Dr J.S. Sarma, Secretary, Department of Telecommunications
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Dr J.S. Sarma was recently appointed secretary of the Department of Telecommunications (DoT) and IT. He sees his role and that of DoT as a facilitator of telephony in the country. In a recent interview with tele.net, he spoke at length on issues such as spectrum, the initiatives likely to be taken under the National Telecom Policy (NTP), 2005, and the OneIndia concept. Excerpts:
How do you perceive growth in the Indian telecom sector?
The Indian telecom sector was expected to achieve a teledensity of 7 by the year 2005, as per the NTP, 1999. However, this target teledensity was achieved two years in advance. The compounded annual growth rate has been about 28 per cent in the last two years. The main reasons for this higher growth have been the increase in demand, a competitive environment and reduction in the cost of infrastructure equipment, which has resulted in a substantial reduction in tariffs. With the planned expansion of BSNL in smaller towns and rural areas, there would be a surge in demand in these areas. Another feature of future expansion would be an increase in the share of mobile phones. It is expected that 80-90 per cent of the future growth would be in the mobile segment.
Given the government's thrust on rural telephony, what efforts are being made in this direction?
The plan is to carpet the entire country with telecom networks by November 2007. This exercise will cover the remaining 66,822 uncovered villages. With the cost of providing mobile connections and handsets coming down to affordable levels, the rural areas are going to see a massive rollout. The government is providing support from the Universal Service Obligation (USO) Fund for giving connections "on demand" by January 2006, even in the commercially unviable 1,685 short distance charging areas (SDCAs), out of the 2,647 SDCAs in the country.The government is also considering a proposal to provide support from the USO Fund for creation of shared passive infrastructure for mobile networks, which will lower the entry cost of private operators in the rural areas.Internet service providers (ISPs) are also reportedly demanding USO funding. What kinds of incentives are being offered to this segment?
The rules for implementing the USO Fund provide for subsidy support to be given for various activities to meet the net cost of providing the specified services. The selection of the USO Fund is through a bidding process among basic service operators, cellular mobile service providers and unified access service licensees or any other entities as specified from time to time. As of now, the eligibility criteria for financial support for USO activities are limited to basic, cellular and unified access service licensees only. However, the UASL does not stipulate a rural rollout obligation.Do you expect the target of 250 million phone users to be met by 2007? What are the necessary policy issues that need to be dealt with to expedite the process?
The target of providing 250 million telephone connections by 2007 is an achievable target. Presently, over 2.5 million telephone subscribers are being added per month, and this rate of growth is expected to increase further in the coming months. Some factors that will fuel growth are:What is the latest development on the spectrum issue?
The main issues pertaining to spectrum are efficient utilisation of spectrum, additional spectrum for GSM/CDMA, 1900 MHz USPCS band (CDMA) versus 3G IMT-2000 band for 3G services and charging for spectrum from service providers. The committee appointed to look into the issues pertaining to spectrum has submitted its report; it is currently being examined.What initiatives are likely to be taken up in the National Telecom Policy (NTP), 2005?
The NTP, 2005 will take into account the rapid technological changes and growth in telecommunications in the recent past for determining telecom access parameters. The NTP, 2005 will seek to provide a technology-neutral environment and a level playing field in the telecom sector. It will endeavour to prescribe measures for promoting indigenous manufacturing of telecom equipment. However, we are in the process of examining the views of several stakeholders, and reviewing and formulating a draft policy. This draft policy would be placed on the web for soliciting the views of various stakeholders.Therefore, at this stage, it is not possible to list out all the initiatives to be taken in the new policy.What is the update on the OneIndia concept?
When is it likely to be implemented? And what are the likely implications on national long distance operators?While the government is working towards a OneIndia call rate, the proposed measure is at the initial stages. Therefore, its impact on local and long distance calls cannot be determined at this stage.
What efforts are being made to encourage domestic manufacturing? What is the likelihood of BSNL procuring equipment from only those vendors who have manufacturing bases in India?
The telecom equipment manufacturing sector has not kept pace with the growth in telecom services. Service operators are estimated to be importing telecom equipment worth $9 billion, which amounts to 50 per cent of the total revenue. The industry has earlier faced problems of an inverted duty structure, thereby making it unviable for companies to get into manufacturing. Now, all customsand excise-related issues have been resolved with no customs duties on inputs, including capital goods. Various other issues are being addressed in the proposed NTP, 2005. Procurement frameworks, whereby only vendors who indigenously manufacture certain telecom products are eligible for procurement, have been finalised by the boards of MTNL/BSNL. This is desirable to achieve the availability of desired quality/standard products at competitive rates, immediate availability of after-sales services and development of new technologies in the country.What, in your opinion, are the key areas of concern that remain in the sector?
In my view, the key areas that still require attention in the sector are the expansion of telephone networks in rural areas, promotion and expansion of broadband, provision of required spectrum to various mobile service providers and promotion of indigenous telecom manufacturing.With the FDI cap in the telecom sector being increased, what amount of investment is being envisaged?
There has been an FDI inflow of about Rs 100 billion against the approved FDI of about Rs 420 billion. The telecom sector has immense potential to attract FDI. A steering committee under the Planning Commission has estimated that the sector has a potential to attract $2 billion per year for five years, provided the FDI cap is raised from 49 per cent to 74 per cent. In view of the target of 250 million phones by 2007, FDI inflows are also expected to have a significant role.What, according to you, will be the thrust areas for accelerating telecom growth?
Triple play or broadband will certainly be a focus area. E-commerce, telemedicine, education and other related areas will spur the demand for broadband.That in turn will increase the demand for better content. Internationally, companies are already looking at triple play on broadband. Apart from broadband, the other sector that needs more emphasis is research and development. Here again, several international and national companies are setting up R&D bases in the country.
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