A year of continuous ringing

In a year of rapid growth in the sector, the private sector shows its mettle V. Jagannathan reports.

Chennai: The year 2004 was a year of continuous ringing — of the right and wrong tones. Indian telecom registered significant successes during the year and emerged as one of the key sectors responsible for India's economic growth. The year also saw mobile phones overtaking the number of landline connections in the country. Certainly 2004 will go down as the year that favoured the private sector.

The sector, which grew between 20 and 25 per cent in 2002-2003 has stepped up its growth between 35 and 40 per cent in the last two years. This rapid growth has been possible due to various policy changes.

During the year the composition of telephony has undergone a significant change: mobile phones, including wireless in the local loop (WLL) with 460.5 lakh connections had already overtaken the fixed line phones (445.1 lakh) by November 30, 2004.

The number of telephones increased from 71 million in January 2004 to over 90 millions in November 2004, thereby a registering a growth rate of 32 per cent per annum to push up the teledensity rate from 6.63 per cent to 8.37 per cent at the beginning of the year.

The most proficient gains were made by the private sector — up from 35 per cent in January 2004 to 45 per cent by the end of November. Of the 200.31 lakh new phone connections provided during the year, about 79 per cent (157.74 lakh phones) were added by the private sector.

To provide a fillip to the rural telephony, the 'universal service obligation fund' disbursed Rs200 crore this fiscal. Agreements have been signed for providing 46,253 'rural community phones' in villages with a population of more than 2,000. An agreement has also been signed for providing 66,822 village public telephones in the remaining eligible revenue villages. With this, all revenue villages will now be provided with village public telephones except thinly populated villages and those located in insurgency prone areas.

During the year, the government has taken several initiatives like:

• Guidelines were issued for 'intra — circle' mergers of licences
  
• Broadband policy was announced
  
• Performance bank guarantee for internet protocol (IP-II) was reduced from Rs100 crore to Rs5 crore. The licence fee for this category was reduced from 15 per cent to 6 per cent.
  
• The performance bank guarantee for 'national long distance' licence was reduced to Rs50 crore from Rs100 crore.
  
• The government has also decided to extend the scope of licence conditions of internet service providers (ISP) permitting them to provide virtual private network (VPN) services to corporate and individuals.
  
• A new policy to popularise '.in' internet domain was announced.
  
• The cabinet committee of economic affairs has also approved a financial package of Rs1,001 crore for reviving the Indian Telephone Industries Limited.
  

The broadband policy will ensure an 'always on' data connection at a speed of minimum of 256kbps capacity for supporting interactive services. The main emphasis is on the creation of infrastructure through various technologies that will contribute to the growth to the broadband services in the country. It is estimated that number of broadband subscribers would be three million by 2005, nine million by 2007 and twenty million by 2010.

Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) have already planned to launch the broadband services by the middle of next month. With a view to encouraging broadband connectivity, the indoor use of low power application in 2.4 GHZ band has been de-licensed. The de-licensing for outdoor usage of low power Wi-Fi and Wi-Max applications in 2.4 GHZ band has been agreed to in principle.

Fraud busted
A notable aspect of the year is the busting of illegal routing of international calls. BSNL and MTNL have claimed several hundred crore as losses from Reliance Infocomm Limited.

With a view to curb the illegal call rackets, the Department of Telecom (DoT) has set up 'vigilance telecom monitoring cells at Delhi, Mumbai, Chennai and Hyderabad. These cells, besides continuously monitoring the operators to check the grey market calls will also ensure that the license conditions are fully complied with.

To enable the general public to help locate illegal calls, toll free numbers 1600-110-420 or 011-2373-1100 have been set up. With the intensification of its surveillance, DoT has already busted over 45 cases of illegal call routing 'exchanges' in the various parts of the country this year.

A year of reduced tariffs
During the year, the telecom sector witnessed major changes in the tariff structure. Although several tariff plans aare offered by operators, some of the prominent tariff reductions effected by BSNL range from Rs7.20 per minute for calls to USA Canada and UK and Rs18.00 to the rest of the world except Europe, Singapore, Thailand, Malaysia, Indonesia and Hong Kong. These countries attract call rates of Rs9.60 per minute.

For 'national long distance calls' the intra-circle tariff was reduced to Rs1.20 per minute for calls beyond 100 km radius. Similarly, the inter-circle tariff was reduced to Rs2.40 per minute for calls beyond 200 km radius.

In response to the pricing salvo fired by the public sector, several private sector service providers too slashed their rates.

This implies a uniform tariff for intra-circle or inter-circle calls beyond a distance of 50 km. The access rates from BSNL 'basic telephone' to Sanchar Net was reduced by 60 per cent. The rentals for ISDN BRA lines were also reduced from Rs500 to Rs400 per month and for ISDN PRI from Rs5,000 to Rs1,750. The initial deposit for ISDN PRI was reduced from Rs60,000 to Rs10,000. The registration charges for new telephones for urban subscribers were also reduced from Rs2,000 to Rs500.

Noteworthy industry events:

• The year also saw VSNL acquiring Tyco Global Network from Tyco International for $130 million.
  
• The Bharti group unified all its telecom offerings under the Aircel brand.
  
• The Chennai-based Sterling group's deal with Hutch to sell its mobile operations in Tamil Nadu failed to materialise.
  
• The other failure is Data Access's initial public offering plans. The company was not able to complete its public issue.
  
• In addition to broadband policy, it has been decided that high-speed, high capacity (minimum 2 Mbps), reliable network connectivity for government-to-government communication will be provided up to the block level through 'state wide area network' (SWAN).
  
• Various e-Governance projects may avail themselves of seamless connectivity using these SWAN and NICNET. The connectivity could be leveraged to provide services electronically to citizens at the village level by extending its reach through wireless and other technologies relevant for the last mile.
  
• Further, in order to bring about a substantially increased proliferation of '.in' internet domain name, a new '.in' policy was announced, which will come in to force from 1st January, 2005 . It aims to put in place a more liberal, efficient and market friendly domain name registration system.