It was, however, in 1850 that the Board of Directors of the East India Company sanctioned construction of a telegraph line between Calcutta and Diamond Harbour. The work was naturally entrusted to Dr.O'Shaughnessy. Construction of the line started on 5^th November, 1850 and the first telecommunication line was opened for traffic in 1851, primarily for official work. That year also saw the beginning of the large scale construction of telegraph lines and in 1855 the telegraph service was made available for the public.

    With the invention of the telephone by Dr. Alexander Graham Bell in 1876, experiments with telephone started in India too. The first telephone exchange was commissioned in India in 1882. For this purpose the Government of India had given licences to the Oriental Telephone Company, a British firm, to establish exchanges at Calcutta, Madras, Bombay, Rangoon and Karachi in 1881.

    The year 1882 saw commissioned exchanges in Bombay with 90 subscribers, in Calcutta 102 subscribers, in Madras 24 subscribers, in Rangoon 17 subscribers and in Karachi 11 subscribers. However, development in the pre-independence period remained very slow.

    After partition, independent India was left with 7,330 telegraph offices, of which 73 were departmental, 3,251 combined posts and telegraph offices and 4,006 railway and canal licensed telegraph offices. There were 321 departmental exchanges with 82,985 telephones and 2,166 private and private branch exchanges with 28,155 telephones. In addition, there were 2,270 telephones in non-exchange systems. There were 537 public call offices throughout the country. The total fixed assets of the combined Posts and Telegraph Department amounted to Rs.315.1 million, out of which Rs.292.6 million were for telecommunication services.

    The trunk and telegraph communications were entirely based on aerial lines. On 31^st March, 1948 there were 80,873 miles of telegraph and trunk telephone lines and 9,746 miles of local telephone lines. Some of the trunk lines had three channel open wire line carrier telephone and voice frequency telegraph systems superimposed on them. The total channel mileage for telephone carrier system was 11,832 and for the voice frequency telegraph systems 1,52,508.

    During 1948-49, the number of departmental exchanges rose from 321 to 387 and the number of telephone connections rose from 82,985 to 84,200. Eight new trunk exchanges were installed at Bareilly, Agra, Calicut, New Delhi, Ahmedabad, Ferozepur, Ambala and Patna. Twenty-three channel systems, seven single-channel systems and 15 voice frequency telegraph systems were installed. Major expansion was undertaken at Delhi by commissioning a 2000 line exchange at Connaught Place. Studies were initiated for installation of 12 channel carrier system on the main trunk routes and for installation of trunk cable systems among centres throughout the country.

    The First Five Year Plan, with an outlay of Rs.470 million for the telecom sector was the very first step towards crystallising the objectives of the telecommunication services. The plan envisaged renovation, automatisation and expansion of telephone exchanges in Calcutta, Bombay, Delhi, Madras, Kanpur, Ahmedabad, Pune etc., and installation of 12 channel carrier system to interconnect major cities. It also envisaged the opening of a telegraph office in every town with a population of 5,000 or more and in every sub-divisional and tehsil headquarters irrespective of the size as also setting up of public call offices in all administrative headquarters towns and sub-divisional headquarters towns and sub-divisional headquarters eventually to be extended to smaller towns and rural areas.

    Subscriber trunk dialling was introduced on a point-to-point basis during the Second Plan which was later extended on a nationwide basis through trunk automatic exchanges. During the Third Plan, Pentaconta Cross-Bar Exchanges, microwave system in the field of transmission and telex service were introduced. With the establishment of domestic satellite network during the Annual Plan periods of 1979 and 1980, the satellite communication system was introduced. During the Sixth Plan, SPC Electronic Analogue Exchanges were introduced and a beginning was made towards the introduction of Digital Electronic Exchanges.

    The two basic thrust areas of the Eighth Plan consist of rapid expansion of telecom network and transforming it into a modern and most efficient one. DoT's Eighth Plan (1992-97) with an approved outlay of Rs.239.46 billion envisages provision of 75 lakh new connections. The DoT has formulated developmental activities for accelerated growth of 15 to 20 per cent of telecommunication services in urban areas and extension of the service to rural areas as developmental infrastructure.

    During the Eighth Five Year Plan (1992-97), 8.7 million telephones were added, which is about 150% of the total number of telephones at the beginning of the Plan period. The average annual growth rate of DELs during the Eighth Plan period was over 20%. During the first three years of Ninth Five Year Plan period ie. 1997-98 , 1998-99 and 1999-2000, it was targeted to provide 29 lakh , 36 lakh and 45.5 lakh new telephone connections respectively. Against this target, 32.6 lakh , 37.92 lakh and 49.17 lakh of new telephone connections were provided. The annual growth rate of the number of telephones in the country for 1997-98 , 1998-99 and 1999-2000 has been 22.4% , 21.3% and 22.7% which are the highest in recent years.

    As a result of the faster growth, the waiting list which stood at nearly 40% of the total DELs at the beginning of Eighth Plan period as on 31-3-92 has declined to 19.9 % by March 1997, the end of the Plan period and it has now become 13.9% as on 31-03-2000.

Net Switching Capacity (Lakh) 72.35

Direct Exchange lines (Lakh) 57.9

TAX (Lakh lines) 5.15

Village Public Telephones 1,00,000

Microwave including

UHF (RKMs) ) 10,000

Optical Fibre Cable (RKMs) 1,00,000

* The telephone connection shall be provided on demand and it shall be sustained.

* The Network shall be made fully digital. All the technologically obsolete analog exchanges will be replaced with digital exchanges.

* To provide digital transmission links up to all SDCAs during the Ninth Plan period.

* Digital connectivity shall be made available to all the exchanges by 2007.

* Extensive use of Optical fibre System in the local, Junction and long distance network so as to make available sufficient bandwidth for the spread of Internet and Information technology.

* ISDN services shall be extended to all the district headquarters, subject to demand.

* To provide Intelligent Network Services, progressively, all over the country.

* To set up Internet Nodes progressively up to District headquarters’ level.

* Upgrading existing STD/ISD PCOs to full fledged Public Tele-Info Centres (PTIC) for supporting Multi media capability and Internet Access.

* Replacement of life expired, analogue coaxial and radio systems.

* Introduction of Wireless technology (Supporting Internet Access) and optical fibre technology in subscriber loop will be gradually increased.

* Introduction of latest telecom services like National directory enquiry, computerization etc.

1. Availability:-

2. Accessibility:-

- Provide telephone facility in all the villages.

- To increase the number of telephones in the villages where only single telephone is working to meet the requirement of increased economic activity.

- Public call offices for every 500 population in urban areas.

- S.T.D. PCOs on National Highways for every 10 kms.

3. Subscriber Trunk Dialling and connectivity:-

- Provide S.T.D. facility to all exchanges by the year 2000.

- All exchanges upto SDCC level to have digital connectivity.

4. Modernisation and upgradation

- Replace life expired and Technologically obsolete switches with digital switches.

- Manual Trunk Services in SSA Headquarters to be computerised.

- Computerised records of cable network.

- Wireless in local loop,H.D.S.L, A.D.S.L and Optical Fibre technologies will be gradually introduced in the local network.

- Common Channel Signalling No.7 to be introduced upto DHQ level along with synchronisation of transmission & switching network.

- Introduction of Better and reliable technologies for providing Village Public Telephones.

- All life expired and unserviceable analogue systems will be replaced with digital systems.

5. Reliability

- All exchanges will have reliable media.

- Diversity in transmission network between TAXs.

- Network management system for control and management

of network.

6. Data Network:-

- PSPDN (Packet Switched Public Data Network) to cover all DHQs.

- Frame relay network to provide access upto 2 Mbs will be introduced in major cities.

- High speed VSAT network for providing Voice and Data will be expanded.

- ATM network will be introduced.

- Internet network will be expanded.

7. Modernisation of Customer Services:-

- Computerised billing and accounting in all the Divisions.

- Modernise Fault Repair Service.

- Computerised Directory Enquiry Services for all SSAs.

- Completion of National Directory Enquiry service for all SSAs

- Computerise Commercial activities in all the Divisions.

- Provide greater accessibility for payment of bills.

- Provide single window customer service centres.

8. New Services:-

    It is aimed to provide widest permissible range of service with(the quality of service of) world standard quality to the customers at reasonable prices. The following services are identified to be introduced by DOT:

- ISDN upto all SSA Headquarters.

- IN in all major cities

- Internet Services

- Mobile Satellite Service

- Personal Communication Service

- Multi-media services.

    The following services have been identified as Value Added Services by the Department of Telecom for franchise to private /public sector companies on non exclusive basis:

- cellular mobile Telephone service

- Radio Paging Service

- Electronic Mail

- Voice Mail and Audiotex service

- Video Conferencing

- Videotex

- Internet

- Public Mobile Radio Trunked Service

- 64 kbps CUG Data service through VSAT

- Credit and Authorisation

9. Telegraph :-

    Ensure delivery of 98% of the telegrams with in 12 hrs. and 100% of telegrams with in 24 hrs. through Store and Forward Fax facilities as and by modernisation of telegraph services by the introduction of micro-processer based technology.

10. Special Focus Areas :-

    While providing telecom facilities liberally during the plan period 1997-2002, priority for early completion within this period will be given to the following areas :

- Sensitive Border areas

- Tribal and Hilly areas

- Industrial Growth Centres

11. Staff Quarters:-

- Achieve a staff satisfaction ratio of 20% on the average by 2002.

    A Mid Term Appraisal of the Plan has been conducted. The salient points of the review are :

* To make available sufficient bandwidth for the spread of Internet and Information Technology.

* To set up Internet Nodes at SSA Headquarters by January 2000 and then up to DHQ level.

* To provide ISDN (Integrated Services Digital Network) facility. It has been planned to introduce ISDN up to DHQ-level, subject to availability of demand.

* To provide IN (Intelligent Network) services in the first phase in a few major cities and in the second phase all over the country.

* To enhance the provision of optical fibre for providing reliable communication media and setting up of backbone network.

Revision of Targets

* Increase in the target of providing new telephone connections and Village Public Telephones since the contribution of private basic service operators has been very less as compared to the initial estimates.

* Increase in the target of Optical Fibre Cables.

    The original outlay was Rs. 83,250 crore. Due to the decrease in the cost of various equipment, the revised outlay, despite the increase in targets, is only Rs. 74,134 crore of which DoT's portion is Rs. 66,708 crore and that of MTNL Rs. 7,426 crore.

    As on 31-3-2000, telephone density (including mobile phones) was 2.85 telephones per hundred population in the country. New Telecom Policy 1999 envisages to achieve a teledensity of 7 by the year 2005 and 15 by the year 2010.

    SDH technology is being inducted on the optical fibre from 1997-98. This consists of STM-I, STM-4 AND STM-16 equipment. 10 rings of 2.4 Gb STM-16 network of about 17,000 Route Kilometres have already been commissioned to connect the 4 metros and the major cities in the country to achieve a highly reliable and very high capacity backbone network for the information super highway. There are also plans to induct DWDM technology to make available Bandwidth on demand.

    The DOT has already firmed up plans to cover all the District Headquarters in the country with reliable digital media. By the year 2002, DoT will further extend this network to cover all the exchanges upto SDCC (Short Distance Charging Centre) level and also increase the bandwidth to meet the requirements of information flow/ computer communication of information industry. By the year 2007 SDH technology system upto STM-16 will take over from the PDH technology.

    Customer access network also will get a boost with more and more Optical Fibre being deployed in the subscribers loop. Emphasis will be made in introduction of Wireless in Local Loop (WILL), Digital Loop carrier systems based on Fibre To The Curb(FTTC) or Fibre To the Building (FTB).

    Target of National Telecom Policy of providing one PCO for every 500 urban population has been achieved. The status of urban PCOs as on 31.7.2000 was 7 lakh.

    The assessment of provision of Telecom facilities for the Perspective Plan period (2000-2010) is indicated below :

1. Direct Exchange Lines lakh lines 527.86

2. Mobile Phones lakh lines 428.40

3. TAX capacity lakh lines 65.75

4. Microwave Rkms 40500

5. Optical Fibre Rkms 280000

    During 2001 to 2005 time frame hybrid switches with the capability of supporting both narrow band and broad band services i.e STM and ATM switch block are likely to be available. With the advantages offered by SDH technology in the terms of larger capacity, higher reliability provided by Self Healing Rings, efficient performance monitoring and measurement, SDH technology will be introduced. With gradual introduction of SDH ATM techniques, the traditional switching and transmission will be converged.

    ISDN services will be extended to all the district headquarters and Intelligent Network services in all major cities. Internet Services will percolate to almost all parts of the country. Also, it is aimed to provide widest permissible range of service with (the quality of service of) world standard quality to the customers at reasonable prices. Many services such as Mobile Satellite Service, Personal Communication Service and Multi-media services are identified to be introduced by DOT.

    Services including the Value Added services such as Cellular Mobile, Radio Paging, Electronic Mail, Voice Mail, Video Conferencing, Videotex, Public Mobile Radio Trunked Service, 64 kbps CUG Data service through VSAT and Credit and Authorisation will continue to be franchised to private/ public sector companies.

    The total investment requirement during the Perspective Plan period (2000-2010) for DOT and MTNL is estimated at Rs.254179 crore.

    The Plan will be financed mainly through internal resource generation supplemented with public borrowings leasing etc.

    As the country advances in the other sector of economy the demand for telephones is also expected to shoot up and then it would be possible to achieve the targets of tele-density 7 by the year 2005 and 15 by 2010 for the country as envisaged in the New Telecom Policy 1999. The projections made now may call for a review after the end of the Ninth Five Year Plan.

    Currently, India has a relatively low tele-density of about 3%, with plans for attaining telephone on demand by 2002, a tele-density of 7 by 2005 and 15 by 2010. Considering, India’s current population of over one billion, it has been estimated that for achieving these objectives, approx 75 million telephone connections would be required to be provided by 2005 and 175 million telephone connections by 2010. At current prices, this translates into an additional investment of approx US$ 37 billion (Rs. 1,600 billion) by 2005 and US$ 69 billion (Rs. 3,000 billion) in the next five years, i.e. by 2010. Considering the international trends of relatively high teledensities, and the explosion in demand with economic growth, the actual growth in the network size is expected to be much higher. The investment potential is not limited to the basic telephone services, but is spread across a wide range of services using latest technologies, be it cellular, internet, paging, radio trunking, GMPCS, or other value added services. The huge surge in growth of various services would facilitate an enormous growth in the market for telecom equipment. Besides, India offers a very attractive base as a regional hub for locating manufacturing facilities for this sector.

    India’s rural telecom network has undergone tremendous transformation with the induction of Small and Medium size electronic digital exchanges of C-DoT technology. Out of the 28,394 telephone exchanges in the country, about 22,032 are working in the rural areas. Presently, about 18% telephones are working in rural areas. This means that out of 265.11 lakh Direct Exchange Lines(DELs), 216.69 lakh lines are working in urban areas and 48.42 lakhs in rural areas.

    Out of the 6,07,491 villages in the country, Village Public Telephones (VPTs) have been provided by the Department of Telecom in 3,74,605 lakh villages as on 01.04.2000. Remaining 2,32,886 villages are proposed to be covered by the Department of Telecom Services(DTSs) by March 2002. Private sector contribution to supplement the efforts of the Government is also envisaged in the 9th Plan in this regard.

    The analogue MARR systems used for the Village Public Telephones have not been found dependable. DoT has planned to introduce the following technologies in rural areas:-

(i) Satellite Based Public Telephones.

(ii) Wireless in Local Loop(WLL) systems.

(iii) C-DoT-based TDMA PMP systems.

    Introduction of new services based on ISDN to the rural areas such as tele-education and tele-medicine have been planned. With the extension of Digital connectivity to the District head-quarters and progressively to the sub-divisional level it would be possible to provide latest telecommunication facilities to the rural areas.

    Telecommunications today is the most vital infrastructure for the socio-economic progress of a nation. In the present Information Age, telecommunications being the purveyor of information and knowledge, Geographical location has become immaterial; the only necessities are availability of world-class skills and connectivity. Indian skills are already globally recognised as second to none, and the Government has been determined to upgrade and modernize the telecom infrastructure to world standards. A series of reforms have been undertaken. The process rapidly accelerated in the recent past and the reforms are now complete, with all the sectors in telecommunications opened for private participation.

    The process of liberalization in the country, however, began in the right earnest with the announcement of the New Economic Policy in July 1991. Before that, in the first stage of entry of private investment in telecom sector in 1984 manufacture of low technology items viz. Terminal equipment were permitted in the private sector. Later, the private sector was permitted to manufacture low capacity switching transmission equipment. With the announcement of the New Economic Policy, the entire telecom manufacturing sector was opened up for private investment. The Government opened up various Value Added Services to the private sector in July 1992. With it, first the cellular services in metro and then other value added services like paging services got opened up. However, the process was further accelerated and the National Telecom Policy was announced in 1994, and with it, the Basic Telephone Services were also opened for private participation in addition to cellular telephony in Circles. The National Telecom Policy 1994 defined certain 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. In accordance with NTP 1994, detailed guidelines were laid down in respect of provision of Basic services by the private sector. However, some of the targets of NTP 1994 could not be achieved and the private sector entry remained slower than what had been envisaged. Another important landmark in the telecom reforms was the establishment of Telecom Regulatory Authority of India in 1997 under the newly passed TRAI Act.

    The most important milestone and instrument of telecom reforms in India has been the New Telecom Policy 1999 (NTP 99). It aims at creating an ideal investment environment to enable setting up of a world-class telecom infrastructure. It also aims at creating a level playing field, strengthening the regulator, attracting private investment, catering for convergence and leveraging on technological advancements. Key features of the NTP 99 include:

• Strengthening of Regulator.
• National long distance services shall be opened to private operators.
• International Long Distance Services – opening of entry to private sector to be reviewed by the year 2004.
• Private telecom operators shall be 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 shall be permitted.
• Department of Telecommunication Services (DTS) shall be corporatised by 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.

    Following are the significant features:

    TRAI Act was amended, first through an Ordinance, in January 2000 and then through the TRAI Act 2000 to reorganize and strengthen the Regulator. As a result:

• The TRAI has been fully empowered to provide recommendations on various aspects related to the functioning of telecom service providers and to discharge certain regulatory functions.
• The Government shall seek recommendations of the TRAI on need and timing for introduction of new service providers and terms and conditions of the licence and consultations with TRAI has been made mandatory and time-bound, in a number of spheres.
• A new high-powered Telecom Dispute Settlement and Appellate Tribunal which is presided over by a retired Supreme Court Judge has been constituted to bring the benefits of an open, fair and competitive communications sector with a level playing field and time-bound resolution of disputes.
• The Telecom Dispute Settlement and Appellate Tribunal (TDSAT) has been empowered to adjudicate on disputes between a licensor and a licensee; between two or more service providers; and between a service provider and a group of consumers. It shall also act as the appellate authority in respect of any directions, decisions or orders of TRAI.
• It envisages time bound (a period of 60 days has been stipulated) decision on appeals and applications made to it. Any appeal thereafter, shall lie to the Supreme Court.

    The opening of International Long Distance telephony service to competition was scheduled to be reviewed by the year 2004. It has now been decided that the monopoly granted to VSNL till 31.3.2004 will now end on 31.3.2002 ahead of schedule, and VSNL will be given a package of compensation in lieu of the premature termination of this monopoly.

    Migration of existing operators to revenue sharing regime has been completed, paving the way for uniform application of NTP 99 all over the country, and resolution of the erstwhile problems. The cap on the number of operators/players in a particular circle both for basic and cellular (within the availability of the spectrum) mobile service has been removed to facilitate greater competition. The Airtime charges and rentals for cellular mobile service have also been revised downwards. The revenue sharing mechanism is being worked out in consultation with the TRAI.

    Action for providing cellular service in the country by BSNL and MTNL has already started. MTNL will start the service in Delhi and Mumbai by November 2000 and BSNL by November-December, 2000 in four states i.e. Kerala, Andhra Pradesh, Bihar and West Bengal.

    The Sankhya Vahini Project has been approved. The objective of the project is to establish a high speed data network in India for the benefit of educational institutions, public and private corporations, service providers, individuals etc. for learning, training, research and other multi-media activities.

    The National Internet Backbone(NIB) Project which is a broad-based access network meant to provide convenient and easy accessible points to the ISPs is under implementation. This is expected to provide better internet service to the subscribers.

    Every district headquarters have been provided internet access and the same is being extended to taluk/block headquarters level.

    Phase-I of the Sanchar Sagar project has been completed in the first week of August 2000. The Project was conceived to provide National Information Infrastructure, connectivity for the National Internet Backbone and bandwidth on demand. The Phase-I of the project covers a route length of approximately 17,000 kms. and provides 10 very high speed 2.5 Gbps capacity rings, connecting 33 large cities all over the country including major state capitals. The increased availability of Bandwidth will benefit a large number of internet service providers, software companies and users of leased high-speed data circuits. The project is also expected to give a big boost for e-commerce and other IT enabled services.

    The work on Phase-II of the Sanchar Sagar project has already begun. The Phase-II project covering a route length of 36,000 kms. on 2.5 Gbps capacity rings will connect an additional 150 cities. All the 32 rings of this project are likely to be commissioned progressively from now on till March 2001. With the completion of the Sanchar Sagar Phase-II project, costing Rs. 257 crore, it would become possible to provide bandwidth on demand.

    The Government has announced that for Fixed Service Providers, there will no restriction on the number of private operators, subject to the guidelines on matters like entry fee, revenue share, eligibility criterion, etc.

    It has been decided that in Cellular telephone service, one more private operator in each of the service areas (circles/metros) will be inducted, subject to guidelines on matters like entry fee, revenue share, eligibility criterion, etc.

    In GMPCS service, participation of private operators has been allowed without any restriction on the number of operators, subject to the guidelines on matters like entry fee, revenue share, eligibility criterion, etc.

    The corporatisation of Telecom Services as envisaged, has been achieved and a new corporate entity, viz., the Bharat Sanchar Nigam Limited has come into being on 1.10.2000. The new company with Book value of assets assessed at Rs. 68,000/- Crores and annual turnover of Rs. 20,000 crores is the largest telecom service provider in the country. The company is fully owned by the Central Government, is expected to step up country’s resolve to achieve an inter national standards in terms of quality of service and price.

    A new National Frequency Allocation Plan (NFAP-2000) has been made public last year in close collaboration and cooperation of the private sector and government departments, and this Plan came into effect from 1^st January, 2000. This NFAP-2000 contains the International Table of Frequency Allocation as per Radio Regulations of the International Telecommunication Union (ITU), Geneva, as well as the National Table of Frequency Allocations. Special requirements of the country have been taken into account and special provisions appear as "Indian Remarks". Channelling plans of frequency usage in certain frequency bands have also been appended to this NFAP-2000. This Plan will enable optimum utilization of the spectrum for development, management and utilization of this scarce natural resource.

• Further, all the required information regarding grant of licence and siting clearance by SAFCA have been put on the Website for better understanding and utilization by the Spectrum users in the country. Applications for grant of siting clearance are updated on weekly basis.
• In order to interact closely with the industry, an Advisory Group has been constituted under the Chairmanship of Wireless Advisor to the Government of India with representatives from different Ministries and the industry. This Advisory Group will monitor the processing time for applications and other related activities so that delays could be identified for taking suitable remedial action.

    The problem of right-of-way clearances to service providers has been resolved and guidelines issued to all concerned.

    A Convergent law in replacement of Indian Telegraph Act 1885 is under active formulation, to be finalized shortly.

    The Government is fully aware of the need of expansion of bandwidth availability in the country, both international and domestic, and ensuring that the supply precedes demand.

• VSNL has been asked and is in process to expedite the procedures for purchase of bandwidth with short span of time to meet the demand. It has already procured 350 Mbps and at much cheaper rates. As per the recent bandwidth acquisitions made by VSNL, a total of 750 Mbps will be available by December 2000. It is expected that VSNL will be able to meet the bandwidth requirement "on demand".
• As a result of opening of NLD and provision of Infrastructure Provider – category I as well as PSUs like Power Grid, Railways and GAIL entering the field, the availability of domestic bandwidth will considerably increase. Further, with the DWDM, Sankhya Vahini and Sanchar Sagar schemes, there will be further multiplication of available bandwidth in the country.
• Instructions have also being issued to field units to expedite the provisioning of domestic part of bandwidth and leased circuits.
• Standing Committee on bandwidth has already been constituted for overseeing the requirements of bandwidth and leased circuits for Industry.
• Private ISPs have been allowed to set up own landing stations for submarine cables.
• FDI guidelines for ISPs (not providing gateways, both for satellite and submarine cables), Infrastructure Providers providing dark fibre (IP Category I), e-mail and voice mail have been further liberalized and FDI cap of 49% has been removed subject to licensing and security requirements.

    The Government is conscious of the need of reduction in tariffs to internationally competitive levels, to raise India’s profile as it competes against numerous other South and Southeast Asian countries for foreign investment. It is, however, to be recognised that the reduction to internationally competitive levels will be done over a period of time. The Government has already set up an independent Telecom Regulatory Authority of India (TRAI) under the TRAI Act which is fully empowered in this regard.

    As per the power conferred on the Authority under Section 11(2) of the above Act, it has already carried out rebalancing of tariffs in line with costs and international trends. The first phase of rebalancing was effected from 1.5.99 and the second phase is operational from 1.10.2000. On account of these the tariffs in respect of long distance calls – both national and international, have been reduced on an average by 23% (in phase-I) and 17%-ISD and 13%-STD (in phase-II) respectively.

    With setting up of independent regulatory authority, India has moved in step with the practices followed by other telecom administrations internationally.

    The Government has taken a number of measures to lower customs duties on the telecom and telecom services related equipments. In this connection, specified telecom equipment for Basic, Cellular, Paging, VSAT, PMRTS and Internet Services covered under Custom Notification No. 16/2000 are being allowed at concessional rate of 5% basic duty, if they are imported by a person licensed by the DoT for the purpose of providing the above services. In fact, reduction of customs duty from 25% to 5% on Cellular Mobile Telephones has seen the number of cellular users altogether almost doubling, by more than a million, during the last few months. Custom duty on ATM switches, Frame Relay switch and Routers has been reduced from 25% to 5% for ISPs.

• Further, by a recent announcement, Customs duty has been lowered:
• Radio Pagers (and their parts) & Radio Trunking Terminal from 25% to 5%
• Individually sheathed Optical Fibre Cables from 25% to 15% and other OFC to 25% .
• Customs duty for silica for optical fibre and PRP rods from 15% to 5%
• Dense Wave Division Multiplexing equipment and Ethernet switches imported by ISPs from 25% and 15% to 5%

    FDI upto 100% is already allowed in manufacturing; similarly now, FDI upto 100% has been allowed (cap of 49% removed) in the following areas subject to licensing and security requirements:

1. ISPs not providing gateways (both for satellite and submarine cables)
2. Infrastructure providers providing dark fibre (IP Category I)
3. Electronic Mail
4. Voice Mail

    The Government has decided to allow restructuring of equity of the licensee company. The lock-in stipulation on share holding for five years provided in the Migration Package stands modified to the extent as under:

1. An existing foreign partner may substitute another foreign partner of similar standing and experience subject to DoT’s approval.
2. The existing Indian partner(s) have been allowed to acquire the foreign partner’s shareholding; and
3. Transfer of equity inter-se between existing Indian promoters has been permitted, provided the majority Indian partner continues to hold at least the present shareholding for a period of five years from the effective date of licence agreement as per the migration packages. Merger of Indian companies has also been permitted, as long as competition is not compromised.

    The above would help in creating of an environment that fosters mergers, acquisitions and amalgamations, which will facilitate creation of globally competitive Indian telecom entities but at the same time ensure that the consumers get the benefits of competition. However, to ensure benefits of competition to the consumers, operators providing same services in a service area with limited competition may not be allowed to amalgamate.

    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.
• Procedures for 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 evolved.
• Foreign equity of 49 percent permitted in basic, cellular mobile, paging, value added services and global mobile personal communications by satellite on an automatic basis.
• 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.

    As envisaged in the National Telecom Policy'99, National Long Distance Service (NLD) has been opened to private sector and the guidelines to this effect have been issued. There will be no restriction on number of operators providing NLD service. The license for NLD shall be granted to the Indian registered company. Foreign equity in such companies is also allowed upto 49%.

    A company seeking license for NLD service should have a minimum paid-up capital of Rs.2.5 billion and the promoters of such company should have combined net worth of Rs. 25 billion. The applicant company shall pay one time entry fee of Rs.1 billion and in addition four bank guarantees of Rs.1 billion each, which will be released on fulfillment of the network roll out obligations. The license shall be issued for a period of 20 years, extendable by 10 years.

    NLD operator will be allowed to carry inter circle long distance voice and data traffic; and intra-circle traffic with mutual agreement with fixed service providers.

    In addition to the above, private participation is also permitted in setting up of infrastructure under NLD policy. Infrastructure Providers (IP) has been divided into: Category-I, who will provide infrastructure viz. towers, buildings, dark fibre etc. and Category-II, who will provide end-to-end bandwidth.

    Internet Service Provider’s (ISP) licenses have so far been granted to about 400 companies. Over 80 companies have already commenced providing internet services in the country. There is no restriction on the number of ISPs. No license fee is payable upto October 31, 2003; thereafter a token license fee of Re.1 per annum is payable. ISPs are free to fix their own tariff.

    ISPs have been permitted to establish their own international gateways for carrying internet traffic. Clearances have been given for establishment of about 120 Internet gateways in various parts of the country using satellite. Recently, ISPs have also been permitted to set up submarine cable landing stations for international Gateways for Internet.

    This liberal policy for ISPs is expected to promote fast proliferation of Internet within the country and give boost to applications, like electronic commerce, web-hosting, virtual private networks, etc.

    The number of internet users is multiplying exponentially. The Government has announced a policy of promoting "Sanchar Dhabas" – Community Communication Cafes – at village levels, vastly increasing internet access.

    Licences have been issued to private companies for providing basic telephone services for six circles – Andhra Pradesh, Gujarat, Maharashtra, Madhya Pradesh, Punjab and Rajasthan. Services by private operators have commenced in Andhra Pradesh, Maharashtra, Madhya Pradesh, Gujarat and Rajasthan. The subscriber base of these operators is rapidly growing. The private operators have till date provided 164 thousand lines. The existing licenses were issued under the old regime of fixed license fee, but the operators are now in process of migration to the NTP’99 regime. The entry fee and percentage of revenue share shall be determined based on recommendations of TRAI. Licence period would be for 20 years, extendable by 10 years. Basic service providers are permitted to establish last mile linkages and carry their own long distance traffic within their service area. They are to be permitted direct interconnectivity and sharing of infrastructure with other basic service providers or any other type of service providers in their area of operation.

    Licences have been awarded to two operators in each circle for cellular services. At present, 22 private companies provide cellular services in 18 circles and 4 metro cities. There are 6 slots for cellular services, which are to be offered to private operators – Jammu & Kashmir (2 slots), Andaman & Nicobar Islands (2 slots), West Bengal (1 slot) and Assam (1 slot). There are about 2.3 million subscribers of cellular services in the country, and the number is rapidly growing. The existing licences were issued under the old regime of fixed license fee, but the operators are now migrated to revenue share regime. Licences for cellular services have also been granted to the Mahanagar Telephone Nigam Limited (MTNL) (for Delhi and Mumbai) and the Department of Telecom Operations (for rest of the country). Additional operators may also be licensed based on the recommendations of TRAI. Cellular service providers are permitted to carry their own long distance traffic within their service area. They are to be permitted direct interconnectivity and sharing of infrastructure with other cellular service providers or any other type of service providers in their area of operation.

    There is no restriction on the number of GMPCS licences and licences are issued on first-cum-first-served basis. Gateways for GMPCS are to be located in India and operation and maintenance of the same is to be with an organization designated by the Government. A two tier licence fee is payable – a fixed component plus a variable component as percentage of revenues.

    As the telecommunications and IT infrastructure in the country is expanding, there is a surge in demand for a range of value added services. The scheme for value added services have been considerably liberalized. These services include radio paging, public mobile radio trunking, domestic data using VSAT, etc. Evolution of new services – Tele-education, Tele-medicine, Tele-banking, Call Centre, etc. are catching up with the Indian industry and have recently witnessed significant investments from domestic and foreign investors.

    There is a great potential for large scale establishment of Call centres in India, considering the huge reservoir of English speaking skilled and technical professionals in India at a fraction of US costs and with the favourable difference in time zones. It is to be recognised that almost 55%-60% of the total cost in a Call centre is attributable to HRD costs, and a saving of over 40% therein can make a substantial difference. Furthermore, the costs of leased lines are rapidly coming down. However, with regard to the observations on Internet telephony and Internet Call centers:

    Internet Telephony is not permitted. There is no bar for carriage of Voice Over Internet Protocol (VOIP). However, the use of the Public Internet for carriage of such calls is not permitted.

    Internet call centres are not permitted as per present call center regulations due to the following reasons:-

• As per NTP-99, internet telephony is not permitted at this stage. However, technological innovations are being monitored to review this issue at an appropriate time.
• So far as international call centres are concerned, no PSTN and network connectivity is permitted and for domestic call centres incoming enabled PSTN is only permitted so that it may not infringe upon the jurisdiction of VSNL and National Long Distance Service Providers.

    A number of measures have been taken to strengthen and streamline institutional arrangements to pursue the implementation of various reforms measures further:

• A Development Council for Telecom Sector has been set up under IDR Act under the Chairmanship of Secretary, DoT.
• An NRI Advisory Committee has been set up under the Chairmanship of the Minister of Communications.
• A Bandwidth Advisory Committee has been set up under the Chairmanship of Chairman Telecom Commission
• A new promotional and interactive website – investindiatelecom.com – has been set up to act as a single window and fast responsive communication channel to facilitate private investment in telecom sector.

    Under the liberalized STD/ISD PCO Policy announced in November, 1999 approx. 1.5 lakhs STD/ISD PCOs have been installed. Thus generating an indirect employment to the poor and unemployed masses.

    A Grievances Cell has been set up in the Minister office to monitor the quality of telecom service in the country. The contact details of the cell has been widely publisized so that public can voice their grievances.

    A Task Force has been constitute at the Ministry level to monitor the implementation of the rural telephone programme.