The telecom services have been recognized the world-over as an important tool for socio-economic development for a nation. Telecommunication is one of the prime support services needed for rapid growth and modernization of various sectors of the economy. It has become especially important in recent years because of enormous growth of information technology and its significant potential for the impact on the rest of the economy. In the past decade or so the distinction between communications & IT has been diminishing with emerging common infrastructures blurring the differentiation between content & carrier methods. At the same time, as has been the case in most of the developed world, the combination of enhanced computing power and improved telecommunications- equated by some to the introduction of steam power in the 18th century and electricity in the 19th, has spurred a major improvement in the productive capacities of the economies.

India is perceived to have a special comparative advantage in information technology and in IT enabled services. The extent of advantage depends critically on high quality telecommunication infrastructure. Telecom infrastructure is treated as a crucial factor to realize the socio-economic objectives in India.

Growth in Telecom Sector

The Telecommunication services were introduced in India soon after the invention of telegraphy and telephone. The first Telegraph line between Kolkata and Diamond Harbour was opened for traffic in 1851. By March 1884, telegraph messages could be sent from Agra to Kolkata. As in the case of telegraph, telephone service was also introduced in Kolkata in 1881-82, barely six years after the invention of telephone. By 1900, telegraph and telephone started serving Indian Railways. The first automatic exchange was commissioned at Shimla in 1913-14 with a capacity of 700 lines.

The Telecommunication services in India have improved significantly since independence. India operates one of the largest telecom networks in Asia and the 10th largest in the world measured in terms of number of phones (as of end of 2004- 05). As on April 30, 2005, the network comprises of 99.17 million telephone connections and over 2.15 million Public Call Offices (PCOs). There are over 42.12 million cellular subscribers in India and the cellular customer base is growing at the rate of over one million per month. The number of departmental exchanges which was around 321 as on March 31, 1948, has increased to 37,565 by April 2005.

Teledensity per hundred population has grown from 7.08 in March 2004 to 8.95 in March 2005 and to a level of 12.74 in March 2006. Fully automatic International Subscriber Dialing (ISD) service is available to almost all the countries. The total number of stations connected to National Subscriber Dialing (NSD) is over 31,686. The growth in rural demand has outstripped urban demand with telecom penetration in villages increasing in multiples. Higher telecom dispersal is indicative of reduced economic disparities, experts point out.

Initially, the telephone exchanges were of manual type, which were subsequently upgraded to Automatic Electro-Mechanical type. In the last one-and-a-half decades, a significant qualitative improvement has been brought about by inducting Digital Electronic Exchanges in the network on a very large scale. Today all the telephone exchanges in India are of electronic type.

The voice and non-voice telecom services, which include data transmission, facsimile, mobile radio, radio paging and leased line service, cater to a wide variety of needs of both residential and business customers. Integrated Services Digital Network (ISDN) facility is available in a number of cities. A dedicated Packet Switched Public Data Network (I-NET) with international access for computer communication services is also made available.

In the field of basic telecom service, there were 31 private licences and two public sector licences at the end of March 2004. After the introduction of Unified Access Service Licence regime in November 2003, 27 licences out of these 31 licences were converted to Unified Access Service Licences. Eighteen more licences were issued for Unified Access Service during 2004- 05.

In the area of mobile telephone, of the total 78 licences, 55 were in the private sector and 23 in public sector. Of the total roll out of telephone connections (basic and cellular) as on April 30, 2005, private sector accounted for about 47 per cent and public sector accounted for 53 per cent.

In the field of international communications, tremendous progress was made by the use of extensive infrastructure of satellite earth stations, state-of-the-art digital gateways, optical fibre multi media submarine cables and multi media data switches.

Reforms in Telecom Sector

Telecommunications is one of the few sectors in India, which has witnessed the most fundamental structural and institutional reforms since 1991. Considering the great potential for the growth of telephone demand with the accelerated growth of economic activities, the Government of India announced the National Telecom Policy in 1994 and the New Telecom Policy in 1999. The National Telecom Policy provides for private sector participation to supplement the efforts of DoT in basic telephone services. The opening up of the basic services provided a big opportunity for private & foreign investors. More policy initiatives included Addendum to NTP -1999, Broadband Policy 2004, Amendment to Broadband Policy 2004 etc.

To a great extent the perceived linkage between communications, information technology and growth has shaped the Indian telecommunications policy, market perception and consequently industry activity. Access to information infrastructure has been seen as a prerequisite not just to a robust IT industry but also to broad based growth and competitiveness in all other services and industries.

The entire sector is now open to unrestricted competition in all segments except cellular services where spectrum is a limiting factor. The reforms process in the telecom sector is still on, aiming to remove the balance hurdles and limitations. One such hurdle is ensuring expansion of sustainable connectivity in rural areas. To encourage rural telephony, the government has set up a universal service fund earlier. Broadband policy has been announced with a view to providing better quality of services. One of the aims of this policy is to make rural connectivity remunerative and sustainable.

The opening of the sector has not only lead to rapid growth but also helped a great deal towards maximization of consumer benefits. The tariffs have been falling continuously across the board as result of healthy and unrestricted competition. Besides, as a result of the various measures and initiatives taken by the Government, India is now fast emerging as one of the leading telecom nations. Since beginning of the Ninth Plan, the telecom services have registered a consistently high growth rate of more than 20 percent per annum. The robust private sector participation has resulted in unprecedented growth in the cellular and WLL services. The growth of network has been very encouraging but still a lot need to be done so that India remains a front- runner in information revolution.

Department of Telecom

The Department of Telecom has been formulating developmental policies for the accelerated growth of the telecommunication services. The Department is also responsible for grant of licenses for various telecom services like Unified Access Service Internet and VSAT service. The Department is also responsible for frequency management in the field of radio communication in close coordination with the international bodies. It also enforces wireless regulatory measures by monitoring wireless transmission of all users in India.

Telecom Commission

The Telecom Commission was set up by the Government of India vide Notification dated April 11, 1989 with administrative and financial powers of the Government of India to deal with various aspects of Telecommunications. The Commission consists of a Chairman, four full time members, who are ex-officio Secretary to the Government of India in the Department of Telecommunications and four part time members who are the Secretaries to the Government of India of the concerned Departments.

The Telecom Commission and the Department of Telecommunications are responsible for policy formulation, licensing, wireless spectrum management, administrative monitoring of PSUs, research and development and standardization/validation of equipment etc. The multi-pronged strategies followed by the Telecom Commission have not only transformed the very structure of this sector but have motivated all the partners to contribute in accelerating the growth of the sector.