Among the Asia-Pacific countries, India has the second largest population, next to only China which has shown tremendous telecom growth since 1987 with its cellular subscribers reaching almost 10 million. And, it is only behind Japan. Many believe that India has the potential and reasons to be another China. Still, there is considerable caution in the forecasts about Indian cellular which range from three to seven million subscribers for the year 2001, implying a penetration of less than 1 percent—among the lowest in the world. We only wish that these forecasts were underestimated, as generally is the experience in the other parts of the world.

And, there are reasons for optimism. Indian operators are utilizing all the available skills and tools ... marketing or technological. Be it mass-market techniques or advanced value-added services, relationship marketing or information services ... Indian operators are behind nobody!

A comparison with other Asian countries brings out many advantages India has had. It started with GSM digital technology from inception while many countries having started with analog technology continue to struggle with problems of fraud and insecure communication (call tapping and so on). Besides, GSM offers the advantage of roaming. Also India has licensed only two cellular operators per region (with the probability of only one more, i.e. DoT/MTNL) while many other countries have issued or are issuing large number of cellular licences, creating difficulties for viability and possibility of imminent mergers. Also, India now has an independent regulator—Telecom Regulatory Authority of India (TRAI)—while many others still do not have an entity like this. India also attracted some of the world’s best known cellular operators as joint-venture partners.

However, the key problem with the Indian operators, particularly in some of the circles, is high licence fees which make business plans look difficult to achieve thus creating difficulties in financial closures in some cases. The lack of resources have also hit the educational campaigns by the operators leading to slow take-off in the circles. The high import duties for handsets as well as infrastructure continue to affect subscriber growth and profitability. Most operators have resorted to subsidizing the handsets to penetrate the price barrier. Automatic roaming is not yet implemented, though an ingenious plastic roaming is in place.

The problems, however, are not unsurmountable. There have been several recommendations by financial as well as industry bodies, for instance, extension of the licence period from 10 to 15 years and moratorium of two years on licence fees to improve the business plans and help in mitigating the financial difficulties.

As telecom development is crucial for the growth of the economy and a significant chunk of union budget revenue is planned from licence fees, it is important for all those involved to make a success of these cellular projects! It is achievable and can project Indian cellular as one of the exemplary privatization exercises in this part of the world: one of the largest and fastest, something to be proud of!

Niraj K Gupta, from my cell, Voice and Data, January, 1998