Telecom Business Environment in India

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Business Environment: Telecom Sector
An Analysis.

Submitted To: Prof. Jagdish Shettigar

Submitted By: Shalini (11DM139) Somendra Sahai (11DM154) Subhro Sen (11DM160) Yuvraj Sarda (11DM178)

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Table Of Contents

Introduction: Evolution Of Communication Technology. Privatization of Telecom sector: Transformation government monopoly to space to private sector Growth of private sector: Aggregate as well as selected major players in the field Companies In The Telecom Industry

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Role of a Regulatory authority: Logic and modus operandi

27

Technological gap with other countries

29

Government policies for telecom industry

30

Pricing of telecom services

34

Challenges facing the telecom industry

38

Recommendations or Policy Suggestions

49

References

52

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Introduction: Evolution Of Communication Technology.
The Indian telecom has evolved from the bygone days of “telephone on demand” to the advent of the 3G services. The evolution began with the laying down of telegraph electric line in Kolkata. In 1881 the teleservices were introduced in Kolkata, Mumbai, Chennai, Karachi and Ahmedabad. After independence, all foreign companies were nationalized to constitute the Post, Telephone and Telegraph (PTT), under government control. The Telegraph Act of 1885 governed the telecommunications sector. Under this act the government was in charge of policy making and provision of services. But the major changes in the sector began in the 1980s. In the Seventh plan of 1985-90, 3.6 % of the total spending was allotted for communications and since 1991, more than 5.5% is spent on it. The initial phase of telecom reforms began in 1984 with the creation of Centre for Department of Telematics (C-DOT) for developing indigenous technologies and private manufacturing of customer premise equipment. Soon after this, the Mahanagar Telephone Nigam Limited (MTNL) and Videsh Sanchar Nigam Limited (VSNL) were set up in 1986. The Telecom Commission was established in 1989. In 1994 when the telecom reforms were initiated there were three incumbents in the fixed service sector, namely DoT (Department of Telecom), MTNL and VSNL.As DoT had its all-India presence and the policy making powers, it enjoyed monopoly in the telecom sector prior to the major telecom reforms. However, in 1999 the new reform restructures the DoT to ensure a level playing field among private operators and the incumbent. The service-providing sector of DoT was split up and called Department of Telecom Services (DTS). DTS was later corporatized and renamed Bharat Sanchar Nigam Limited (BSNL). Thus the incumbent service provider was separated from the policy maker. Now DoT is responsible for policy making, licensing and promotion of private investments in both telecom equipment and manufacture and provision of telecom services. BSNL, a corporate body, is responsible for the provision of services. One of the important steps taken by the Indian telecom sector was setting up of an independent regulatory body in 1997 – The Telecom Regulatory Authority of India (TRAI), to assure the investors that the sector would be regulated in a balances and fair manner. The government has retained its power of licensing functions with itself but that the terms and conditions of licensing 3

should involve consultations with TRAI to ensure transparency in the bidding process. Some of the main functions of TRAI include fixing tariffs for telecom services, dispute-settlement between service providers, protecting consumers through monitoring of service quality and ensuring compliance to license conditions, setting service targets and pricing policy for all operators and service providers. To take over the adjudicatory and disputes functions from TRAI, a separate disputes settlement body was set up called Telecom Disputes Settlement and Appellate Tribunal (TDSAT) in January 2000. The Telecom Sector in India underwent the following...
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