The Indian Budget 1996-97 The Indian Economy Overview

IN DEPTH: Telecom Value-added Services

[Indian Telecom Industry] [Related Pages: 1 2 3 4 5 6 ]

Value-added Services get a Head Start in India's Telecom Game

The Indian Department of Telecom has been making claims of giving a boost to Telecom Value Added Services, but this may well be an eyewash, as even basic Telecom infrastructure in the country leaves much to be desired. The blame lies squarely on the DoT, with it's distinctively monopolistic policies which have kept Indian Telecom a decade behind its peer nations'.

India's economic liberalization program, now five years old, has thrown open the doors for tremendous investment opportunities, but the road to a free-market economy is a bumpy one. A telecom scandal, unhappy investors, and a general lack of transparency have characterized the de-regulation process.

The National Telecom Policy recognizes that a privatized telecommunications sector will act as a lure for further investment in the foreign-echange starved economy. However, it remains to be seen if the new federal government, led by the United Front coalition will keep the reform program on track.

The move to deregulate telecommunications stems from a vital need to upgrade India's antiquated network and to fulfill the ever-growing demand for telephone lines. The government also recognized that private companies would be hard pressed to invest in the economy if they could not be guaranteed telecommunnications services.

Under normal circumstances, the provision of basic telephone services would have been a priority; but today getting a telephone connection is still a long and arduous process that can take up to three years. Meanwhile,value-added services (VAS), particularly cellular telephones are plugging India into the global telecommunications network.

Mumbai (formerly known as Bombay) and Delhi have proved to be the most lucrative markets so far, sharing 60,000, roughly half, of the country's cellular telephone subscribers. But overall returns have been disappointingly low in the first year of operation.

While investors in the basic services were asked to bid for regions, or "circles", proposals for value-added services like Very Small Aperture Terminal (VSAT) intra-national satellite communication networks, paging services, long distance call services and E-mail have all been approved on a case to case basis. Licenses have varied in price from $45,000 to $60,000 (Rs.15-20 lakhs).

Industry analysts say the telecom sector in India is one of the fastest growing in the Asian sub-continent, news that should gladden the hearts of those who gambled on basic services. However, major telecom investors are eyeing the new United Front government with apprehension. The recently devised Common Minimum Programme, an outline of the government's five-year mandate, is silent on the future of telecommunications policy.

The telecom industry is hoping that the new government will rectify the blunders of the previous Congress administration and make telecommunications a priority in the development of India's expanding economy.

[Indian Telecom Industry] [Related Pages: 1 2 3 4 5 6 ]

Veena Shekhar is a regular observer of happenings in the reforming of telecommunications in India and the ongoing debates after liberalization.

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