India releases draft of new telecom policy

The draft policy has a strong focus on local manufacture

Indian Minister for Communications Kapil Sibal announced a new draft telecommunication policy on Monday, aiming to give preference to domestic manufacturers of equipment, with an eye to reducing the country's import bill and ensuring the security of telecom networks.

The policy aims to boost local manufacture of equipment to 80 percent of total requirement by 2020, taking advantage of the large networks being set up in India to meet booming demand for mobile connections.

The country had 858 million subscribers at the end of July, after adding 6.7 million new subscribers in the month, according to data released by the Telecom Regulatory Authority of India (TRAI).

India can certainly leverage its large market for telecom equipment to promote local manufacture and employment, said Kamlesh Bhatia, a principal research analyst at Gartner.

Equipment makers such as Nokia Siemens Networks already make some of their equipment in India. Huawei Technologies has recently started making optical equipment through a contract manufacturer in Chennai in south India, a spokesman said.

The new draft telecom policy has ambitious targets, including providing phones to all Indians in rural areas by 2020, and extending the range of services on mobile phones to include financial services, proof of identity, and multilingual services targeted at India's illiterate people.

"The mobile phone will not be a communication device any more in the years to come," said Sibal in a speech that was also televised. "It will be an instrument of empowerment."

Currently about 35 percent of Indians in rural areas have access to mobile phones. The country is also aiming at increase broadband connections in the country to 175 million by 2017 and 600 million by 2020, offering a minimum bandwidth of 2 Mbps. The number of broadband connections in the country at the end of July was 12.5 million, according to TRAI.

The policy, for which feedback is solicited from the public, will also allow users to roam at no cost from one state to another.

Its announcement comes in the wake of scams in the telecommunications ministry that have led to the arrest of one communications minister A. Raja in February, and the charging of another, Dayanidhi Maran, for corruption on Monday. A number of business executives have also been arrested.

To the spectrum-starved mobile services industry, the government has promised 300 MHz of spectrum by 2017 and another 200 MHz by 2020. If earlier spectrum came bundled with licenses, operators will under the new policy have to buy spectrum at market rates, according to the new policy. Licenses will also be awarded to offer a bundle of converged services including voice, data, video, Internet telephony, broadcasting services, and value added services.

The policy will also allow operators to share and trade in spectrum, to optimize it use. The telecom industry will also be treated as an infrastructure industry, with possible tax breaks.

The new policy is however short on details of how the country plans to raise funds for the telecom expansion. The ambitious targets cannot be reached by private sector investment alone, Bhatia said. Government will have to look at technology as an important enabler for meeting social objectives, and invest substantially, he added.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

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