lems in your work ? a. Superior . :olleagues 3"iscussion4 c. Function %ea" ". %ea" of %! "epartment Q11. %ow often you face stress situation eing taken care off ? a. Mostly . !arely c. Fre>uently ". #ot at all Q1$ %ow "o you +an"le Stress situations? a. Optimistically . 'it+ t+e +elp of ot+ers c. .epen"s upon level Q1&. ?o w+at level t+e Management is effective in +an"ling your Stress situation? a. :ompletely . ?o a certain e@tent c. ?o a satisfactory ". #ot at all Q1*. .oes t+e upper Management pressure main reason for stress ? a. 0es . #o !elate" posts:
1. $. &. *. Stress Management: %ow to !e"uceA 2reventA an" :ope wit+ Stress Stress Management in %uman !esource :auses of Stress Best 'ays to !e"uce Stress

Background Paper submitted to the Committee on India: Vision 2020

Telecom Sector in India: Vision 2020

Manas Bhattacharya *, IE
!Deputy Director General (Finance), Department of Telecommunications, Ministry of Communications & IT, Government of India"

?+e views e@pose" in t+is paper are t+at of t+e aut+ors not of t+e 2lanning :ommission

Diews e@presse" are aut+orEs personal.

Telecom Sector in India: Vision 2020

by Manas Bhattacharya *, IE
!Deputy Director General (Finance), Department of Telecommunications, Ministry of Communications & IT, Government of India"

Introduction #he purpose o$ this paper is to construct a %ision o$ Indian te&ecom sector $or the year 2020, i'e', about t(o decades $rom no(' )e%e&opment being a continuous process, the choice o$ the year 2020 is *ust an arbitrary di%ision o$ time, a pre+ de$ined time hori,on to take stock o$ (hat is &ike&y to be achie%ed' Pre+portraya& o$ a stage o$ de%e&opment in $uture re-uires understanding o$ the process o$ change, the dynamics that set &a( o$ motion' In attempting to do so, the present paper deciphers the recent past' Process o$ change is o$ten %o&ati&e and responsi%e to inter%ention and g&oba& circumstances impacting it' In such an inherent&y dynamic situation it is con%enient to assume that cross+country e.periences incubate the most recent seeds o$ change' #his is because countries at %arious stages o$ de%e&opment encapsu&ate de%e&opmenta& e.periences that occur (ith the passage o$ time' #he present paper iso&ates the agents o$ change based on internationa& e.periences and situates India in this de%e&opment continuum' #he agents o$ change, as obser%ed $rom internationa& perspecti%e, ha%e been broad&y categori,ed into economic structure, competition po&icy and techno&ogy' Economic re$orms and &ibera&i,ation ha%e dri%en te&ecom sector through se%era& transmission channe&s o$ (hich these three categories are o$ ma*or signi$icance' #he paper, as it un$o&ds, is di%ided into si. sections' ection / gi%es a brie$ account o$ the era o$ competition that (as hera&ded in Indian te&ecom sector and the resu&ts achie%ed' 0na&ysis o$ the resu&ts, particu&ar&y comparison (ith other ma*or countries intrigued $urther discussions on economic structure, synergy bet(een te&ecom and I#, competition po&icy and techno&ogy in sections 2,1'2 and 3 respecti%e&y' 4ogica& e.tension o$ the arguments, as they de%e&oped, e.tended to a %ision $or 2020 in each o$ these sections' #he paper conc&udes in section 5'

Diews e@presse" are aut+orEs personal.

#he current po&icy con$igurations o$ India6s te&ecom sector ha%e been &isted in the 0ppendi.' /' Reforms and Performance India, &ike many other countries o$ the (or&d, ha%e adopted a gradua& approach to te&ecom sector re$orm through se&ecti%e pri%ati,ation and managed competition in di$$erent segments o$ the te&ecom market' #o begin (ith, India introduced pri%ate competition in %a&ue+added ser%ices in /772 $o&&o(ed by opening up o$ ce&&u&ar and basic ser%ices $or &oca& area to pri%ate competition' #he #e&ecom 8egu&atory 0uthority o$ India !#80I" (as constituted in /779 as an independent regu&ator in this sector' Competition (as a&so introduced in nationa& &ong distance !:4)" and internationa& &ong distance !I4)" te&ephony at the start o$ the current decade /' #he current po&icy stance a$$ecting te&ecom sector in India is presented in the 0ppendi.' #(o state+o(ned pub&ic sector incumbents (ith a &arge e.isting subscriber base dominate the $i.ed &ine ser%ice' 0s on )ecember 1/, 200/, the t(o Pub&ic ector Enterprises !P Es", B :4 and M#:4 2 o(ned 12'91 mi&&ion )irect E.change 4ines !)E4s" against 0'23 mi&&ion pri%ate&y o(ned )E4s' #hese t(o P Es (ere a&&o(ed be&ated entry into the ce&&u&ar segment in the beginning o$ the present decade' Conse-uent&y, their ce&&u&ar subscriber base is tiny compared to the pri%ate operators' ;ut o$ 9'1 mi&&ion ce&&u&ar subscribers in the country in <une 2002, they had on&y 0'2 mi&&ion subscribers 1' )espite asymmetry in initia& market endo(ments bet(een pub&ic sector incumbents and pri%ate operators, the act o$ opening up o$ the market un&eashed dynamism that (as hitherto &atent in the sector' #his is e%ident $rom a number o$ per$ormance indicators' In terms o$ o%era&& si,e o$ main te&ephone &ines in operation, India ranked /2 th in the (or&d in /773' #he rank impro%ed to 9 th position in 200/ !#ab&e /"' #ab&e /: Top 14 countries in the world in terms of number of main telephone lines in operation

,overnment "iveste" $/ per cent strategic stake of Di"es+ Sanc+ar #igam <imite" 3DS#<4A a pu lic sector monopoly incum ent in I<. telep+ony to ?ata ,roup in t+e private sector out of /$.=8 per cent e>uity +el" y t+e government. ?+is was followe" y opening up of I<. usiness to private players from 7pril 1A $55$A terminating DS#< monopoly two years a+ea" of sc+e"uleA DS#<A 16th Annual Report, 2001-2002A p./. $ ?ill 1=91 telecommunication was a pu lic utility owne" y t+e ,overnment of In"ia. Ma+anagar ?elep+one #igam <imite" 3M?#<4 was create" in 1=91 as a 2S( to take out telecommunication services from t+e ,overnment entirely in t+e cities of .el+i an" Mum ai. It was in t+e same year t+at DS#< was create" in t+e I<. segment. B+arat Sanc+ar #igam <imte" 3BS#<4 was forme" as a 2S( on Octo er 1A $555 as a telecom service provi"er in all ot+er places. Bot+ t+ese incum ents in+erite" t+e entire preF e@isting su scri er ase wit+ t+e ,overnment. & tele.netA #ew .el+iA Dol.&A issue no.8A Guly $55$A pp. /*F//.


!o" of lines Ran%s &1##$' !o" of lines Ran%s &2001' in 1##$ in 2001 !=000" !=000" > 0 /37,913'2 / /70,000'0 / <apan 52,272'0 2 95,000'0 1 ?ermany 22,000'0 1 32,2@0'0 2 China 20,903'9 2 /97,012'0 2 Arance 12,200 3 12,012'7 7 >B 27,2//'2 5 12,9/0'0 @ 8ussia 23,0/@'7 9 13,900'0 5 Ita&y 22,@23'0 @ 29,101'0 /0 Borea, 8ep' /@,500'0 7 22,922'9 // Canada /9,359'0 /0 20,1/7'1 /2 pain /3,073'2 // /9,229'0 /2 Bra,i& /1,251'0 /2 19,210'@ 3 #urkey /1,2/3'9 /1 /@,700'7 /1 India //,79@'0 /2 12,912'/ 9 ource: Cor&d #e&ecommunication )e%e&opment 8eport 2002, I#> :et(ork e.pansion in India (as accompanied by an increase in producti%ity o$ te&ecom sta$$ measured in terms o$ ratio o$ number o$ main te&ephone &ines in operation to tota& number o$ $u&& time te&ecom sta$$ !#ab&e 2"' ;ne (ay o$ &ooking at the (e&$are gains to subscribers is to (atch the trend in prices $or te&ecom ser%ices, (hether such prices came do(n in the competiti%e regime' Chat consumer u&timate&y pays inc&udes renta& as (e&& as te&ecom tari$$s' Because o$ comp&ications in%o&%ed in summari,ing di$$erentia& rates app&icab&e to peak and non+peak hours, a con%enient pro.y $or the change in te&ecom prices cou&d be constructed in terms o$ obser%ed trend in re%enue earned $rom te&ephone ser%ices at constant prices e.pressed as a ratio o$ number o$ main te&ephone &ines in operation' #ab&e 2 sho(s a signi$icant dec&ine in this ratio since /773 in Indian $i.ed &ine segment' It may be noted that the :ationa& #e&ecom Po&icy (as announced in May /772' teps (ere intensi$ied to introduce pri%ate competition in the basic and ce&&u&ar ser%ices therea$ter' #he beginning o$ the dec&ining trend in per &ine re%enue at constant prices coincided (ith the period, (hich (itnessed emergence o$ competiti%e pressure in the sector' #ab&e 2: Trend in producti(it and price )ear !umber of main telephone lines in operation per full*time telecom staff /3'3@ Telephone ser(ice re(enue at constant prices &CPI: 1##$+100' per main telephone line in operation !8s' =000" 7'/1


/772 /9'53 /771 20'12 /772 21'1@ /773 2@'23 /775 11'70 /779 2/'@7 /77@ 30'71 /777 52'79 ource: Computed $rom the data pub&ished in the #e&ecommunication er%ices, /77/+2000, I#>

/0'23 //'02 /0'/9 7'21 5'/2 3'52 2'72 2'22 Dear book o$


#ab&e 1 sho(s the &ong run trend in supp&y and demand o$ )E4s' #he number o$ )E4s in operation !i'e', main &ine in operation" has been taken as supp&y (hereas demand has been computed by adding the number o$ subscribers in the (aiting &ist to the number o$ )E4s in operation' Eo(e%er, it needs to be kept in mind that the number in the (aiting &ist, in certain cases, is un&ike&y to re$&ect potentia& demand $or te&ecom ser%ices in the economy' #he market potentia& may be much more than (hat is re%ea&ed through (aiting &ist because the number in the (aiting &ist re%ea&s demand registered in those areas (here te&ecommunication $aci&ities are a%ai&ab&e and reasonab&e e.pectations $or demand to be $u&$i&&ed' In the areas (here te&ecom in$rastructure is not ade-uate, demand may not get registered at a&& and remain suppressed' #ab&e 1: ,-.: Suppl and demand !mi&&ions" )ear endin/ 0arch 11 ,irect -2chan/e 3aitin/ .ist ,emand .ines !)E4s" /7@/ 2'/3 0'23 2'5 /7@1 2'29 0'55 1'/1 /7@3 2'70 0'@2 1'92 /7@9 1'27 /'/2 2'5/ /7@7 2'/9 /'22 3'37 /77/ 3'09 /'75 9'01 /771 5'@0 2'@3 7'53 /773 7'@0 2'/3 //'73 /779 /2'32 2'@7 /9'21 /777 2/'37 /'7@ 21'39 200/ 12'22 2'72 13'15 ource: Indian #e&ecommunication tatistics 2002, Ministry o$ Communications, ?o%ernment o$ India' #he $igure be&o( sho(s an interesting phenomenon' #ota& demand tends to e.ceed supp&y by a margin, (hich does not get narro(ed do(n as supp&y e.pands' It sho(s that market $or $i.ed &ine is supp&y constrained and demand

tends to increase as supp&y e.pands' #he $igure a&so re%ea&s that there is signi$icant gro(th in supp&y o$ )E4 in the 70s, the e%ent$u& decade o$ sectora& re$orms' #he gro(th momentum is sustained in the current decade (ith a positi%e supp&y gap'

,-.: S4PP.) 5!, ,-05!,


35ITI!6 .IST8,-. 5!, T9T5. ,-05!, &million'

13 10 23 20 /3 /0 3 0
/7 @/ /7 @1 /7 @3 /7 @9 /7 @7 /7 7/ /7 71 /7 73 /7 79 /7 77 20 0/

)-5R -!,I!6 05RC7 11

#ota& demand Caiting 4ist )e& #ab&e 2 indicates te&e+density $or the countries inc&uded in #ab&e / as measured in terms o$ number o$ main &ines per /00 inhabitants' #ab&e 2: !umber of main telephone lines per 100 inhabitants Countr > 0 <apan ?ermany China Arance >B 8ussia Ita&y Borea, 8ep' 1##$ 50'91 27'5/ 3/'11 1'10 35'0/ 30'/@ /5'7/ 21'11 2/'22 2001 55'23 37'57 51'2@ /1'@/ 39'13 39'9@ 22'11 29'05 29'50

Canada 37'@3 53'3/ pain 1@'30 21'// Bra,i& @'3/ 2/'57 #urkey 2/'22 2@'32 India /'27 1'1@ ource: Cor&d #e&ecommunication )e%e&opment 8eport 2002, I#> 0bo%e tab&e indicates that despite phenomena& achie%ement in terms o$ net(ork e.pansion, the si,e o$ the popu&ation is responsib&e $or India6s &o( te&e+density 2' 0 comparison bet(een #ab&e / and #ab&e 2 re%ea&s that countries (ith sma&&er net(ork si,es than India are ha%ing much higher te&e+densities' Eo(e%er, in terms o$ tota& te&e+density, i'e', the sum o$ $i.ed+&ines and mobi&e subscribers per /00 inhabitants, India6s comparati%e ranking in the (or&d impro%ed $rom /50 in /770 to /23 in 2000, an impro%ement by /3 positions 3' :e%erthe&ess, c&osing the digita& di%ide in terms o$ te&e+density remains a daunting task' #he present paper estimates that in order to attain the net(ork si,e o$ > 0 in 200/ India has to e.pand its number o$ operationa& te&ephone &ines at a compound annua& gro(th rate !C0?8" o$ 21'22 per cent bet(een 2002 and 2020' #he corresponding gro(th rates to reach China and <apan6s &e%e&s are 21'05 per cent and /9'51 per cent respecti%e&y' E%en that is not going to mean much in terms o$ te&e+densities in comparison to most o$ the countries cited in #ab&e 2' 0ssuming no change in India6s si,e o$ popu&ation !i'e', assuming popu&ation si,e to remain at 200/ &e%e& o$ /'01 bi&&ion", India6s te&e+density (i&& be /@'2@ &ines per /00 peop&e e%en i$ India6s net(ork si,e reaches the &e%e& o$ > 0' Considering the $act that India6s )E4 gre( at a C0?8 o$ /7'2 per cent during /773+2000, signi$icant e$$ort (ou&d be needed to step up gro(th rate abo%e 21 per cent' >nderstanding te&ecom gro(th prospect (ou&d re-uire understanding o$ the sources o$ gro(th +++ (hat accounts $or cross+country di$$erences in gro(th e.periences' Countries do di$$er among themse&%es in respect o$ their economic structure, sectora& po&icies and techno&ogica& changes' 0ssuming these three to be key dri%ers o$ gro(th it can be said that =Vision 20206 o$ Indian te&ecom sector (i&& be shaped in an important (ay by the e%o&%ing economic structure, sectora& re$orms inc&uding competition po&icy and techno&ogy trend' 2' -conomic Structure It has been obser%ed that =gro(th in the number o$ ne( te&ephone subscribers has $ar e.ceeded the gro(th in the g&oba& economy6 in the &ast t(enty years 5' #his sho(s that aggregate gro(th a&one does not determine te&ecom e.pansion

It may e note" t+at teleF"ensity eing an averageA "oes not t+row lig+t on t+e "istri ution of telep+ones across various income categories. If "istri ution is skewe"A teleF"ensity may not e an appropriate in"icator of teleFaccessi ility of t+e poor. / I?-A World Telecommunication Development Report 2002A ,enevaA $55$A p./1. 1 I i".A p.1.

and there may be need to &ook at composition o$ gro(th as (e&&' Eo(e%er, in$&uence o$ economic structure on te&ecom e.pansion !or $or that matter on achie%ab&e &e%e& o$ te&e+density" does not $ind e.p&icit consideration in today6s &iterature on te&ecom economics as much as the other t(o $actors, i'e', competition and techno&ogy' ;ne p&ausib&e reason cou&d be because o$ the importance that has been attached to income gap as a $actor e.p&aining digita& di%ide' Moreo%er, income gap, by itse&$ subsumes di$$erences in certain structura& characteristics and there$ore di%erts the $ocus o$ attention $rom structura& gap to income gap9' Proponents o$ =income determinism6 may stop short o$ addressing structura& $actors because o$ their primary concern regarding income trans$er bet(een the de%e&oped to the de%e&oping countries as the on&y (ay to address the prob&ems o$ digita& di%ide' tructura& issues, on the other hand, are more pertinent to the be&ie%ers o$ =&eap$rogging6 capabi&ities o$ the countries (ho are on the (rong side o$ the di%ide @' It is $or them that the present paper goes on to pro%e that the e$$ecti%eness o$ direct promotion o$ te&ecommunications as a comp&ementary po&icy to o%era&& macroeconomic re$orms (i&& be determined in an important (ay by ho( structura& issues in the economy are addressed' In the $irst p&ace, it is note(orthy that there are countries (ith per capita income &ess than that o$ India but (ith higher te&e+density' 0s $or instance, Bo&i%ia had per capita income o$ > F 21@0 in 2000 7 compared to > F 2170 $or India' Bo&i%ia6s te&e+density/0 (as 5'03 in that year against 1'20 $or India' Mo&do%a had a te&e+density o$ /1'11 (ith a per capita income o$ > F 2220' ?eorgia, (ith a per capita income o$ > F 2290 had a much higher te&e+density o$ /1'@5' #hough Ecuador had a &itt&e higher per capita income o$ > F 2720 compared to India, te&e+density (as signi$icant&y higher at /0'00' It (as a&so noted that these countries had either more e-uitab&e income distribution than India !measured in terms o$ percentage o$ popu&ation &i%ing on &ess than F2 a day" or had a higher (eightage o$ %a&ue added by the ser%ice sector in the ?ross )omestic product !?)P" or both' 0 comparati%e picture o$ India %is+G+%is these countries in respect o$ the t(o a$oresaid characteristics are presented in #ab&e 3' #ab&e 3: Structural characteristics and tele*densit 8 2000

?+ere is a twoF way relations+ip etween telecommunications an" economic "evelopment. ?+e relations+ip t+at operates t+roug+ telecom e@pansion causing economic growt+ is known as GippEs <awA after 2rofessor 7. GippA w+o was one of t+e first to write a out it. ?+e relations+ip is "escri e" in terms of a HGipp :urveEA see for "iscussionA I i".A p.1*. 9 See for instanceA #egroponteA #.A H?+e ?+ir" S+all e First: ?+e #et <everages <atecomers in t+e .eveloping 'orl"EA Wired MagazineA Ganuary 1==9. = 222 incomeA i.e.A income measure" in terms of 2urc+asing 2ower 2arity. 15 #um er of main telep+one lines in operation per 155 in+a itants.


Value added b the ser(ice sector in the 6ross ,omestic product &6,P' !H" Mo&do%a /1'11 2220 1@'2 31 Bo&i%ia 5'03 21@0 3/'2 2@ India 1'20 2170 2/'2 25 ?eorgia /1'@5 2290 4ess than 2 32 Ecuador /0'00 2720 32'1 52 ource: !i" Dear book o$ statistics, /77/+2000, I#>I !ii" Cor&d )e%e&opment 8eport 2002' In order to e.amine the genera&ity (ith (hich such re&ationships mani$est in a &arger samp&e o$ countries, te&e+density (as regressed on percentage o$ popu&ation &i%ing on &ess than F2 a day and per capita income o%er a cross+ section o$ 99 countries// $or the year 2000 to yie&d the $o&&o(ing resu&ts: #e&e+density J 7'51 K 0'/351** !Percentage o$ popu&ation &i%ing on &ess than F2 a day" L 0'00/7**!Per capita income" 82 J 0'@2I ** : igni$icant at /H' #he resu&t sho(s that income distribution has a much &arger coe$$icient than per capita income and there$ore emphasi,es the $act that te&ecom de%e&opment strategy shou&d ha%e substantia& e-uity component bui&t into it' #o assess the signi$icance o$ ser%ice sector in te&ecom de%e&opment, te&e+density has been regressed on percentage contribution o$ %a&ue added by the ser%ice sector in ?)P o%er a cross+section o$ //3 countries $or the year 2000' #he $o&&o(ing resu&t (as obtained: #e&e+density J + 1/'32 L 0'7259** !Percentage contribution o$ %a&ue added by the ser%ice sector in ?)P" 82 J 0'2@I CC : igni$icant at /H'

Tele*densit Per capita Percenta/e !per /00 income of population inhabitants" !F PPP" li(in/ on less than :2 a da


?+ere were 88 countriesA for w+ic+ re>uire" "ata was availa le.

#he resu&t indicates a strong association bet(een ser%ice sector gro(th and te&ecom de%e&opment imp&ying that $uture te&ecom e.pansion (i&& depend signi$icant&y on the pro&i$eration o$ ser%ices in the economy' 0s a matter o$ strategy, it can be said that targeted inter%ention through access promotion can be potentia&&y instrumenta& in de&i%ering gro(th (ith e-uity' 0ccess promotion means e.pansion o$ te&ecommunication and there$ore (i&& cause gro(th to occur/2' Conse-uent&y, a broad based access promotion strategy (ou&d &ead to more e-uitab&e gro(th' #he $irst step to(ards broad based access promotion in India (as initiated in the eighties (hen Pub&ic Ca&& ;$$ices !PC;s" (ere gi%en pri%ate $ranchises $or both domestic and &ong distance ser%ices' #ota& number o$ PC;s gre( $rom 0'2 mi&&ion in /771 to 0'7 mi&&ion in 200/' #he Eighth P&an !/772+79" targeted at pro%ision o$ Panchayat /1phones in 150,000 %i&&ages' #hrust on >ni%ersa& er%ice ;b&igation !> ;" as a part o$ broad based te&ecommunication de%e&opment strategy/2 began (ith the :ationa& #e&ecom Po&icy o$ /772 and (as rein$orced as one o$ the ob*ecti%es o$ the :e( #e&ecom Po&icy /777 !:#P+77"' #he &icenses $or the basic ser%ices, $or (hich open tenders (ere in%ited in <anuary /773,contained an ob&igatory pro%ision in the agreement $or the pri%ate operators to pro%ide /0 per cent o$ the )E4s as Vi&&age Pub&ic #e&ephone !VP#"' :#P+77 targeted comp&ete rura& co%erage by the end o$ 2002 pro%iding Vi&&age Pub&ic #e&ephones/3 in a&& the 0'5 mi&&ion %i&&ages (ith emphasis on =a%ai&abi&ity, accessibi&ity and a$$ordabi&ity6 /5' By the end o$ <anuary 200/, 0'2 mi&&ion %i&&ages ha%e been co%ered' hare o$ rura& areas in tota& number o$ )E4s in the country stood at about 22'5 per cent in <anuary 2002, increasing $rom 2/'2 per cent in March 200//9' #he trend is suggesti%e o$ potentia& scope o$ e.pansion o$ te&ecommunication in the rura& sector' #hough > ; is mandatory $or the basic ser%ice operators, other ser%ice pro%iders are a&so a&&o(ed to participate in it sub*ect to technica& $easibi&ity' #he subsidy e&ement o$ the > ; (i&& be $inanced $rom a $und generated through >ni%ersa& er%ice 4e%y !> 4", i'e', &e%y o$ certain percentage o$ &icense $ees charged $rom di$$erent ser%ice pro%iders' 0s a $o&&o( up o$ :#P 77 and subse-uent recommendations o$ the #80I, #he >ni%ersa& er%ice upport Po&icy

It was empirically evi"ent t+at countries +aving more t+an e@pecte" num er of telep+ones or a +ig+er teleF"ensity 3given t+eir income levels4 e@perience" +ig+er growt+ t+an t+e countries wit+ lower t+an e@pecte" num er of telep+ones or teleF"ensities. SeeA ?+e 'orl" Bank ,roupA n!ormation and "ommunication technologie#$ A World %an& 'roup (trateg)A 'as+ington ..:.A $55$A p.1. If more telep+ones e>ual growt+A countries can leapfrog several percentage points growt+ t+roug+ "irect telecom promotion. 1& <ocal selfFgovernment o"y consisting of electe" representatives at village level. 1* -SO is now common in many countries seeking promotion of rural telep+ony. ?+e mo"alities "iffer in matters of "etails. 1/ D2? is a community telep+one facility. 11 #?2 == also envisage" provision of Internet access to all "istrict +ea">uarters y $555. 18 ,overnment of In"iaA Ministry of :ommunications I Information ?ec+nologyA .epartment of ?elecommunicationsA Annual Report, 2001-2002.

!> P" came into e$$ect $rom 0pri& /, 2002 and the )epartment o$ #e&ecommunications !);#" issued detai&ed guide&ines $or imp&ementation /@' 0part $rom e.pansion o$ VP#s, the guide&ines a&so en%isaged upgradation o$ VP#s to Pub&ic #e&ecom and In$ormation Centers !P#ICs" to pro%ide data transmission $aci&ities and insta&&ation o$ high speed P#ICs !EP#ICs" in the hort )istance Charging 0reas ! )C0s" (ith broadband access' 0&&ocation o$ subsidy (i&& be to the bidder -uoting &o(est amount o$ subsidy, chosen through a mu&ti+ &ayered bidding process sub*ect to a cei&ing o$ the benchmark cost estimated by the );# on the basis o$ e$$iciency criteria/7' o $ar, the pub&ic sector incumbents ha%e spearheaded e.pansion o$ rura& te&ephony (ith %ery &itt&e contribution by the pri%ate sector' By the end o$ )ecember 1/, 200/, out o$ 0'2 mi&&ion %i&&ages, the pri%ate operators co%ered on&y 9/@ %i&&ages and the rest (as by the pub&ic sector' Pri%ate sector presence is pro&i$ic in Pub&ic Ca&& ;$$ices !PC;s" and Internet Biosks in the cities and to(ns 20' Eo(e%er, there are certain pi&ot pro*ects in the rura& sector (orking to e%o&%e cost e$$ecti%e (ire&ess techno&ogica& so&utions in partnership (ith &oca& ser%ice pro%iders' Many such pro*ects ha%e de%e&oped app&ications based on &oca& content and so$t(are in Indian &anguages and user+ $riend&y icons $or i&&iterate peop&e2/' #e&ecommunications ha%e emerged as a springboard o$ IC# app&ications (ith economy+(ide rami$ications' #here are p&enty o$ anecdota& e%idences 22 to sho( that te&ecom is impro%ing &i$e chances across the strata o$ the society tiding o%er the =di%ide6' 0 (ho&e range o$ in$ormation based industry and app&ications ha%e

.epartment of telecommunications of t+e Ministry of :ommunications I Information ?ec+nology is t+e policy making arm of t+e ,overnment of In"ia in t+e area of telecom "evelopment. 1= :+ilean e@perience is a fre>uently >uote" success story of leveraging -SJ *5 million of private fun"ing Hon t+e asis of )ust over -SJ $ million of pu lic su si"yEA see for "iscussionA ?+e 'orl" Bank ,roupA n!ormation and "ommunication technologie#$ A World %an& 'roup (trateg)A 'as+ington ..:.A $55$A p.11 an" B)orn 'elleniusA *+tending Telecommunication# (ervice to Rural Area# , The "hilean *+perienceA ?+e 'orl" Bank ,roupA Fe ruary 1==8. (arly pilot results s+owe" t+at in outputF ase" contracts for rural services 2eru succee"e" in mo ilizing private investment e>uivalent to "ou le t+e amount of su si"y provi"e"A for "etails see :annock ,eoffreyA Telecom (u-#idie#A ?+e 'orl" Bank ,roupA 2rivate Sector an" Infrastructure #etworkA Gune $551. $5 M?#< also commercially launc+e" $/ Internet kiosks eac+ in .el+i an" Mum ai. ,overnment of In"iaA Ministry of :ommunications I Information ?ec+nologyA .epartment of ?elecommunicationsA Annual Report, 2001-2002A p. 1*. $1 :or.ect is one suc+ tec+nology. SeeA #oron+aA Fre"eric, nternet !or all$ ndian villager# to get acce## at price# the) can a!!ordA K also y t+e same aut+orA We- &io#&# !or ndia.# villager#A K H:ommunications !evolution set to transform 1555 ?amil villagesEA n!om)A Fe ruary 1/A $551K HIn"ia OnlineEA /atureA Ganuary $*A $55$. It +as een reporte" t+at HIn Sout+ern In"iaA skille" Internet users "ownloa" information a out weat+erA agriculture an" fis+ing an" roa"cast it over t+e ra"ioE. I?-A World Telecommunication Development Report 2002A ,enevaA $55$A op.cit.A p.&*. $$ See for e@ampleA 0i!e at Wor& in the n!ormation *conom)A 'orl" (mployment !eport $551A I<OA ,enevaK .asguptaA S.A Somik <all an" .avi" '+eelerA 1olic) Re!orm, *conomic 'ro2th and the Digital Divide$ An *conometric Anal)#i#A 'orking 2aper #o. $/18A 'orl" BankA Marc+A $9A $551K Soo"A 7"itya .evA H%ow to 'ire !ural In"iaA 2ro lems an" 2ossi ilities of .igital .evelopmentEA *conomic and 1olitical Wee&l)A Octo er $8A $551.

come up creating ne( sources o$ emp&oyment and earning (ith (e&$are enhancing conse-uences $or the (ea&thy and the poor' 0s a meta+techno&ogy, IC# has caused rapid inno%ations to occur in a&& other areas o$ materia& sciences' 0s a $abric o$ in$ormation society, IC# has impro%ed access in the $ie&ds o$ education, hea&thcare, go%ernance and a&& aspects o$ business ser%ices' It has a&so impro%ed the abi&ities o$ the poor to manage risks and mitigate %u&nerabi&ities through pro%ision o$ time&y in$ormation' Vision 2020 is a %ision o$ in$ormation society and kno(&edge economy bui&t on the edi$ice o$ IC#' In India, the aggressi%e e.pansion o$ pub&ic sector te&ecommunications in$rastructure in hitherto uncharted territories o$ geographica&&y remote &ocations (ou&d un&eash &atent economic energies and market $orces, (hich (i&& erode the %ery $oundation o$ percei%ed &ack o$ pro$itabi&ity o$ rura& in%estment among the pri%ate in%estors' ;nce this is achie%ed, Vision 2020 (i&& be a %ision o$ (ea&thier and more e-ua& society $u&& o$ creati%ity, inno%ation and competition' 1'Telecom and IT #he %ision o$ te&ecommunications in 2020 is a %ision o$ in$ormation society bui&t on an edi$ice (here I# and te&ecommunications merge' 8apid techno&ogica& con%ergence has a&ready imp&ied a symbiotic o%er&ap bet(een the de%e&opment strategies o$ I# and te&ecommunications' Part o$ today6s I# is =te&ecom (rit &arge6, it $&ourishes on the te&ecom+net(ork and in turn permits modern day te&ecommunications to use sophisticated I#+so$t(are' Eard(are is a common p&at$orm $or both I# and te&ecom' #here is a &egacy %ision deri%ed $rom e.port+success o$ India6s so$t(are that has gi%en rise to optimism regarding India6s gro(ing pre+eminence in g&oba& I# can%as' uch a %ision bui&ds on a much &arger %ision o$ a&& round de%e&opment o$ I# that per%ades (ide cross+section o$ Indian economy and society' )eeper ana&ysis sho(s that there is need $or a comprehensi%e I# de%e&opment strategy to ensure India6s durab&e presence in the g&oba& so$t(are market' 0s discussion in the subse-uent paragraphs (i&& sho(, =enc&a%e6 type de%e&opment o$ so$t(are (ith e.c&usi%e $ocus on e.port can not bring about desired bene$its i$ such a strategy ignores the &inkages bet(een e.port and the domestic market' Vision 2020, there$ore, is a much &arger %ision' Airst, it is to be appreciated that $oreign e.change contribution o$ so$t(are e.port net o$ import o$ hard(are is rough&y $i$ty per cent 21' :et $oreign e.change contribution (i&& increase i$ India is ab&e to de%e&op a strong base o$ hard(are' econd, scrutiny o$ the structure o$ India6s so$t(are e.port %is+G+%is the emerging dynamics o$ the g&oba& market re%ea&s that India has margina& presence in the

Gosep+ L.G. an" L.#. %arilalA HStructure an" ,rowt+ of In"iaEs I? (@portsA Implications of an (@port Oriente" ,rowt+ StrategyEA *conomic and 1olitical Wee&l)A 7ugust $/A $551A p.&$18.

$astest gro(ing segment o$ the g&oba& I# market consisting o$ so$t(are packages and so$t(are products22' India6s c&ose competitors, on the other hand, ha%e achie%ed greater success through di%ersi$ication o$ e.ports (ith so$t(are packages23' #here is, there$ore, need $or India to c&imb %a&ue chain (ith more inno%ati%e so$t(are products in the internationa& market' #his is possib&e (hen India is ab&e to broad+base the de%e&opment o$ I# (ith a strong and &arge domestic market supporting inno%ation and its di$$usion a&ong (ith the gro(th o$ component manu$acturing base' 0ppropriate synergy bet(een the domestic and e.port market (i&& be key to enduring success o$ Indian I# sector in o%erseas market and de%e&opment o$ state+o$+the art te&ecom in$rastructure is a prere-uisite to both' Aina&&y, de%e&opment o$ human resources through I# education, training and ski&& de%e&opment is $undamenta& to the (ho&e process' #(o important indicators o$ I# penetration in Indian market are Internet use and a%ai&abi&ity o$ Persona& Computers !PCs"' #here has been signi$icant e.pansion in both during the &ast decade !#ab&e 5"' #ab&e 5: 6rowth in a(ailabilit of Personal Computers and estimated number of Internet users )ear -stimated number of Internet 5(ailabilit of Personal users Computers /772 /,000 2/0,000 /771 2,000 350,000 /772 /0,000 @00,000 /773 230,000 /,200,000 /775 230,000 /,300,000 /779 900,000 2,000,000 /77@ /,200,000 2,900,000 /777 2,@00,000 1,100,000 2000 3,00,0000 2,500,000 :ote: )ata $or /77/ on Internet users is not a%ai&ab&e' #he series start $rom /772 because data on both is a%ai&ab&e $rom this year' ource: Dearbook o$ statistics, /77/+2000, I#> )espite impressi%e gro(th in the number o$ Internet users and a%ai&abi&ity o$ PCs, India remains on the (rong side o$ the di%ide !#ab&e 9"' :umber o$ users o$ Internet is sti&& a neg&igib&e $raction o$ India6s tota& popu&ation' Per capita a%ai&abi&ity o$ PC is a&so %ery &o('

$* $/

I i".A p.&$1/. :+akra orty :+an"ana an" :. Gayac+an"ranA HSoftware Sector: ?ren"s an" :onstraintsEA *conomic and 1olitical Wee&l)A 7ugust $/A $551A p.&$/9.

#ab&e 9: Internet penetration and PC a(ailabilit 8 2001 Countries fallin/ in Internet users per PCs per !! inha"itants different income 108000 inhabitants cate/ories 4o( income countries 52'2/ 0'37 ;$ (hich India 5@'/5 0'3@ 4o(er midd&e income 252'72 2'23 countries >pper midd&e income 772'55 @'22 countries Eigh income countries 1772'@9 19'1/ ource: I#>, Cor&d #e&ecommunication )e%e&opment 8eport 2002 Internet kiosks, te&ekiosks, te&ecottages and cyberca$es ha%e emerged in important ro&es in e.panding community access to IC# popu&ari,ing I# among the masses and promoting domestic market' Eo(e%er, their e.pansion crucia&&y hinges on the gro(th o$ te&ecommunications in$rastructure' In India, a spectrum o$ techno&ogies has been un&eashed to connect remote %i&&ages, (hich inc&udes Cire&ess in 4oca& 4oop !C44", (ire&ess cum (ired techno&ogy de%e&oped by C+ );#25, radio systems, s(itching systems o$ di$$erent capacities integrated (ith underground cab&es, Cor)ect and medium capacity sate&&ite systems' Besides, a number o$ sma&&+sca&e IC# initiati%es is a&ready at (ork in di$$erent parts o$ the country !Bo. /"' It is en%isaged that (ith the gro(th o$ te&ecom in$rastructure such e.amp&es (ou&d mu&tip&y and create an in$ormation society in not so distant a $uture' Bo. /: 7arbin/ers of information societ #$%I: ustainab&e 0ccess in 8ura& India ! 08I" is a *oint initiati%e bet(een MI# Media 4ab, Center $or Internationa& )e%e&opment at Ear%ard, II# Chennai and the I+?yan Aoundation' #he pro*ect is &ocated in northern Madurai district o$ Chennai' It seeks to pro%ide %oice and Internet connections in /000 %i&&ages (ith the use o$ Cor)ect system' 0part $rom pro%ision o$ a kiosk in each %i&&age, connections (i&& be pro%ided in schoo&s, co&&eges and primary hea&th centers' #he pro*ect a&so pro%ides $or interest $ree &oans and easy insta&&ments $or purchase o$ computers and training support to technica& personne&' Continuous e%a&uation o$ the socio economic impact o$ the pro*ect is a part o$ the initiati%e 29'


?+e ,overnment of In"ia promote" center for t+e .evelopment of ?elematics 3:F.O?4 in 1=9* to "evelop in"igenous "igital switc+es. :F.O? also "esigne" H!ural 7utomatic (@c+angeE 3!7M4 an" manufacture" small metersA w+ic+ ecame popular wit+ t+e 2:Os. See #oron+a Fre"ericA nternet !or all$ ndian villager# to get acce## at price# the) can a!!ordA $8 H:ommunications !evolution set to transform 1555 ?amil villagesEA n!om)A Fe ruary 1/A $551 cite" in

n&'o(ue: =n+4ogue6 is a company incubated by a group o$ pro$essiona&s in II# Chennai under pri%ate initiati%e' #he company o$$ers (ire&ess e-uipment, mu&timedia computer e-uipped (ith so$t(are in Indian &anguage and other accessories to set up cost e$$ecti%e Internet kiosks in partnership (ith &oca& ser%ice pro%iders' uch kiosks are coming up in Madhya Pradesh, 8a*asthan and #ami& :adu2@' M)#) #*aminathan %esearch Foundation: #his pro*ect is &ocated in Pondicherry o$ outh India' Vi&&age Bno(&edge Centers ha%e been estab&ished under this pro*ect (ith dedicated (eb sites o$ &oca&&y re&e%ant in$ormation' #he Aoundation a&so disseminates kno(&edge and in$ormation through (ire&ess radios to rura& communities27' The +arana +ired ,illa(e Pro-ect: #his is a co&&aborati%e pro*ect bet(een the centra& and the state go%ernment, &ocated on the banks o$ ri%er Carana in Maharashtra' It operates distributi%e accounts system $or the Carana sugarcane cooperati%e' The Gyandoot Pro-ect: 0 *oint initiati%e o$ the district co&&ector o$ )har district o$ Madhya Pradesh and the )istrict 8ura& )e%e&opment 0gency !)8)0"' More than thirty Community In$ormation Centers !kno(n as = oochana&aya6", one $or a group o$ %i&&ages, ha%e been set up to pro%ide in$ormation on market rates o$ agricu&tura& products, &and records, education, hea&th, Panchayat re&ated matters, go%ernance issues, issue o$ certi$icates and registering comp&aints' E+mai& $aci&ities in Eindi are a%ai&ab&e' Ma*ority o$ these Centers are o(n and run by the %i&&age communities (ith costs borne by the Panchayats' ;thers are pri%ate&y run and bank $inanced10' Tarahaat)com: #his is a commercia& pro*ect promoted by a )e&hi based :?;, =)e%e&opment 0&ternati%e6' #he pro*ect pro%ides on&ine in$ormation centers $or rura& communities (ith interacti%e and graphic inter$ace in some p&aces at :orth India' .ole&in&the *all initiative: 0 pi&ot pro*ect &aunched by the :II#, a so$t(are company in urban s&ums by pro%iding unmanned computers' #hrough continuous %ideo monitoring it (as $ound that despite &anguage di$$icu&ties boys and gir&s $rom the neighbourhood de%e&oped access ski&&s in (eb sur$ing and graphic designs e%en (ithout $orma& training' India(riline: #his is an on&ine net(ork o$ trading, contract management, banking, retai&ing etc' promoted by EI) Parry, a company dea&ing in $ood products 1/'
$9 $=

#oron+a Fre"ericA We- &io#&# !or ndia.# villager#A I<OA $551A p.1=&. &5 Lot+ariA Bri)A 7vinas+ 2an"ey an" 7mita :+u"garA H,yan"oot: :an it e t+e +ar inger of knowle"ge?E ndia n!ra#tructure Report 2002, 'overnance i##ue# !or "ommercializationA &i #etworkA O-2 $55$A pp.1=9F$5/. &1"

#chool /et India: 0n initiati%e o$ the In$rastructure 4easing and Ainancia& er%ices !I4MA " to de%e&op on&ine mu&ti&ingua& content and C)+8;Ms as supp&ementary teaching aid in c&assrooms' #0+$: e&$+Emp&oyed Comen6s 0ssociation ! EC0" is an :?;, (hich organi,es poor and se&$+emp&oyed (omen' EC0 has promoted on&ine g&oba& marketing o$ the products turned out by their members 12' ource: ood, 200/ and other sources' #he &ist o$ anecdotes inc&uded in the Bo. is by no means e.hausti%e' Cith progress o$ connecti%ity such e.amp&es (i&& mu&tip&y bringing in its train bene$its o$ an in$ormation economy and society' 0ccording to one estimate, 500,000 *obs ha%e been created in cyberkiosks in India in addition to possib&e emp&oyment due to spi&&o%er e$$ects11' Emp&oyment bene$it o$ IC# occurs across (ide range o$ ski&& spectrum' 0part $rom gro(th o$ emp&oyment and income at $irm &e%e& due to IC# induced producti%ity gro(th in a &arge number o$ industries, a (ho&e range o$ IC# enab&ed acti%ities and ser%ices has started booming' ome such e.amp&es inc&ude operations &ike data entry, preparation and maintenance o$ database, re%enue accounting, preparation o$ payro&&, processing o$ insurance c&aims, human resource ser%ices, ca&& center operations, running o$ customer support centers, medica& transcription, content de%e&opment and animation, (eb site ser%ices, so$t(are de%e&opment, hard(are repair and maintenance, systems engineering, systems design and integration etc' #he process o$ *ob creation and producti%ity gro(th is e.pected to bring about market e.pansion supporting gro(th o$ domestic hard(are and so$t(are industries broadening the base o$ IC# de%e&opment' #his, in turn, (i&& induce 8M) spontaneity enab&ing India to transit $rom the status o$ an importer o$ sub+assemb&ies o$ I# and te&ecom hard(are to a higher state o$ de%e&opment endo(ed (ith strong domestic manu$acturing base o$ sophisticated hard(are and so$t(are products booming $rom indigenous ideas, inno%ation and comparati%e ad%antage' 0 modern te&ecommunication in$rastructure (i&& acce&erate this process through pro%ision o$ high+speed communication &inks' In the g&oba& I# market India (i&& be a ma*or p&ayer at the higher end o$ %a&ue chain based on per$ect synergy bet(een the domestic and o%erseas market' 0s in the past, state (i&& p&ay an important ro&e in this de%e&opment both as a proacti%e po&icy maker and a&so by taking a position in the market' Ma*or po&icy trust o$ the go%ernment to promote I# (as through pro%ision o$ #echno&ogy Park, $isca& incenti%es, simp&i$ication o$ administrati%e ru&es and procedures, promotion o$ institutiona& $inance inc&uding %enture capita& and &ibera&i,ation o$ $oreign e-uity
&$ &&

I<OA $551A p.1=/. I i".A p.&19.

participation' In the area o$ so$t(are, po&icies to encourage g&oba& presence inc&uded market support, o%erseas campaign $or e.port promotion, -ua&ity certi$ication, in$ormation security management and 8M) support' Indian I# companies ha%e been a&&o(ed to issue 0)8N?)8 &inked stock options to emp&oyees under $a%ourab&e ta. treatment' 0ppro%a& mechanism has been simp&i$ied under automatic route permitting o%erseas business ac-uisition through 0)8N?)8 route' #he I# 0ction P&an on Eard(are en%isaged e.tending E.port ;riented >nit !E;>" status to hard(are manu$acturing units and deemed e.port status to te&ecom manu$acturers' #raditiona&&y, state has been the most important source o$ demand $or I# industry12 in India' #he trend continues e%en today and go%ernment spending on I# is a key dri%er o$ domestic demand $or I# products' ;ne reason is that the go%ernment has signi$icant market presence in many goods and ser%ices' #he other reason is that the go%ernment is conscious&y promoting the use o$ I# in acti%ities (ithin its domain o$ acti%ities' #o undertake de%e&opment o$ I# as a thrust area a separate =Ministry o$ In$ormation #echno&ogy6 (as $ormed in ;ctober /777' 8ecent&y, Ministry o$ Communications and Ministry o$ I# ha%e been merged to $orm a sing&e =Ministry o$ Communications M I#6' 0part $rom encouraging use o$ I# in research and scienti$ic areas, the go%ernment has a&so taken ma*or initiati%e to computeri,e (ork o$ %arious ministries and departments' Ministries and departments ha%e come up (ith their (ebsites (ith a&& the re&e%ant detai&s' #hough computeri,ation o$ many more areas (ithin the go%ernment are under imp&ementation, signi$icant resu&ts ha%e a&ready been achie%ed in computeri,ation o$ rai&(ay reser%ation, a&&ocation o$ Permanent 0ccount :umber !P0:" $or income ta. payers, processing o$ passport app&ication, conduct o$ pub&ic e.amination, custom c&earance, 8egiona& #ransport ;$$ices, schemes under imp&ementation by the :?;s, %igi&ance in$ormation, V 0# based money orders under the )epartment o$ Post, upreme Court, &and records, Par&iament -uestions, debates and de&iberations 13' )i$$erent ministries ha%e been ad%ised to earmark 2 to 1 percent o$ the budget on I#' Many state go%ernments ha%e a&so dec&ared I# po&icies and computeri,ed records, certi$icates, registration o$ deeds, issue o$ &icences, %arious payments systems etc' Computerisation is a&so spreading %ery $ast in the $ie&d o$$ices o$ the go%ernment, $inancia& and educationa& institutions' 0ccording to one estimate, /2,000 out o$ 23,000 bank branches ha%e imp&emented ma*or computeri,ation 15'


(vansA 2eter B.A HIn"ian Informatics in t+e 1=95s: ?+e :+anging :+aracter of State InvolvementEA World DevelopmentA Dol.$5A #o.1A Ganuary 1==$A p.$. &/ ?+ese are only some e@amples. More "etails of computerization in t+e :entral an" t+e State ,overnments are availa le in t+e we site of t+e Ministry of Information ?ec+nology. See &1

4egis&ati%e $rame(ork has been put in p&ace (ith the enactment o$ the In$ormation #echno&ogy 0ct 2000 recognising digita& signature as means o$ authentication o$ go%ernment certi$icates' #he act imparts &egitimacy to contract through e&ectronic means un&ess other(ise agreed' Indian Copyright 0ct o$ /739 and its amendment in /772 out&a( so$t(are piracy' #he $oundation o$ digita& democracy has been &aid to usher in an era o$ e+ go%ernance, transparency and e+accountabi&ity' 0 recent study sho(s that the number o$ Indians using Internet $or accessing go%ernment ser%ices and products as a proportion to tota& number o$ Internet users has increased $rom 22 percent &ast year to 1/ percent this year 19' ?ro(ing &egitimacy o$ I# based transactions in go%ernment has started cata&y,ing the use o$ I# in pri%ate market and e.panding the domain o$ e+business and e+ commerce reducing transaction costs signi$icant&y and increasing producti%ity' In time to come, the batt&e against digita& di%ide (i&& be (on and IC# (i&& be &e%eraged to bene$it the poor' 0part $rom higher earnings associated (ith producti%ity gains and *ob creation, bene$its $or the poor (i&& a&so resu&t $rom risk mitigation and reduction in %u&nerabi&ity due to time&y a%ai&abi&ity o$ in$ormation on (eather and market, guidance on impro%ed $arm practices and e&imination o$ e.p&oitation by the intermediaries' #here (i&& be genera& impro%ement in the -ua&ity o$ &i$e o$ the poor through more responsi%e go%ernance, impro%ed de&i%ery in the socia& sector programmes, better -ua&ity o$ pub&ic ser%ices and more e$$ecti%e pub&ic e.penditure (ith more e$$icient targeting and monitoring' E+ education and e+medicine (i&& surmount a&& the access barriers to reach the remote and iso&ated &ocations' #here has been substantia& dep&etion in the stock o$ I# personne& in India through migration into > 0 and Europe' #here is need to rep&ete this stock and p&an $or increased a%ai&abi&ity o$ ski&&ed manpo(er to meet the $uture demand' Education, training and ski&& de%e&opment (i&& meet the demand $or ski&&ed manpo(er o$ the industry and at the same time keep the cost o$ I# education, ser%icing and maintenance (ithin reasonab&e &imit' #rained manpo(er (i&& a&so be an important source o$ demand $or I# products and ser%ices' #he ?o%ernment has taken steps to increase the teaching $aci&ities to doub&e the number o$ techno&ogy students and sponsored training institutes &ike Indian Institute o$ In$ormation #echno&ogy and Management at 0&&ahabad, Banga&ore, Bo&kata and Eyderabad in addition to Indian Institute o$ #echno&ogy and Management at ?(a&iar' Initiati%e has a&so been &aunched to upgrade e.isting regiona& engineering co&&eges, gi%e acti%e support to the po&ytechnics and co&&eges and encourage pri%ate participation in training in the $ie&d o$ I#' 0 society1@ has been $ormed to e.tend accreditation to

&8 &9

HMore In"ians using #et to "eal wit+ ,ovtEA The Time# o! ndiaA #ovem er =A $55$A p.1. Lnown as .O(7::

institutions at non+$orma& sector $or certain courses and net(ork ser%ices 17 ha%e been &aunched to &ink academic and research communities' o$t(are in &oca& &anguages is being increasing&y a%ai&ab&e' Computers ha%e a&so been specia&&y designed $or use in the mass market 20' Vision 2020 is a %ision o$ I# $or the masses' 0&& round de%e&opment o$ digita& &iteracy (ou&d put Indian society in comp&ete command o%er the IC# too&s' 0%ai&ab&e indications suggest that I# education is gaining popu&arity 2/' Percei%ed uti&ity o$ IC# as enab&er o$ business processes (ou&d continue to enhance market $or I# education' Education (i&& spur inno%ation, producti%ity and entrepreneurship' 0 kno(&edge society (i&& be $ormed (ith participation $rom the rich and the poor, men and (omen, young and o&d, organi,ed and unorgani,ed, go%ernment and the go%erned' 2' Competition Polic Countries o$ten di$$ered in pattern o$ se-uencing and the speed o$ &ibera&i,ation' Competition has been contro&&ed (ithin &imit by state po&icy through &icensing o$ &imited number o$ market p&ayers in certain segments granting thereby a period o$ e.c&usi%ity to the operators' Eeterogeneity o$ routes to sectora& re$orms, as seen $rom the e.amp&es o$ some o$ the 0sian countries, c&assi$ied into di$$erent combination o$ po&icies and approaches to te&ecom re$orm, are presented be&o(22: ) Competition in the fi1ed line se(ment *ith state o*ned incum"ents2 China, India and 3orea) 4) Privati5ation of state o*ned incum"ents "ut deferred competition throu(h e1clusivity (ranted to private investors2 .on( 3on(, Indonesia, Malaysia, Pa6istan and #in(apore) 7) #imultaneous introduction of privati5ation and competition2 8apan and #ri 'an6a) 9) :penin( up of local mar6et to competition first2 .on( 3on(, India and #in(apore) ;) :penin( up of competition in the international services first2 3orea, Malaysia and the Philippines) <) Introduction of second domestic lon( distance carrier first2 China

&= *5

(!#(? HSimputerEA a pocket ook size" icon ase" computer is one suc+ e@ample. *1 In a ackwar" semiFari" sparsely populate" "istrict of !a)ast+anA more t+an 155 computerFtraining centers +ave een opene" un"er t+e franc+ise of popular ran" names to operate on commercial asis. .espite total a sence of relia le connectivity in t+e "istrictA enrolment in t+ese centers is +ig+ in"icating popularity of I? courses. SeeA Soo"A $551. *$ ?aken from Fink :arstenA Mattoo 7"itya an" !an"eep !at+in"ranA 0i-erali#ing %a#ic Telecommunication#$ The A#ian *+perienceA ?+e 'orl" BankA .evelopment !esearc+ ,roupA 'as+ingtonA .:A #ovem er $551.

=) The sector ministry e1ercises re(ulatory functions2 China, Indonesia, 8apan, 3orea, Malaysia, Tai*an and Thailand) >) #eparate re(ulator *ith the responsi"ility for interconnection lyin( *ith the dominant operator *hile re(ulator is responsi"le for ar"itration of disputes2 .on( 3on(, Pa6istan and Philippines) In most countries, restricting the number o$ &icensees or imposing geographic &imitations has &imited competition' In India, $or instance, competition in ce&&u&ar te&ephony (as a&&o(ed in a duopo&y mode' #his (as gradua&&y increased to &icensing o$ $our operators in each o$ the $our metros and thirteen circ&es' Basic ser%ice in India is sti&& &imited to one pri%ate operator competing (ith state o(ned incumbents in the circ&es' #hough pri%ate sector has been &icensed and they are &aying in$rastructure, metros are sti&& in the grip o$ pub&ic sector monopo&y and it (i&& take a (hi&e be$ore pri%ate competition takes p&ace' )i$$erences in modes o$ pri%ati,ation ha%e been obser%ed in other countries' In #hai&and, pri%ate entry (as a&&o(ed through Bui&d ;perate and #rans$er !B;#" mode (hi&e the net(ork (as contro&&ed by the state' In Vietnam, net(ork (as pub&ic&y managed (ith $oreign operators participating in pro%ision o$ training, e-uipment and super%ision through Business Cooperation Contracts !BCCs"' China did not a&&o( pri%ate entry in the te&ecom sector and &imited competition bet(een state+o(ned entities o$ the ministries' Many countries in 0sia restricted $oreign e-uity participation' Aor e.amp&e, China, India, Indonesia, Borea, Ma&aysia, the Phi&ippines and #hai&and &imited $oreign e-uity be&o( $i$ty per cent 21' It is interesting to note that competing techno&ogica& standards ha%e a&so &imited competitions' Countries are di%ided in their technica& options $or mobi&e net(orks' Chi&e Europe predominant&y opted $or ?&oba& ystem $or Mobi&e communications !? M" techno&ogy and > 0 $or Code )i%ision Mu&tip&e 0ccess !C)M0", (ithin 0sia, China, India, Indonesia and Ma&aysia ha%e opted $or ? M in ce&&u&ar mobi&e net(ork, (hereas Eong Bong, Borea, the Phi&ippines, ingapore and #hai&and ha%e opted $or C)M022' Eo(e%er, se%era& countries are no( opting $or more than one standards' Aor e.amp&e, in > 0, =Companies &ike 0#M# and Cingu&ar are increasing&y mo%ing to ? M623' =China is going (ith some C)M0 as (e&&'6 25 India is using C)M0 in Cire&ess in 4oca& 4oop !C44"' Mu&tip&e techno&ogica& standards $ragment market rendering base stations purchased $rom one company un(orkab&e (ith s(itches bought $rom another company potentia&&y &imiting the scope o$ e.p&oitation o$ economies o$ sca&e that cou&d accrue in a mu&ti+%endor en%ironment 29' #he (ay mu&tip&e techno&ogica& standards may con$use regu&atory stance &eading to market $ai&ures can be seen $rom the recent e.periences o$ se%era& %endors
*& **

I?-A World Telecommunication Development Report 2002A ,enevaA $55$A p./. I i".A p.1. In"ia +as opte" for :.M7 in '<<. */ Interview wit+ Ian ,oetzA pu lis+e" in tele.netA Dol. #o.&A issue no. *A 7pril $55$A p.&$. *1 I i".A op.cit.A p.&1. *8 I i".A p.&1.

(hi&e trying to &aunch 1? in Europe' European >nion has mandated a sing&e techno&ogica& standard ca&&ed =Cideband C)M06 !C+C)M0" $or 1? co%erage' ome o$ the companies that sought to &aunch 1? ser%ices in eptember 2002 !dead&ine stipu&ated in the &icenses $or the &aunch o$ ser%ices" $aced the di$$icu&ties that net(orks and handsets o$ di$$erent %endors cou&d not (ork (ith each other' =C)M020006, another standard $or 1?, (hich is (orking success$u&&y in 0sia and > 0 cou&d not be adopted in Europe because European operators did not ha%e $reedom to use =C)M020006 as per their &icensing restrictions 2@' Chich competition po&icies (orked better than othersO 4iterature cites certain de%e&opmenta& e.periences to dra( conc&usions $rom =be$ore and a$ter6 and =(ith or (ithout6 e%a&uations' #he purpose here is to cite these re$erences' In the absence o$ more detai&ed in$ormation, e.amination o$ the %a&idity o$ such conc&usions is not intended here' Competition *ith privati5ation Cor&d o%er, there is an obser%ab&e trend o$ gro(ing number o$ state o(ned te&ecom incumbents being pri%ati,ed' In 2000, $rom among the member countries o$ the I#>, those (ith $u&&y or partia&&y pri%ati,ed incumbents outnumbered countries (ith $u&&y state+o(ned operators 27' It has been obser%ed that =countries (ith a pri%ate&y o(ned incumbent operator account $or @3 per cent o$ the (or&d market by re%enue' #hose (ith $u&&y state+o(ned operators, in mobi&e as (e&& as $i.ed &ines, account $or *ust t(o per cent'630 It has been suggested that pri%ati,ation (ith competition (orks better than pri%ati,ation (ithout competition' Aor e.amp&e, Chi&e started pri%ati,ation in /7@@ but did not &imit competition through grant o$ e.c&usi%ity period or &icensing ob&igations' 0rgentina, on the other hand, pri%ati,ed in /770, but granted se%en+ year e.c&usi%ity period, (hich (as subse-uent&y e.tended by three years' Moreo%er, 0rgentina imposed &icensing ob&igation in terms o$ stipu&ated gro(th rate o$ 5'3 per cent' In the decade $o&&o(ing pri%ati,ation, Chi&e $ar e.ceeded 0rgentina in terms o$ net(ork gro(th' Moreo%er, starting (ith ha&$ o$ the te&e+ density, Chi&e surpassed 0rgentina in ten years6 time3/' #he issue o$ granting a =period o$ shared e.c&usi%ity6 %ersus =a&&o(ing more e.tensi%e market entry6 has been discussed in the &iterature' E.perience o$ >B has been cited in this conte.t' #e&ecom e.pansion (as reported&y much more rapid in the >nited Bingdom !i" a$ter the e.piry o$ e.c&usi%ity period $rom /7@2+70, that (as granted to Mercury, the second operator and !ii" a$ter cab&e #V operators (ere permitted to o$$er te&e+ser%ices 32' #here$ore, it (as conc&uded that open competition (as better than duopo&y' Both > 0 and Canada &ost in terms o$
*9 *=

&, telecoms: <et (uropeEs operators freeA The *conomi#tA Septem er $9t+ 6 Octo er *t+ $55$A p.1/. I?-A World Telecommunication Development Report 2002A ,enevaA $55$A p.*5. /5 I i".A p.$. /1 I i".A p.*$. /$ I i".A p.*/.

their mobi&e te&e+density+rankings in the (or&d in the 70s' #(o reasons (hich ha%e been cited $or this are: !i" persistence (ith regiona& duopo&y $or too &ong, and !ii" s&o( transition $rom ana&og to digita& systems 31' :ot(ithstanding the merits o$ the abo%e conc&usions (hatsoe%er, it can be argued that pri%atisation o$ e.isting state+o(ned incumbent operator is not the on&y (ay to promote pri%ate in%estment' ;pening up o$ ne( ser%ices not preoccupied by state monopo&y can attract pri%ate in%estors, pro%ided regu&atory po&icies do not inhibit gro(th o$ pri%ate markets in such areas' ?ro(th o$ pri%ate mobi&e operators in India is a case in point' Eo(e%er, it is necessary $or the regu&atory authority to ensure that state incumbent does not inhibit gro(th o$ competition32' ;perationa&isation o$ these ideas is not (ithout ha,ards' 0 con$&ict o$ common occurrence re&ates to interconnection issues' Interconnection bet(een state+o(ned $i.ed &ine incumbent net(ork and pri%ate mobi&e net(ork has been a bone o$ contention in many countries' =Pincumbent te&ecommunication operator, (hich o$ten ho&ds a monopo&yPcan set the price, typica&&y at a high mu&tip&e o$ the actua& cost6 33' Independent re(ulator? ound regu&ation is a pre+re-uisite to hea&thy competition' #here$ore, issue o$ competition cannot be di%orced $rom the issue o$ regu&ation' #he autonomy that a regu&ator en*oys $rom go%ernment contro& has o$ten been gi%en primacy o%er many other $actors in determining a regu&ator6s abi&ity to discharge regu&atory ro&e in an impartia& manner' In rea&ity, ho(e%er, it is di$$icu&t to percei%e independent regu&ation as synonymous (ith impartia& regu&ation' #here are e.amp&es o$ e$$ecti%e regu&ation under regu&atory $unctions being per$ormed by the go%ernment departments' imi&ar&y, there are instances o$ =independent regu&ators that ha%e been captured by market p&ayers6 35' Chat about non+sector speci$ic regu&ationO :e( Qea&and e.perimented (ith non+ sector speci$ic regu&ation re&ying on Competition Commission o$ the country' #his &ed to protracted &itigations and disputes on interconnection and net(ork access issues s&o(ing do(n the progress o$ the sector' Aina&&y, :e( Qea&and enacted =#e&ecommunication 0ct6 in )ecember 2000 and created a #e&ecommunication Commission (ithin the Competition Commission39'

/& /*

I i".A pp./*F//. .asguptaA fin" econometric evi"ence to support t+at H"ifference in competition policies +ave muc+ greater impact on Internet intensity t+an "ifferences in incomeE. %ere competition is measure" in terms of 'orl" BankEs rating in"e@A w+ic+ captures to w+at e@tent state in+i its a competitive private sector. ?+e results suggest positive impact of competition. ?+e stu"y also fin"s favoura le impact of competition on mo ile penetration. SeeA .asguptaA S.A Somik <all an" .avi" '+eelerA 1olic) Re!orm, *conomic 'ro2th and the Digital Divide$ An *conometric Anal)#i#A 'orking 2aper #o. $/18A 'orl" BankA Marc+A $9A $551. // I?-A World Telecommunication Development Report 2002A ,enevaA $55$A op. cit.A p. $=. /1 I i".A op.cit.A p.*=. /8 I i".A p./5.

In India, #80I 0ct (as amended in <anuary 2000, to remo%e some o$ the shortcomings obser%ed ear&ier' #he &egis&ation aimed at, inter alia, protection o$ interests o$ ser%ice pro%iders and consumers o$ te&ecom sector' Cith this amendment, recommendatory $unctions (ere separated $rom en$orcement $unctions' 0 separate #e&ecom )isputes ett&ement and 0ppe&&ate #ribuna& !#) 0#" (as set up (ith both origina& and appe&&ate *urisdiction' It became mandatory $or the centra& go%ernment to seek prior recommendations o$ the #80I be$ore introduction o$ ne( ser%ices' #80I6s po(er to issue directions (as restricted to on&y its en$orcement $unctions' )irect appea& to the upreme Court o$ India against an order o$ #80I (as pro%ided $or' #hus, neutra&ity o$ Indian te&ecom regu&atory regime (as ensured through re&iance on mu&tip&e agencies $or con$&ict reso&ution3@' #80I had a pro%en record o$ maintaining neutra&ity' It had cha&&enged se%era& decisions o$ the ?o%ernment o$ India 37' In tune (ith the internationa& de%e&opment and e%o&ution o$ techno&ogy, #he Communication Con%ergence Bi&& 200/ (as introduced in the Par&iament and is under consideration o$ the tanding Committee o$ Par&iament on #e&ecom and I#' =#he Bi&& aims at promoting, $aci&itating and de%e&oping, in an order&y manner, the carriage and content o$ communications !inc&uding broadcasting, te&ecommunications and mu&timedia", to $aci&itate de%e&opment o$ a nationa& in$rastructure $or an in$ormation based society, and to enab&e access thereto' It a&so seeks to pro%ide a choice o$ ser%ices to the peop&e (ith a %ie( to promoting p&ura&ity o$ ne(s, %ie(s and in$ormation6 50' #hus, regu&atory regime in 2020 (i&& be o%erarching, based on con%ergence, (hich apart $rom pa%ing the (ay to a $u&&+gro(n in$ormation society (i&& enhance gro(th and producti%ity o$ te&ecommunications and I# through e.p&oitation o$ economies o$ scope and co%erage' Competition *ithout privati5ation Interesting&y, there are other mode&s o$ competition (ithout pri%ati,ation' China #e&ecom, one o$ the (or&d6s ma*or Pub&ic #e&ecommunication ;perators !P#;s" is sti&& $u&&y state+o(ned' Both China and Vietnam $o&&o(ed simi&ar po&icies o$ competition (ithout pri%ati,ation' Competition has been a&&o(ed bet(een ministries o$ the go%ernments' Participation o$ $oreign in%estors has been a&&o(ed through *oint %entures' Both these countries ha%e been %ery high achie%ers in terms o$ progress o$ te&ecom sector 5/' =#he key under&ying $actor is the (i&& o$ the state to in%est in, and prioriti,e, te&ecommunication de%e&opment6' 52

,alal 7+me" an" B+arat #auriyalA Regulation o! Telecom in Developing "ountrie#$ 3utcome#, ncentive# and "ommitmentA ?+e 'orl" BankA 7ugust 1==/. /= See for suc+ instancesA (anctit) o! "ontract and Rule o! 0a2 in ndian 1o2er, Telecom and n!ra#tructure (ector#A :onference "ocument presente" y In"epen"ent 2ower 2ro"ucers 7ssociation of In"iaA 1$F1& Septem erA $551A #ew .el+iA pp. 18/F188. 15 ,overnment of In"iaA Ministry of :ommunications I Information ?ec+nologyA .epartment of ?elecommunicationsA Annual Report, 2001-2002. 11 I?-A World Telecommunication Development Report 2002A ,enevaA $55$A p./$. 1$ I i".A op.cit.A p./&.

#here ha%e been instances o$ repeated market $ai&ures arising out o$ impudent in%estment decisions o$ the pri%ate operators' In :or(ay, &icense to pro%ide 1? mobi&e ser%ices purchased $or > F 22 mi&&ion (as returned unused' In%estment (orth se%era& bi&&ion do&&ars (ere sunk and &ost in the Iridium ?&oba& Mobi&e Persona& Communications by ate&&ite !?MPC " net(ork pro*ect' ?&oba& Crossing (ent bankrupt (ith debts o%er > F /2 bi&&ion $or a pro*ect o$ construction o$ /50,000 km $iber optic net(ork 51' ;ne %ie( is that too many competitors deciding =to bui&d enormous net(orks $or (hich there (as &itt&e demand6 (ere responsib&e $or such crashes 52' Market $ai&ures o$ such magnitudes create back&ash in the industry and can potentia&&y risk a g&oba& crisis' uch $ai&ures, i$ not a%oided, (ou&d pro%e too cost&y in terms o$ &ost in%estment in a country &ike India' 0 ca&ibrated approach through managed competition ho&ds assurances $or the in%estors o$ a reasonab&e time period $or conso&idation and there$ore, seems to be a (iser strategy to $o&&o(' )espite di$$erences in competition regimes across the countries, the g&oba& trend is to(ards gro(ing pri%ati,ation and competition' India, (ith her commitment to re$orms is a&ready a part o$ this process' Arom the perspecti%e o$ business organisation, as the g&oba& e.perience suggests, this process is &ike&y to undergo an a&ternate cyc&e o$ di$$erentiation and con%ergence' Con%ergent nature o$ techno&ogy may, by itse&$ dictate mergers and ac-uisitions bet(een companies in certain cases' :et(ork operators and ser%ice pro%iders (i&& ha%e to merge (ith content de%e&opers to add %a&ue to their ser%ices' #his is &ike&y to create temporary o&igopo&y in the market ti&& competition intensi$ies (ith the emergence o$ more $irms o$$ering mu&tip&e ser%ices 53' India in 2020 (i&& see competition among big $irms o$$ering inno%ati%e %a&ue+added ser%ices to capture market through creation o$ ne( digita& needs and priorities' 8egu&atory en%ironment (i&& mature to a&&o( ma.imum $&e.ibi&ity and $reedoms to encourage inno%ation and e.pansion, consistent (ith this process o$ e%o&ution'
1& 1*

I i".A p./=. ?+e great telecoms cras+A The *conomi#tA Guly $5t+ 6 $1t+ $55$A p.11. 1/ ?+ere can e +orizontal mergers like mergers etween telecom operators an" ca le operators. SimilarlyA t+ere can e vertical mergers etween mo ile telecom operators an" content provi"ers. Mergers an" ac>uisitions can also occur wit+ t+e aim of reaping t+e enefits of economies of scale. In In"ian telecom sectorA t+ere are instances of mergers etween operators in contiguous license territories. It +as een in"icate" t+at in $551A only 8 groups were controlling nearly =5 per cent of t+e market s+ares in terms of cellular su scri ers against $5 playersA w+o were awar"e" licenses in 1==/F=1. See for "etailsA ,argA <okes+ an" Denu Ma"+avA Mergers an" 7c>uisitions in t+e In"ian ?elecom SectorA ndia n!ra#tructure Report 2002$ 'overnance ##ue# !or "ommerciali#ationA &i #etworkA O@for"A $55$. 7 num er of e@amples on -.S. market can e foun" in Bala)iA #.A The ndian Telecom (ector$ %a#ic Telecom 4 "ellular (ervice# A In"ian Institute of ManagementA <ucknowA availa le at file:;;c:Nwin"owsNtempNIn"ian telecom e@perience F IIM< stu"y.+tm. In t+e conte@t of recent telecom cras+ in t+e worl" market a view +as een e@presse" t+at suc+ crisis may Hcause t+e pen"ulum to swing ack too far in favour of t+e former monopolies. In t+e s+ort termA t+ey are likely to attract investmentA to pick up t+e assets of ankrupt rivalsA an" to lea" t+e way in consoli"ating t+e in"ustry. ?+is will provi"e some welcome sta ility. But it woul" e wrong to grant t+e former monopolies any regulatory concessions now t+at woul" protect t+em from competitors in future.E ?+e great telecoms cras+A The *conomi#tA Guly $5t+ 6 $1t+ $55$A op. cit.A p.11. %enceA mergers an" ac>uisitions are also likely occur in t+e process of market consoli"ation.

3' Technolo/ trend Broad&y speaking, techno&ogies o$ mobi&e te&ecommunications and Internet are going to set the contours o$ $urther techno&ogica& progress in the current decade and the ne.t' #he most recent initiati%e aims at con%ergence o$ %oice and data recei%ed $rom mu&tip&e sources, both (eb based and rea& time %ideo streams, in mobi&e handhe&d de%ices' ?&oba& sate&&ite systems, mobi&e handsets and ca&&ing cards ha%e made %irtua& presence possib&e a&most e%ery(here and any(here o%ercoming the barriers o$ distance, topography and remoteness' #here has been phenomena& gro(th in mobi&e subscribers in the (or&d in the nineties, increasing $rom // mi&&ion in /770 to 72/ mi&&ion by the end o$ 200/' In /77/, &ess than one per cent o$ the (or&d popu&ation had a mobi&e phone' #he proportion has gro(n to the %icinity o$ one phone per e%ery si. peop&e by the end o$ 200/' imi&ar&y, one+third o$ the tota& number o$ countries o$ the (or&d had ce&&u&ar net(ork in /77/' #he ratio rose to o%er 70 per cent by end+200/ 55' Considering that the $i.ed te&ephone &ines numbered *ust o%er a bi&&ion in this year, it is &ike&y that mobi&e phones (ou&d surpass $i.ed &ine in 2002' It is interesting to obser%e that China has surpassed > 0 to become the &argest mobi&e market o$ the (or&d' In 0$rica, mobi&e subscribers outnumber $i.ed &ine subscribers in more than ha&$ the countries 59' Mobi&e te&ephony has emerged as the ma*or gro(th dri%er in this sector' But $or e.pansion in mobi&e net(ork, there (ou&d ha%e been hard&y any gro(th in te&ecommunications in many countries' In de%e&oped countries, mobi&e phones ha%e comp&emented $i.ed &ines (hereas in many de%e&oping countries (ith &o(+&e%e& $i.ed &ine penetration, mobi&e has a&ready surpassed $i.ed &ines 5@ $i&&ing up supp&y gaps created due to inade-uate gro(th in the &atter' It has been obser%ed that =the abi&ity o$ a country to gro( its mobi&e net(ork to the point (here it o%ertakes the $i.ed+&ine net(ork is not a $unction o$ its (ea&thPthe crosso%er point can come as &o( as a $i.ed te&edensity o$ 0'2 !$or instance, in Ma&(ai" to as high as 93 !the case o$ 4u.embourg" and at any point in bet(een657' #here are three important economic imp&ications o$ mobi&e e.p&osion $or the de%e&oping countries' Airst, by o$$ering a %iab&e techno+economic a&ternati%e it is he&ping in impro%ing te&ecom penetration bypassing shortages o$ $i.ed &ines' Conse-uent&y, it is bringing a&ong (ith it a&& concomitant economic bene$its o$ enhanced te&ecom accessibi&ity' econd, it is promoting a better entrepreneuria& cu&ture and supporting emp&oyment generation through pro&i$eration o$ kiosks 90' #hird, there has been a shi$t in in%estment burden $rom state to pri%ate sector and the consumers9/'
11 18

I?-A World Telecommunication Development Report 2002A ,enevaA $55$A p.1&. I i".A p.1. 19 I i".A p.8. 1= i i".A op. cit.A p.1/. 85 I i".A p.1/.

Ce&&u&ar mobi&e te&ephones subscribers in India increased $rom 99 thousand in /773 to 1'5 mi&&ion in 2000' By March 2002, it has gro(n to 5'2 mi&&ion' Ce&&u&ar subscribers in proportion to tota& number o$ te&ephone subscribers !basic p&us ce&&u&ar" has increased $rom 0'5 percent in /773 to /2'5 percent in 2002' #his is sti&& &o(er than the a%erage o$ 22'5 percent achie%ed by the &o(+income countries in 200/' #he corresponding ratio $or &o(er midd&e+income countries is 2/'@ percent, 32'@ percent $or upper midd&e+income countries and 30'2 percent $or high+income countries' India is yet to e.perience mobi&e e.p&osion o$ the sca&e other countries ha%e seen' ;ne (ou&d e.pect a rapid gro(th in mobi&e te&ephony in coming decades' India has a&so achie%ed signi$icant -ua&ity upgradation o$ its net(ork in the 70s' )igita& &ines in proportion to tota& number o$ main te&ephone &ines ha%e increased $rom @9 per cent in /773 to 77'@ percent in /777' 4ike mobi&e, the &ast decade (itnessed phenomena& gro(th in Internet usage' In 200/, 73 per cent o$ the countries (ere connected to Internet compared to /3 per cent in /770' #here are about ha&$ a bi&&ion Internet users in the (or&d in 200/(ith subscribers numbering an estimated 210 mi&&ion 92' It is a&so interesting to note that in /773 Internet users in de%e&oped countries (ere se%en times more than the number o$ Internet users in the de%e&oping countries' In 200/, this gap has narro(ed do(n to &ess than $our times' Initia& stance o$ techno&ogy supporting e.pansion o$ Internet dictated re%enue mode& based on con%ergence bet(een te&ecom and Internet' Internet is accessed predominant&y through dia& up in o&d te&ephone &ines' #his has resu&ted in une-ua& distribution o$ bene$its bet(een the dotcom operators and the te&ecom operators' It has been obser%ed that (hi&e dotcom operators =are $ai&ing to make money on the Internet, te&ecom operators are' #he reason is that they contro& the pipes o%er (hich Internet tra$$ic runs6 91' =Incumbent te&ecom operators tend to be among the &argest Internet er%ice Pro%iders !I Ps" in their countries6 92' #here are three important imp&ications o$ this de%e&opment' Airst, it inhibits gro(th o$ content de%e&opment as an independent specia&i,ed acti%ity because re%enue+ share o$ the content de%e&opers depends on the $irst c&aim on re%enue by the in$rastructure pro%iders' econd, technica& capabi&ities o$ te&ephone &ines constrain de%e&opment o$ Internet in$rastructure and conditions speed o$ do(n&oad' #hird, de%e&oping countries are $aced (ith ma*or bott&enecks in the spread o$ Internet due to shortage o$ te&ephone &ines and high te&ephone charges' #echno&ogica& ans(ers to these prob&ems ha%e a&ready emerged in the $orms o$ Integrated er%ices )igita& :et(orks !I ):", (ire&ess so&utions and upgraded cab&e te&e%ision net(orks enab&ing high+speed Internet access (ithout c&ogging te&ephone &ines' >se o$ V 0# techno&ogy $or Internet connecti%ity can a&so great&y enhance the speed o$ data transmission 93' In the present decade and the ne.t, one (ou&d hope to see $aster e.pansion and conso&idation o$ these

Mo ile telecom e@pansion "oes not nee" to wait for state to lay copper lines. '+ile private service provi"ers lay t+e ase stationA consumers purc+ase mo ile stationsA i.e.A +an"sets. I i".A p.1/. 8$ I i".A p.8. 8& I i".A p.8. 8* I i".A p.9.

techno&ogies ushering in Internet re%o&ution' Broadband access techno&ogies, (hich inc&ude )igita& ubscriber 4ines !) 4" and cab&e modem, permit $aster do(n&oad and graphic+intensi%e Internet app&ications' Eo(e%er, di$$usion o$ this techno&ogy is so $ar minima&, particu&ar&y in the de%e&oping countries' Commercia& e.p&oitation o$ Internet crucia&&y hinges on the spread o$ broadband techno&ogy' #he issue that con$ronts de%e&oping (or&d is ho( to create demand $or broadband app&ications at the $irst instance' 0t the ear&y stage, go%ernment can p&ay an important ro&e to promote broadband usage in e+education, e+ go%ernance, e+medicine to stimu&ate its demand 95' 0nother con%ergent trend that has emerged is the use o$ Internet as carriers o$ %oice' Conse-uent&y, =increasing share o$ %oice tra$$ic shi$ted to the Internet, to be carried as Voice o%er IP !VoIP"699' 0t the uppermost end o$ the con%ergent techno&ogy spectrum ha%e a&ready emerged #hird ?eneration !1?" mobi&e de%ices (ith the capabi&ity o$ access to mobi&e data and %oice9@' More than > F /00 bi&&ion ha%e been spent by the industry since 2000 to ac-uire 1? &icense and spectrum' Eo(e%er, a $u&&+gro(n market is yet to de%e&op to assure in%estors6 return' #echnica& and commercia& conso&idation is e.pected to take -uite some time' By 2020, one (ou&d e.pect 1? to be (ithin reach o$ (ider section o$ Indian popu&ation' #he pace at (hich 1? is going to pro&i$erate in India (i&& depend upon, inter alia, the market demand $or higher band(idth data' #here is a %ie( that perhaps the present demand $or high speed data !greater than 52 kbps" can be met cost e$$ecti%e&y (ith ?enera& Packet 8adio er%ice !?P8 "' Chi&e pent up demand $or emerging data+needs can be met by using 2? systems &ike hort Message er%ice ! M ", ?P8 etc', the dri%e $or 1? in Indian market can come $rom =corporate roaming tra$$ic %ia internationa& %isitors6 97' ubstantia& (ork needs to be done in de%e&oping 1? re&e%ant contents so as to e.pand its market' Initiati%e has a&ready been &aunched in these areas' Aor e.amp&e, onera !$ormer&y #e&ecom Ain&and" has a&ready &aunched in$ormation porta& $or mobi&e phones inc&uding Internet &oca&isation ser%ices @0' Auture (ork in this area (i&& be in the $orm o$ adding more %a&ue to the ne( ser%ices'


DS7? stan"s for HDery Small 7parture ?erminalsEA w+ic+ Hare miniature eart+ stationsA use" for transmission of "ataA vi"eoA or voice via satelliteE. ?+e #epalese ,overnment +as allowe" IS2s to use DS7?s for esta lis+ing t+eir own connectivity lea"ing to remarka le gain in spee" from &$5 k ps to over / m ps wit+in si@ mont+s. I i".A p.&5. 81 I i".A p.&1. 88 I i".A op.cit.A p.*1. 89 .ataFlike applications on mo ile "evices +ave alrea"y starte" taking off in "evelope" an" "eveloping countries. I i".A p.=. 8= Interview wit+ Ian ,oetzA pu lis+e" in tele.netA Dol. #o.&A issue no. *A 7pril $55$A pp.&5 F &1. 95 Suc+ services give information like Hw+ic+ gas stations are near yE. Finlan" is a pioneer in cellular telep+ony. I?-A World Telecommunication Development Report 2002A ,enevaA $55$A p.1=.

0d%anced p&ans are necessary to de%e&op %ibrant industries $or 1? app&ications' #his may ca&& $or in%estments' 0 synchroni,ed gro(th o$ user industry and 1? techno&ogies (ou&d ensure that pay+o$$ period in in%estment is minimi,ed' )e%e&oping kno(&edge based industry to pro%ide mobi&e app&ications (ou&d reduce uncertainties regarding return $rom pri%ate in%estment in 1? techno&ogies' 0s a preparatory ground(ork to usher in 1?, it is essentia& to demarcate areas (here massi%e harmoni,ation e$$orts (ou&d be needed' #his (ou&d entai& upgrading hard(are and so$t(are $or high band(idth mu&timedia ser%ices' Earmoni,ation (ou&d a&so be needed bet(een the t(o emerging %arieties o$ C)M0, i'e', (ideband C)M0 that a&so supports $i.ed net(ork and C)M0 K 2000' ince it is &ike&y that both these so&utions (ou&d u&timate&y support $i.ed and mobi&e app&ications, a marriage o$ the t(o (ou&d pre%ent techno&ogica& $ragmentation o$ the market' #here is need to de%e&op deeper understanding o$ the e%o&ution o$ ne( end+ users in the market $or the mobi&e mu&timedia ser%ices' Mu&timedia ser%ice pro%iders (i&& emerge as important shareho&ders in the net(ork %a&ue chain' Countries shou&d en%ision ne( partners, ne( entities, and ne( stakeho&ders in the business mode&s' Mu&timedia porta&s (i&& be important components o$ such business mode&s' #here is need $or $urther (ork to match regu&atory perspecti%es emerging as a part o$ the con%ergence regime (ith the re-uirements o$ 1?' 0nother important area o$ (ork (i&& in%o&%e $urther thought o%er e$$icient bi&&ing mode& ++++ a transition $rom time dependent bi&&ing mode& to content dependent bi&&ing @/' #he re%enue mode& in the te&ecommunications sector is going to change signi$icant&y in times to come' In many cases P#;s ha%e started o$$ering $ree Internet to augment re%enue $rom te&ephone &ines @2' In the Phi&ippines, a g&oba& &eader in M use in mobi&e handsets, re%enue $rom M contributed a gro(ing share o$ mobi&e re%enue' M pro%ed to be much cheaper than %oice ca&& @1' 5' Conclusions 4)Cs are e.periencing $astest gro(th in te&ecom net(ork' In the mid+70s, gro(th in tota& te&ephone subscribers per /00 inhabitants o$ the 4)Cs surpassed that o$ the de%e&oped countries' In 200/, 4)Cs surpassed emerging countries achie%ing the distinction o$ $astest among the three @2' ?i%en the re&ationship bet(een te&ecom e.pansion and gro(th, there is hope $or narro(ing do(n o$ digita&+di%ide, pro%ided, 4)Cs are ab&e to sustain gro(th momentum in the &ong run' #he %ision is no doubt optimistic' It has been cited that some t(enty years ago #okyo had
91 9$

For "etaile" "iscussions see various reports of -M?S ForumA <on"on. I?-A World Telecommunication Development Report 2002A ,enevaA $55$A p.11. 9& I i".A p.15. 9* I?- classification of <.:sA emerging countries an" "evelope" countries +as een referre" to. I i".A p.18.

more te&ephones than the (ho&e o$ 0$rican continent (hereas today 0$rica has more than t(ice the number o$ main te&ephone &ines than that o$ #okyo @3' It is but natura& that markets in high+income countries saturate (hi&e e.pansion in de%e&oping countries continues unabated' ;ne notab&e break (ith the past is that (ith opening up o$ the de%e&oping economies and (idespread sectora& re$orms, catching up process has become $aster' )e%e&oping countries (ith &ibera& po&icies ha%e much better opportunity to &eap$rog than be$ore' Mobi&e e.perience o$ the &o(+income countries bears testimony to this process' India is a participant in this g&oba& process' #here is tremendous appetite to absorb ne( techno&ogy' 0t the higher end o$ the market, India (i&& mimic the most sophisticated te&ecom techno&ogy o$ the (or&d and $ace a&& types o$ uncertainties that are associated (ith any ne( techno&ogy any(here in the (or&d' It (i&& take time $or the market $or ne( techno&ogies to conso&idate' =Market maturing6 (i&& be a continuous process at some o$ the segments o$ te&ecom sector' #his ho&ds good e%en today' #oday6s market does not guarantee =re&iab&e re%enue stream6 to in%estors in ne( techno&ogy &ike VoIP, bradband and 1? since they &ack an e.isting c&ient base @5' ide by side, a process o$ di$$usion (i&& continue unhindered in respect o$ estab&ished techno&ogy in the mass market' Chat (i&& be the te&ecom scenario in India in 2020O #o &ook $or(ard, $rom no( on, the gro(th momentum in the e.pansion o$ $i.ed &ine net(ork is &ike&y to be sustained' #his is the current phase o$ e.pansion de%e&oping countries are passing through' In 2000, three out o$ $our $i.ed &ines (ere insta&&ed in de%e&oping countries' China a&one insta&&ed more $i.ed &ines in 2000 !13 mi&&ion" than the entire de%e&oped (or&d in /777 and 2000 @9' ;nce $i.ed &ine market is matured, mobi&e (i&& crosso%er $i.ed &ine market' India is sti&& much be&o( the crosso%er point e%en by the standard o$ the &o(+income countries' 0 mobi&e re%o&ution is in the o$$ing in India' #he ne.t points o$ crosso%er (i&& be bet(een data and %oice @@, and bet(een mobi&e and $i.ed+&ine Internet@7' #his is going to take some time because this is yet to occur e%en in high+income countries' #he process o$ technica& conso&idation and system integration o$ di$$erent competing standards in a sing&e p&at$orm (i&& by itse&$ take some time' #he process o$ commercia& conso&idation (i&& start therea$ter'
9/ 91

I i".A p.18. I i".A p./=. 98 I i".A p. 19. 99 Increasing "eman" for "ata s+oul" not lea" to a conclusion t+at voice services will not attract innovation any longer. It +as een +el" t+at in a miniature +an"+el" "eviceA information can e receive" only in t+e form of voice. <ot of "evelopments is in t+e offing in t+e area of voice recognitionA integration etween voice an" te@t an" vice versa. SeeA Interview wit+ Ian ,oetzA pu lis+e" in tele.netA Dol. #o.&A issue no. *A 7pril $55$A p. &$. 9= ?+is point +as alrea"y een reac+e" in Gapan. I?-A World Telecommunication Development Report 2002A ,enevaA $55$A p.8&.

In order to guess the time $rame o%er (hich such techno&ogica& and commercia& cyc&es may run their courses in $uture it may be o$ interest to &ook at the past e.periences' ?oing by the history, commercia&isation o$ ce&&u&ar mobi&e te&ecommunication ser%ices began in &ate se%enties, (hen <apan took the &ead in /797' Many de%e&oped countries ha%e reached saturation point on&y no( though de%e&oping countries are $ar $rom it' imi&ar&y, market $or Internet in the de%e&oping countries is yet to mature though the ser%ice commenced in &ate /750s, (hen > 0 took the &ead in /757' 0s right&y obser%ed, =But $or both these inno%ations, the $u&& e.tent o$ their impact on businesses and consumers is probab&y sti&& to come' E+commerce, $or instance, is sti&& in re&ati%e in$ancy and is e.pected to boom in coming years as Ro&d economyS $irms re+orient their business processes around it' imi&ar&y, the true potentia& o$ a mobi&e phone, as an integrated communications, entertainment and positioning de%ice, is on&y beginning to be rea&i,ed670' I$ past trend (ere any guide, it (ou&d be reasonab&e to hope that by 2020 India (ou&d comp&ete transition into digita& s(itching and transmission, VoIP, broadband and 1?' #hough there (ou&d be a&(ays a sma&& niche market in India, (hich (ou&d catch up (ith the cutting age o$ the techno&ogy, conso&idation and e.pansion o$ e%o&%ing techno&ogies across the &ength and the breadth o$ the country (i&& $o&&o( (ith a &ag' Auture %ision o$ te&ecom is a %ision o$ I#' #e&ecom (i&& be the springboard o$ $uture e.pansion o$ I# hera&ding in an in$ormation society' IC# (i&& spread among the masses and (i&& spur inno%ation, entrepreneurship and gro(th' 0n e.panding domestic market (i&& deepen the synergy bet(een the domestic and the e.port market and strengthen India6s presence in the high+%a&ue segment o$ the g&oba& trade and in%estment' IC# bene$its (i&& spread among a&&, the rich and the poor, the young and the o&d, the men and the (omen, the organi,ed and the unorgani,ed and the go%ernment and the go%erned' 5ppendi2 Indian Telecom Sector: Recent Policies /' 0&& the %i&&ages sha&& be co%ered by te&ecom $aci&ity by the end o$ 2002' 2' #he Communication Con%ergence Bi&& 200/introduced in the Par&iament on 0ugust 1/, 200/ is present&y be$ore the tanding Committee o$ Par&iament on #e&ecom and I#' 1' :ationa& 4ong )istance er%ice !:4)" is opened $or unrestricted entry' 2' #he Internationa& 4ong )istance er%ices !I4) " ha%e been opened to competition' 3' #he basic ser%ices are open to competition'

I i".A op.cit.A p.8$.

5' In addition to the e.isting three, $ourth ce&&u&ar operator, one each in $our metros and thirteen circ&es, has been permitted' #he ce&&u&ar operators ha%e been permitted to pro%ide a&& types o$ mobi&e ser%ices inc&uding %oice and non+%oice messages, data ser%ices and PC;s uti&i,ing any type o$ net(ork e-uipment, inc&uding circuit andNor package s(itches that meet certain re-uired standards' 9' Po&icies a&&o(ing pri%ate participation ha%e been announced as per the :e( #e&ecom Po&icy !:#P", /777 in se%era& ne( ser%ices, (hich inc&ude ?&oba& Mobi&e Persona& Communication by ate&&ite !?MPC " er%ice, digita& Pub&ic Mobi&e 8adio #runked er%ice !PM8# ", Voice Mai&N 0udiote.N >ni$ied Messaging er%ice' @' Cire&ess in 4oca& 4oop !C44" has been introduced $or pro%iding te&ephone connections in urban, semi+urban and rura& areas prompt&y' 7' #(o te&ecom P >s, V :4 and E#4 ha%e been disin%ested' /0' teps are being taken to $u&$i&& >ni%ersa& er%ice ;b&igation !> ;", its $unding and administration' //' 0 decision to permit Mobi&e Community Phone er%ice has been announced' /2' Mu&tip&e Ai.ed er%ice Pro%iders !A Ps" &icensing guide&ines (ere announced' /1' Internet er%ice Pro%iders !I Ps" ha%e been a&&o(ed to set up Internationa& Internet ?ate(ays, both ate&&ite and 4anding stations $or submarine optica& $iber cab&es' /2' #(o categories o$ in$rastructure pro%iders ha%e been a&&o(ed to pro%ide end+to+end band(idth and dark $iber, right o$ (ay, to(ers, duct space etc' /3' ?uide&ines ha%e been issued by the ?o%ernment to open up Internet te&ephony !IP"' In(estment Polic ;ramewor% /' Aoreign )irect In%estment o$ up to /00 percent permitted $or the $o&&o(ing: F Manu$acturing o$ te&ecom e-uipment F Internet ser%ice !not pro%iding internationa& gate(ays" F In$rastructure pro%iders !Category I" F E+mai& ser%ice F Voice mai& ser%ice F Ca&& Centers and I# enab&ed ser%ices 2' Aoreign )irect In%estment o$ up to 92 percent permitted $or the $o&&o(ing: F Internet ser%ice !pro%iding internationa& gate(ays" F In$rastructure pro%iders !Category II" F 8adio paging ser%ices 1' Aoreign )irect In%estment o$ up to 27 percent permitted $or the $o&&o(ing: F :ationa& &ong distance ser%ice


Basic te&ephone ser%ice Ce&&u&ar mobi&e ser%ice ;ther %a&ue added ser%ice

2' 0dditiona& $oreign in%estment through ho&dingNin%estment company 3' 0utomatic appro%a& $or techno&ogy $ee up to > F 2 mi&&ion, roya&ty up to 3 percent $or domestic sa&es and @ percent $or e.ports in te&ecom manu$acturing !higher amount through speci$ic appro%a&s" 5' Au&& repatriabi&ity o$ di%idend income and capita& in%ested in the te&ecom sector 9' Aisca& incenti%es and concessions $or the te&ecom sector: F 0morti,ation o$ &icense $ee F #a. ho&iday F 8ebate on subscription to sharesNdebentures F cope $or ta. e.emption on $inancing through %enture capita& F Import duty rates reduced $or %arious te&ecom e-uipment
ource: !i" 0nnua& 8eport, 200/+2002 and !ii" Indian #e&ecommunication tatistics 2002 !Po&icy Arame(ork, tatus and #rends", both pub&ished by the )epartment o$ #e&ecommunications, Ministry o$ Communications M I#, ?o%ernment o$ India'