India operates one of the largest telecom networks in Asia, comprising
over 21,328 telephone exchanges with a capacity of over 15 million lines
and 12 million working connections. The network has been growing at an
annual rate of 21.6% and is expected to expand to over 24 million lines
by the turn of the century. However, there is scope for much improvement
as even today three of every four villages have no telephone service,
and only 5% of India's villages have long-distance service.
The entire telecom equipment manufacturing industry has been
de-licensed and de-reserved, with the deregulation of the economy in
July 1991. The National Telecom Policy of 1994 opened up the area of
basic telephone services to private sector participation. The tremendous
response of global telecom giants, in joint ventures with Indian
companies, resulted in perhaps the most competitive bidding for telecom
services witnessed anywhere in the world.In August 1995, the Lok Sabha
passed a bill amending the Indian Telegraph Act 1885, paving the way for
setting up a Telecom Regulatory Authority of India. The TRAI has well
defined functions, responsibilities and powers to function as the
watchdog of the telecom sector. The terms of reference inter alia
include standard setting, price regulation, ensuring technical
compatibility among different service providers, facilitating revenue
sharing arrangement between the DOT and private operators and fixation
of access charges.
Specific Government reforms include:
- Value-added services (VAS), including cellular mobile telephones,
radio paging, electronic mail, voice mail/audiotex services,
videotex services, data services, video-conference and credit card
authorization services, were opened for private sector participation
in 1992.
- Maximum foreign equity of 49% has been permitted in the case of
basic services, cellular mobile, radio paging, VSAT and other
wireless services.
- 51% foreign equity is allowable in other Value Added Services,
including e-mail, voice mail, on-line information, database
retrieval and data processing, enhanced / value added facsimile
services.
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