11.5 by 2007

Yes, that’s the teledensity target set by India’s policy makers. By the
year 2007 they want the total teledensity (fixed as well as cellular phones) to
be 11.5, and by 2010 they want to reach the 15 mark.

From a teledensity of 4.7 today, that we have got over 50 years, we want to
double that in the next four years. That means 52 million fixed line and 31
million cellular connections. A very aggressive target indeed, but not
unachievable.

Only two things are required to achieve this–political will, and money.
Political will because India is just coming out of its monopoly shell and the
fate of this target will depend basically on the performance of two companies–BSNL
and MTNL. And money because according to the NK Singh recommendations on how to
reach the 11.5 million mark by March 2003, a mammoth investment of Rs 165,216
crore is required.

A big moving force behind the complete change that is seen in the attitude
and aspirations of DoT, and MTNL-BSNL is the pressure from the private
operators. We would not have seen any of this, had telecom still been a state
monopoly. Clearly, the private players need to be kept involved in all the plans
drawn up to achieve the ambitious teledensity target. The overall telecom
business climate should be made such that private players continue to be as
motivated as they are.

Although initially there were concerns about how private and foreign players
would treat the Indian market, it is now abundantly clear that market forces are
in full control as far as services and pricing are concerned. The government
needs to immediately address several unresolved policy issues such as
interconnect for service providers, and WLAN spectrum policy for business users.
Conducing environment is needed not just for the supply side but also for the
demand side.

As far as funding is concerned, Rs 165,216 crore will obviously not come from
the government. Also, about Rs 44,160 crore of this will have to go into rural
areas, which does not appear an attractive idea to many, and therefore funding
would be even tougher. At present, we are getting about Rs 8,000 crore as annual
FDI in the telecom sector. The government needs to understand this and ensure
that the cap on FDI in telecom is raised from 49 percent to 74 percent as
suggested by NK Singh. Management control is a sensitive issue, but not
something for which there are no solutions.

Similarly, revenue sharing terms need to be reviewed so that re-investing is
easier. Also to be considered are options of tinkering with the USO component
(since a huge amount of money is anyway going into rural telephony). The report
also suggests linking of spectrum allocation to demand-supply dynamics for users
like the police and defence forces, and start charging them on that basis.

The target is very well defined. The plans have to be put in place very fast
now. This target will have a bearing not just on the future of India’s
operators and service providers. It will also affect the future of the entire
country–from its national economy right down to its per capita income. At a
time when globalization is actually happening and services like ITES are
throwing immense opportunities for India, moving fast on the recommendations of
NK Singh report will surely be a very good start.

ibrahima@cmil.com