India, Science and Technology:  2008

S&T and Industry

 

 

 

India’s Telecommunications Industry

 

 

Sunil Mani

 

The phenomenal growth of the IT industry in India has brought to the fore the growing importance of India as a knowledge powerhouse. But this competitiveness is restricted to the services sector. In fact it is the sector that is increasingly contributing to the high growth rate recorded in the country. Despite showing a good growth performance over the last three or four years, the manufacturing sector is still a non-performer although three industries constituting the manufacturing sector, namely auto parts, cotton textiles and pharmaceuticals are showing much dynamism in terms of exports. However India’s exports have now diversified to encompass services. In fact the service sector in general has come to occupy a pre eminent position in India’s economy in terms of its contribution to overall GDP, exports and as a destination for Foreign Direct Investments (Table 1). But the manufactured exports basket is still dominated by low and medium technology products although, as stated earlier some high tech products such as pharmaceuticals and certain types of machine tools have crept into India’s export basket. But the growth of IT exports and evidences of moving up the value chain in IT, the emergence of other high technology industries such as biotechnology, aerospace etc is enabling India to be in the league of high technology producers from the developing world. The recent growth of R&D outsourcing is yet another illustration of the country’s prowess in high technology activities. An interesting dimension of high technology production in India is that this capability is largely in the realm of services rather than in manufacturing. However there are indications that this capability in high tech services is slowly percolating to high tech manufacturing. And an industry where it is very clearly visible is in the area of telecommunication where a revolution of sorts is taking place (Mani, 2007). In the context, the purpose of the present section is to understand the technological implications of the phenomenal growth of this industry.

The entire section is structured into five sub-sections. The first sub-section traces the contribution of the telecommunication services sector to the overall growth performance of India’s economy and in that process to the catching up of her economy. The second sub-section distills out the various dimensions of the telecom services industry. Seven dimensions of the growth performance are identified and discussed here. The third sub-section identifies at least three disquieting features of this growth performance in terms of the growing digital divide, the increasing dependence on imported equipments for providing these services and the low diffusion of Internet. However there is at least one silver lining in this otherwise dark cloud, namely the possibility that India may soon emerge as a major manufacturing hub for not just mobile handsets but also for the manufacturing of semi-conductor devices that go into the production of these handsets. A detailed discussion of this tendency and its implication for the economy forms the theme of the fourth sub-section. Finally the fifth and concluding section summarizes the main findings and identifies the policy conclusions that arise.

 

The contribution of telecommunications to the growth performance of India’s economy

Communications is the fastest growing sector within India’s economy. The average compound rate of growth of the sector works out to 24.02 per cent per annum since the turn of this millennium (See Table 2). No other sector of the economy has clocked such a high rate of growth. The sector accounts for about 4 per cent of GDP and therefore with this rather high rate of growth contributes about 11 per cent of the growth in overall GDP of the country. Of the Information and Communications Technology (ICT) sector of the economy, it is again the communications sector that is more important. This is evident from a dataset on ICT spending developed by World Information Technology and Services Alliance (2006), of the total spending on ICT by India, about 63 per cent was in communications (See Figure 1).

 

Fig 1: Distribution of total ICT spending in India, 2001-2006

NOTE: World Information Technology and Services Alliance (WITSA) (2006)

 

 

	Real GDP	Exports	FDI
1990-91	40.6	20	Not Available
2006-07	61.8	39	81

Source: Computed from Reserve Bank of India (RBI) (2007)

 

The communication sector is composed of both services and equipment manufacturing although in the above characterization the data refers only to the services segment. The domestic production of telecom equipments has shown some impressive increases during the period since 2001, but even now (c 2006), it accounts for only about 15 per cent of the total telecoms industry.  Even then with some fluctuations the equipment sector is slowly decreasing its share in the total revenues of the telecommunications industry (See Figure 2).

 

	Share	Growth rate of communication sector	Overall rate of growth of GDP	Contribution(%)
1999-2000	1.6
2000-2001	1.9	26.9	41	12.47
2001-2002	2.2	19.5	56	7.66
2002-2003	2.6	25.6	34	19.58
2003-2004	3.1	25.4	86	9.16
2004-2005	3.5	22.8	75	10.64
2005-2006	4	23.9	91	10.51

Source: Central Statistical Organization (2007)

 

 

Fig 2: Relative shares of the equipment and service sectors in the total telecom equipment sector, 1992-93 to 2005-2006

Source: Department of Telecommunications (DoT) (2007) and World Markets Research Centre (2005)

 

 

Dimensions of the of the growth performance of telecommunications services

In 1991, India had just 5 million telephone subscribers. At the end of July 2007, there were 233 million subscribers thus showing an average annual growth rate of over 27 per cent per annum. No other country in the world, other than China, has shown such high rates of growth in the number of telephone subscribers (See Table 3). Tele density too which was below 1 telephone per 100 persons has now risen sharply to about 20. Among the infrastructure industries, telecommunications is the only industry that has shown significant improvements over the reform period. Consequently it is generally opined that a revolution of sorts is taking place in the Indian telecoms industry. There are at least, seven dimensions of this growth performance that merit our attention.

 

(i) Dominance of wireless technology, rather than wireline: The Indian telecom sector is now heavily dominated by wireless technologies, which include cellular mobile and fixed wireless technologies. In fact almost the entire increase in the availability of telephones have been contributed by wireless technologies. India has one of the highest ratios of wiressless to wireline technologies, which is now almost 5 (Table 3). In fact what is interesting is that since 2005, the availability of wireline technologies has started decreasing. A number of factors explain this and this decrease in the popularity of fixed telephones has now become a worldwide trend. This rather heavy reliance on wireless technologies, while extremely positive from the availability point of view, has some implications for the diffusion of Internet in the country. This will be analysed in some more detail in one of the subsequent sub-sections.

 

Columns	Fixed	G. Rate	Mobile	G. Rate	Total	G. Rate	Tele Density	Ratio of mobile to Fixed
1991	5.07				5.07		0.6
1992	5.81	14.60			5.81	14.60	0.67
1993	6.8	17.04			6.8	17.04	0.77
1994	8.03	18.09			8.03	18.09	0.89
1995	9.8	22.04			9.8	22.04	1.07
1996	11.98	22.24			11.98	22.24	1.26
1997	14.58	21.37	0.34		14.88	24.21	1.56	0.02
1998	17.8	22.42	0.88	158.82	18.68	25.54	1.94	0.05
1999	21.59	21.29	1.2	36.36	22.79	22.00	2.33	0.06
2000	26.51	22.79	1.88	56.67	28.39	24.57	2.86	0.07
2001	32.44	22.37	3.58	90.43	36.02	26.88	3.58	0.11
2002	41.84	27.87	13	263.13	54.48	51.25	4.3	0.31
2003	42.58	2.65	33.58	158.31	76.16	39.79	5.1	0.79
2004	45	5.68	50	48.90	95	24.74	7.04	1.11
2005	49	8.89	76	52.00	125	31.58	10.66	1.55
2006	40.43	-17.49	149.5	96.71	198.93	51.94	17.16	3.70
2007	39.25	-2.92	233.63	56.27	272.28		25	5.28
2008 *	38.92		277.92		325.78		28.33	7.14

                 *as on June 30 2008

                  Source: Department of Telecommunications (DoT) (2005) and Telecommunications Regulatory Authority

of India (TRAI) (various issues)

 

(ii) Monthly addition to mobile subscribers and the growing market for telecom handsets: As a corollary of the above, it is seen that there has been a steady increase in the average number of mobile subscribers per month since 2003 (Table 4). In 2003, on an average 1.5 million new subscribers were added to the existing stock. This has since increased to approximately 7 million per month in 2007. The very sharp reduction in the number of subscribers in March 2007 was due to a governmental security regulationⁱ . These large increases in the number of mobile handsets have strong positive implications for the telecom equipment industry and specifically the mobile handsets industry, which means that close to 7 million handsets are being sold every month. Consequently a huge domestic market for telecom equipments has suddenly emerged in the country spawning the creation of a significant manufacturing base. The South Indian city of Chennai has become a thriving cluster for mobile handsets manufacturing and this has important implications for the downstream industries such as the semiconductor industry. This point will be discussed in some depth in the fourth sub-section.

 

(iii) Increasing privatisation of the telecom services industry: The distribution of telecom services in the country was entirely in the hands of the public sector for a very long time until the middle of the 1990s. The new telecom policy of 1994 changed all this.

 

Column	2002	2003	2004	2005	2006	2007	2008
January		0.64	1.58	1.76	4.69	6.81	8.77
February		0.6	1.6	1.67	4.27	6.22	8.53
March		0.96	1.93	0.78	5.03	3.53	10.1
April	0.28	0.64	1.37	1.46	3.88	6.11	8.21
May	0.29	2.26	1.33	1.72	4.25	6.57	8.62
June	0.35	1.42	1.43	1.97	4.78	7.34	8.81
July	0.36	2.32	1.74	2.46	5.39	8.06
August	0.49	1.79	1.67	2.74	5.9	8.31
September	0.37	1.61	1.84	2.48	6.07	7.8
October	0.53	1.67	4.51	2.9	6.71	8.05
November	0.72	1.9	1.56	3.51	6.8	8.32
December	0.8	1.69	1.95	4.46	6.4	8.17
Average	0.46	1.46	1.63	2.33	5.35	7.1075

Source: Telecom Regulatory Authority of India (TRAI) (various issues)

 

The share of the private sector in the overall telecoms industry has been rising (Figure 3) and the ratio of private to public actually crossed unity in 2006. This again is due to the fact that the public sector is more dominant in wireline (or fixed) and the private sector is dominant in the wireless (mobile) segment (Table 5).

 

 

               Fig 3: Rising privatisation of the telecommunications services sector, 1995-2006

Source: Department of Telecommunication (DoT) (2007)

 

 

This sort of a structure of the industry is largely the product of historical reasons. The two public sector service providers BSNL and MTNL dominated the wireline sector, while the private sector was able to dominate the new wireless technology. In fact it was only quite recently that the government allowed the public sector entities to provide wireless communication services.

 

	Wireline	Wireless
Public	91	19.32
Private	9	80.68
Total	100	100

Source: Telecom Regulatory Authority of India (TRAI) (2007 a)

 

(iv) Competition in the provision of telecom services: Fixed vs. Mobile and within Mobile GSM vs. CDMA: An interesting feature of the industry is that after a very long time, it has suddenly become very competitive. There are three dimensions to this competition. First it is a competition between two standards or technologies, namely Global System for Mobile Communications (GSM) vs. Code Division Multiple Access (CDMA) standards. Second it is a competition between various service providers, although this competition was restricted to public policy designed spaces or markets known as telecom circles. A still another dimension is the type of market. There are essentially three types of markets based on the geographic coverage of the service. They are: i. Local telephone market; ii. Long distance or national telecom services; and iii. Foreign or the overseas market. In the present we focus on all the three dimensions of competition between the service providers.

A. Competition in Fixed and Mobile technologies: The markets for mobile services are much more competitive than the one for fixed line services. In the latter the incumbent service provider, BSNL continues to have a lion’s share of the market. However the existence of mobile communication services have made the market for fixed line services contestable and as a result despite high concentration, prices of fixed telecom services kept falling or kept under check over the last five years or so. The trends in prices of telecom services will be analysed in detail below. I now analyse competition in the fixed (wireline) and mobile (wireless) technologies separately.

(a) Competition in fixed telephone services: If one goes by overall summary measures of domestic competition, the market for fixed telephone services are much more concentrated than the one for mobile services. For instance (as on May 31 2007), the Herfindhal Index for fixed services for the nation as a whole works out to 0.6899 while the one for mobile services work out to 0.1592. This national level picture hides the level of competition that exists at the sub national level. In order to gauge this, I have computed the structure of the market for fixed telecom services in each of the 28 telecom circles that the country is divided into. See Table 6. As can be seen from this Table, the market for fixed telecom services is highly concentrated in all the telecom circles, although in seven of them, namely Delhi-NCR, Chennai, Madhya Pradesh, Mumbai, Punjab and Karnataka, the H. Index has a value less than 0.8000. Of course this does not mean that the market for fixed telecom services is not competitive. There are two dimensions to this level of competition for fixed services. First, as has been argued earlier, the consumers are increasingly substituting mobile for fixed services, so the fixed service providers face intense competition from mobile services. Second, the existence of telecom regulator too has acted as a check on the dominant service provider, BSNL from charging high prices. Instead what one sees is a significant improvement in the performance of BSNL during this periodⁱⁱ during this period . First of all, BSNL is one of the leading profit making central public sector enterprises in the country: in 2005-06 it made a net profit of Rs 89.40 billion- one of the few non oil public sector enterprises (PSE) in the top 10 profit making PSEs in the country. Three areas where the firm has made performance improvements are in: (a) considerable reductions in the number of consumers on the waiting list for a connection; (b) reductions in the number of faults per subscriber; and (c) number of personnel per 1000 subscribers. On all the three indicators BSNL has made substantial progress (Department of Telecommunications, 2007) and I argue that this entirely due to the force of competition leading to efficiency gains for this rather monopolistic firm which have had a previous history of being completely impervious to the demands of consumers.

 

Source: Telecommunications Regulatory Authority of India (TRAI) (various issues)

 

(b) Competition in the mobile services industry: The history of the mobile services industry can be traced to 1997 or so when GSM cellular services were started. Since then the industry has grown and matured with another standard, CDMA, being introduced towards the end of 2002. Compared to the fixed services, the mobile services industry has a number of distinguishing features. First, the industry started as one dominated by private sector enterprises and the government religiously followed a policy of ‘managed competition” by licensing more than one service provider in a telecom circle. In fact majority of the 28 circles have at least four services providers and in a number of cases there are six service providers well. In short right through inception the government envisaged an oligopolistic form of competition. Second, most of these private sector enterprises had some of foreign equity holding of sorts. Third all of them are based on new technologies that were state-of-the art. Fourth, the conduct of the industry was, relatively speaking, more regulated by the newly created independent regulatory agency, the Telecom Regulatory Authority of India (TRAI). Fifth, it is one of the fastest growing industries in India and it can be safely assumed that it is the growth of this industry that has catapulted the communications sector as one of the major growth-contributing sector of India’s economy. Sixth, the mobile communications industry, especially the equipment part of the industry is the second largest in the world (next to China) and therefore has attracted considerable FDI in the manufacture of handsets leading to the employment of skilled manpower. Seventh, India is supposed to be having the cheapest mobile telecom tariffs in the world. The early part of the industry was of course riddled with much controversy pertaining to the terms and conditions under which the licenses were issued and the spectrum allocated between various kinds of service providers (Desai, 2006). Since all the services providers were new and had the same vintage of technology, their competition was more in terms of price and conditions of sale and of late these two aspects are much in public scrutiny thanks to the timely intervention, on various occasions, by the regulator.

If one computes the H-Index for the industry, at the national level (which is not exactly a meaningful as some of the providers are only at specific telecom circles), it shows a mild increase: the H-Index for the industry increased from 0.1370 in 2002 to 0.1593 in 2007. However this increase hides considerable variations at the circle level (See Table 7).

Most of the service providers have focused on specific regional markets, with the exception of Bharti (the largest mobile service provider). In fact there are only four service providers who have a presence in at least 20 of the 29 circles. It is also interesting to see that the circles where BSNL has a monopoly position are also those with very low revenue potential. In other words, the private sector providers have positioned themselves in the most revenue earning circles. Also it is seen that it is the circles with high revenue earning potential that one sees an increase in the intensity of competition- the metros of Delhi, Mumbai and Chennai for instance.

 

Source: Telecom Regulatory Authority of India (TRAI) (various issues)

 

(c) Competition between mobile standards: It was seen above that mobile phones were introduced in the country towards the latter half of the 1990s and specifically in 1997. Ever since that year and until the end of 2002, the market was dominated by just one technology, namely the GSM. But in December 2002, a firm called Reliance Infocomm Ltd launched CDMA services across 17 circles on a countrywide basis. CDMA has since been growing faster than GSM, although there are some year-to-year variations (See Figure 4). Most Indian consumers are unaware of the nitty gritty of the two technologies. So the deciding factor between the two technologies is often based on price and other conditions of offer such as the coverage of the service ease of obtaining a new connection and whether a handset is available at a reduced price as part of the deal. Given this sort of a possibility of perfect substitution between the two types of technologies, the existence of the two standards have made both the markets for GSM and CDMA services very competitive. This is especially so when the market for CDMA services is highly concentrated with just two service providers accounting for almost the entire output (See Table 8). This is further indicated by the higher Herfindhal Index for CDMA services. What is being argued here is that despite being highly concentrated CDMA service providers have to compete with GSM service providers and this has prevented the CDMA service providers wielding any excessive market power.

 

 

Fig 4: Ratio of GSM to CDMA subscribers, 2001 through 2007

       Source: Cellular Operators Association of India (http://coai.in); and Association of Unified Telecom Service Providers of India (http://www.auspi.in/default.asp)

 

 

GSM		CDMA
	Market share		Market share
Bharti	0.2830	Reliance Infocomm	0.7356
BSNL	0.2480	Tata Teleservices	0.2315
Hutchison	0.2220	BSNL	0.0234
Idea	0.1065	MTNL	0.0053
Aircel	0.0377	HFCL	0.0029
MTNL	0.0280	Shyam Telelink	0.0014
Spice	0.0279
Reliance	0.0275
BPL group	0.0194
Herfindhal Index	0.2063	Herfindhal Index	0.5952

Source: Telecom Regulatory Authority of India (TRAI) (2007 a)

 

One of the most important institutional requirements for competition to emerge and sustain is the introduction of number portabilityⁱⁱⁱ. Number portability allows a customer to move from one mobile service to another within GSM, and also between GSM and CDMA, while retaining the same number. TRAI had recommended in March 2006 to the, Department of Telecommunications (DoT) that mobile number portability be introduced by April 2007. According to this recommendation, a subscriber would be able to avail himself of the service by making a one-time payment of Rs 200 that would enable the operator to recover in three to five years her investment cost involved in introducing portability. It appears that DoT has not accepted this recommendation citing technical reasons such as non availability of dual technology handsets that can handle both GSM and CDMA handsets. It is generally held that major opposition to number portability came from GSM service providers while the CDMA providers were welcoming it with the hope that it would allow them to expand their market share.

 

(v) Competition between mobile standards: One of the more direct effects of this competition is lower prices. Before the deregulation of the telecom services industry and indeed the entry of mobile service providers, the telecom consumers were periodically subjected in increases in the tariff. This has now been effectively checked. Although it is not easy talk about the price of telecom services, basically it follows a two part tariff both in the case of fixed and mobile services, first an activation charge followed by a charge for each type of calls. For mobile communication consumers then there is the additional cost of calls according to whether it is post or prepaid. Based on estimates made by TRAI (2006), I have obtained the minimum effective charge derived out of an outgoing usage of 250 minutes per month per quarter during 2003 through 2005. This is plotted for both fixed and mobile services as well. Although charges for both the calls have come down, a higher reduction is noticed in the case of mobile services. In fact, India now has one of the cheapest mobile tariffs in the world (Table 9) and this can give an additional fillip to the growth of the Information and Communications Technology (ICT) industry in the country. If one were to plot the price of telecom services and the number of subscribers, one can see an inverse relationship in the case of mobile services although in the case of fixed services such an inverse relationship is not visible. This is because of the relative advantages which mobile technology can bestow on its user.

 

Country	Call charges per minute (US $)	Minutes of usage per subscriber per month	Average Revenue Per User (US $)	Termination rates per minute Mobile (US $)
Australia	0.24	159	43	0.152(.016)**
Brazil	0.11	92	11	0.080(0.020)
China	0.04	261	10	0.025(0.010)
Switzerland	0.45	119	59	0.163(0.017)
Japan	0.33	156	63	0.130(0.022)
India	0.03*	309	11	0.007(0.007)

NOTE: *refers to 2005 rates; Figures in parentheses indicate the termination rates per minute for fixed telephones.

Source: Telecom Regulatory Authority of India (TRAI) (2006), p. 17

 

 

The two state-owned service providers, BSNL and MTNL have launched "One India Plan" with effect from 01.03.2006. Under this a three minute local call and a one minute national long distance call (referred to as STD calls) will cost only Re. 1. The "One India" plan, also, for the first time, takes away the distinction between the fixed line tariff and the cellular tariff and thus, makes the tariff "technology independent". A similar plan has also been introduced for the customers of post paid and pre-paid mobile services of BSNL and MTNL.

 

(vi) Institutional support: An interesting feature of the growth of telecommunications industry in the 1990s and beyond compared to the earlier period is the strong public policy support that the industry has received. It manifested in the form of the following policies:

1. National Telecom Policy of 1994
2. Telecom Regulatory Authority Act of 1997
3. New Telecom Policy of 1999
4. Broadband Policy of 2004

 

Other policies having an indirect effect are: FDI policy, the Electronic Hardware Policy of 2003, and the Semiconductor Policy of 2007^vi .

Of these four main policies, in my view, the most important piece of legislation that is determining the growth performance of the industry is the establishment of a regulatory agency in the name of Telecom Regulatory Authority of India (TRAI)^v.

The ten year history of telecommunications regulation in India can be divided into two phases: the first covering the period 1997-2000, when TRAI was established for the first time, and the second covering the period 2000 onward, when considerable amendments were made to the original TRAI Act. On the whole, TRAI’s functioning has been marred by a number of bitter disputes between it, the DoT and the service providers, although in more recent times (especially since 2001) it has been rather effective in shaping the conduct of the industry in terms of pricing behaviour and indeed in quality of service. Here in this subsection, I do not attempt to provide a a detailed review of TRAI’s operations since its inception, but a quick survey of its place in telecom regulation in India. The purpose is essentially to illustrate the need for a more independent regulator that can effectively oversee the functioning of now an almost completely deregulated industry. The actual benefits that the consumers have received from this regulation have been discussed in detail elsewhere in the paper in terms of increased easy access to telecom services, considerable improvements in both the price and quality of services and being an ever present watch dog of the industry.

TRAI’s functions can be broadly categorised into two: recommendatory and mandatory. It is seen that in most of the important conduct variables such as the promotion of competition, pricing, technology and quality of service and in the efficient use of spectrum etc, the pronouncements of TRAI are merely recommendatory and the final decision is to be taken by the government. The mandatory powers of TRAI are restricted to a number of technical issues such as fixing the terms and conditions of inter-connectivity between the service providers, laying down the standards of quality of service and to ensuring that these conditions are actually met by the service providers and ensuring the effective compliance of Universal Service Obligation. This shows that the effective space that is available for the TRAI in terms of asserting its real power is very limited. This fact has to be borne in mind while one assess the contribution of this regulatory agency towards improving the conduct of the industry even post 2000 than that actually prevailed in the previous period.

After a detailed review of its functioning during the earlier period (1997-2000), Mani (2002) referred to the TRAI as a ‘muddled regulator”. This is because during this phase, TRAI’s functions were poorly articulated, and it was generally viewed as driven by the well-organized and vociferous lobby of private phone service operators. TRAI did little to hide its pronounced contempt for the DoT and the state-owned providers, BSNL and MTNL. At the same time, it failed to ensure that private operators adhered to their license conditions. It authority and credibility were undermined by court rulings that clearly exposed its lack of power. Its reputation suffered even more when it allowed the private operators to fight its court battles. In short, it would not be incorrect to state that there was ‘regulatory capture’ during this first and initial phase of its operations.

The governmental admission of the ineffectiveness of TRAI resulted in the cabinet approval of a plan to reinvent the regulator and define its functions more clearly. This takes us to the second phase in TRAI’s history and this thinking manifested itself in the form of the issuance of an ordinance to replace TRAI with an appellate tribunal with judicial powers and a reconstituted regulator that lacked one of the most important functions of any telecom regulator, namely the power to settle disputes between the various stakeholders. This function has been vested with the newly created Telecom Dispute Settlement and Appellate Tribunal (TDSAT)^vi. However this was followed up with a strengthening of TRAI’s role in a number of other areas. But it can be shown that although the amendment has further clarified the precise role of the regulator by considerably reducing the grey areas, it has effectively reduced the power of the regulator. TRAI’s recommendations to the government are binding only with respect to the non-compliance and efficient use of the spectrum. On the crucial issues of timing and licensing of new service providers, TRAI’s recommendations are not binding. In sum, the TRAI has been reduced to a tariff-setting body empowered only to fix tariffs and inter connection charges and to set norms on quality of service. And on these two and especially on the tariff issue, TRAI’s role is generally considered to be very satisfactory.

 

(vii) Growing R&D outsourcing: It is generally held that India has emerged as a major R&D hub. The recently concluded Technology Information and Forecasting Assessment Council (TIFAC) (2007) study has confirmed this commonly held proposition and according to this study, R&D investment worth of $1.13 billion has flowed into India during the five-year period 1998-2003. The total receipts on R&D services have doubled itself from US $ 221 million in 2004-05 to US $ 519 million in 2005-06 (Reserve Bank of India, 2006, p. 1355). Telecom along with the pharmaceutical industry is a major recipient of these investments. The innovative performance of this segment can be gauged from the fact the number of US patents issued to inventors from India (including MNCs having operations in India) in the area of telecom technologies have increased from just 1 in 2001 to 13 in 2005 (Table 10).

 

 

	Multiplexing	Pulse or Digital	Telephonic	Telecommunication	Total
2001	0	1	0	0	1
2002	2	1	0	1	4
2003	3	1	0	1	5
2004	6	2	1	0	9
2005	7	2	1	3	13

Source: Compiled from USPTO

 

 

 

 

 

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• Telecom Regulatory Authority of India (2007a), Annual Report 2005-06, New Delhi: Telecom Regulatory Authority of India (TRAI).
• Telecom Regulatory Authority of India (2007b), Draft Recommendations on Growth of Broadband, New Delhi: Telecom Regulatory Authority of India.
• Telecom Regulatory Authority of India (2007c), A journey towards excellence in Telecommunications, New Delhi: Telecom Regulatory Authority of India (TRAI).
• Telecom Authority of India (various issues), Press Releases dealing with monthly additions to subscriber base, New Delhi: Telecom Regulatory Authority of India.
• World Information Technology and Services Alliance (2006), Digital Planet 2006, The Global Information Economy, Arlington, VA: World Information Technology and Services Alliance (WITSA)
• World Markets Research Centre (2006), WMC Country Reports: India (Telecoms).

 

 

 

 

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ⁱOwing to security concerns, the government insisted that the service providers verify the bonafides of new subscribers. See Telecom Regulatory Authority of India (2007 a).

ⁱⁱBSNL’s sales revenue emanate from two major segments: basic services and cellular services. Of the two, although the share of basic services has gone down even in 2005-06, its share was over 80 per cent of the total. So the performance of BSNL depends to a large extent the way it manages fixed telephone services although with the growth of mobile services the relative importance of fixed telephone services is likely to come down over time. See the Annual Report 2005-06 of BSNL at http://www.bsnl.co.in/company/results2005-06/resultcomplete_06.pdf (accessed on August 25 2007)

ⁱⁱⁱIt refers to the ability of the telecom consumer to transfer either an existing fixed-line or mobile telephone number assigned by a local service provider and reassign it to another service provider.

^ivFor the specific details of the policy, see http://www.isaonline.org/semiconpolicy.html (accessed on September 6 2007).

^vIn working out the ideas contained in this subsection, I have relied on my own writings on the topic in Mani (2002), Desai (2006) and TRAI (2007c).

^viFor the details on the functioning of TDSAT, see http://www.tdsat.nic.in/

 

 

 

 

 

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