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India Long Distance Service Liberalisation

2008-12-04

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Foreign firms were allowed only ownership of up to 49% of the total stake, which represents mostly their contribution in technology transfer.

During this period, recommendations from the World Bank and the ITU pushed for the liberalization of India’s long distance services, which consequently released the monopoly of the state owned DoT and VSNL and opened the field to other players.

The Rao-led government indeed implemented liberalization but not according to the WB-ITU’s recommendations. Instead, the country’s local services was the target of liberalization efforts, which was a good way too in taking the opposition’s confidence while not alienating foreign telecoms involvement. It promised that long distance phone liberalization will follow after 5 years.

The country was divided into 20 telecommunication circles for basic telephony and 18 circles for mobile services. These circles were divided into category A, B and C depending on the value of the revenue in each circle. The government threw open the bids to one private company per circle along with government owned DoT per circle. For cellular service two service providers were allowed per circle and a 15 years license was given to each provider. As these progressed, the government did face oppositions from...

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Telecom Regulatory Authority of India