Telecom is the exchange of information between two distant points in space.

The telecom
industry is very important for the socio economic development of a nation. It is one of the main
architects for accelerated growth and progress of different segments of the economy. Post
liberalization the telecommunication industry has grown by leaps and bounds.

Evolution Of Indian Telecom

Year Event
1851 First operational landlines were laid by the government near Calcutta
1881 Telephone service introduced in India
1883 Merger with the postal system
1923 Formation of Indian Radio Telegraph Company (IRT)
1932 Merger of ETC and IRT into the Indian Radio and Cable Communication Company(IRCC)
1947 Nationalization of all foreign telecommunication companies to form the Posts, Telephone
and Telegraph (PTT),a monopoly run by the government’s Ministry of Communications
1986 Conversion of DOT into two wholly government-owned companies: the Videsh Sanchar
Nigam Limited (VSNL) for international telecommunications and Mahanagar Telephone Nigam
Limited (MTNL) for service in metropolitan areas.
1997 Telecom Regulatory Authority Of India (TRAI) was created.
1999 Cellular Services are launched in India. New National Telecom Policy is adopted.
2000 DoT becomes a corporation, BSNL

Liberalization
As part of the policy of liberalization, telecom equipment manufacturing was delicensed in 1991
and value added services were accessible to the private sector in 1992.As a result a number of
manufacturing units were established across the country. The National Telecom Policy resolution
of 1994 further liberalized the telecom sector for private initiative.

National Telecom Policy 1994

In 1994,the government came up with the National Telecom Policy which set certain important
goals like availability of telephone on demand, providing International standard infrastructure and
services at affordable prices, enhancing India's competitiveness in global market and
encouraging exports, create environment conducive for both FDI and domestic investment,
accelerate India's growth as a major manufacturer and exporter of telecom equipment and
availability of telecom services to every village.

Telecom Regulatory Authority Of India (TRAI)

The opening up of the Indian telecom sector for private enterprises resulted in the need for
independent regulation. In 1997 The Telecom Regulatory Authority Of India (TRAI) was initiated
by an act of Parliament. The purpose of this act was to regulate telecom services, fix/revise tariffs
for telecom services which till then was under the control of the central government. The objective
of TRAI was to create an environment which would enable Indian Telecomm to play an important
role globally. Another important objective for TRAI was to provide equal opportunity for all and
ensure fair competition. To ensure these objectives, TRAI has issued a large number of
regulations, orders and directives and strategized the plan to direct the telecom industry from a
government controlled monopoly to multi operator multi service competitive market. In January
2000, TRAI was modified by an act resulting in Telecommunications Dispute Settlement and
Appellate Tribunal (TDSAT) to settle disputes between a licensor and a licensee, between two or
more service providers, between a service provider and consumers and to settle appeals against
any direction, decision or order of TRAI.

National Long Distance

In 2000 the government created guidelines for the entry of private sector in National Long
Distance without restricting the number of operators. Some of the salient features of NLD are:

* Unlimited entry for both inter circle and intra circle calls.
 * Total foreign equity must not exceed 74%.Promoters must have a net worth of Rs 25 million.
* Private operators will have to enter into an arrangement with fixed service providers within a
circle for traffic between long distance and short distance charging centers.
* Private operators allowed to set up landing facilities that access submarine cables and use
excess bandwidth available.
* License period would be for 20 years and extendable by 10 years.

International Long Distance

* India had accepted under the GATS to open up ILD in 2004.But India allowed competition in
ILD in the year 2002 itself.
* There can be any number of service providers. The license for ILD service is issued for a
period of 20 years, with automatic extension of the license by a period of 5 years.
* The private applicant would have to pay a onetime non refundable fee of Rs 25 million plus a
bank guarantee of Rs 250 million, which will be given back on honoring of the commitment.
* The annual license fee is at 6% of the Adjusted Gross Revenue and the fee for use of
spectrum is to be paid separately.

Internet service Providers (ISPs)

In 1998 the private sector was given permission to be internet service providers. In the interest of
the customer, the government has set certain guidelines to grant license to prospective service
providers. Any company in India with a maximum foreign equity of 74% is eligible for license. The
segment has seen tremendous technological advancements.

Broad band Policy 2004

Realizing the immense potential of Broadband service in the growth of economy and the
improvement in quality of life due to various functions like tele education, tele medicine, e-
governance, entertainment and in job creation, the government came up with the Broadband
policy in 2004.The main aim was to create infrastructure to enhance the progress of broadband.
Some of the technology applicable for broadband would be Optical Fibre, Asymmetric Digital
Subscriber Lines (ADSL), Cable Network, DTH etc.

Foreign Direct Investment

* In Basic, Cellular, Paging and Value Added Service and Global Mobile Personal
Communications by Satellite, FDI of 74% is allowed subject to license granted by Department Of
Telecommunication.
* FDI up to 74% is also permitted in Radio Paging Service and Internet Service Provider.
* FDI up to 100% is allowed for Infrastructure Providers of dark fibre, electronic and voice mail.
The condition set was that these companies would divest 26% of their equity in favor of Indian
companies in five years, provided they were listed in other parts of the world.
* FDI of 100% was allowed in telecom manufacturing.