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
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
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.
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
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.