Telecom Policy

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In a country like India which is not yet telephone-saturated and ongoing changes in related areas are resulting in a rapidly changing profile of users, providers and their respective needs, continuous revision of the telecom policy is imperative. Given the emerging new technologies and the integrating economies there must be fairness among competitors.

The objections raised to VSNL's decision to invest in Tata TeleServices show how fragile and untenable the government's disinvestment programme is so long as politicians are not effectively stopped from interfering in the functioning of the privatised PSUs.

The government's reluctance in the first round of reforms to break the dominance of department of telecommunications and to overhaul the legal and regulatory regime led to endless litigation, which delayed the liberalisation process for almost a decade. The explosive growth of the Internet and wireless technologies and the threat by investors to decamp and withdraw their investment led the government to make efforts to untangle the problems. The 1999 Telecom Policy, the Internet Policy of 1998, and the recent legal and regulatory initiatives to overhaul the legal and regulatory regime are all steps in a positive direction. This article takes India's case as an example to show that a proper legal and regulatory regime at an institutional level at the outset, and a clear commitment to pro-competitive market principles at the political level, are necessary preconditions to successfully reforming the telecom sector.