Telecom: A saga of missed opportunities

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India is now counted as amongst the leading telecom markets of the world. But how much of it is due to the initiatives of the UPA government, and how much has happened in spite of it?

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An analysis of the facts shows that had it not been for the stupendous growth in the cellular subscriber user base – the result of aggressive marketing by mobile phone companies – this Government would not have had much to show for its performance.

The reason: a bagful of missed opportunities. For example, the Communications Ministry failed to bring some key next generation reforms, which would have truly catapulted India to the high table of technology adopters.

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Indeed, the list of missed opportunities includes policy initiatives to introduce unrestricted Internet telephony, mobile virtual network operators (MVNOs), preventing unwanted telemarketing calls and enforcing quality of services on mobile operators.

The biggest letdown, however, was the decision to postpone auctioning spectrum for third generation mobile and Wimax-based high-speed broadband services. After years of living with dial-up Internet, broadband speeds that tested everyone’s patience and frequent call drops, consumers deserved the benefits of these new technologies.

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The last five years has also been a story of missed targets and underperformance in the communications sector.

The Government missed its broadband penetration targets by a long shot, given a myopic policy that depended too much on the state-owned companies to fulfil national objectives.

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Another major failure has been the projects undertaken by the Universal Services Obligation fund.

Despite having close to Rs 20,000 crore in its kitty, the USO fund has not been able to bridge the urban-rural digital divide. Some of its projects, such as the one to set up cellular infrastructure in rural areas, have just not taken off.

Slow progress

Not that the Department of Telecom did not think about pushing through all these initiatives. It did, and also made announcements of intent from time to time.

But the slow pace at which decisions were taken made sure that the proposals, some of them were drafted way back in 2004, remained in Government files even after five years.

Often, it seemed that the focus of the Ministry of Communications and IT was elsewhere. Instead of pushing through the reforms, the Ministry courted controversies one after the other, especially in the last two years.

Instead of introducing consumer-friendly initiatives, this Ministry swayed to corporate lobbying. Even moves that were apparently taken with the interest of consumers in mind did not take off.

For example, the decision to give out new licences to 5-6 new players has proved to be a damp squib, with none of the operators launching services, even after a year.

And instead of levying a penalty on them, DoT has diluted the roll-out obligations, giving them more time to sit on the spectrum allocated. To be fair, the Ministry had started out well, as soon as the UPA government came to power.

The policy to encourage global manufacturers of telecom equipment, mobile handsets and semi-conductor chipset makers to set up base in India was path-breaking.

Then there were other encouraging initiatives, such as liberalising the long-distance telephony segment further, allowing operators to share infrastructure, abolishing the Access Deficit Charges and relaxing the foreign direct investment cap from 49 per cent to 74 per cent.

But the gains made in the initial years were squandered when the government allowed individuals with vested interests to run the show.

Problems persist

So, at the end of five years, the same problems persist. Broadband penetration is still sluggish, fixed line telephone segment has recorded negative growth, rural tele-density is pathetic, spectrum allocation remains chaotic, foreign investors are crying hoarse about lack of transparency; and consumers are suffering from frequent call-drops and congested networks.

The Government will probably hide behind the fact that India is now the fastest-growing telecom market, with the lowest mobile tariffs in the world. But even the high growth in the cellular segment is a faƧade.

With the Government adopting subscriber-based spectrum allocation, it is widely known that operators are exaggerating their numbers by at least 20-30 per cent.

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Besides, mobile operators are faced with declining average revenue per user (ARPU) and falling minutes of usage – two key parameters used to judge the health of the sector. Introducing 3G would have enabled the operators to launch services that improve their ARPU.

The UPA Government had an excellent opportunity to build on the goods delivered by the New Telecom Policy 1999.

Unfortunately, though, a sector that epitomises India’s reform process was, ironically, allowed to be strangulated by a few.

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