5.5 by 2007

DQW Bureau
New Update


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


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.


On the privatization front, initially there were concerns about how private

and foreign players would treat the Indian market. Now it is abundantly clear

that market forces are in full control as far as services and pricing are

concerned. The government need to immediately address several unresolved policy

issues such as interconnect for service providers and WLAN spectrum policy for

business users.

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.