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Telephone penetration good; can do better

The Survey termed broadband services where voice, video and data are offered on a single platform as the 'Next Frontier'.

india Updated: Feb 27, 2006 15:20 IST
Press Trust of India
Press Trust of India

Complimenting the government and telecom players for a five-fold increase in phone penetration in last six years in tandem with significant cut in tariff, the Economic Survey called for further intensifying the efforts, saying the present growth was not enough to match the vast potential.

Listing out development in the sector, including a tele-density of 11.32 per cent, up from 2.32 per cent in 1999, the Survey said that though the government has adopted a "technology neutral" policy, the scarce Spectrum needed to be allocated efficiently to maximise its economic value.

"Although India's 125 million strong telephone network including mobile phones is one of the largest in the world, the telephone penetration rate continues to be low at about 11.32 per cent per hundred population. The country offers vast avenues for growth," stated the Survey, tabled in Parliament in the run-up to Budget 2006-07.

"Efforts are being made to introduce newly emerging radio communication technologies without unduly constraining the other existing operations. There has been an ongoing process of addressing bottlenecks in the spectrum availability as and when they are encountered", the Survey said.

The Survey has also pointed out the falling market share of the PSUs -- BSNL and MTNL -- in fixed telephony segment.

"The two PSUs -- BSNL and MTNL-- have been losing their marketshare in fixed telephony. From 98.65 per cent in 2001-02, their combined share declined to 85.31 per cent in December 2005. In the past two years, PSUs have actually seen a decline in the number of fixed lines while such lines have grown in the private sector", the Survey (2005-06) observed.

However, the Survey took comfort in the fact that telecom PSUs have improved their share in mobile telephony from 3.98 per cent to 21.11 per cent.

In tele-density too, it hailed the fact that under the New Telecom Policy, 1999, with provision of affordable communication, the telecom sector in India has acheived a lot.

"With rapid growth, tele-density levels have surpassed the targets set. The total number of telephones rose from 22.8 million in 1999 to more than 125 million at the end of December 2005.

Overall tele-density has risen from a mere 2.32 in 1999 to 11.32 per cent in December 2005", the Survey said, adding by 2007-end, the total number of phones are targeted to reach 250 million.

The Survey has praised the role of Foreign Direct Investment in the growth of tele-density. The total FDI approved up to September 2005 was Rs 41,551 crore.

The Survey, which is the report card on the government's performance during 2005-06, also termed broadband services where voice, video and data are offered on a single platform as the 'Next Frontier'.

Here too, the Survey complimented the significant growth in broadband subscribers from 49,000 in December 2004 to 7.5 lakh in November 2005 and asked to increase these numbers vis-a-vis other Asian countries.

"These numbers would, however, need to increase substantially to look comparable with other Asian countries", it stated.

The Survey zeroed in on competition and growing economy as the drivers for raising the sector's performance bar in the medium term, while asking the segment to be ready to meet the challenges posed by Internet and convergence architecture.

"The sector however, would need to address and harness the challenges being posed to it by the Internet and convergence architecture", it said.

The Convergence of voice, video and data in terms on data, telephony and broadcasting has not yet taken off in the country and considering its vast potential to offer multiple services on a single platform, the Survey wants the convergence opportunity to be tapped and the bottlenecks towards this removed.

The report has taken note of the 'dramatic fall' in telecom tariffs with increased competition.

First Published: Feb 27, 2006 12:51 IST