A Transformative Journey: Untold stories of Indian telecom

The story of Indian telecom is an epic saga of bold decisions and visionary policymaking, enabling regulation and innovative entrepreneurship that transformed a nation once struggling with extremely limited connectivity into a global telecom powerhouse. Over three decades, this journey has not only revolutionised communication but also redefined the country’s economic and social landscape. A few little-known stories within the main saga are related in this chronicle of the transformative journey.

The genesis of reforms and NTP 1994

It all started in 1991 when Dr Manmohan Singh, India’s reformist Finance Minister, dismantled the government’s monopoly in the near-bankrupt nation and invited private investment into the telecom sector, which was struggling with a telephone penetration of only eight fixed phones per 1,000 persons and no mobile phone whatsoever. India’s first National Telecom Policy (NTP) of 1994 followed and the Government thereafter issued tenders mandating GSM technology for mobile licences, aligning India’s infrastructure with global standards and paving the way for future advancements.

NTP 1994 was basically a good policy, and it had the highly laudable objective of “Telecommunications for all and telecommunications within the reach of all,” signalling ubiquity and affordability. (What is little known is that Shri Dhirubhai Ambani, with his vision of a telephone call for the price of a postcard of 10 paise, is supposed to have played a significant role in the making of NTP 1994). With India facing a shortfall of about Rs 230 billion in meeting the revised reasonable targets of the VIII Plan, Dr Manmohan Singh wisely stipulated that public sector undertakings could not participate in the tender and that it would be strictly for private parties along with a foreign partner. This became the game changer for India’s telecom industry, which, in turn, became the poster boy of economic reforms in India.

The constitution of TRAI

A key enabler of the telecom transformation was the constitution of the Telecom Regulatory Authority of India (TRAI). Established early in 1997 following a Supreme Court directive after a petition by the new entrant mobile operators challenging the arbitrary interconnection orders of the monopoly government landline operator, TRAI was tasked with introducing an independent regulatory framework to manage the burgeoning telecom sector. Previously, the Department of Telecommunications served as a policymaker, licensor, regulator and competitive operator (even Bharat Sanchar Nigam Limited [BSNL] had not been created till 2000). This arrangement was quite unfair to private competition. The draft TRAI Bill had been lapsing in session after session of Parliament since it had low priority until the Supreme Court order, which resulted in the Government establishing TRAI with effect from February 20, 1997 by an Act of Parliament. The TRAI Act was amended in 2000, bifurcating it into the regulatory-focused TRAI and the Telecom Disputes Settlement and Appellate Tribunal (TDSAT), which became a specialised forum for resolving disputes. This is a unique system in the telecom world globally and has been instrumental in developing a competitive, transparent and consumer-driven telecom market.

Enhancing the scale of early mobile networks

When the first round of metro cellular networks were being set up in Delhi, Mumbai, Kolkata and Chennai, the envisaged sizes of the networks were quite modest – around 20,000-30,000 subscriber capacity networks in Delhi and Mumbai and only about 5,000-8,000 subscriber capacity networks in Chennai and Kolkata. The trailblazer in thinking big was Shri Shashi Ruia, who imagined a mobile phone in the hand of every common man and decided to set up the Delhi Essar cellphone network, with a capacity of 100,000 subscribers. Initially, there was much skepticism about the viability of this, but soon other players in Delhi and Mumbai followed suit and scaled up their plans. Essar cellphone had a record number of 130,000 pre-registrations before the launch of the network. Essar surprised many by even providing a free mobile phone to all chauffeurs of their senior officers.

The game-changing role of Telecom Secretary Shri A.V. Gokak, BICP and ICICI

By 1997, the fledgling cellular mobile industry was in serious trouble due to a combination of reasons of both Governmental and private sector origin. As a result, the entire mobile sector was on the verge of collapse and the connectivity-starved public would have lost out even more. At this juncture, the then telecom secretary, Shri A.V. Gokak, played a vital but little-known role by invoking independent fast-track financial studies, first by ICICI and then by the Government agency, Bureau of Industrial Costs and Prices (BICP). These clearly established that there were serious viability issues for the networks and that the Government should consider actions for remedying the situation.

The making of the New Telecom Policy 1999 and migration of existing players

When the private operators were struggling under unsustainable licence fees, compounded by regulatory challenges, leaders such as Shri Sunil Bharti Mittal and Shri Rajeev Chandrasekhar were instrumental in demonstrating the need for a new telecom policy and then played a pivotal role in advocacy, which led to the announcement of the world-class New Telecom Policy, 1999 by the then Prime Minister, Shri Atal Bihari Vajpayee.

The Government played a stellar role in offering operators the option to migrate to a revenue-sharing model, while introducing greater competition, including a licence to BSNL. This bold decision was fundamentally consumer-centric, enabling the expansion of affordable mobile services, fuelling rapid growth and concurrently making the Government a stakeholder in the market success or failure through the revenue-sharing arrangement. Few may know now that when the Public Interest Litigation (PIL) against the Government for permitting operators to migrate and causing an alleged loss of billions of rupees to the exchequer was being heard in the Supreme Court, the then Attorney General of India, Shri Soli Sorabjee, informed the Hon’ble Bench that yes, the Government was foregoing huge money, but it was not for benefitting the private players; much more than the foregone money would be put into the pockets of telecom consumers through reduced prices and increased competition. The Hon’ble Bench asked the Attorney General whether private operators would submit an undertaking in this regard, and he answered in the affirmative. An affidavit was filed within the next few days stating that drastically slashed mobile tariffs would be implemented  by January 2000. With this assurance, the apex court was pleased to dismiss the PIL and permit the migration.

Introduction of CPP

The early 2000s brought another transformative policy – a shift from mobile party pays (MPP) to calling party pays (CPP). This eliminated charges for receiving calls, democratising mobile telephony and making connectivity affordable for millions. Affordable sachet-type prepaid innovations such as chhota recharge, helped extend connectivity to the bottom of the pyramid. The industry’s innovations, such as the shared-towers initiative commenced in 2004-05, outsourcing of non-core operations (managed services) to reduce costs and accelerate roll-outs, have been driving mobile adoption by the public. The creation of Indus Towers, a joint venture of the top three operators, which grew to become one of the largest tower companies globally, showcased how cooperation could drive progress for all. “Coopetition”, that is, collaboration on common issues concurrently with fierce competition in the marketplace, became a hallmark of the Indian mobile sector.

Data – The new oil

The industry faced further challenges such as the Supreme Court’s 2012 decision on the 2G spectrum case, cancelling 122 licences, exposed governance flaws while reinforcing the need for transparency and fairness. Again, the sector was disrupted in 2016 when a new stand-alone 4G operator entered the market, offering free voice calls and low-cost 4G data plans that completely shook up the industry, but gave the common man in India, for the first time, affordable mobile broadband. Jio’s entry transformed India into one of the largest data markets globally. Shri Mukesh Ambani’s statement, “data is the new oil,” underscored the importance of connectivity in driving economic progress.

Bold policies and some challenges

To strengthen the sector, the Government has continued to lead with bold policies such as the Production Linked Incentive scheme in 2021, which boosted domestic manufacturing, the IN-SPACe initiative and satellite communication reforms in 2022, which opened new frontiers in connectivity. The Telecommunications Act of 2023, replacing the 138-year-old Indian Telegraph Act, provided legislative clarity on several issues.

Despite many successes, challenges remain in the sector. Fixed broadband access needs to be urgently improved to meet the goal of an advanced digital economy or Viksit Bharat. The wide and deep digital divide – in all its colours including urban-to-rural, gender and technology – needs to be bridged on an urgent basis, keeping in mind the twin objectives of “digital first” and “sabka sath, sabka vikas”.

One thing is certain – India’s digital sector will continue shaping the nation’s economic and social landscape. As Prime Minister Narendra Modi aptly stated, “In India, we have made telecom not just a medium of connectivity, but also a medium of equity and opportunity.”

(The author’s views presented above are his personal views.)