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Guest Column: Making India a Telecom Trendsetter

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VoicenData Bureau
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In the past five years, telecom service providers in India have added three

times more subscribers than in the first 53 years of post-independence

existence. Owing to its rapid development, the telecom industry has truly

emerged as the poster child of Indian economic reforms.

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A major contributor towards the growth of the telecom industry in India is

the Association of Unified Telecom Service Providers of India (AUSPI). It

represents the interests of the CDMA wireless and fixed-line operators in India.

Owing to the new leadership of our core members, with Ratan Tata having assumed

the chairmanship of Tata Teleservices and Anil Ambani the chairmanship of

Reliance Infocomm in recent months, the industry has registered tremendous

growth.

Mukund G Rajan,

president, Association of Unified Telecom Service Providers of India

(AUSPI)

Our compound annual growth rate has been in excess of 200% since the launch

of our services. The figure is impressive when compared to the rest of the

cellular industry, which has been growing at around 70%. Our subscriber base has

crossed 30 mn, and our members have been regularly adding over a million

subscribers each month. Our reach now extends to the largest number of towns and

villages amongst the private operators. With some of the most customer-friendly

and affordable tariffs in the Indian market, we are aggressively leading the

thrust into rural India.

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In the last round of bids announced by the Universal Service Obligation (USO)

fund administrator, our members were the only private operators to win the right

to offer rural services in as many as 103 secondary switching areas (SSAs)

covering 40% of rural India.

Our members provide some of the most innovative and creative solutions in the

Indian telecom sector. To cite an example, the fixed wireless phones propagated

by our members have transformed basic communication in India. By providing many

more value-adding features, including Internet connectivity and SMS, our members

have gone much beyond the services provided by traditional telcos. In fact, one

of our members received the prestigious World Communications Award 2005 under

the category “Best Telecom Service in Emerging Markets” as an

acknowledgement of this constant innovation.

We are also leading the sector in providing the killer application in

rural India, which is data connectivity for access to government services and

critical information.

With the largest customer-facing presence, including exclusive outlets and

huge numbers of feet-on-street and world-class back-end capabilities, our

members are now poised to dominate the Indian telecom landscape. This includes

state-of-the-art network operations centres and the largest call centres in

India.

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Reshaping the Telecom Industry



By virtue of their performance in India, the AUSPI members are also helping

to shape the future of CDMA technology evolution. We believe India can and ought

to take a leadership role in defining the future evolution of CDMA. We already

have membership of the various CDMA standards bodies, including the CDMA

Development Group (CDG).

Spectrum

should



be equally allocated to all service providers

Equally important, we have led in India the reduction in handset prices to

deliver in the Indian market the world's most affordable CDMA devices. Our

ability to do this in the area of data-enabled handsets and devices is playing a

key role in supporting the government's vision of providing data-rich

information services to the rural parts of India.

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We are sure we will receive the government's support, as has the IT

industry, in our endeavour to lead further technology evolution in the CDMA

industry, including in the areas of 3G technologies such as EV-DO, and other

wireless broadband technologies.

Challenges Before AUSPI



The Indian telecom industry has come a long way since its inception. It is

widely recognized that the industry in India has attracted some of the savviest,

smartest business persons. I often say that if one can succeed in telecom in

India, one can succeed in any business. The Indian telecom sector has seen some

of the toughest Indian and multinational competition, and relatively complex

regulation. Moreover, as a rapidly changing technology, it can turn

yesterday's powerful companies into today's losers rendering billions of

dollars of investment worthless.





The reduction in handset prices is playing a key role in supporting the
government's vision of providing data-rich information services to the

rural parts of India
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Like the IT industry, the Indian telecom industry is attracting many of the

brightest young minds in India. The average age of employees in the Indian

telecom sector is in the early 30s. It lies in the hands of this community of

young and bright minds to shape India's future, to create in a country where

around 50% of the population is below the age of 25 years a future in which

every Indian adult is networked and connected, so that India emerges as the

premier knowledge society in the world.

Yet, on our path to achieve these objectives lie several challenges.

The availability of raw material or spectrum: Without this, wireless

communication is impossible. We need more spectrum, and this should be released

as soon as possible, as part of a well-defined spectrum policy. Critically,

spectrum should be equally allocated to all service providers, and service

providers must be free to adopt whichever technology they please, with all the

attendant risks, of course. In this connection, it is imperative that the

significantly large and complicated allocations to the defense services are

coordinated and generous allocations are released to the service providers, who

today are struggling with some of the lowest allocations of spectrum in the

world.

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The management of policy and regulation: It will always be the case that

technology development will outpace developments in policy and regulation.

Rather than penalizing those in the forefront of innovation, the licensor and

regulator need to be supportive of innovation and encourage the delivery of new

services and technologies to subscribers. We need a fair, stable and predictable

policy regime, and sensible regulation. The benefits of this have already been

demonstrated in the IT sector in India. One would hope, given that the cabinet

minister in charge of IT also presides over the telecom industry, that the same

philosophy that has allowed IT to bloom in India will increasingly permeate the

telecom space.

The creation of a level playing field: We must ensure that the same

yardsticks and rules apply to all players, and they are put to common tests.

This means we must have a system where the private players receive the same

incentives and support that the powerful and profitable incumbents controlled by

the government receive. And where such fundamental rights as the right to

interconnection are not delayed or altogether denied for inadequate reasons.

India has

one of the highest tax-paying telecom sectors in the world. Combined with

the lowest tariffs in the world, it leaves wafer-thin margins for service

providers

 Taxes and levies: India has one

of the highest tax-paying telecom sectors in the world. Combined with the lowest

tariffs in the world, it leaves one with wafer-thin margins for service

providers. A calculation shows that our taxes and levies at between 19-28% of

revenues plus GST are far higher than other emerging markets, including Sri

Lanka, Pakistan, and China. To provide incentives to increase penetration in low

teledensity areas, it is imperative that these levies be reduced. This is

particularly necessary in rural areas which have lesser purchasing power and low

density of population, and therefore higher network costs. Such a measure will

certainly provide the Indian economy with a sustainable competitive advantage

vis-à-vis other emerging markets.

All of these challenges can and will be overcome, with typical Indian

ingenuity. But the sooner we do so, the quicker India can emerge as a

trendsetter in the world of telecom. With 4-5 mn subscribers being added each

month, the Indian market is rapidly becoming the most creative telecom market in

the world. The future, as I can foresee, is hugely exciting.

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