More than a decade has passed since the government formulated its first telecom policy in 1999. During this period, India's telecom landscape has changed with mobile users rising to whooping 700 million from a mere 2 million and tariffs are down to 30 paise a min from the 16 rupees charged then. Let's take a journey down the memory lane to see how this industry has transformed our lives.
In 2000, Ram Vilas Paswan, the then telecom minister allowed the entry of government owned MTNL and BSNL in the mobile space. Till that time only two mobile service providers were allowed per circle.
By 2001 along with BSNL and MTNL's entry the government also auctioned the fourth cellular licences which saw the entry of companies like Idea in the telecom space.
It was based on this auction that the government set the future entry fees for a pan India telecom licence at Rs. 1651 crore.
The entry of the fourth operator and BSNL saw competition intensifying in the telecom sector and call tariffs fell.
While these changes were happening in the mobile space, basic service provider companies like Reliance and Tata were already using a new technology called WLL based on CDMA spectrum for providing basic telephony. Ram Vilas Paswan soon gave the go ahead to limited mobility for these phones meaning you could carry your basic phone around the city. Soon companies like Reliance started using this to provide virtual mobile services.
Existing operators like Bharti, Hutch and BPL mobile protested vigorously as they argued that Reliance was being allowed a backdoor entry into the mobile space.
To end this controversy NDA government decided to bring about one of the biggest policy changes in the sector.
Existing mobile players challenged the move in court but ultimately all smoked the peace pipe under the new telecom minister, Arun Shourie.
Arun Shourie to keep existing mobile players happy brought down revenue share paid by telcos. Foreign investment cap went up while fresh spectrum was given to the older players.
Mobile penetration deepened further in 2003 when incoming calls were made free. Mobile call rates fell further bringing down STD and ISD call rates.
And the darkest period of the Indian telecom industry began in 2007 when A Raja decided to give new licences in 2007 at 2001 price of Rs. 1651 crore.
Hundreds of applicants rushed in but ultimately 122 licences were given. But soon allegations of wrong doing and favouritism surfaced.
Questions began to be raised as to why the licences were not auctioned when so much demand existed and why was the cutoff date for receiving applications changed.
Similarly, questions also popped about why was the date of application not taken into account under first come first served policy.
The issue snowballed into a major controversy after country's auditor CAG found that 85 of the 122 licencees were ineligible. The auditor has also claimed that the country lost revenue worth Rs. 1,76,000 crore due to this policy and the parliament has been in turmoil ever since.
Raja had to finally step down and the country's premier investigating agency CBI is now investigating the whole process. With a new minister in charge the process of getting the sector back on track has to start.
Most telecom watchers are hopeful that the sector will be able to ride out this storm but they also agree that short term solutions will not work to save this sector the government will have to address core problems, introduce clear and transparent policy and bring a level playing field for all companies.
Read more at: http://profit.ndtv.com/news/show/the-decade-that-changed-indian-telecom-industry-132004?cp
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