INDIA TELECOM SECTOR

Mohinder Verma — Wed, 30 Jan 2008 08:15:00 GMT

Indian Telecom Sector

Introduction

The telecom services have been recognized the world-over as an important tool for socio-economic development for a nation. It is one of the prime support services needed for rapid growth and modernization of various sectors of the economy. Indian telecommunication sector has undergone a major process of transformation through significant policy reforms, particularly beginning with the announcement of NTP 1994 and was subsequently re-emphasized and carried forward under NTP 1999. Driven by various policy initiatives, the Indian telecom sector witnessed a complete transformation in the last decade. It has achieved a phenomenal growth during the last few years and is poised to take a big leap in the future also.

Status of Telecom Sector

The Indian Telecommunications network with 256 million connections (as on Oct 07) is the third largest in the world. The sector is growing at a speed of 46-50% during the recent years. This rapid growth is possible due to various proactive and positive decisions of the Government and contribution of both by the public and the private sectors. The rapid strides in the telecom sector have been facilitated by liberal policies of the Government that provides easy market access for telecom equipment and a fair regulatory framework for offering telecom services to the Indian consumers at affordable prices. The Government has taken following main initiatives for the growth of the Telecom Sector:

Liberalization

The process of liberalization in the country began in the right earnest with the announcement of the New Economic Policy in July 1991. Telecom equipment manufacturing was delicensed in 1991 and value added services were declared open to the private sector in 1992, following which radio paging, cellular mobile and other value added services were opened gradually to the private sector. This has resulted in large number of manufacturing units been set up in the country. As a result most of the equipment used in telecom area is being manufactured within the country. A major breakthrough was the clear enunciation of the government’s intention of liberalizing the telecom sector in the National Telecom Policy resolution of 13th May 1994.

National Telecom Policy 1994

In 1994, the Government announced the National Telecom Policy which defined certain important objectives, including availability of telephone on demand, provision of world class services at reasonable prices, improving India’s competitiveness in global market and promoting exports, attractive FDI and stimulating domestic investment, ensuring India’s emergence as major manufacturing / export base of telecom equipment and universal availability of basic telecom services to all villages. It also announced a series of specific targets to be achieved by 1997.

For more details, visit National Telecom Policy 1994

Telecom Regulatory Authority of India (TRAI)

The entry of private service providers brought with it the inevitable need for independent regulation. The Telecom Regulatory Authority of India (TRAI) was, thus, established with effect from 20th February 1997 by an Act of Parliament, called the Telecom Regulatory Authority of India Act, 1997, to regulate telecom services, including fixation/revision of tariffs for telecom services which were earlier vested in the Central Government.

TRAI’s mission is to create and nurture conditions for growth of telecommunications in the country in manner and at a pace, which will enable India to play a leading role in emerging global information society. One of the main objectives of TRAI is to provide a fair and transparent policy environment, which promotes a level playing field and facilitates fair competition. In pursuance of above objective TRAI has issued from time to time a large number of regulations, orders and directives to deal with issues coming before it and provided the required direction to the evolution of Indian telecom market from a Government owned monopoly to a multi operator multi service open competitive market. The directions, orders and regulations issued cover a wide range of subjects including tariff, interconnection and quality of service as well as governance of the Authority.

The TRAI Act was amended by an ordinance, effective from 24 January 2000, establishing a Telecommunications Dispute Settlement and Appellate Tribunal (TDSAT) to take over the adjudicatory and disputes functions from TRAI. TDSAT was set up to adjudicate any dispute between a licensor and a licensee, between two or more service providers, between a service provider and a group of consumers, and to hear and dispose of appeals against any direction, decision or order of TRAI.

For more details, visit, http://www.trai.gov.in/

http://www.tdsat.nic.in/

New Telecom Policy 1999

The most important milestone and instrument of telecom reforms in India is the New Telecom Policy 1999 (NTP 99). The New Telecom Policy, 1999 (NTP-99) was approved on 26th March 1999, to become effective from 1st April 1999. NTP-99 laid down a clear roadmap for future reforms, contemplating the opening up of all the segments of the telecom sector for private sector participation. It clearly recognized the need for strengthening the regulatory regime as well as restructuring the departmental telecom services to that of a public sector corporation so as to separate the licensing and policy functions of the Government from that of being an operator. It also recognized the need for resolving the prevailing problems faced by the operators so as to restore their confidence and improve the investment climate.

Key features of the NTP 99 include:

Strengthening of Regulator.
National long distance services opened to private operators.
International Long Distance Services opened to private sectors.
Private telecom operators licensed on a revenue sharing basis, plus a one-time entry fee. Resolution of problems of existing operators envisaged.
Direct interconnectivity and sharing of network with other telecom operators within the service area was permitted.
Department of Telecommunication Services (DTS) corporatised in 2001.
Spectrum Management made transparent and more efficient.

All the commitments made under NTP 99 have been fulfilled, each one of them, in letter and spirit, some even ahead of schedule, and the reform process is now complete with all the sectors in telecommunications opened for private competition.

For more details, visit New Telecom Policy 1999

National Long Distance

National Long Distance opened for private participation. The Government announced on 13.08.2000 the guidelines for entry of private sector in National Long Distance Services without any restriction on the number of operators. The DOT guidelines of license for the National Long Distance operations were also issued.

Highlights - NLD Guidelines

Unlimited entry for carrying both inter-circle and intra-circle calls.
Total foreign equity (including equity of NRIs and international funding agencies) must not exceed 74%. Promoters must have a combined net worth of Rs.25 million.
Private operators will have to enter into an arrangement with fixed-service providers within a circle for traffic between long-distance and short-distance charging centres.
Seven years time frame set for rollout of network, spread over four phases. Any shortfall in network coverage would result in encashment and forfeiture of bank guarantee of that phase.
Private operators to pay one-time entry fee of Rs.25 million plus a Financial Bank Guarantee (FBG) of Rs.200 million. The revenue sharing agreement would be to the extent of 6%.
Private operators allowed to set up landing facilities that access submarine cables and use excess bandwidth available.
Licence period would be for 20 years and extendable by 10 years.

For more details, visit National Long Distance

International Long Distance

In the field of international telephony, India had agreed under the GATS to review its opening up in 2004. However, open competition in this sector was allowed with effect from April 2002 itself. There is now no limit on the number of service providers in this sector. The licence for ILD service is issued initially for a period of 20 years, with automatic extension of the licence by a period of 5 years. The applicant company pays one-time non-refundable entry fee of Rs.25 million plus a bank guarantee of Rs.250 million, which will be released on fulfillment of the roll out obligations. The annual licence fee including USO contribution is @ 6% of the Adjusted Gross Revenue and the fee/royalty for the use of spectrum and possession of wireless telegraphy equipment are payable separately. At present 10 ILD service providers (9 Private and 1 Public Sector Undertaking) are there. As per current roll out obligations under ILD license, the licensee undertakes to fulfill the minimum network roll out obligations for installing at least one Gateway Switch having appropriate interconnections with at least one National Long Distance service licensee. There is no bar in setting up of Point of Presence (PoP) or Gateway switches in remaining location of Level I Tax’s. Preferably, these PoPs should conform to Open Network Architecture (ONA) i.e. should be based on internationally accepted standards to ensure seamless working with other Carrier’s Network.

For more details, visit International Long Distance

Universal Service Obligation Fund

Another major step was to set up the Universal Service Obligation Fund with effect from April 1, 2002. An administrator was appointed for this purpose. Subsequently, the Indian Telegraph (Amendment) Act, 2003 giving statutory status to the Universal Service Obligation Fund (USOF) was passed by both Houses of Parliament in December 2003. The Fund is to be utilized exclusively for meeting the Universal Service Obligation and the balance to the credit of the Fund will not lapse at the end of the financial year. Credits to the Fund shall be through Parliamentary approvals. The Rules for administration of the Fund known as Indian Telegraph (Amendment) Rules, 2004 were notified on 26.03.2004.

The resources for implementation of USO are raised through a Universal Service Levy (USL) which has presently been fixed at 5% of the Adjusted Gross Revenue (AGR) of all Telecom Service Providers except the pure value added service providers like Internet, Voice Mail, E-Mail service providers etc. In addition, the Central Govt. may also give grants and loans. An Ordinance was promulgated on 30.10.2006 as the Indian Telegraph (Amendment) Ordinance 2006 to amend the Indian Telegraph Act, 1885 in order to enable support for mobile services and broadband connectivity in rural and remote areas of the country. Subsequently, an Act has been passed on 29.12.2006 as the Indian Telegraph (Amendment) Act 2006 to amend the Indian Telegraph Act, 1885.

For more details, visit Universal Service Obligation Fund

Unified Access Services

Unified access license regime was introduced in November’2003. Unified Access Services operators are free to provide, within their area of operation, services, which cover collection, carriage, transmission and delivery of voice and/or non-voice messages over Licensee’s network by deploying circuit, and/or packet switched equipment. Further, the Licensee can also provide Voice Mail, Audiotex services, Video Conferencing, Videotex, E-Mail, Closed User Group (CUG) as Value Added Services over its network to the subscribers falling within its service area on non-discriminatory basis. The country is divided into 23 Service Areas consisting of 19 Telecom Circle and 4 Metro Service Areas for providing Unified Access Services (UAS). The licence for Unified Access Services is issued on non-exclusive basis, for a period of 20 years, extendable by 10 years at one time within the territorial jurisdiction of a licensed Service Area. The licence Fee is 10%, 8% & 6% of Adjusted Gross Revenue (AGR) for Metro and Category `A’, Category `B’ and Category `C’ Service Areas, respectively. Revenue and the fee/royalty for the use of spectrum and possession of wireless telegraphy equipment are payable separately. The frequencies are assigned by WPC wing of the Department of Telecommunications from the frequency bands earmarked in the applicable National Frequency Allocation Plan and in coordination with various users subject to availability of scarce spectrum. At present 3 to 6 service providers (2-5 Private and 1 Public Sector Undertaking) are there in most of the service areas.

For more details, visit (CMTS & Unified Access Service)

Internet Service Providers (ISPs)

Internet service was opened for private participation in 1998 with a view to encourage growth of Internet and increase its penetration. The sector has seen tremendous technological advancement for a period of time and has necessitated taking steps to facilitate technological ingenuity and provision of various services. The Government in the public interest in general, and consumer interest in particular, and for proper conduct of telegraph and telecom services has decided to issue the new guidelines (Details) for grant of licence of Internet services on non-exclusive basis. Any Indian company with a maximum foreign equity of 74% is eligible for grant of licence.

Interconnection Usage Charges

In January 2003, TRAI notified the Interconnection Usage Charges (IUC) Regulation, 2003 and issued the same in October 2003, which covered arrangements amongst service providers for payment of IUC, covering Basic Services, including Wireless-in-Local Loop (Mobile), Cellular Mobile Services, National Long Distance (NLD) and International Long Distance (ILD) services. This regulation provided for charges payable by one operator to another for origination, transit and termination of calls in a multi-operator environment. It came into force with effect from 1 February 2004. The main features of the new IUC regime were lower Access Deficit Charges (ADC), uniform termination charges of Rs 0.30 per minute irrespective of the terminating network, reduction of ADC on NLD and ILD calls, all of which resulted in lower tariff environment on voice telephony.

Broadband Policy 2004

Recognizing the potential of ubiquitous Broadband service in growth of GDP and enhancement in quality of life through societal applications including tele-education, tele-medicine, e-governance, entertainment as well as employment generation by way of high-speed access to information and web based communication; Government has announced Broadband Policy in October 2004. The main emphasis is on the creation of infrastructure through various technologies that can contribute to the growth of broadband services. These technologies include optical fibre, Asymmetric Digital Subscriber Lines (ADSL), cable TV network; DTH etc. Broadband connectivity has been defined as “ Always On” with the minimum speed of 256 kbps. It is estimated that the number of broadband subscribers would be 9 million by 2007 and 20 million by 2010. With a view to encourage Broadband Connectivity, both outdoor and indoor usage of low power Wi-Fi and Wi-Max systems in 2.4 GHz-2.4835 GHz band has been delicensed. The use of low power indoor systems in 5.15-5.35 GHz and 5.725-5.875 GHz bands has also been delicensed in January 05. The SACFA/WPC clearance has been simplified. The setting up of National Internet Exchange of India (NIXI) would enable bringing down the international bandwidth cost substantially, thus making the broadband connectivity more affordable.

The prime consideration guiding the Policy includes affordability and reliability of Broadband services, incentives for creation of additional infrastructure, employment opportunities, induction of latest technologies, national security and bring in competitive environment so as to reduce regulatory interventions.

By this new policy, the Government intends to make available transponder capacity for VSAT services at competitive rates after taking into consideration the security requirements. The service providers permitted to enter into franchisee agreement with cable TV network operators. However, the Licensee shall be responsible for compliance of the terms and conditions of the licence. Further in the case of DTH services, the service providers permitted to provide Receive-Only-Internet Service. The role of other facilitators such as electricity authorities, Departments of ITs of various State Governments, Departments of Local Self Governments, Panchayats, Departments of Health and Family Welfare, Departments of Education is very important to carry the advantage of broadband services to the users particularly in rural areas.

For more details, visit Broadband Policy 2004

Tariff Changes

The Indian Telecom Sector has witnessed major changes in the tariff structure. The Telecommunication Tariff Order (TTO) 1999, issued by regulator (TRAI), had begun the process of tariff balancing with a view to bring them closer to the costs. This supplemented by Calling Party Pay (CPP), reduction in ADC and the increased competition, has resulted in a dramatic fall in the tariffs.

· The peak National Long Distance tariff for above 1000 Kms. in 2000 has come down from US$ 0.67 per minute to US$ 0.02 per minute in 2006.

· The International Long Distance tariff from US$ 1.36 per minute in 2000 to US$ 0.16 per minute in 2004 for USA, Canada & UK.

· The mobile tariff for local calls has reduced from US$0.36 per minute in 1999 to US$ 0.009 - US$ 0.04 per minute in 2006.

· The Average Revenue Per User of mobile is between US$ 5.06 - US$ 7.82 per month

Foreign Direct Investment (FDI)

In Basic, Cellular Mobile, Paging and Value Added Service, and Global Mobile Personal Communications by Satellite, Composite FDI permitted is 74% (49% under automatic route) subject to grant of license from Department of Telecommunications and adherence by the companies (who are investing and the companies in which investment is being made) to the license conditions for foreign equity cap and lock in period for transfer and addition of equity and other license provision. (Press Note 3(2007))

Foreign direct investment upto 74% permitted, subject to licensing and security requirements for the following: -

· Infrastructure providers (category-II)

· Radio Paging Service

FDI upto 100% permitted in respect of the following telecom services: -

· Infrastructure Providers providing dark fibre (IP Category I);

· Electronic Mail; and

· Voice Mail

The above would be subject to the following conditions: -

· FDI upto 100% is allowed subject to the conditions that such companies would divest 26% of their equity in favor of Indian public in 5 years, if these companies were listed in other parts of the world.

· The above services would be subject to licensing and security requirements, wherever required.

· Proposals for FDI beyond 49% shall be considered by FIPB on case-to-case basis.

In manufacturing sector 100% FDI is permitted under automatic route.

Foreign Direct Investment upto 49% is also permitted in an investment company, set up for making investment in the telecom companies licensed to operate telecom services. Investment by these investment companies in a telecom service company is treated as part of domestic equity and is not set of against the foreign equity cap.

Investment Opportunities and Incentives

An attractive trade and investment policy and lucrative incentives for foreign collaborations have made India one of the world’s most attractive markets for the telecom equipment suppliers and service providers.

No industrial license required for setting up manufacturing units for telecom equipment.
Automatic approval of 100 percent foreign equity, technology fee up to US $ 2 million, royalty up to 5 percent for domestic sales and 8 percent for exports in telecom manufacturing projects.
Foreign equity of 74%(49 % under automatic route) permitted for telecom services - basic, cellular mobile, paging, value added services - and global mobile personal communications by satellite.
Telecom services projects extended a number of incentives:
Amortization of license fee
Tax holiday
Enhanced limit of external commercial borrowings
Rebate on subscription to shares/debentures.
Scope for tax exemption on financing through venture capital

· Concessional import duties for import of equipment by telecom service projects (including cellular, basic, internet etc.)

· Full repatriability of dividend income and capital invested in the telecom sector.

Present Situation of Indian Telecom Sector

The Indian telecom market has been displaying sustained high growth rates. Riding on expectations of overall high economic growth and consequent rising income levels, it offers an unprecedented opportunity for foreign investment. A combination of factors is driving growth in the telecom market, promising rich returns on investments. The Indian Telecom services industry accounts for around 3.97 per cent of GDP during FY2006.

Contribution to National Income

India is the second largest among the emerging economies of Asia. Today, it is the fastest growing market in the world. The telecommunication sector continued to register significant success during the year and has emerged as one of the key sectors responsible for India’s resurgent India’s economic growth. Contributing significantly to growth of GDP and household income, it changes the socio-economic life of common people.

At present, contribution of Communication sector to the National Income has been growing consistently for the last one-decade.

The contribution of communication sector to the Indian GDP has gone up from about 1.59 per cent in the FY 2000 to 3.97 per cent in the FY 2006.

Network Expansion

The telecom sector has shown robust growth during the past few years. It has also undergone a substantial change in terms of mobile versus fixed phones and public versus private participation. The following table shows the growth trend of telecom sector from last five years:

The number of telephones has increased from 54.63 million as on 31.03.03 to 256.27 million as on 31.10.07. With this, the total telephone numbers crossed the 250 million mark two months ahead of the target subscribers for Dec 2007. Wireless subscribers increased from 13.3 million as on 31.03.03 to 217.13 as on 31.10.07. Whereas, the fixed line subscribers decreased from 41.33 million in 31.03.03 to 39.14 million in 31.10.07. The broadband subscribers grew from a meager 0.18 million to 2.69 million during the last 3 years.

Trend in Tele-density

Tele-density in the country increased from 5.11% in 2003 to 22.56% in Oct’07 i.e. an incremental growth of 34.15 % during last 5 years (about 7% per annum). In the rural area teledensity increased from 1.49% in Mar 2003 to 7.03% in Oct 2007 and in the urban areas it is increased from 14.32% in Mar 2003 to 56.93% in Oct 2007.This indicates a rising trend of Indian telecom subscribers.

Rural Telephony

Apart from the 58.67 million fixed and WLL connections (as on Oct 07) provided in the rural areas, 551064 VPTs have been provided. Thus, 92% of the villages in India have been covered by the VPTs. More than 2 lakh PCOs are also providing community access in the rural areas. Further, Mobile Gramin Sanchar Sewak Scheme (GSS) – a mobile Public Call Office (PCO) service is provided at the doorstep of villagers. At present, 2772 GSSs are covering 12043 villages. Also, to provide Internet service, Sanchar Dhabas (Internet Kiosks) have been provided in more than 3500 Block Headquarters out of the total 6337 Blocks in the country. A target has been set for 50 million rural connections by 2007 and 80 million by 2010. USO subsidy support scheme is also being utilized for sharing wireless infrastructure in rural areas with about 18,000 towers by 2010.

Broadband Connections

The Year 2007 has been declared the year of broadband. At present 2.69 million broadband connections have been provided. Target has been set for 20 million broadband connections by 2010 and providing Broadband connectivity to all secondary and higher secondary schools, public health institutions and panchayats by 2008.

In rural areas, connectivity of 512 KBPS with ADSL 2 plus technology (on wire) will be provided from about 20,000 existing exchanges in rural areas having optical fibre connectivity. Community Service Centres, secondary schools, banks, health centres, Panchayats, police stations etc. can be provided with this connectivity in the vicinity of above-mentioned 20,000 exchanges in rural areas. DOT will be subsidizing the infrastructure cost of Broadband network through support from USO Fund to ensure that Broadband services are available to users at affordable tariffs.

Performance of telecom equipment manufacturing sector

As a result of Government policy, progress has been achieved in the manufacturing of telecom equipment in the country. There is a significant telecom equipment-manufacturing base in the country and there has been steady growth of the manufacturing sector during the past few years. The figures for production and export of telecom equipment are shown in table given below:

(Rs. in crore)

*Year*	*Production*	*Export*
*2002-03*	14400	402
*2003-04*	14000	250
*2004-05*	16090	400
*2005-06*	17833	1500
*2006-07*	23656	1898

Rising demand for a wide range of telecom equipment, particularly in the area of mobile telecommunication, has provided excellent opportunities to domestic and foreign investors in the manufacturing sector. The last two years saw many renowned telecom companies setting up their manufacturing base in India. Ericsson set up GSM Radio Base Station Manufacturing facility in Jaipur. Elcoteq set up handset manufacturing facilities in Bangalore. Nokia set up its manufacturing plant in Chennai. LG Electronics set up plant of manufacturing GSM mobile phones near Pune. Ericsson launched their R&D Centre in Chennai. Flextronics set up an SEZ in Chennai. Other major companies like Foxconn, Aspcom, Solectron etc have decided to set up their manufacturing bases in India. The aim is for US$ 2 billion FDI in manufacturing, doubling the production in 2007 and quadrupling it in 2010. Target has been set for achieving exports of 6 times from present level of 0.5 billion in 2010.

The Government has already set up Telecom Equipment and Services Export Promotion Forum and Telecom Testing and Security Certification Centre (TETC). A large number of companies like Alcatel, Cisco have also shown interest in setting up their R&D centers in India. With above initiatives India is expected to be a manufacturing hub for the telecom equipment.

Opportunities

India offers an unprecedented opportunity for telecom service operators, infrastructure vendors, manufacturers and associated services companies. A host of factors are contributing to enlarged opportunities for growth and investment in telecom:

An expanding Indian economy with increased focus on the services sector
Population mix moving favorably towards a younger age profile
Urbanization with increasing incomes

Investors can look to capture the gains of the Indian telecom boom and diversify their operations outside developed economies that are marked by saturated telecom markets and lower GDP growth rates. Till recently, the industry believed that while the hike in Foreign Direct Investment (FDI) limits was necessary, it was not a sufficient condition for growth of the telecom sector. With most of the regulatory uncertainty getting over, there is heightened interest in Indian telecom.

Further, at a time when global telecom majors are struggling to cope with their losses and the rollout of 3G networks, which has been a non-starter for close to a year now; India, with its telecom success story, represents an attractive and lucrative destination for investment. Inflow of FDI into India’s telecom sector during Jan 1991 to June 2007 was about Rs 20342.9 crore. Also, 20 per cent of the approved FDI in the country is related to the telecom sector.

The trend of FDI inflow in the telecom sector from 1993- Jan 2007 (calendar year) is shown in the chart given below,

Research & Development

India has proven its dominance as a technology solution provider. Efforts are being continuously made to develop affordable technology for masses, as also comprehensive security infrastructure for telecom network. Research is on for the preparation of tested infrastructure for enabling interoperability in Next Generation Network. It is expected that the telecom equipment R & D shall be doubled by 2010 from present level of 15%. Modern technologies inductions are being promoted. Pilot projects on the existing and emerging technologies have been undertaken including WiMax, 3G etc. Emphasis is being given to technologies having potential to improve rural connectivity. 3G policy is also in the process. Also to beef up R&D infrastructure in the telecom sector and bridge the digital divide, cellular operators, top academic institutes and the Government of India together set up the Telecom Centres of Excellence (COEs). The main objectives of the COEs are as follows:

· Achieve Telecom Vision 2010 that stipulates a definite growth model and take it beyond.

· Secure Information Infrastructure that is vital for country’s security.

· Capacity Building through Knowledge for a sustained growth.

· Support Planned Predictive Growth for stability.

· Reduce Rural Urban Digital Divide to reach out to masses.

· Utilize available talent pool and create environment for innovation.

· Management of National Information Infrastructure (NII) during Disaster

· Cater the requirement of South East Asia as Regional Telecom Leader

To achieve these objectives seven Centre of Excellence in various field of Telecom has been set up with the support of Government and the participation of private /public telecom operators as sponsors, at the selected academic institutions of India. The details of COEs are enumerated below: -

TCoEs Centres

*Sr. No.*	*Associate Institute*	*Sponsor*	*Work Assigned*
1	IIT Kharagpur	Vodafone Essar & Texas Instruments	Next Generation Network (NGN) & Network Technology
2	IIT Delhi	Bharti Airtel	Telecom Technology & Management
3	IISC (Indian Institute of Science), Bangalore	Aircel & Texas instrument	Information Security & Disaster Management of Infrastructure
4	IIT Kanpur	BSNL & Alphion	Technology Integration, Multimedia & Computational Mathematics
5	IIT Chennai	Reliance Communication	Telecom Infrastructure & Energy
6	IIT Mumbai	Tata Teleservices	Rural Applications
7	IIM Ahmedabad	Idea Cellular	Policy, Regulation, Governance, Customer care & Marketing

Telecom Development – International comparison

Telecommunication has grown very rapidly in India. However, viewed in the context of global growth pattern and indicators, it needs to achieve more in terms of tele density. As compared to China at 62.62% in December 2006, the teledensity in India was only 18.47 % as on 31^stDec 2006. There is a positive co-relation between the teledensity and the GDP of a country as the growth in the telecommunication sector has linkages to the other sectors of the economy. It is therefore, imperative that the telecommunication sector in the country grows at a rapid rate so that the access is available in all parts of the country including rural and remote areas. The status of tele density along with other indicators like population, per capita income etc. at an international level are given in the table below:

Status of telecom indicators in some countries as on December 2006

*Country*	*Population (in million)*	*GDP per capita (US$)*	*Total Telephones (000s)*	*Teledensity (%)*
*Brazil*	188.88	4742.00	126063.00	67.63
*China*	1323.64	1732.00	828844.00	62.62
*Germany*	82.72	33877.00	138500.00	167.44
*Japan*	128.22	35513.00	156853.00	122.33
*India*	1119.54	733.00	206820.00	18.47
*Indonesia*	225.46	1288.00	78623.70	34.87
*Korea (Rep)*	47.98	16388.00	67063.00	139.76
*Malaysia*	25.80	5030.00	23805.80	92.28
*Pakistan*	157.00	718.00	39746.60	25.32
*USA*	301.03	41768.00	405031.90	134.55

Source: International Telecommunication Union

Targets Set By Government

1. Network expansion

500 million connections by the year 2010.
Provision of mobile coverage of 90% geographical area by 2010.

2. Rural telephony

One phone per two rural households by 2010 (about 80 million rural connections).
Reduce urban-rural digital divide from present 25:1 to 5:1 by 2010.

3. Broadband

Broadband with minimum speed of 1 mbps.
Broadband coverage for all secondary & higher secondary schools and public health care centres by the year 2008.
Broadband coverage for all Grampanchayats by the year 2010

4. Infrastructure Sharing

USO subsidy support scheme for shared wireless infrastructure in rural areas with about 18,000 towers by 2010.
Increase sharing in urban areas to 70% by 2010.

5. Introduction of Spread of IPTV and Mobile TV

IPTV in 600 towns by 2010.

6. Manufacturing

Making India a hub for telecom manufacturing by facilitating more and more telecom specific SEZs.
Quadrupling production in 2010.
Achieving exports of 6 times from present level of 0.5 billion in 2010.

7. Research & Development

Pre-eminence of India as a technology solution provider.
Comprehensive security infrastructure for telecom network.
Tested infrastructure for enabling interoperability in Next Generation Network.
Doubling the telecom equipment R&D by 2010 from present level of 15%.

8.International Bandwidth

Facilitating availability of adequate international bandwidth at competitive prices to drive ITES sector at faster growth.

Indian Telecommunications at a glance

(As on 31^st October 2007)

Rank in world in network size	3^rd
Tele–density (per hundred populations)	22.56
*Telephone connection (In million)*
Fixed	39.14
Mobile	217.13
Total	256.27
Village Public Telephones	5.6 lakh
Foreign Direct Investment (in million)	2,07,178.05 million (on July, 2007)
Reduction in national and international Long Distance Tariffs	97%
*Licenses issued*
Basic	2
CMTS	60
UAS	97
Infrastructure Provider I	173
Infrastructure Provider II	7
ISP (Internet)	382
ISP with Telephony (Broadband)	125

Mohinder Verma - Account Technology Specialist Microsoft : Telecommunications