Liberalization of Indian telecommunications: Causes, course, and critical issues

1 The paper describes and discusses the compulsions leading to demonopolization of telecom equipment and cable manufacture, both confined to state-owned enterprises for over four decades; results of competitive production; and the effects of monopoly on the fortunes of the private-sector companies. 2 Across-the-board liberalization of the Indian economy, whose main feature is end of state monopolies; the opposition of the employees and officers to corporatize telecoms; the inability of the government Department of Telecoms (DOT) to raise investment funds, the mounting waiting lists for telephones, led to the adoption in May 1994 of a new National Telecom Policy (NTP), which (i) restricts the DOT to its old lines of business, (ii) allocates all new services to private-sector telephone companies only, and (iii) subjects DOT to competition from P-Telcos in basic services. The course of competition and liberalization is distorted because the operator DOT acts as the Ministry, Operator, Regulator, Licensor, and Arbitrator and a number of problems regarding licence fees, interconnection charges, continuing monopoly in interstate and international infrastructure and services have arisen These aspects of liberalization and economics and regulation are analyzed. 3 The paper concludes with a mention of the lessons that could be drawn from India's tortuous and as yet incomplete and still evolving liberalization exercise.