India - Next wave in telecom

The recommendations made by the Telecom Regulatory Authority of India (TRAI) to liberalise internet telephony within the country have raised expectations that the next wave of pro-consumer growth in the telecom sector, represented by cheaper calls, will soon begin. The spectacular rise in the number of phone connections in recent years has created a massive base for internet telephony and value-added services. Of the 325.78 million phone connections as of June this year, 2 86.6 million are in the wireless category; the telecom regulator has assessed that 70 million mobile connections are ready for third generation (3G) service and broadband wireless access. The fast clip at which India’s mobile phone sector has grown, thanks to affordable ownership, is a well-known success story. With sustained competition, such as through internet telephony, call costs can go down further. TRAI’s objective to bring the fruits of technological innovation to a wider section of people is welcome. Towards this end, the regulator has opened up domestic voice calls service to internet service providers. Although the option of providing internet telephony has been available for sometime now to holders of basic, unified and mobile services licences, they have not rolled out the service. Obviously it is seen as disruptive to prevailing business models. But a protectionist stance can only stifle technological advancement and deprive consumers of better value.
The availability of good quality broadband connections and adequate bandwidth on all parts of a network is a prerequisite for voice calls to be made over the internet. Many among the existing 4.38 million broadband subscribers in the country are aware of the potential of the technology to drive down long distance and international calling charges; many already use it for free computer-to-computer and international calls. The business process outsourcing sector has welcomed the TRAI recommendations for their potential to lower call costs. If the new framework gets the green signal, it could attract a significant number of fixed and mobile phone subscribers. Globally, there has been a mixed response to internet calling in countries such as Germany and Britain, while a third of the households in France use the service. In the U.S., both phone and cable companies are adding a large number of internet phone customers. One reason cited for the slow adoption in some countries is resistance from large, conventional phone companies. But India has achieved fast telecom expansion with cascading benefits to the economy, thanks to a growth-oriented policy environment. Internet telephony will help millions of subscribers make cheaper long distance and international calls.