Telecom Regulatory and Policy Environment in India: Results and Analysis of the 2008 TRE Survey
affiliation not provided to SSRN
In India, like in many other developing countries, the abysmal performance of the state-owned telecommunications service provider and the increasing requirement to attract capital for the upgrading the sector were the major drivers for liberalization. At the macro level after enshrining policy in a closed centralized economic model based on import substitution for almost four decades, India made a structural shift to a market-oriented model in the early 1980s. This shift in policy and the associated institutional arrangements also had an impact on the telecommunications industry. India faced many difficult challenges in liberalizing its telecommunications industry from a monopoly to a decentralized competitive model. During monopoly era, telephone was not considered as a necessity, and, as a result, telephone penetration levels were very low and the quality of service was poor. However, long-waiting lists, technological advancement and pressure from various domestic and international stakeholders pushed the government to initiate reforms in middle of 1980's to spread telephone infrastructure.
Telecom reforms in India allowed for private entry but did not entail privatization of the incumbent erstwhile monopoly service providers. Market liberalization accompanied with the introduction of new laws and regulations was the cornerstone of reform. Regulatory agencies and regulation have become integral components of the telecom reform process, in order to protect consumers, reassure investors and, in theory, help advance competition.
The results of liberalization have been impressive. Teledensity has increased from merely 2 percent or so in 1999 to around 26.22 percent in 2008 and almost 6 million mobile subscribers are added every month. Wireless has been the principal engine for telecom growth in the country. The wireless subscriber base has grown from 0.88 million in1999 to 261.07 million in 2008.
Given the importance of the Telecom Regulatory Environment (TRE) on the outcomes of reforms, LIRNEasia has developed a TRE index, which summarizes stakeholders’ perception on certain TRE dimensions. The index is created with the help of a survey of the key stakeholders. The first survey was conducted in July 2006 in five Asian countries, India, Sri Lanka, Pakistan, Thailand, and the Philippines on six dimensions: i) market entry; ii) access to scarce resources; iii) interconnection; iv) tariff regulation; v) anti-competitive practices; and vi) universal services, for the fixed and mobile sectors. In the most recent survey carried out in July 2008, a seventh dimension dealing with the “quality of service” was added, and the survey was conducted for the broadband sector in addition to fixed and mobile sectors. The survey was carried out in eight countries, which are, Bangladesh, India, Indonesia, Sri Lanka, Maldives, Pakistan, Thailand, and the Philippines.
Number of Pages in PDF File: 34working papers series
Date posted: February 22, 2010
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