Statement
by
Mr. Shyamal Ghosh
Secretary, Department of Telecommmunications
 & Chairman, Telecom Commission 
Republic of India

Wednesday, 20 March 2002

Technology is the driving force behind economic development. From the advent of Industrial Revolution it is technological innovation which has been responsible for growth. Presently Information technology is the catalytic agent for growth. For this to be effective there is need to have a robust telecom infrastructure.

The Goal of Reforms in the telecom sector should recognize the need for providing Universal Access leading to a situation where Telecom is available on demand. A necessary corollary of this now is the need to provide at least Broadband public access.

It must be recognized that it was technological changes which lead to the transformation of Telecom from a natural monopoly to a competitive environment. It must also be recognized that the march of technology cannot be stopped on the contrary every step should be taken to facilitate use of new technology and in that context adopt a technology neutral approach. It is apparent that adequate resources will not be available , in developing countries, from the public sector alone to foster the growth needed for accelerating the national economic development in both urban and rural areas. Telecom infrastructure must be recognized as an engine for growth, particularly in the context of I.T. revolution. In India the telecom sector has been growing at an annual compounded growth rate of 22% ; in spite of recessionary trend, this year also it is expected to grow at 22%.The software sector will grow at the rate of 30 %. In fact Satellite Communication has revolutionized software export. What was perceived as a disadvantage has now become an advantage. The time difference between India and USA at one time led to difficulties in communicating. Now this has been transformed into a twenty-four hours virtual Office.

Essential Features of Reforms in India

The reforms process in India followed the typical path that emerged in most countries. There was migration from state monopoly to corporatisation followed by selective privatization of certain state sector services. Side by side private sector was allowed to provide all services – from value added to Basic and then to Domestic and International Long Distance and now Internet telephony. Concurrently an independent statutory regulatory body was constituted to ensure level playing field. There was no restriction on the number of players in almost all the sectors allowing for free play of market forces. It was also the experience that at least initially public sector presence in all the services areas ensured full competition leading to lowering of tariff and increase in customer base thereby facilitating exploitation of economies of scale. This happened particularly in Cellular Mobile Services which has been registering growth of nearly 100 % annually. It has, therefore, been recognized that there is more than enough space for both public and private sector. After all in India a teledensity of 4.5.% reflects that nearly 950 million people are yet to get a telephone.

Lessons to be drawn

A few lessons can be drawn from the Indian Experience. Firstly, competitive forces improves affordability through reduced tariff; secondly, funds from outside Govt. budget become available to facilitate telecom growth but private sector funds are more readily available for deployment in urban areas than in rural areas; thirdly, this phenomenon emphasizes the importance and need for setting up a transparent Universal Service Fund; fourthly, providing a bouquet of application services through e-governance, distance education, telemedicine as well as basic information may provide the necessary sustainability of private enterprise in this area. Above all there is need to synergise efforts of various governmental and non-governmental organizations for this purpose so that instead of constructing schools and dispensaries , virtual classrooms and virtual referrals become a reality. These lessons could provide inputs for drawing up a meaningful action plan for minimizing digital divide and providing Universal Access.

Inherent Contradictions in the Indian experience

While India can claim to have the eighth largest network in the world, with a subscriber base of 45 million, yet teledensity is only 4.5 % ; per capita household penetration may be even lower and rural penetration lower still. While Broadband access is essential for major I.T. application services but it is very costly and not very affordable for individuals. Therefore, to the populistic slogan of need to provide food, clothing and shelter for the common man a fourth component was added, namely bandwidth. There is always conflicting demand on limited resources.

Convergence Phenomenon can address these contradictions

It has been accepted that there is need to develop synergies through convergence of resources of Telecom/IT/Broadcast to facilitate Universal Access. A bill to facilitate convergence has already been introduced in the Indian Parliament to create a super regulatory Commission to regulate both Broadcasting and Telecom. This is in recognition of the fact that there are 45 Million Telecom Subscribers, 80 Million TV owners, 40 Million Cable TV Subscribers and 4 Million PCs all enabling access for Multi-Media services. The benefits of facilitating I.T. enabled services are obvious but needs to be clearly recognized. It will allow people to work from their home, minimize urban migration and reduce urban stress, consequently improve productivity, quality of life and even reduce gender divide. There is a scheme to convert Post offices and Public Call offices into cyber-cafes providing internet access to the general public. The importance of using new technologies like ADSL over legacy network will also facilitate providing relatively cheaper bandwidth to the household. Use of VOIP/Internet Telephony will also improve affordability. Above all it will be wise to adopt a technology neutral approach.