India announces sweeping Telecommunications Reforms.
Hi Satish:
Well it's about time wouldn't you say?
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Friday March 26 12:12 PM ET
India Announces Sweeping Telecommunications Reforms
By Narayanan Madhavan
NEW DELHI (Reuters) - India announced Friday sweeping free-market reforms of its telecommunications sector and intended to promote the country as an information technology superpower.
The government said in its New Telecoms Policy 1999, unveiled by Communications Minister Shri Jagmohan, that it intended to create a futuristic telecom infrastructure.
''The new policy will aid the proliferation of Internet services in India in a big way,'' it said.
The government, balancing past commitments made to private firms under an old policy and emerging technology changes leading to the convergence of data, sound and video, wants to gradually introduce a free market system, officials said.
The new policy proposed to move from the existing regime of tenure-based telecommunications license fees to one involving a one-time entry fee and a revenue sharing arrangement with the government.
The new policies will be implemented in vacant zones or areas vacated by existing licensees.
The policy, which is to take effect in April, strengthens the role of regulatory authorities, clips the wings of powerful state-run incumbents and junks antiquated laws governing wireless and cable-based communications.
Private companies will be allowed to compete in the domestic long-distance telephone market from January 1, 2000 and the government will review in 2004 the question of opening international telephony to competition.
''It is a big positive,'' said a telecommunications analyst with a European securities firm. ''The detailing of the policy lifts the cloud of uncertainty over the whole telecommunications sector and the stage is now set for its rapid growth in India.''
The new policy curbs the overarching power of the Department of Telecommunications (DoT), which has faced fierce criticism from private firms because it plays the roles of licensor and policy-maker as well as service provider.
The DoT will become a corporate firm by 2001, and a new Department of Telecom Services will be created to separate policy and licensing functions from service functions. ''The new policy assures the industry of level playing field conditions between all operators -- public and private,'' Industry Group on Telecommunications (InGot), a representative body of private telecommunications firms, said in a statement.
The government said its goal was to make telephones available on demand by 2002 and to raise the density to 15 telephones per 100 people by 2010 from the current two per 100.
Last year, more than 3.2 million people in urban India were waiting for telephone connections. The government formed an inter-ministerial group in November to come up with a new policy.
Private firms that had won licenses under the old policy had faced difficulties from low subscriber growth, regulatory deficiencies, reluctant bankers and the powerful DoT.
Private licenses have taken effect only in six of the 21 zones for which tenders were awarded in fixed telephony. The new policy allows cable television networks to provide voice and data communications in recognition of the revolutionary potential of convergence of information technology, telecommunications, television and consumer electronics, the government said.
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