Telecom Revolution

India’s XI Plan had projected a telecom services growth, but in reality, but the growth rate exceeded planned projections. In the matter of telephony, India attained the near impossible of more than 75% in density. India’s rural areas were widely covered, giving access of telephony to a large number of people in the rural areas. Though the growth was sensational, there were some policy lapses pertaining to the award of licenses and the matter is seized by the Courts of Law, hence sub judice. There are charges and counter charges. 2 G Spectrum is sparse and naturally, its use should have been made under harsher conditions and upper value. Many experts believe that the licenses were given at rock bottom prices. Though different agencies like Comptroller and Audit General, Central Bureau of Investigation, TRAI, Government of India had given varied figures regarding the revenue that would been acquired if 2 G Spectrum was auctioned, and the revenue that actually came in because of grant of licenses on First-cum-First-served basis. The comparison made by the various authorities must have been made on a base, and that base has to stand the test of law of probability under the eyes of Law. There were certain agencies who calculated the increased revenue by comparing the value received in 3 G auction, some calculations were made on the disposal of shares by companies who had fetched the license (based on the market value of shares), one company had quoted a pan-India value for receiving the license in Court and that value was taken etc. There have been economists and experts who had argued that the ‘base had to be on demand of tele services and the cost to the company to service a customer including cost of investment to be incurred in the new services that would have resulted in ‘x’percentage of growth’. The mean value of that would have accurately and fairly determined the demand for the Services on the basis of which the revenue should have been based. The growth of the Telecom industry in India during the 3rd millennium was reckoned as 40%. Expansion of a service and its acceptability of the same depend on its cost effectiveness. The example of dramatic market expansion in the Telecom industry proves the above concept. When mobile telephony started, the total number of subscribers in India was around 40,000. Telephone instrument costed Rs 40,000/-. The in-coming and out-going charges were Rs 18/- and Rs 32/-. All the Service providers were making huge losses. Today, on an average 5-6 million customers are added and the cost of the calls is very low. Instruments are available from Rs 500/- onwards. India has the World’s second largest mobile phone users at 865 million (August 2011). Teledensity is 73.97%. By 2014-15, it is expected to grow to 1 billion (84%). Wold’s 4th largest internet customer is India with 100 million users (Dec 2010). Internet hosts are 45, 36,000. 40 million use internet through their mobile phones. 10 million are employed in the industry of which 2.8 million are on direct employment and 7 million on indirect employment. In 2005-06, the Revenue through mobile phones at factor cost at constant prices was Rs 32,000 billion, but in 2010-11 it went up to Rs 57,600 billion and in 2015-16, it is expected to yield Rs 103,680 billion. Telecom equipment segment sold equipments worth Rs 1,17,039 Cr (US $ 23.74 billion).ARPU(Average Revenue per Mobile User per month) and the total income has been calculated on the basis of Gompertz model of mobile phone diffusion in India. Government receives Regulatory charge, Service charge from each mobile user. Government Regulatory charges are 13%(This is far more than Pakistan 4.5%, Sri Lanka 0.3%, Malaysia 6.5%, South Africa 5%) Service tax (which no other country charges) in India is 12.24%. The revenue to the Government for 2005-6 at factor cost at current prices would be Rs 53 billion (Regulatory charges) + Rs 41 billion (Service tax) fetching a value of Rs 94 billion. In 2010-11, it was Rs 156 billion +Rs 187 billion = Rs 343 billion, while in 2015-16 it is quantified using the Sigmoid Curve(S-shaped Growth curve) at Rs 324 billion and Rs 388 billion = Rs 712 billion. [The Diffusion of Mobile Phones in India by Dr Sanjay Singh, IIT, Kanpur]. 4G Mobile servicing with LTG Tech will be introduced in 2012. All this will take the nation to a telecom revolution. This is the reality. The annual recurring income revenue to the Government has to be noted.