Financial Express

The cheapest phone tariffs in the world

RISHI RAJ

30 July 2006

Even the harshest critics of reforms accept that had no moves been made towards liberalisation, Indian telecom would still be antediluvian. From the time when one had to wait several years for a landline connection to 5 million new users every month, the domestic telecom sector has come a long way.

Reforms have ensured that India leapfrogged legacy technologies when it launched GSM services in 1995 on the then latest platform. With the advent of CDMA, India could offer the latest CDMA 2000.

The country's teledensity has grown from 2% in 1991 to 13.95% now. India’s telephone subscriber base now stands at 153 million compared with 5 million in 1991. During the post-independence period of 50 years, from 1948 to 1998, teledensity grew a total of 2%. By 2010, it is projected to touch 42%. On subscriber base, India today stands fifth after China, US, Japan and Russia.

In 1994, under the National Telecom Policy, the government started inviting bids from private players for fixed and cellular licences. But the process ran into trouble when private players, particularly Himachal Futuristic Communi-cations Ltd (HFCL), bid exorbitant amounts. It took over four years to recover from the setback before Bharti launched the first private sector basic phone services at Indore in Madhya Pradesh in 1998.

The years 1997-2002, saw slow growth in mobile telephony. By end-2002, there were about 13 million mobile users. There were two reasons: one, the tariffs were high (at one point, almost Rs 16 [0.35 cents] a minute. Two, in-coming calls too were charged, thereby limiting use. Towards 2002-end, operators were forced to lower tarifs after the Telecom Regulatory Authority of India enforced new regulations like the ‘calling party pays’. In 2003, mobile services were opened up for CDMA. The ceiling of two private operators plus a state-owned operator for a circle was removed. This led to fierce competition, causing tariffs to drop significantly. The divide between local calls, STD and ISD also blurred with Videsh Sanchar Nigam’s monopoly ending in 2002. Today, at Re 1[0.02 cents] a minute for a call to anywhere in the country, India has the cheapest tariff in the world.

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