Contents - Connect-World

National Development
Apart from blunders in the
licensing process, telecom
growth in the country was
hampered by the authoritarian
attitude of the DOT
with regard to choice of
technology. While private
companies had almost no
choice in what technologies
they might adopt, the
DOT family had complete
freedom in technology
selection. It was only in
1999 that these e-mail
service providers were
grudgingly allowed to
migrate to TCP-IP.
The same guidelines
imposed a starting licence
fee of Rs. 25 to 50 lakhs per annum on
e-mail service providers. Bulletin
Board Service (BBS) operators, typically
run by students who allowed
users to dial into their computers and
leave messages for each other, were
asked to pay an amazing Rs. 15 lakhs
per year for permission to run a free
service! VSNL paid no licence fees for
a service that offered far more than
just e-mail.
Similarly, cellular operators were
forced to use GSM technology,
although cheaper alternatives might
have been far more popular in a poor
country. When MTNL started to offer
mobile telephony, it was not bound by
this restriction, and chose Code
Division Multiple Access (CDMA)
technology.
A wireless local loop system called
corDECT, which reduced the cost of
connecting a new subscriber to the
telephone network from Rs. 35,000 in
urban areas and Rs. 75,000 in rural
areas to a figure close to Rs. 10,000
could not be used. While only one per
cent of the population could afford
conventional technology without cross
subsidies, the cheaper corDect technology
could have been within reach
of 15-20 per cent of the countrys population.
Yet, DOT dragged its feet in
providing wireless and other clearances.
Another grievous technology choice
made by the government was the ban
on Internet telephony, another means
of low-cost telecom access. VSNL
even blocked access to Internet sites
offering information on the technology.
Internet telephony and corDECT technology
were both eminently suited to a
new paradigm for telecommunications.
Instead, similar to the Internet
model, a large number of small to
Figure 1: Cables became a problematic issue.
medium players could connect to
national and international optic-fibre
backbones, but the DOT recipe for privatisation
only allowed large players,
since each needed to be in a position
to cater to a circle, typically an entire
state.
Besides the high licence fees, private
operators faced other problems. It
took them many months to get spectrum
clearance to use wireless.
Spectrum allocation was (and still is) a
terrible mess in the country; the available
spectrum had been parcelled out
to several government departments
and ministries, each of which managed
the spectrum in its own domain.
“Internet telephony and
corDECT technology
were both eminently
suited to a new paradigm
for telecommunications.”
Anyone wanting clearance to use wireless
also needed clearance from
dozens of government departments.
This forced each department to manage
the spectrum in their bands, which
they were not equipped to handle.
In other countries, information pertaining
to all broadcasting antennae is
fed into a single computer program.
Anyone wishing to use wireless provides
information pertaining to the
antenna, direction, height, power, frequency,
etc., which is also fed into the
computer program, which then clearly
indicates whether or not this new
antenna would interfere with existing
equipment.
While departments made wasteful use
of spectrum, by far the worst culprits
were the defence services.
All over the world, defence
services do occupy large segments
of spectrum. To
bring this in check, the
NATO countries have uniformly
adopted the so-called
NATO Band. that allows
equipment from different
countries to inter-operate.
India purchases equipment
both, from NATO and non-
NATO countries, and therefore
uses far more spectrum
than other countries.
Other government departments
are also blocking
more spectrum than needed
because of past indiscriminate
purchases of non-standard
equipment. This approach cost
the government the substantial revenues
it could be earning from spectrum
fees.
If wireless was hard to use, laying
cables was no simple task for the private
operator either: "The National
Highways Authority of India (NHAI)
demanded it be paid Rs. 75,000 per
km if the cables were being laid along
the nation highways the DOT pays
only reinstatement chargesa fraction
of this in each case, the operators
had two choices — petition the government
and wait out the delays, or just
bribe the authorities."
It was hoped that the formation of the
Telecom Regulatory Authority of India
(TRAI) in 1997 would increase the
confidence level of the private operators.
TRAI was established to regulate,
oversee and promote competition
and growth in telecom.
The substantial investment needed for
growth, about 50 billion dollars in the
next five years, is beyond the governments
or DOTs fiscal capacity and
has to come mostly from private and
foreign sources.
These investors need to be assured of
a level playing field and a pro-competitive
regime. Hence, the need for a
credible and strong independent regulator,
to enable new entrants to compete
against a giant government
owned incumbent that owns the existing
network.
The Telecom Regulatory Authority
was established, as well, to prevent
anti-competitive behaviour such as
cross-subsidies, establish terms for
non-discriminatory interconnection,
administer universal service obligations,
and transparently administer
licensing, radio frequency allocations,
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