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Bridging the Digital Divide: India's Telecommunications Experience

This paper explores the Indian telecommunications industry's role in the country's economic growth, its performance dimensions, competition, institutional support, and challenges like the digital divide and import dependence. It concludes with recommendations for bridging the divide and maximizing industry spillovers.

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Bridging the Digital Divide: India's Telecommunications Experience

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  1. Markets, regulation and bridging the digital divide:The Indian experience in increasing the access to telecommunications servicesProfessor Sunil ManiCentre for Development StudiesPrasanth Nagar Ulloor, Trivandrum-695011, Kerala, India

  2. Outline • Case of India’s telecommunications services industry • Contribution of telecommunications to the growth performance of India’s economy • Seven dimensions of the growth performance of India’s telecom services industry • Three substantive features of the growth performance • One silver lining on the cloud • Conclusions 2

  3. Contribution of telecommunications to the growth performance of India’s economy 3

  4. Seven dimensions of growth performance • Dominance of wireless technology than wireline • Monthly addition to mobile subscribers and the growing market for telecom handsets • Increasing privatisation of the telecom services industry • Competition in the provision of telecom services: Fixed vs. Mobile and within Mobile GSM vs. CDMA • Price iof telecommunications services • Institutional set up • Growing R&D outsourcing 4

  5. Monthly addition to mobile subscribers and the growing market for telecom handsets(million numbers) 5

  6. Dominance of wireless technology than wireline 6

  7. The rising privatisation of the telecommunications services sector, 1991-2009 7

  8. Structure of the telecommunications services industry according to ownership(percentage shares as on May 31 2007) 9

  9. Competition in telecom services industry (as on December 31, 2009) 10

  10. Competition between mobile standards- GSM vs CDMA 11

  11. Structure of the GSM and CDMA Services Industry(Market shares as on March 31 2009) Sunil Mani, October 19 2007, Georgia Tech, Atlanta, USA

  12. Price of Telecom Services (as in June 2004) 13

  13. Institutional Support • National Telecom Policy of 1994 • Telecom Regulatory Authority Act of 1997 • New Telecom Policy of 1999 • Broadband Policy of 2004 14

  14. Patents issued to Indian inventors in the US, 2002-2006 (Number of patents) 15

  15. Three substantive issues • Decreasing digital divide • Increasing import dependence • Low diffusion of internet 16

  16. Issue 1: Decreasing digital divide 17

  17. Issue 1: The digital divide within telecom circles in India (as on March 31, 2009) Sunil Mani, October 19 2007, Georgia Tech, Atlanta, USA

  18. Issue 1: Functioning of the Universal Service Fund, 2002-03 through 2008-09(Rs in Crores) Sunil Mani, October 19 2007, Georgia Tech, Atlanta, USA

  19. Issue 2: Increasing import dependence 20

  20. Issue 3: Low diffusion of Internet in India (Numbers in Millions) 21

  21. Domestic production of telecom equipments in India, 1992-93 through 2008-09

  22. The Silver Lining on the CloudFDI inflows to the telecoms industry (Rs in Millions) 23

  23. The Silver Lining on the CloudIndia emerging as a manufacturing hub for mobile telecom equipment (c2007) 24

  24. Conclusions • The telecom industry is a fine example of what can be achieved by easing governmental regulations with respect to production, imports and exports and focusing more on tariffs and other conditions of sale. T • The growth of the services segment of the industry is appears to be spawning a manufacturing industry. • In order to sustain this high growth, the government ought to be very serious about examining various proposals for bridging the digital divide through the support of private sector service providers as well. • But unlike the Chinese case, the colour of one part of this industry is largely foreign. • The policy focus of the government would be to maximize the spillovers of this activity to local Indian companies especially downstream industries such as components and semiconductor manufacturing. • The formation of a Telecom Equipment Export Forum and the announcement of the Indian Semiconductor Policy 2007 are right steps in this direction. • Success crucially depends on the response of the private sector to these incentives. • Given the importance that a regulatory agency can play in this crafting, no effort should be lost in strengthening the powers of the TRAI. 25

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