Strategic Plan Document

for
Department of Telecom,
Government of India

JS Deepak (IAS: UP 1982)

Pravir Kumar (IAS: UP 1982)

Mid Career Training Programme for IAS Officers Phase V 2010

Lal Bahadur Shastri National Academy of Administration, Mussoorie

6th January, 2011

 CONTENTS

Sl. Subject Page No.

No.
1 Introduction 1

2 Vision, Mission, Objectives and Functions 1

3 Stakeholder Consultation 4

4 Assessment of the Situation & Key Challenges 6

Facing the Telecom Sector

5 Strengths, Weaknesses, Opportunities and 6

Threats (SWOT) Analysis

6 Outline of the Strategy 9

7 Implementation Plan 21

8 Linkage between Strategic Plan and RFD 27

9 Cross Departmental Issues Impacting the 28

Implementation and Other Cross Functional
Issues

10 Monitoring & Review Arrangements 31

11 Strategic Plan- Continuity & Change 31

12 Note – Regarding modifications done 33

subsequent to discussions after Presentation
1.0 Introduction

The telecom sector is one of the major drivers of the growth of the Indian
economy. It is the fastest growing telecom sector in the world with more than
15 million subscribers being added every month to the subscriber base of 650
million. Today India has more than 600 million wireless subscribers in about
150 state-of- the- art networks. Rollout of services has taken place in 8000
towns and cities and over 500,000 villages and there are about 10 mobile
operators in each circle. The auction of 3G/BWA spectrum in June 2010 has
opened the gates for the availability of the latest technology and innovations for
Indian consumers at the lowest prices in the world. The total teledensity is now
60% and the telecom sector revenues have touched a whopping Rs 150,000
crore and are growing. And all these are the achievements only of the last 5
years!

Although, the progress of the past few years has been spectacular, there are
several areas of deficit and concern for which a well thought out strategy has to
be evolved for the development of this sector. This strategy paper is an attempt
in this direction.

2.0 Vision, Mission, Objectives and Functions

Vision, Mission, Objectives and Functions of the Department of telecom (DoT),

as mentioned in the Results Framework Document (RFD) of DoT, are as under:

2.1 Vision:

2.1.1 To provide to the people of India, reliable and affordable tele-

connectivity capable of delivering tele-services anytime,
anywhere.

2.2 Mission:

2.2.1 To develop a strong, vibrant and state-of-the-art

telecommunication network.
2.2.2 Promote Research and Development for India-specific
applications and for developing cutting edge technologies.
2.2.3 To provide seamless access to info-highways across the country and
in particular rural and remote areas.
2.2.4 To create knowledge based society through proliferation of broad
band facilities in every part of the country.
2.2.5 Make India a global hub, for telecom manufacturing.

2.3 Objectives:

2.3.1 To facilitate coherent growth of telecommunications by

formulating revised policy in the following areas:

2.3.1.1 Optimum utilization of scarce spectrum resource

2.3.1.2 Policy to guard against malwares, spywares, trapdoors and
ensuring security in telecom networks and measures to deal with
cyber warfare
2.3.1.3 Grant of licences including rationalizing licence fee structure
2.3.1.4 Merger and acquisition including rationalizing usage charges
2.3.1.5 Convergence of IT, Broadcasting and Telecom

2.3.2 Enhancing Spectrum availability for commercial use

2.3.3 Rapid expansion of Telecom infrastructure for Voice, Data &

Broadband with special emphasis on rural and remote areas
2.3.4 Developing consumer grievances redressal mechanism

2.3.5 Promoting R&D and manufacturing of telecom related equipment

2.3.6 Migration of network from Ipv 4 to Ipv 6

2.4 Functions:

2.4.1 Policy, Licensing and coordination matters relating to Telegraphs,

Telephones, Wireless, Data, Fascimile, Telematic services and
other like forms of communications
2.4.2 Promotion of standardization, research and development in
telecommunications
2.4.3 Promotion of private investment in telecommunications
2.4.4 Financial assistance for the furtherance of research and study in
telecommunication technology and for building up adequately
trained manpower for telecom programme including assistance to
institutions and to universities for advance scientific study and
research
 The objectives of the DoT listed above include convergence of IT,
Telecom and Broadcasting. Due to the convergence of voice, data
and video and with next generation networks being converged this
would be a worthwhile reform. Apart from other obvious and not
so obvious benefits, it would also facilitate the vacation of 700
MHz ‘digital dividend’ spectrum for commercial use. However,
this is an extremely ambitious and difficult to implement reform
and a bill for convergence introduced in Parliament some years
ago lapsed as it could not get support. We have therefore not
included this in the objectives of the Strategic Plan meant for next
5 years, though a few good ideas of the convergence bill like a
licence without spectrum have been included in the proposed
strategy.

3.0 Stakeholder Consultation

The Department of Telecom (DoT) is responsible for facilitating various

activities for the growth and expansion of the telecom sector. In doing so it has
to ensure that the interests of various stake holders like telecom operators,
equipment manufacturers, government and above all, the consumers, are
safeguarded. While defining its role, the first requirement for DOT is to
understand the needs of the main stake holders. An effort was made to obtain
inputs from them formally and these are summarized below:

3.1 Telecom Operators: Telecom Operators are of the view that the DoT should
go beyond tele-density and look at the country’s requirement of vital telecom
infrastructure and its most efficient utilization. There is a need to come out with
a comprehensive telecom policy focusing on reforming the licensing framework
with service and technology neutrality and separation of licensing and
spectrum. They also want uniform rates of license fees in different circles, a
simplified regime of annual spectrum charges and a market determined and
transparent system of allocation and pricing of spectrum. Operators also want
proactive efforts for release of more spectrum for the rapidly growing
commercial telecom services which by 2014 will require more than 300MHz of
spectrum. They also want an aggressive use of the USOF for creating shared
telecom infrastructure in rural areas and powering it by subsidized solar power
for reducing operating expenses and thus increasing the viability of rural
operations. Simple subscriber verification norms, a forum for addressing
security concerns and promotion of mobile commerce are also priorities listed
by them.

3.2 Equipment Manufacturers: Equipment manufacturers want a long term and

stable security regime based on international best practices for testing and
clearance of imported telecom equipment being inducted into networks. They
also want incentives to be provided to telecom operators who induct
domestically manufactured equipment.

3.3 Government: Government would like the growth in telecom services to

continue with special emphasis on rural teledensity and broadband. It would
also want an orderly expansion of the networks with efficient utilization of
scarce spectrum and sharing of highly capital intensive infrastructure.
Continuing growth of revenues and low tariffs and wide choice of providers to
customers is also part of Government objectives.

3.4 Consumers: Consumers want a variety of voice, data and video services,
latest technologies at low tariffs, high quality of services along with a simple
and quick system of redressal of complaints. Easy and cheap system of
switching from one provider to the other to enforce accountability is also highly
desired.

On the basis of the needs identified and the situation analysis an effort is made
to identify the key challenges being faced by the sector and suggest various
strategies for maximizing the benefits for the sector.

4.0 Assessment of the Situation & Key Challenges Facing the Telecom
Sector

4.1 India has witnessed a tremendous growth in the telecom sector in

the last decade. This has been possible due to advances in technology,
regulatory reforms, policy changes introduced by the Government and the
dynamism of the private sector in a fiercely competitive environment. This has
led to more than 650 million telephone connections and the lowest tariffs in the
world. However, rural tele-density is still very low, there are less than 11
million broadband connections, and about 40% of the country does not have
wireless coverage.
4.2 The industry suffers from a huge regulatory risk due to uncertainty
in licensing and spectrum policy, lack of domestic manufacturing and lost
opportunities in fulfilling the universal service obligation. The huge scam in 2G
spectrum allocation has shaken the stakeholders’ confidence in the system of
governance in the DoT. Though to a certain extent the spectacular 3G auctions
have redeemed the reputation of the Government, a number of challenges need
to be addressed through a variety of reforms. All this requires a cogent strategy
and a 5 year strategic plan which lays out the policy and reform roadmap to
maximize the benefits for various stakeholders and chart an orderly growth path
for the sector.

5.0 Strengths, Weaknesses, Opportunities and Threats (SWOT)

Analysis

The major strengths, weaknesses, opportunities and threats faced by the

Indian telecom sector are the following:-

5.1 Strengths

 huge growth in the number of telephone connections in the last 5

years.
 foreign investment and latest technology available along with huge
private sector investment.
 low cost of operations due to economies of scale resulting in the
lowest tariffs in the world.
 competition in every part of the country leading to low tariffs and a
variety of packages for the consumer.
 policy of infrastructure sharing leading to cost sharing and better
viability.
 successful model of 3G spectrum auction for large scale
implementation.

5.2 Weaknesses

 more than six operators (six being the optimum number) in each
circle leading to fragmentation of spectrum and its sub-optimal
utilization.
  large and increasing rural-urban divide in tele-density
 slow broadband growth and almost no high speed broadband
available in rural areas.
 high regulatory risk due to frequent changes of views and delays in
decision making by the regulator and government.
 poor governance often leading to non-transparent and controversial
implementation of policies.

5.3 Opportunities

 possibility of initiating reforms relating to licensing, spectrum

management, license fees etc.
 utilizing the huge corpus of USO Fund for creation of telecom
infrastructure in rural and remote areas.
 rapid expansion of high speed broad band connectivity, including
in rural areas.
 laying out a country wide network of Optical Fibre Cable (OFC)
and sharing with operators to provide backhaul and high volume
connectivity.
 making available internet telephony for cheap international calls,
Mobile Virtual Network Operators (MVNO) for bulk services for
niche customers, mobile banking for financial inclusion, mobile
number portability for changing the operator without changing the
number, and other innovations for better, more varied and less
costly services for consumers.

5.4 Threats

 delay in decisions in licensing and spectrum management reforms

leading to uncertainty.
 non-release of spectrum from users like Defence, Space and
Broadcasting resulting in shortage of spectrum for commercial
services beyond 2014.
 sickness of BSNL (and MTNL) resulting in industrial unrest and
erosion of value of government equity.
 non-development of local telecom equipment manufacturing,
leading to over dependence on foreign suppliers.
  increasing attacks on telecom networks, leading to security
concerns.

6.0 Outline of the Strategy

The future thrust of policy in the telecom sector has to be on raising its
competitiveness to make it a world leader. In view of the situational analysis
and the identified needs of the key stakeholders, the following policy options
are proposed for achieving the long term goals and objectives of the DoT:

6.1 Spectrum Availability, Management and Policy

The rapid growth of the wireless telecom network with more than 650
million connections has resulted in scarcity of spectrum with operators,
resulting in call drops coming in the way of providing top quality services.
Further, the issue of a large number of new licences and allocation of
spectrum to them in 2008, has resulted in spectrum fragmentation and its
consequent inefficient utilization, since a compact 10 MHz block of
spectrum can support about four times the number of users as a 5 MHz
block. This has made the task of identifying and making available fresh
spectrum for commercial use absolutely urgent. In addition, the controversy
associated with spectrum allocation and pricing in the recent past makes it
imperative that a transparent policy and mechanism be created which
optimizes spectral efficiency while ensuring a level playing field amongst
different players and technologies. The recent TRAI recommendations
which are available with the DoT provide an opportunity for addressing this
vexed issue right away. Some specific areas of intervention are:

6.1.1 Vacation of Spectrum: A significant amount of spectrum should be got

vacated from defence, space and broadcasting for commercial use. An
early switch to digital broadcasting, which requires much less spectrum,
can make valuable spectrum available for commercial use. This
spectrum, referred to as the ‘digital dividend’ in the 700 MHz band,
could be used for providing affordable mobile broadband throughout the
country.
6.1.2 Disclosure of spectrum availability: The overall availability of spectrum
along with anticipated release should be put in the public domain, along
with the definition of defence and space bands.
6.1.3 Auction of spectrum: A market based approach through auction should
be followed for the allocation of spectrum amongst different operators.
Further, the spectrum should be auctioned for 20 years at a time and at
the time of renewal the entity holding the spectrum should have the right
of first refusal.
6.1.4 Flat rate for Spectrum: Once spectrum is allotted at the market price,
spectrum user charges should be pegged at a flat rate to provide a level
paying field and facilitate merger and acquisition of spectrum.
6.1.5 Charges for excess spectrum: Operators should be allocated contractual
spectrum and those who have excess spectrum should be appropriately
charged.
6.1.6 Spectrum sharing: Opportunities for innovative spectrum access by using
innovative models of spectrum sharing, spectrum trading and use of
unlicensed spectrum bands should be encouraged and expanded as they
result in efficient use of spectrum.
6.1.7 Incentive mechanisms: Incentive mechanisms should be developed for
more efficient use of spectrum.
6.1.8 Centre for Excellence: A centre of excellence with expertise from
government and academia be setup for study and research of latest and
advanced techniques of spectrum management.

6.2 Licensing Reforms

This is an area requiring urgent attention for facilitating orderly growth of

the telecom sector. Transparency in licensing norms and procedures will
promote investment and lead to consolidation and increased efficiency. A
uniform licence fee regime across telecom circles and services is a long
overdue reform which will address issues related to level playing field
between internet service providers and telecom operators providing internet
services. It would also facilitate the introduction of innovations like low cost
internet telephony in the Indian market. The following are recommended:

6.2.1 De-linking license and spectrum: This would provide flexibility for
transfer of spectrum between operators and entry of players in the basic
telephony space.
6.2.2 License renewal terms: Terms of license renewal need to be clarified and
notified along with charges for spectrum and license fees. Amendments
to license conditions should be done through mutual consent.
6.2.3 Service and technology neutrality: Need for having a more convergent
licensing framework with service and technology neutrality is essential
for maintaining a level playing field.
6.2.4 Uniform rates for license fees: Across different telecom service areas and
for different service licences like Internet Service Provider (ISP) and
Universal Access Service (UAS), uniform license fee should be levied.
6.2.5 Internet telephony and MVNO: Licences for internet telephony and
Mobile Virtual Network Operators (MVNO) should be issued to provide
their benefits to the Indian consumer and market.

6.3 Broadband Expansion

The growth of broadband in India has been dismal and there are only about
11 million users at the end of 2010 against a target of 20 million. This
shortfall has been due to a number of reasons, including absence of optical
fibre network and poor quality of copper network which is limited to rural
areas, unavailability of 3G/Broadband Wireless Access (BWA) technologies
due to delay in spectrum allocation for them and absence of appropriate
content, especially in local languages. As a 10% point increase in broadband
penetration is estimated to increase GDP by 1.5%, this area requires urgent
attention. The way forward could be:

6.3.1 Broadband penetration: Broadband for all be made a reality by increasing

availability of high speed (2mbps) broadband in all Gram Panchayats in
the next 2 years.
6.3.2 Allocation of resources for broadband: Ensure sufficient allocation of
resources like spectrum, right of way management and infrastructure
sharing for broadband.
6.3.3 Cross-sectoral use of broadband: Provide incentives to encourage the
uptake of broadband in sectors like education, healthcare, public safety,
government operations, etc. by subsidizing customer premise equipment.
6.3.4 Expansion of broadband in rural areas: Provide funding and support to
encourage the rollout of mobile broadband on 3G/BWA spectrum
speedily in rural and remote areas.
6.3.5 Development of local content: USOF to provide seed funding for
development of local language content suitable for rural consumers
6.4 Universal Service Obligation Fund (USOF) Activities

The USOF to provide support for telecom infrastructure in rural and remote
areas is one of the finest innovations in the telecom sector but its potential
remains largely unrealized. 5% of the adjusted gross revenue of telecom
operators is collected as USOF levy every year and retained in a non-
lapsable fund. At current level of operations an amount of Rs 6000 crore is
added annually to the USOF corpus which at present is about Rs 20,000
crore. At the same time utilization of funds has been only to the tune of less
than Rs 2,000 crore annually and that too in providing access deficit charges
to BSNL. A rapid acceleration of USOF spending on well designed subsidy
schemes for promoting voice and broadband penetration in rural areas is
urgently called for. USOF should be metamorphosed into an efficient
organization for the design, implementation and monitoring of large
schemes of shared mobile towers and broadband infrastructure, including
optical fibre network and consumer premises equipment. It should also take
a lead role in supporting ‘green’ telecom infrastructure by subsidizing solar
power for mobile BTSs and other installations and equipments. As diesel
consumption for power back-up is a major item of operating expense in rural
areas, this will also increase the viability of telecom operations in rural areas
and facilitate their expansion. Some areas of intervention could be the
following:

6.4.1 Autonomy for USOF: Revamp and reorganize USOF within DoT as an
autonomous unit with freedom to formulate and implement schemes. It
should be guided by a Governing Council including experts and
academicians.
6.4.2 Use of USOF for expansion of coverage: USOF should aggressively
invest the funds at its disposal to provide voice coverage for 90% of the
geographical area of the country in the next 3 years. The target of 90% is
being suggested keeping in mind the feasibility and practicality of
implementing it. At present the telecom coverage is about 60% of the
geographical area and therefore a target of increasing the coverage to
90% in 5 years is ambitious, yet achievable. Further, there are large
areas of the country which are uninhabitable and constitute snow
covered, mountainous and dense forests and it would not be feasible to
expand coverage to entire country during the next 5 years. This telecom
expansion of 90% does not include the additional areas extending into
 the seas or beyond borders, where in any case, spillover mobile foot print
would be available.
6.4.3 Incentives for speedy implementation: It should develop enabling
subsidy schemes rather than elimination schemes to encourage operators
to develop telecom infrastructure in areas where it may otherwise not
make business sense. The schemes should be more effective and speed up
implementation by adopting a system that provides a minimum subsidy
below the benchmark cost and additional incentives for early completion.
6.4.4 Special schemes for J&K and NER: In the next year specific schemes
need to be floated for wireless broadband, fibre based backhaul, alternate
energy, technology development and for mobile and broadband
penetration in J&K and the NER.
6.4.5 Appointment of Advisor: Engage an independent agency to design the
bidding/auction process for its schemes.
6.4.6 Support for use of Solar energy: USOF should provide subsidy to service
providers to deploy solar energy for powering rural BTSs and charging
units.
6.4.7 OFC connectivity to all Gram Panchayats: Fund and implement a project
for providing OFC connectivity to all Gram Panchayats within a period
of 2 years.

6.5 BSNL

BSNL is hurtling towards sickness at a feverish pace. Many years of lack of

accountability and mismanagement coupled with an extremely competitive
environment has hurt both its top line and bottom line. The continuing loss
of its core wireline business and the huge burden of employee cost which
today is 40% of its revenues (compared to 5-7% for competitors) has further
accelerated its decline. While there are no strategic reasons for supporting
BSNL, BSNL is a valuable asset owned by Government and if it is turned
around it will fetch much greater value for Government than at present
when it is staring at sickness. Further, BSNL still possesses assets and core
competencies, which if effectively leveraged, can turn it around. But time is
fast running out and the main challenge is to restructure its business and fix
its governance before it collapses. Possible measures for resuscitation
include:
6.5.1 Autonomy for management: Insulate BSNL from ministerial interference
by separating the posts of Chairman and MD and bringing in an eminent
person from the private sector as Chairman and an able manager as MD.
6.5.2 Restructuring of BSNL: Carve out an infrastructure company from BSNL
and transfer all BSNL’s optical fibre assets and excess staff to this
company to make BSNL a lean, right sized telecom company with staff
costs as per sector benchmarks. BSNL assets should be leveraged to
generate resources for strengthening BSNL mobile network. The
infrastructure company would implement, own and share all BSNL fibre
assets and be funded by the USOF.
6.5.3 Merger of BSNL and MTNL: Merge BSNL and MTNL as they have
complementary operations and can combine their strengths for synergies.
6.5.4 Focus on core competencies: Focus on enterprise business, services to
government and public sector, value added services and new technologies
like 3G where BSNL has a comparative advantage.
6.5.5 Sale of MTNL spectrum: Allow MTNL to sell its unused BWA spectrum
in Mumbai and Delhi.
6.5.6 Listing of BSNL: After improvement of performance, BSNL should go
in for IPO and listing on the stock exchange for better disclosure and
accountability.
6.5.7 Absorption of ITS officers : Speedily complete absorption of ITS officers
in BSNL for ensuring their accountability and preserving the autonomy
of BSNL.

6.6 Optical Fibre Infrastructure

In this age of ubiquitous connectivity, the demand for bandwidth is exploding.

The copper network we have is only in cities and not of the quality that can
support broadband over distances of more than a few kilometers. In order to
provide high speed broadband with a minimum speed of 2mbps, it is essential
to have an optical fibre network throughout the country. Further the rapid
growth in mobile telephony has greatly increased the requirement of optical
fibre for backhaul which can no longer be supported by microwave. While
BSNL has about 6 lakh kilometers of OFC network and other operators have a
few lakh kilometers amongst them, mostly along rail routes and along
highways, there are huge gaps outside urban pockets. Best estimates available
suggest that an additional 3.5 lakh kilometers of additional OFC would be
required to connect all Gram Panchayats and it would cost about Rs 18,000
crore. It is therefore suggested:
6.6.1 OFC connectivity to all Gram Panchayats: To map OFC network of all
operators and fill in gaps to connect all Gram Panchayats and provide
OFC connectivity in phases to all 250,000 Gram Panchayats to ensure
high speed broadband (2mbps) connectivity to them with last mile
wireless broadband connectivity to users within 2 years. Since laying
such extensive OFC will involve getting right of way permissions from
various local bodies, village panchayats and other agencies it will be an
arduous task. This could be simplified greatly by fixing the OFC
alignment along PMGSY roads connecting villages. In areas where these
roads are yet to be constructed (large parts of North and East India)
trenches for OFC could be included in the road design itself while in
other parts OFC laid along completed roads.
6.6.2 Use of USOF for expansion of OFC Network: Use USOF funds to the
tune of about Rs 18,000 crore to lay this OFC and make it available for
sharing amongst all operators.
6.6.3 Management of OFC Network: Use the infrastructure company, spun off
from BSNL, for supervising construction and management of OFC
Network.

6.7 R & D and Standards

It is estimated that for every mobile telephone line that is added in India we lose
US$ 15 in royalty payments to foreign suppliers. India has lost the race for IPRs
in 2G and 3G technologies but we have a chance for getting a few IPRs in
equipment for 4G technology. Institutions like IIT Bombay and Madras
working on these initiatives in partnership with private organizations need to be
encouraged and supported so that Indian standards get into international
specifications. This will require strong support including the following:

6.7.1 Telecom Centres of Excellence: Centres of Excellence, set up in PPP

mode, need to be encouraged for carrying out R & D related to telecom.
6.7.2 R&D Fund: Create a large corpus fund for supporting R & D. This fund
should be used to perform research to address the problems of Indian
service providers and their future requirements.
6.7.3 IPR Generation: Focus on IPR generation by Indian organizations and
pushing them into international standards to provide a competitive
advantage to domestic telecom equipment manufacturers.
6.7.4 Development of Human Resources: Increase human capital formation for
telecom sector by supporting facilities for skills development and
training.

6.8 Promotion of Indigenous Telecom Equipment Manufacturing

India is the second fastest growing telecom market but most of the equipment
used by operators as well as the handsets are imported legally or through the
grey market. This involves an import of more than Rs 30,000 crore worth of
equipment. In addition, these imports result in serious security related, health
and environmental concerns. Therefore the need for creating a supportive
ecosystem for telecom equipment manufacture cannot be overemphasized.

6.8.1 Incentives for use of indigenous equipments: Use USO Fund to subsidize
operators by paying some part of the spectrum charges when they buy
Indian equipment. Government should also encourage home-grown
technologies and subsidize local manufacturers.
6.8.2 R&D and Testing Labs: Set up R&D and testing labs for testing of all
telecom equipments in India.
6.8.3 R&D for local needs: Support efforts to develop equipment for India
specific applications like solar mobile chargers for use in villages without
regular grid power, universal adaptors for all brands of mobile phones
and equipment with low electromagnetic radiation levels.

6.9 Security, Surveillance and Monitoring

Advances in telecom technology has brought great benefits but has also raised
serious security concerns. Since telecom networks are all interconnected, they
can be infected with various malwares to snoop, create denial of service
situations or unleash cyber attacks. In addition the use of telecom services by
criminals and terrorists underlines the need for having an effective system of
lawful interception and monitoring. The rapid advances in technology, different
security protocols used by different vendors and IPR issues involved in sharing
source codes for proprietary software add to the complications. A very
restrictive security regime can deprive consumers of new products and services
while a lax system can compromise national security. Thus an ongoing
collaboration is required between the licensor and security agencies on the one
hand and vendors and operators on the other. This can be achieved by:
6.9.1 Network Security: A forum be setup involving various stakeholders to
effectively engage in developing a practical and efficient approach to
ensure telecom network security.
6.9.2 Interception and Monitoring: An automated system of lawful interception
and monitoring be implemented, based on international best practices, to
balance security requirements of the state and privacy of the citizens.

6.10 Regulatory and Governance issues

The telecom sector is going through a turbulent phase due to the non-
transparent and arbitrary functioning of the DoT and the inability of the
regulator, TRAI, to come out with consistent, timely recommendations after
consultation with experts as per its mandate. The 2G scam and the inordinate
delay by TRAI in giving its recommendations (10 months against a statutory
provision of 2 months) on important licensing and spectrum issues has been
widely criticized. Their non transparent and inconsistent functioning, inordinate
delay in policy formulation and perceived unfairness in the functioning of both
the Licensor and the Regulator is primarily responsible for ‘regulatory risk’
being perceived as the most important factor inhibiting foreign investment in
the sector. This needs to be urgently remedied by:

6.10.1 Decisions on TRAI recommendations: Quick and transparent decisions

on various pending TRAI recommendations related to releasing spectrum
for commercial use, its allocation and pricing.
6.10.2 Transparent Functioning: DoT and TRAI need to re-invent themselves
and work in a manner that emphasizes impartiality, transparency and
non-discrimination between operators, agencies and technologies.

6.11 Responsiveness to Consumers

While competition has ensured that the customer gets a number of benefits like
low tariffs and a variety of service plans, the quality of services leave much to
be desired. The TRAI monitors quality by quarterly checks and consumer
surveys but this has not forced operators to incur incremental expenditure for
improving quality and consumer dissatisfaction on this score remains high.

Mobile number portability is an intervention which enables a consumer to

change his operator without changing his telephone number. Once this service
 is introduced, dissatisfied customers can switch from one operator to another
and this risk of losing customers, experience shows, makes operators invest in
providing better service quality and more responsive customer grievance
redress. Thus the following is recommended:

6.11.1 Introduction of Mobile Number Portability: This much delayed reform

should be introduced within 6 months to give consumers a real choice of
telecom service providers.
6.11.2 Health Safety and Radiation norms for telecom equipment and handsets:
Health and safety norms need to be evolved urgently and enforced
strictly for protecting the population from health hazards due to electro-
magnetic radiation emanating from mobile sets, towers and other
equipment.

7.0 Implementation Plan

The following Implementation Plan is proposed:

Option Policy Option Stakeholder Funds Tracking and Target

Sl. No Responsible Required Monitoring Date &
Priority
6.1 Spectrum Availability, Management and Policy

6.1.1 Vacation of DoT, MoD, NIL DoT, 12/2011

Spectrum DoS, MoI&B Telecom
Commission High
(TC), Cabinet
Sectt., PMO
6.1.2 Disclosure of DoT NIL DoT 12/2011
Spectrum availability Medium
6.1.3 Auction of Spectrum DoT NIL DoT, 06/2012
Telecom
Commission High
(TC), Cabinet
Sectt.
6.1.4 Flat rate for DoT NIL DoT, TC 06/2011
Spectrum High
6.1.5 Charges for excess DoT, TRAI and NIL DoT, TC, 06/2011
spectrum Telecom MoF High
 Operators
6.1.6 Spectrum sharing DoT and NIL DoT, TC 06/2011
Telecom Medium
Operators
6.1.7 Incentive DoT, MoF NIL DoT, TC, 06/2011
mechanisms MoF Medium
6.1.8 Centre for DoT, IITs, IIMs, Funds from DoT 06/2011
Excellence IISc. USOF Medium
6.2 Licensing Reforms

6.2.1 De-linking license DoT, TRAI NIL DoT, TC, 06/2011

and spectrum Cabinet Sectt. High

6.2.2 License Renewal DoT, TRAI, NIL DoT, TC 06/2011

terms Operators Medium
6.2.3 Service and DoT NIL DoT, TC 06/2011
Technology High
neutrality
6.2.4 Uniform rates for DoT, TRAI, NIL DoT, TC, 06/2011
license fees MoF MoF High
6.2.5 Internet telephony DoT, TRAI NIL DoT, TC 12/2011
and MVNO High
6.3 Broadband Expansion

6.3.1 Broadband DoT, TRAI, Funds from DoT, 03/2013

penetration Railtel, USOF Telecom High
Powergrid, NIC Commission
and Operators (TC), Cabinet
Sectt., PMO
6.3.2 Allocation of DoT, State NIL DoT, MoF 09/2011
resources for Governments, High
Broadband Local bodies
6.3.3 Cross-sectoral use of DoT, DIT, Funds from DoT, TC, 12/2011
Broadband MHRD, USOF DIT, Cabinet Medium
MoHFW, State Sectt.
Governments,
Consumer
premises
equipment
 manufacturers,
MoE&F
6.3.4 Expansion of DoT, DIT, DoT, TC, 03/2013
Broadband in Rural MoPR, PRIs Cab. Sectt. High
areas
6.3.5 Development of local DIT, MoI&B, DoT, DIT 12/2012
content State Medium
Governments,
Content
Developers
6.4 Universal Service Obligation Fund (USOF) Activities
6.4.1 Autonomy for USOF DoT, MoF NIL DoT, TC 06/2011
Medium
6.4.2 Use of USOF for DoT, USOF Funds from DoT, USOF, 03/2013
expansion of USOF TC High
coverage
6.4.3 Incentives for speedy DoT, USOF 06/2011
implementation High
6.4.4 Special schemes for DoT, USOF, DoT, TC, 06/2011
J&K and NER DoNER, MHA, Cabinet Medium
State Sectt.,
Governments DoNER,
MHA
6.4.5 Appointment of DoT, USOF DoT, USOF 03/2011
Advisor Medium
6.4.6 Support for use of DoT, USOF, DoT, TC, 03/2012
Solar energy MNRES, MNES, Cab. High
Equipment Sectt.,
manufacturers,
Operators
6.4.7 OFC connectivity to DoT, USOF, Funds from DoT, TC, 03/2013
all Gram Panchayats MoRD, MoPR, USOF MoPR, Cab. High
PRIs, Operators Sectt., PMO
and State
Governments
6.5 BSNL
6.5.1 Autonomy for DoT, DPE NIL DoT, TC 03/2011
management High
6.5.2 Restructuring of DoT, MoF, DPE DoT, TC, 12/2011
 BSNL Cab. Sectt., High
6.5.3 Merger of BSNL and DoT, MoF, DPE PMO 06/2012
MTNL Medium
6.5.4 Focus on core DoT, BSNL DoT, BSNL 06/2011
competencies Medium
6.5.5 Sale of MTNL DoT, MTNL, DoT, TC, 06/2011
spectrum MoF MTNL, Cab. Medium
Sectt.
6.5.6 Listing of BSNL DoT, BSNL, DoT, BSNL, 06/2013
DoD, MoF DoD Medium
6.5.7 Absorption of ITS DoT, BSNL DoT, DoPT 06/2011
officers Medium

6.6 Optical Fiber Infrastructure

6.6.1 OFC connectivity to DoT, USOF, Funds from DoT, USOF, 03/2013
all Gram Panchayats MoRD, MoPR, USOF TC, MoPR, High
PRIs, Operators Cab. Sectt.,
and State PMO
Governments
6.6.2 Use of USOF for DoT, USOF Funds from 06/2013
expansion of OFC USOF High
Network
6.6.3 Management of OFC USOF, BSNL Funds from DoT, USOF, 12/2013
Network Infra-structure USOF BSNL Infra- Medium
Company structure
Company
6.7 R & D and Standards
6.7.1 Telecom Centres of DoT, IITs, IIMs, Funds from DoT, TC 12/2012
Excellence (TCoE) IISc. USOF Medium
6.7.2 R&D Fund DoT, USOF 06/2012
Medium
6.7.3 IPR Generation USOF, TCoE 03/2014
Medium
6.7.4 Development of DoT, TCoE 03/2015
Human Resources Medium
6.8 Promotion of Indigenous Telecom Equipment Manufacturing

6.8.1 Incentives for use of DoT, USOF Funds from DoT, TC, 06/2011
 indigenous USOF USOF Medium
equipments
6.8.2 R&D and Testing DoT, USOF, 06/2012
Labs Pvt. Labs, TCoE Medium
6.8.3 R&D for local needs DoT, Equipment 06/2013
Manufacturers, Medium
Telecom
Operators,
USOF, MNES,
TCoE
6.9 Security Surveillance and Monitoring

6.9.1 Network Security DoT, MHA, Budgetary DoT, MHA 06/2011

Telecom Support High
6.9.2 Interception and Operators, NIC, 03/2012
Monitoring DIT, Equipment Medium
manufacturers,
LEAs
6.10 Regulatory and Governance issues
6.10.1 Decisions on TRAI DoT, Telecom NIL DoT, TC 06/2012
recommendations Commission High
6.10.2 Transparent DoT, TRAI NIL DoT, TRAI, 06/2011
Functioning Cab. Sectt. High
6.11 Responsiveness to Consumers

6.11.1 Introduction of DoT, TRAI, NIL DoT, TRAI 06/2011

Mobile Number Telecom High
Portability operators
6.11.2 Health Safety and DoT, MoHFW, Funds from DoT, 03/2012
Radiation norms for Equipment USOF MoHFW, High
telecom equipment manufacturers, USOF
and handsets Telecom
Operators

The Telecom Commission is expected to play an important role in monitoring

and implementation of the Strategic Plan.

8.0 Linkage between Strategic Plan and RFD

The implementation of the proposed strategic plan is broadly in tune with the
Vision, Mission, Functions and Objectives of the DoT, as stated in its RFD.
However, the strategic plan goes beyond the scope of RFD, in view of its longer
time horizon of 5 years instead of 1 year for RFD. The revised timelines as well
as the priority levels of various policy options of the proposed strategic plan
have been brought out in the Implementation Plan, as stated above. The RFDs
of the forthcoming years may be prepared on the basis of the proposed strategic
plan.

9.0 Cross Departmental Issues Impacting the Implementation and Other

Cross Functional Issues

Implementation of this strategy requires certain performance requirements from

other Departments. These include the following:

9.1 Cross Departmental Issues Impacting the Implementation

Sl. Department Requirement from Consequence of Non-

No Department Performance by the
Department
1 Defence Identification of Spectrum shortage would
Defence bands and constrain the mobile
release of spectrum in broadband roll-out and
the 800MHz, start impacting the quality
1800MHz &2.1GHz of services in a few years
bands
2 Space Release of spectrum in Shortage of spectrum for
the 2.3GHz band 4G services like super
high speed data and video
streaming
3 I&B Switchover to digital Shortage of spectrum for
broadcasting and mobile broadband
release of spectrum in services in this most
the 700MMHz band efficient and cost-
effective band which
requires one-third the
capital investment
compared to other bands
like 2.3 GHz band
4 Home A-Develop a practical Hurdles in roll-out and
system for telecom expansion of telecom
network security with networks
clear guidelines for
requirements from
foreign and domestic
vendors of equipment

B- Implement a Security risks and in-

simplified system for convenience to
subscriber verification consumers

C-Develop an Security risk and invasion

automated system of of privacy
lawful interception &
monitoring
5 Finance Agree to the spending Delay in funding and
(Expenditure) of USOF money implementation of USOF
already available in a schemes
non-lapsable fund

9.2 Other Cross Functional Issues

9.2.1 Environmental issues – Telecom sector has emerged as one of the biggest
consumers of electricity. For a country like India, with lakhs of villages still
without regular power supply, the use of solar energy is vital for the successful
penetration of telecom in rural and remote areas. The present usage of
generators for powering the telecom equipments and towers is not only wasteful
but also costly and environmentally hazardous. Similarly, the people in rural
areas, living without electricity face a huge challenge in charging their mobile
phones, laptop computers etc. thereby increasing the ‘Digital Divide’.
Therefore, there is an urgent need to develop and market solar powered
handsets, devices and equipments, to enable the people living in remote rural
areas to participate in the Telecom and IT revolution taking place in the country
and the world. Similarly, early development and standardization of universal
chargers for mobile phones would lead to huge saving of scarce resources. A
clear policy is also needed for safe disposal of e-waste, generated due to
proliferation of new mobile handsets and their short life cycle and quick
obsolescence.

9.2.2 Social issues – Telecom infrastructure is indeed the vehicle of IT &

broadcasting also. With the convergence of phones, computers, TV etc., this
sector has become a vital instrument for the spread of education, information,
entertainment and empowerment of masses by giving them access, information
and networking opportunities. Therefore, in times to come, a holistic approach
to various policy options would be necessary and the concerned departments
and Ministries would have to give up the “silo’ approach to policy making.

9.2.3 Health issues – It has been reported that the radiation from telecom
infrastructure and long term usage of mobile phones has potential to cause
cancer and is also resulting in other physiological and psychological disorders
like isolation, depression and deprivation syndrome. More research is needed in
these areas, for making necessary modifications and improvements in the
telecom technologies and spreading awareness about these issues.

10.0 Monitoring & Review Arrangements

Responsibility for monitoring and review of various policy options proposed in

the strategic plan have been detailed in the Implementation Plan. The strategic
plan is to be monitored primarily by the DoT, while some of the important and
cross-sectoral activities would need to be reviewed at the level of Cabinet
Secretary. Ministry of Finace (MOF) would need to monitor activities having
large financial implications. Some of the most critical items would, however,
need to be monitored and reviewed by the PMO.

11.0 Strategic Plan- Continuity & Change

11.1 The Indian telecom sector has seen a number of policies since it was
opened up in the early nineties. The New Telecom Policy (NTP) 94 was the
first attempt which led to the setting up of the Telecom Regulatory Authority of
India (TRAI), followed by the NTP 99 which set rolling the process of
liberalization. This was followed by various initiatives to reduce the licence fee,
bring in more operators in different telecom circles to enhance competition, and
introduce innovations like prepaid cards and the ‘calling party pays’ regime.
11.2 Licences were auctioned in 1994-95, but rash bidding pushed the telecom
sector into a crisis. It had to be rescued by a movement to the revenue sharing
system. More recently the policy of infrastructure sharing increased the cost
efficiencies in the industry which saw a pinnacle of achievement with the
successful 3G spectrum auctions, which established the market-determined
price of spectrum in a transparent manner for the first time.

11.3 The rapid growth and development of the telecom sector in the last decade
has thrown up challenges which have underlined the need of a revised policy.
The recent 2G scam has highlighted the urgency for a reform based strategy
based on the principles of transparency, non-discrimination and providing a
level playing field for different players and technologies.

11.4 The strategic plan presented above focuses on spectrum and licencing
reforms and is based on the identified priorities of different stakeholders
together with the learning from the best and worst practices of the last decade. It
also highlights the need for rapid growth of telecom services-voice and
broadband-in rural areas to bridge the ‘digital divide’ by active intervention
from the under-utilized USOF fund. The rapid decline of BSNL in the last 5
years calls for urgent remedies which form part of the strategic plan. Other
pressing and neglected issues like promotion of indigenous telecom equipment
manufacture, R&D, and security concerns; introduction of new innovations like
internet telephony, mobile banking and mobile number portability; regulatory
reforms and improved governance have also been touched upon. The strategy
document also seeks to address implementation and monitoring issues and fix
responsibilities and time lines.
Note – Regarding modifications done subsequent to discussions after
Presentation

During the discussion after the presentation of Strategy Paper at LBSNAA,

Mussoorie on 7-1-2011, a number of valuable suggestions were made by the
Task Force members and peers. The suggestions have accordingly been
incorporated in the Strategy Paper.

For ease of identification, these insertions/modifications have been shown in

italics.

Suggestion –
(i) Convergence of IT, Telecom and Broadcasting to be included in
the Objectives of the department. [Action – Comments added on
page 3-4]
(ii) (a) Why the coverage target under USOF has been kept at 90%
instead of 100% and (b) Why not suggest expansion of coverage to
even beyond the land area of the country, in the coastal areas, for
use by fishermen and sailors [Action – Comments added on page
14]
(iii) Justification for suggesting Restructuring and listing of BSNL
[Action – Comments added on page 15]
(iv) Issues relating to expansion of OFC Network to all Gram
Panchayats [Action – Comments added on page 16-17]
(v) Role of Telecom Commission in monitoring Implementation Plan
[Action – Comments added on page 27]
(vi) Correction of factual error regarding year of auction of licences
[Action – Correct year mentioned on page 31]