The Hindu Business Line : `FDI not a limiting factor in telecom growth'

ALTHOUGH foreign direct investment (FDI) remains "important and welcome" in the telecom sector, it has not been "a limiting or even determining factor" in the growth of telecommunications in the country, the new Chairman, Telecom Commission & Secretary, Department of Telecommunications, Mr Nripendra Misra, said.

In his first-ever interview to the media after he assumed office on February 1, in Sanchar Bhawan, Mr Misra said: "In the past one-and-a-half years, the private sector has added almost 25 million lines even though the FDI has been negligible. Till the year 2002, five million lines were added with an FDI of about Rs 9,000 crore. The determination of FDI in the telecom sector has also something to do with the investment decisions of the foreign firms including their own countries' requirements."

Responding to the jolt to the promised hike in the FDI limit to 74 per cent or the DoT proposal of allowing 49 per cent FDI with an additional 25 per cent for foreign institutional investors, Mr Misra said: "The issue of raising FDI limit is quite complex involving issues like management control, security etc, which are under consideration of the Government."

On the vexed issue of spectrum distribution, Mr Misra said: "TRAI is currently working on a spectrum pricing formula including incentive for efficient use of spectrum as well as disincentives for sub-optimal usages."

Excerpts from the interview Mr Misra gave to Business Line:

The telecom industry is undergoing a phase of consolidation. What is next after the introduction of Unified Access Service Licensing?

Telecommunication is a highly technology intensive sector. The efforts of the Government have been to provide a fillip to rapid growth of this sector by taking advantage of the technological innovations. It is in this direction that the Universal Access Service Licensing has been introduced. In February 2004, guidelines for intra-circle merger of access service licences has been issued, which would further contribute towards efficient utilisation of resources serving the consumer interests.

Policies need to be constantly realigned to match the rapidly developing technology. For instance, Internet telephony is likely to be more popular in the near future. Similarly, the use of broadband facilities would also increase significantly. The Government would continue to play the role of a facilitator and an enabler to ensure that the advantages of technology are brought to the consumer with a view to providing widespread and affordable telecom Service, in keeping with the principles enunciated in the New Telecom Policy, 1999.

How are you going to ensure proper spectrum distribution in the face of limited availability? What steps is DoT contemplating to ensure no free use of spectrum? Will spectrum be pried to ensure its efficient use?

Radio frequency spectrum is a limited natural resource. Hence, it is of paramount importance that spectrum be used efficiently, economically, rationally and optimally in a transparent manner.

In keeping with the NTP 1999, spectrum is priced to ensure its efficient and optimal use. No telecom service provider is being given spectrum free. With a view to ensuring optimum utilisation of the spectrum, an inter-ministerial committee was constituted which recommended, among others, that frequency would be assigned to meet specific requirements, benchmarks would be fixed for determining spectrum usage efficiency and that those operating between fixed points would be encouraged to shift to alternate media such as optical fibre cable or higher frequency bands.

In the absence of carrier access code (CAC), private players are unable to offer choice of tariffs for long-distance telephony. What is DoT doing to see that at least BSNL makes some move in this direction with its vast fixed line network?

It would be wrong to think that the consumers are being denied the benefits of cheaper long-distance phone calls only because of non-induction of CAC. The benefits of the competition are constantly accruing to the consumer. In fact, BSNL recently announced that their international long- distance calls might become cheaper in the immediate future. This is in addition to the reduction in tariff, by as much as 64 per cent, effected by BSNL only last year. Introduction of CAC will require heavy investment on the part of BSNL, having the quasi totality of the fixed lines, the cost of which will need to be also borne, directly or indirectly by other operators and finally by the consumers. I am sure that technical and commercial considerations will influence the introduction of a CAC.

There is a perception of asymmetrical development in the telecom industry with so much supervening in voice telephony to the neglect of data transmission, Internet and broadband. How is DoT going to address and set right this anomaly?

The country has witnessed impressive growth in respect of Internet. The number of Internet subscribers has increased from 0.23 million in March 1999 to approximately 3.8 million in December 2003.

It is true that the spread of Internet in India is not commensurate with the growth of telecom. On its part, the Government has liberalised the issue of ISP licences and today there are more than 200 ISP licensees spread all over the country. At the same time, the growth of Internet is also related to the cost of the access device i.e., the computer, as well as the content being available in Indian languages. Efforts are being made to improve the availability and affordability of international bandwidth. We are separately taking steps to strengthen and expand the National Internet Backbone.

While the Government will do what is necessary, a large number of players will also have to actively participate to maximise Internet use. This will include access providers as well as content developers. The State Governments will also have to put in place procedures to enable the citizens to access various services through Internet.

Did both public sector and private sector companies fail to fulfil their committed obligation to roll out rural telephony? What are the steps taken to rectify this?

Already, 5.20 lakh of the 6.07 lakh villages have been provided with village public telephone by both public and private sector providers. Apart from targeting 100 per cent coverage (other than inaccessible areas and sparsely populated villages) we are planning to provide Public Telephone Info Centres for villages having a population of more than 2,000. I expect a progressively increased availability and use of broadband facilities even in the rural areas, in the next few years.

More Stories on : Interview | Telecommunications | Foreign Direct Investment

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Aircel network in 200 towns in TN circle

IT counters end firm

Wipro sees traction in `managed services'

`FDI not a limiting factor in telecom growth'