-

Given the runaway growth in the Indian telecom sector and the ambitious targets that have been set for the future, Siddharth Behura, secretary, Department of Telecommunications (DoT), has a job that is both exciting and challenging. Behura discusses the growth drivers, challenges and prospects of the telecom industry. Excerpts...

What are the key factors that will drive growth in the telecom industry?

In 2007-08, 104 million customers were added. In the current fiscal year, we expect an addition of about 125 million customers at the rate of over 10 million additions every month. By the end of February 2009, we had added about 113 million telephone connections.

Rural penetration will be the key driver for future telecom growth in the country. Rural India is definitely the new area of opportunity both for public and private players given the fact that rural teledensity is just over 14 per cent.

What is the scope for new operators, and how will the dynamics of the sector change once these companies start operations? Do you expect further consolidation?

The telecom sector provides enormous scope for the new entrants. About 70 per cent of the country's population lives in rural areas, and we have so far achieved a rural teledensity of only about 14 per cent. The overall teledensity in the country is about 36 per cent, which is also less as compared to developed countries.

The high growth rate in population and GDP in the recent past indicates that the telecom sector has immense potential. The new entrants can benefit from this potential. Of course, there is always scope to introduce new products and services in the telecom sector given the diversity of the information and communication needs of customer groups –­ both corporate and individuals –­ in the form of data, text, video, audio and animation. The introduction of 3G technology will also provide more opportunities.

As the new players start operations, they will push growth in the sector and contribute towards achieving the target of 500 million connections. As urban markets move towards saturation, the focus will increase on the rural areas and rural telephony will gain momentum. As a result of overall competition, the tariffs can be sustained at low levels. It is expected that there will be further consolidation, and we will be able to achieve the telecom subscriber target well within time.

What are the key concerns in the telecom sector? How does DoT plan to address them?

DoT has ambitious targets for the future –­ 500 million telephone connections, 40 million internet connections and 20 million broadband connections. Raising the funds needed for these ambitious plans would be a tremendous challenge for the industry as well as for the country. The opening up of the telecom sector has created an impressive forward momentum in India, resulting in massive investments and expansion in supply.

There is the issue of access and the large rural-urban divide in connectivity. Although the growth in the past few years has been truly impressive and our tariffs are among the lowest in the world, vast portions of the rural population have little or no access to telecom services.

Promotion of research and development (R&D) is another issue that needs greater attention. An enabling R&D environment is necessary for the development of world-class infrastructure and manufacturing facilities for the telecom sector. The government has already taken an initiative in this direction by announcing the setting up of Telecom Centres of Excellence on a public-private partnership basis at premier institutions of higher learning. This will help to maintain our presence in cutting-edge technologies.

What measures is DoT taking to increase the rural teledensity?

The Universal Service Obligation (USO) Fund is used to subsidise telecom projects in rural areas. Out of the total 593,485 inhabited villages in India, 553,085 villages have been provided with village public telephones. The number of rural direct exchange lines at the end of February 2009 was 117.31 million.

Subsidy support from the USO Fund is being provided for setting up and managing 7,871 infrastructure sites for mobile services in rural and remote areas in 500 districts in 27 states. This infrastructure shall be shared by the service providers for provision of mobile services in rural areas.Already, about 3,941 towers have been set up and 3,715 base transceiver stations have been installed. About 10,128 towers are proposed to be installed under the second phase of this scheme.

With these efforts, it is expected that there will be an expansion of the wireless network in rural areas, which will help in increasing the rural teledensity.

What steps is DoT taking to improve broadband penetration?

Efforts are being made to make broadband-ready devices available at an affordable cost. The government is planning to launch bundled schemes offering broadband connectivity along with customer premises equipment, including PCs, with subsidy support from the USO Fund. There is also a plan to provide broadband connectivity to all government higher secondary schools under the Rural Broadband Project by the year 2012.

To provide e-governance and data services to the rural masses, the government is considering a proposal to extend broadband connectivity to rural and remote areas in a phased manner. Under this scheme, all villages located within a 10 km radius of 5,000 blocks shall be connected by wireless broadband.

How has been the Telecom Regulatory Authority of India's (TRAI) performance during your tenure?

Some of the important recommendations made by TRAI in 2007-08 were on allocation of 3G spectrum to new entities, provision of calling cards by national and international long distance operators, infrastructure sharing, growth of broadband, provision of internet protocol TV, issues relating to mobile TV services, support for rural wireline connections, and improving the effectiveness of the National Internet Exchange of India. Moreover, TRAI undertook several consumer-centric initiatives like the establishment of a three-tier system of consumer grievance redressal through the Telecom Consumer Protection and Redressal of Grievances Regulation, and the establishment of the Telecommunications Consumer Protection Fund.

There is a user perception that the quality of mobile services in India is poor. How will DoT address this issue?

The growth of telecom in India has been led by the mobile segment as the services have become affordable due to a sustained reduction in tariffs. New licences have been issued, which will lead to the rollout of more telecom services and increased competition. Increased competition will have a positive impact on quality of service.

TRAI monitors the performance of basic and cellular service providers against the benchmark prescribed by it by analysing the quarterly performance reports received from service providers. The regulator holds follow-up meetings with the service providers for improving quality of service.

To ensure seamless interconnection, TRAI monitors congestion at the points of interconnection between various service providers on a monthly basis. It has also appointed independent agencies to conduct surveys to assess customers' perception of service.

DoT strives to provide an enabling environment that is conducive to growth and efficiency. Provision of towers under the USO Fund; 3G technology; R&D initiatives; and proposed measures like mobile number portability will further improve the quality of mobile services.

Do you expect the global economic slowdown to impact the Indian telecom sector?

There is sufficient demand for various telecom services, and the steps being taken by the finance ministry will help sustain the demand in the future. In view of the growth of the sector and the continued inflow of FDI equity, the current financial crisis is not likely to have an adverse impact on the Indian telecom sector in the coming years.

What are the key domestic and global technology trends in telecom?