Telecommunication penetration for voice and mobile broadband key to Indian GDP growth. Is policy makers pulling it down?

Past 7 years has seen Indian economy growing at rapid pace and being rated as most stable market. Companies have taken global outlook and no company can survive being regional specific without exploiting economies of scale and efficieny by integrating global resources. Taking the lead most IT companies , TATA Motors, TATA steel, Mahindra and now telecom giant Airtel has taken giant step in being global players. Indian companies have shown they can compete globally.

Telecom sector over this period has seen massive price reduction and telephone connection has become effortable to common people . This penetration in telephone connection has been driven by widespread availability of low cost prepaid connections and mobile handset. Creadit must be given to business model of Indian operators led by Airtel in moving to outsourcing model and paying per capacity used. This low cost model in offering voice minutes has credited to deep penetration of mobile connections.

India is one of the country where cost of mobile communication is least. From user perspective there has been no demand to reduce this further but need to have customized product packages catering to their requirements.

All these factors have made telecom business very lucrative and has been envy of other industries.

There has been lots of changes in past one year which is concern as citizen of this country:

1. Too many licenses were given to new operators at low cost , leading to short term unrealistic cost of services , making business unviable for most of them . No where in the world more than 3-4 operators are permitted to operate in same region. Some of them have taken licenses and sold equity at exhorbitant rate.

2. This also led to precious spectrum being unavailable for major operator who needs it due to higher subscribers but being unutilized by new entrants as subscribers are less.

3. Price of 3G spectrum has been very high as existing operator needs spectrum to support voice in key cities where their spectrum is choked to address subscriber addition. This will have impact on data penetration.

4. Broadband wireless access (BWA) license and spectrum is virtually own by one company which is not good for consumers and country.

5, Regulatory and policies have become major risk factor in teelcom business as compared to technology becoming outdated or customer taste changing .

All the above will have following impact:

1. Operators will start refocussing where money can be generated rather than pushing for rural penetration which they have been focussing.

2. Data reachability to rural and semi urbal will be slow against anticipation and government goal for broadband penetration will suffer.

3. Opportunity to extend eHealth , eEducation and eGoverance to rural and far distance locations will have huge imapct

4. Money collected from auction of spectrun will be used for covering country fiscal deficit which is easy way to do rather then bringing effiecieny in goverment spending.

With none of the policies pro commuincation infrastructure development and exhorbitant prices of licenses will have definite imapct on overall GDP in long run and bridging urbal - rural gap.

Need is to have policies which provides low cost communication to people of this country and at same time telecom industry should be attractive to investors.

"View expressed above in this post are individual assesment"