Telecom network is the conduit for the information flow across the global economic landscape. Any country aspiring for a place in the sun in the global village should strengthen its telecom network, as information is an extremely potent competitive weapon in any industry. Further, for transfer of information, telecom is a far cheaper alternative than any other mode of transportation. The cost savings from reliable telecom network is substantial, if we go by the assessment of Sam Pitroda, the founder of C-DOT, who attributes 60 per cent of intra-Mumbai travel to the movement of information.India paradoxically has an advantage over developed countries due to its under invested and obsolete telecom network. The sunk investment over years has paid back many times over. The change over to contemporary technology is far easier with lower switching costs as compared with the developed world. This situation should be deemed as an opportunity for upgradation, rather than lull India into inaction. At this juncture,inadequate telecom network is a stumbling block for India to achieve global competitiveness.
India has an abysmally low penetration of 1.3 telephones per hundred people as on March '96, making it a laggard even among the developing countries. The rural tele-density at 2 telephones per thousand is even worse. The waiting list for telephone is estimated to be over 2 million.
A recently published survey by PHD (Punjab, Haryana and Delhi) Chamber of Commerce estimates `core sector bottlenecks'--road, rail, power, phone and post--to have caused a 20 per cent loss of industrial production. Telecom contributes to this sorry state in no small measure, with 218 faults per 100 lines every year.
In terms of direct exchange lines (DELs) provided, there was a whopping 52 per cent increase in 1991-92. This increase finally trickled down to 17.5 per cent in 1996-97. These growth rates however, are the highest compared with any sector of the economy. The country today has a telecom network of over 23,406 telephoneexchanges, with a capacity of 212.6 lakh lines and 178 lakh direct exchange lines (DELs). Out of 6,04,374 villages in the country, 2,87,832 villages have been provided with telephones.
Rakesh Mohan Committee in their India Infrastructure Report, suggested an addition of 52 million lines at an overall capital expenditure of the order of Rs 1,70,000 crore by 2006. A unique features of telecom sector is that after an upfront investment, the resources for growth can be mobilised through internal generation.
The aforesaid committee further said that out of the above requirement of 52 million lines, Department of Telecom (DoT)/Mahanagar Telephone Nigam Ltd (MTNL) can put in an additional 29.2 million lines from internal accruals.
But the investments during the first three years have trailed behind the recommended quantum.
Against the budgeted outlay of Rs 13,266 crore for 1997-98, the revised outlay is 16 per cent lower. The shortfall is deemed to be entirely in the outlay for the Department ofTelecommunications (DoT). This has been caused by the shortfall in the collection of license fee.
Notwithstanding the gap between target and achievement, even if the telecom sector could grow at the rate of 20 per cent for the next five years, then by the year 2001, it would rank among the largest telecom networks in the world.
The telecom sector was opened up as a sequel to the liberalisation process triggered in the early 1990's. The telecom equipment manufacturing was opened to private sector, followed by opening up of value-added services such as voice mail, E-mail, radio paging and cellular mobiles. Later, broad guidelines were issued for entry of private sector in basic services. Along with these measures, certain organisational entities with designated roles emerged viz. Videsh Sanchar Nigam (VSNL), MTNL and Telecom Regulatory Authority of India.
This avalanche of changes metamorphosed this sector. Clocking an average growth of 20 per cent in the recent past, the telecom sector has out performedany other sector in the economy. Even in term of technology upgradation, the transition to digital technology is proceeding rapidly with over two-third of the exchanges turning digital. However, on the flipside, several issues are yet to be resolved.
The tariffs are not cost oreinted; overseas calls subsidise domestic long distance calls which in turn subsidise local calls. Further, the urban local calls subsidise the rural local calls. Viability of cellular mobile telephone operators is threatened and they are seeking moratorium on license fee and extension of license period from 10 years to 15 years. Indian consumer pays substantially higher costs for the services due to lopsided tariff regime. Further, for awarding contracts to the private operators, the emphasis is on license fee and not on end cost to the consumer. Harnessing the world wide web is not within the reach of a common man. The competitive nature of the telecom market is vitiated by the monopoly of MTNL andVSNL.The Indian telecom sector has come a long way since the liberalisation from a tangled web of obsolete exchanges and is poised to emerge as the country's neural network to navigate the information age. The technology changes in this sector have taken place at a break-neck speed. The change began with coalescence of computers and communication.
The next change is now happening with the blending of Computers, communication and broadcasting. This change would bring about a structural transformation of the regulatory structures in place. An inter-ministerial body would bridge the interface between the ministry of information and broadcasting, Department of Electronics and Department of Telecom. With a few glitches removed and with private sector participation, this investment intensive sector would become the handmaiden for the information revolution in India in the new millenium.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
Printer-friendly page
