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January 12, 1999


The future is unwired: The buzz is that in India, mobile phones of all types will overtake ordinary landline phones!

A discussion paper put up to the government's Group on Telecommunications says that mobile phones would overtake fixed phone services in the country. The GoT is expected to formulate the new telecom policy.

Email this story to a friend. It is expected that the number of mobile phones of various types may count up to 10 million by 2007.

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In the short term, the paper estimates that the number of phones would touch 2.2 million by 2002. In addition, value-added mobile services, including mobile computing, data, fax, videophone services would grow along with traditional mobile phones in 2002-2007.

Significantly, the paper estimates that the price of mobile phones would be competitive to fixed services.

It also says that spectrum management would become more efficient with the passage of time.

The paper estimates an additional demand of telephones from 1997 to 2007 to be 66.4 million, of which 23.7 million would be for the period from 1997-2002.

It is also expected that the number of fixed telephone lines would be 4 per 100 persons by the end of 2002. It estimates that teledensity would increase to 9 telephones per 100 persons by 2007.

The paper estimates that all telephone exchanges would be on reliable long-distance media by 2002.

There would be a need to increase the information carrying capacity of the transmission network to meet user needs like Internet, video conferencing, captive networks and special networks.

This would lead to the creation of a very high capacity information highway on all major routes by 2007.

The paper also estimates that telecom technology would find application in many diverse sectors like banking, commerce, tele-education, telemedicine/surgery and virtual office.

On the issue of development of telecom facilities to rural, remote and tribal areas of the country, including the northeastern region, the paper states that sate-of-art technology will have to be installed in these areas.

In addition, it would also become necessary to extend new protocols like V-5.2 and V-5.1 to provide ISDN facilities to the rural areas.

The paper expects that these areas would be able to have telecom services commensurate to their needs and satisfaction.

On the Internet revolution, the paper estimates that the number of users would grow to astronomical figures by 2007, putting the number of users to be about 1.5 to 2 million by 2002.

According to the paper, a separate perspective plan would have to be prepared for the northeastern region, with a special focus to improve the services faster and to stimulated demand.

It is also necessary to have special focus in the plan proposals of the government for the tribal and hilly areas.

Telecom infrastructure is likely to play a very important role in meeting the diverse needs of people. The paper has visualised the development of technology within the 1998-2002 and 2002-2007 timeframes.

The visualisation is commensurate with the objectives of new National Telecom Policy, taking into account developments in other associated sectors in the country.

Duty cut on cellular handsets likely

Customs duties on cellular phones may be in for a cut with the Department of Telecommunications slated to include a proposal for duty reduction in its Budget proposals.

The issue is currently under discussion in the DoT.

Customs duties for handsets are currently at around 53 per cent. Cellular operators and vendors have been representing to the government that reduction in duties would shrink the grey market and thereby benefit the government.

The grey market is estimated at 45 per cent by way of volumes and at 50 per cent by way of value.

The number of cellular subscriptions grew from 794,000 in December 1997 to approximately 1.085 million in December 1998, a growth of 291,000 subscribers.

Approximately, 50 per cent of them use handsets purchased from the grey market, according to industry estimates.

Most of the handsets purchased from the grey market are high-end products costing $250-300 each. Vendors point out that since import duty inflates the cost of these sets by around $150, most of these high-end systems have been sourced from the grey market.

Apart from this, the replacement market, which is dominated by upgrades, is another avenue for grey market sales.

Based on these estimates, the government would lose close to Rs 800-900 million annually. The operators also point out that the duty reduction would increase subscription sales and therefore, bring further tax revenues.

The DoT is currently studying these issues in order to make a case for the finance ministry.

Apart from this proposal, the DoT is also likely to propose a reduction in excise rates for domestic manufacturers of telecom equipment.

Currently, the slabs are 8/13/18 per cent. DoT sources say that they are looking at bringing more items to the 8 per cent level.

The reduction will principally aid the DoT itself since it has an annual capital outlay of Rs 80 billion. A reduction of 5-10 per cent in duties on crucial products such as switches could save the DoT a couple of hundred millions, officials said.

A further reduction in duties for pagers from 18 per cent to 13 per cent may also be on the anvil.

- Compiled from the Indian media

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