Welcome Address by Mr. Rajeev Chandrasekhar, MP and President FICCI at the Inaugural Ceremony of “India Telecom 2008 – Connecting Rural India”

11 December, 2008, New Delhi

Good afternoon!

I would like to extend a very warm welcome to all of you to ‘India Telecom 2008’. It is indeed a testimony to the confidence in India, that we have a strong participation from a large number of International countries, despite the recent attacks on India. I particularly thank all those who have travelled from outside India for standing by India at this time.

I welcome our Prime Minister, Dr. Manmohan Singh who, as most of us know, was the catalyst of India’s wireless revolution, when he first opened up the sector to Private Participation in 1991, and thank him for being here this afternoon.

I would also like to welcome the Hon’ble Minister for Communications and IT, Thiru Raja and Hon’ble Minister of State, Shri Jyotiraditya Scindia and I thank them for their presence this afternoon.

India’s telecommunication sector has been a remarkable success story. As someone who has been a participant and observer, and now a public policy advocate, I can say its performance is something to be proud about for all its participants. Tele-density has increased from 5% in March 2003 to 32% currently, with a good mix of private and public investment and capital. Indian Telecom has grown from serving a mere 0.3 million subscribers in 1997, to serving over 325 million subscribers at the end of October 2008. India today has the world’s second largest wireless consumer base.

While these macro numbers do represent a form of success for the sector and the public policy governing it, its important to recognize that the next stage of growth will require some public policy reviews and restructuring. So let me discuss at least two them since we have the government leadership and other stakeholders here at this summit.

First is the issue of serving more Rural Indians - Successive governments have accepted that in a sector that has performed remarkably well, rural India has been an area of serious challenge. Even today, while three out of every four urban Indians have access to a phone – mostly a mobile phone – in rural India, the number drops to slightly over one out of every ten. This digital divide has a serious multiplier effect in holding back socioeconomic growth, especially as nearly 67% of India still resides in the rural heartland. Lack of connectivity and affordable options are both major deterrents for rural India to catch up with the progress that you see in urban, and in some cases, semi-urban cities. India has a unique opportunity to dramatically grow and connect a large majority of rural Indians and do so rapidly. I would urge a focused strategy of incentives and SOPs to accelerate investments into rural markets, combined with a more aggressive use of the Universal Service Obligation Fund.

Second is the issue of sustained affordability - One of the most important aspects of our public policy has been the focus on affordability and consumer benefit and indeed consumers have benefitted. Actually, Affordability and consumer benefit has been the principle justification of the Regulator and the government on more than one occasion to introduce new wireless licenses.

One technology that can revolutionize low cost connectivity for rural India is Voice over Internet Protocol (VoIP). Even though the TRAI has made its recommendations in this regard quite a few months ago, the government is yet to act. I understand existing Telcos are opposing this. This isn’t unusual. This type of opposition has been played out in various markets world wide. But the acceptance of this opposition by the government is surprising, given the government’s stated position on consumer benefit and cheaper services taking precedence over incumbent commercial interests. It will be difficult to justify why the commercial interests of some of the richest companies in the country would come in the way of implementing a policy decision that is universally known to reduce tariffs and especially benefit the rural heartland.

TRAI’s VoIP recommendations have received universal appreciation across all stakeholders, media and users. Any delay in this decision will be a serious lapse as it has tremendous opportunity of reducing tariffs, ushering in new technology, but most importantly, revolutionizing rural connectivity and tariffs in a significant manner. India is currently at the similar situation in the early 1990s when the incumbent operators were opposing the expansion of wireless operators. As then, the government must take the strategic positive step by introducing VoIP into the affordability equation.

Third – the issue of institutional and regulatory performance - as someone who has intimately lived the highs and lows of the Telecom sector from the day it was first opened to private capital, I must say that one of the big disappointments around the sector is continued ambiguity on what should be a relatively straight forward process of licensing and allocation of spectrum. When the TRAI act was enacted in 1997 and amended in 1998 by Parliament, it was done to assure an era of transparency and accountability. Sadly, the performance has been patchy and highly inconsistent, and dare I say, sometimes very questionable. I believe it is time for a complete review of the TRAI Act and associated government policies.

There are some interpretative lacunae and lack of sufficient enforcement powers in the act. These need addressing and there must be an increased culture of holding regulators and departments to account for their decisions.

These policy moves, coupled with the significant headroom for growth will make India the most vibrant and exciting Telecom opportunity in the world for Investors, Vendors and Consumers.

Let me end by drawing the attention of everyone present here to the recent Terror attacks in Mumbai. This was an attack on India, and as our P.M. and other political leaders have said, our Nation is firm in its resolve that it will fight back and prevail in this war that was launched on us.

Unlike many of the other industries, the telecom sector has played an important role in helping law enforcement agencies combat terrorism.

The Mumbai attacks have shown us that the terrorists are using the available latest consumer technologies and therefore there is a need for a very serious upgrade in the Government’s thinking on the level of cooperation that it is currently engaging in with the telecom industry to counter terrorism. The telecom industry currently provides real time support through legal intercept and monitoring mechanism, But given the expertise in this area largely resides outside the government, I strongly urge the Government to develop an institutional framework where the technology, services of the Indian telecom sector is available to the entire range of government agencies engaged in this war, including creating standing advisory councils as in other countries that are engaged in this kind of effort against terror. FICCI would be pleased to offer all assistance to the government on this vital issue.

Again, let me welcome all of you to this India Telecom summit and I wish you a successful summit of discussions, debate and interactions.

Good afternoon,
Thank you and Jai Hind.