India has a long way to go - A User's View - Statistical Data Included - Editorial

CommunicationsWeek International, April 1, 2002

Ewan Sutherland advocates In March. India said it passed the level of six million mobile phone subscribers. At the same time, China had added the same number in one month, totalling 156 million. Yet the difference in population is "comparatively" small, one billion to 1.2 billion. The government is to blame for the slower growth. particularly as it pertains to foreign investment.

The Indian government has switched from charging hefty license fees on operators to the simpler route of a special tax on telecoms users, typically 10%. which the government terms "revenue sharing." From 1 April, there will be additional operators in India for long distance and international calls. This is causing the price to fall by about half. At the same time, IP-originated calls will be permitted. But the termination market remains closed, except for SIP. Callers to India will not benefit.

A license will be available to ISPs willing to accept the risk that the regulator will not exercise its attracting foreign investors power to impose a specified quality of service or a revenue sharing tax.

The WTO commitments agreed by India require it to have an independent national regulator. The government has retained key decisions on which it takes on the advice of the regulator. but only with careful regard to its financial stake in the three incumbent operators and the revenues that flow from them.

For multinational corporations operating call centers in India. there remain a number of hurdles, the most obvious being the inability to connect an international call center to the domestic switched network, an archaic arrangement intended to preserve the revenues of the incumbent operators. Network-to-network connections are either not allowed or subject to punitive license fees. The incumbent operators are allowed to act as de-facto regulators. Both liberalization and regulation have a long way to go.