“I would like at the outset to extend a hearty welcome to all the editors who have assembled here today for this conference on the achievements of the Government during the last two years. It gives me great pleasure to be amongst you today and explain the various policies of the Government which have helped in strengthening the communication and information technology sector and place it at the vanguard of the economic development. The pro-active policies of the present Government have resulted in an unprecedented development in all the three sectors of the Ministry of Communications and Information Technology namely Telecom, Posts and Information Technology. We have been able to raise the standards of these sectors so that they deliver world class services to the citizens of this country at competitive rates and are also responsive to the needs of the people.
In the telecommunication sector we have been able to provide state of the art world class infrastructure at globally competitive tariffs and reduce the digital divide by extending connectivity to the unconnected areas. We are adding over 8 million subscribers per month and in the last month we have added more than 10 million subscribers. Handsets are being sold at a price which are within the reach of common man and has made this country one of the most sought after telecom manufacturing destination. Some broad indices of the telecom development during the last two years are witness to what I have said above. The total number of connections have gone up from 142 million in March, 2006 to 353 million in September 2008. What is more important is that rural telephones have gone up from 18.5 millions in March, 2006 to 105 million in September, 2008. The massive thrust in rural telephony is finally bearing fruit as more and more rural areas get connected to the telecom growth story. The Government is also actively encouraging rural telephony by releasing funds form the Universal Service Obligation Fund. Upto 31.03.2008 approximately Rs. 6,400 crores have been released for rural telephony and during the last one and half years Rs. 1646 crores have been released from USOF. The focused programme to provide VPTs in 66,822 uncovered villages have also been undertaken and till 31st October 2008 nearly 55,420 villages have been provided with telephones. The overall tele density has gone up from 7 per cent in March, 2004 to 30.64 per cent in September, 2008. While rural tele density has gone up from 5.9 per cent in March, 2007 to 12.89 per cent in September, 2008. Thus, the target set by National Telecom Policy 1999 for teledensity at 15 per cent by 2010 and 4 per cent in rural density by 2010 have already been achieved.
I will now turn on, to some of the major achievements in the Telecom Sector in the last 18 months.
1. You are aware that USO Fund has been set up with the objective of subsidizing telecom infrastructure in rural and remote areas. So far the USO mandate was restricted to supporting wirelines and by providing Village Public Telephones (VPTs) and Rural Direct Exchange Lines. In the recent past USOF has floated schemes to provide support for about 19,000 shared towers by providing mobile telephone services in rural areas. These towers are spread out over more than 500 districts in the country and each will be shared by at least 3 service providers to give choice to consumers. I have also enlarged the mandate of USO Fund for providing support for broadband services. This will enable good quality broad band services even in rural areas and help our rural brethren access e-governance and other facilities being provided under various programmers of the Government. The USO Fund rules have been amended to enable it to compensate BSNL to the tune of Rs. 2000 crores per year for 3 years in lieu of Access Deficit Charges. This will help BSNL sustain their rural wirelines which because of fixed tariffs mandated by TRAI are not economically viable.
2. With a view to enhance availability of wireless services in rural areas I have taken a decision to exempt rural wirelines from license fees from 1st October 2008. This will give a boost to rural telephony and will also encourage extension of broadband services in rural areas.
3. In order to reduce input cost of Telecom Access Providers and thereby facilitating reduction in tariff and enhanced teledensity particularly in rural areas new guidelines on sharing of infrastructure have been announced. These guidelines provide for sharing of active infrastructure amongst service providers based on mutual agreement entered amongst them. Financial incentives have also been given for sharing of infrastructure in rural areas to all eligible service providers.
4. New Guidelines for intra service area merger of Cellular Mobile Access Services and Unified Access Services have also been announced. Under these guidelines the prior approval of the Department of Telecommunications would be required for merger of licenses and any permission for merger shall be accorded only after completion of three years from effective date of the licenses. The market share of the merged entity in the relevant market shall not be greater than 40 per cent either in terms of subscriber based separately for wireless as well as wireline subscriber base or in terms adjusted gross revenue. The post merger licensee entity shall be entitled to the total amount of the spectrum held by the merged entities and will have to fulfill all the conditions applicable for holding such spectrum within 3 months of the merger. In case of failure to meet the spectrum allocation criterion within 3 months the excess spectrum would have to be surrendered.
5. The Government has in a pioneering decision, decided to auction 3G and BWA spectrum in January, 2009. Broad guidelines have been issued and independent auctioneer M/s N.M. Rothschild has been selected. Spectrum will be allotted through simultaneous ascending e-auction. The Reserve Price for one block of Pan India spectrum is Rs. 2020 crores. On an average 5 blocks will be auctioned. The Reserve Price for auction of 5 blocks will be Rs. 10100 crores. Government expects to realize significantly higher amounts. BWA spectrum is to be auctioned in a similar fashion. Four blocks will be auctioned, each having a Pan India Reserve Price of Rs. 1010 crores. The auction of BWA spectrum will bring Wi-Max services to rural areas and will help in broadband roll out. I have allotted 3G and Wi-Max Spectrum to both BSNL and MTNL in the month of September 2008 with a view to ensure early roll out of 3G and Wi-Max services in the country. MTNL will be launching services in December 2008 in Delhi and BSNL in January 2009 in Chennai. They will pay the same price for the spectrum as discovered through the auction.
6. Another major decision which I have taken recently is the introduction of Mobile Number Portability. This policy decision will enable customers to change their service provider without changing their mobile numbers and thereby provide increased choice to the consumers. It will encourage service providers to give better quality services at competitive rates so as to retain their customers. Mobile Number Portability will be available by June 2009 in four metros and thereafter will be extended in phases to the rest of the country.
7. The Department of Telecom is also actively considering increasing revenue from various sources. The license fee and spectrum charges of more than Rs. 55,000 crores have been collected since 2003 when the UASL regime came into effect. Every year telecom revenues are growing by about 15%. In addition, the Telecom Commission has taken a decision for increasing annual spectrum charges for 2G Spectrum. This decision, when implemented, will realize additional revenue of about Rs. 1200 crores per year.
8. As per the New Telecom Policy 1999 Government decided to foster more competition in the telecom sector so as to reduce tariffs for consumers and increase teledensity. TRAI has also recommended issue of new licenses. Consequent to this recommendation, Government has issued new licenses and when these operators roll out their network within three years, rural teledensity as well as revenue receipts of the Government will increase sharply.
9. Due to various measures taken by the Government the Telecom sector in India has become more vibrant and the Foreign Direct Investment inflow has gone up form US$ 478 million in 2006-07 to US$ 1261 million in 2007-08. This two and half times increase is unprecedented.
10. All the above policy initiatives would go a long way in helping the consumer to utilize the telecom services to the full.
10. With regard to the Postal Department, I have launched a freighter aircraft connecting Kolkata-Guwahati-Imphal-Agartala-Kolkata in August, 2007 which has expedited the delivery of mails and parcels in and from the North Eastern States of India. I propose to acquire three more freighter aircraft to provide connectivity throughout the country under the 11th Plan.
11. Through my initiatives the India Post Network has been collaborating with 11 State Governments for rolling out social welfare schemes under National Rural Employment Guarantee Scheme through Post Office Savings Bank Schemes.
12. I have opened the booking of Railway tickets through Post Offices through joint cooperation with Railways for the people who reside in far off places away from the railway stations. Money Orders are being sent through electronic transmission, which enables the remittances to reach distant locations very fast.
13. Sale of Gold Coins from Post Offices was launched this year on 15th October in association with Reliance Money and World Gold Council. Gold in small quantities like 0.5 gms, 1 gms, 4 gms, 8 gms are available for sale at 108 Post Offices. This has been a hit with the small investors and very soon it will be extended to other post offices.
14. Finally we have launched our ambitious Project Arrow as all of you might be aware. In the first phase the Project was introduced in 50 Post Offices and in the next phase it is being introduced in 450 Post Offices. 4500 Post Offices will be taken up shortly. We have upgraded infrastructure and business processes of Post Offices as part of the project. We have also, with this reason in mind, redesigned the logo of the India Post to make it more flexible and dynamic.
15. In the midst of turbulence in global markets, the IT sector in India continues to maintain a healthy growth rate both in the IT software and IT enabled services as well as in the IT and Electronics hardware sectors. A number of pro-active steps were taken by the Government to sustain and facilitate growth of the sector. These include extension of the benefits of income-tax exemption under Section 10 A and 10 B to the industry and introduction of a new IT Investment Regions Scheme to develop infrastructure facilities in tier II and tier III cities. Three States have already shown strong interest and have begun taking steps to set up such IT Investment Regions.
16. Last year we had also announced the Special Incentive Package Scheme (SIPS) to encourage investment for setting up of Semiconductor Fabrication and other micro and nano technology manufacture industries in India. The scheme has received very positive response from prospective investors. Seventeen proposals involving an investment of the order of Rs.1, 55,000 crores (over a period of 10 years) covering setting up of Semiconductor fab., LCD and solar photovoltaic industries have been received under the Scheme. As a result of the various measures taken by Government as well as stepped up investment by Government in e-Governance, the IT and electronics hardware and the software and services sectors are expected to continue to grow at a rate of over 20% per annum. Foreign Direct Investment (FDI) in the Electronics Hardware sector has shown phenomenal growth. I would like to mention that FDI during the last one year (May 2007 to July 2008) was 183 million US $ as against the cumulative FDI of US $ 160 million during the three year period from May 2004 to April 2007.In case of Software sector FDI during May 2007 to July 2008 has been 2400 million US $. During the period May 2004 to April 2007 the FDI in this sector had been 4568 million US $. With this robust growth in the IT Sector, the IT industry is expected to continue to employ professionals at a similar incremental rate.
17. A key step being taken to facilitate the growth and penetration of IT services and to curb misuse and Cyber Crime is the Amendment of the IT Act of 2000 taking into account further developments and emerging needs. The Cabinet has very recently approved the proposed amendments and we will be introducing them in Parliament shortly.
18. Under the National e-Governance Plan (NeGP), the establishment of Common Service Centres (CSCs) is proceeding briskly and out of the 1,00,000 CSCs envisaged by the Government, 20,000 have already been established and we expect most of the remaining CSCs to come up by the middle of next year. Investment by the private sector in this scheme is 2-3 times the Rs.5742 crores originally estimated. Six States have already implemented State Wide Area Networks (SWAN) and most of the remaining States are at an advanced stage of implementation. Similarly, the State Data Centres (SDCs) being set up to host government information and services in States are expected to be operational by next year. We have also initiated a fast-track action plan for making available a minimum level of Government services to the common man in rural and urban areas through CSCs within the next 6-9 months. A number of major e-Governance projects have been awarded to implementing agencies by the Departments and Ministries concerned such as the Passports project of MEA. Many of these projects have been facilitated and supported by the Department of Information Technology. Cumulatively, these measures are not only improving governance but are also contributing to the continued high demand growth in the domestic sector.
19. In the last few minutes I have tried to explain some of the important achievements and policy initiatives of the government which has taken this sector to great heights. I would like once again to thank all the editors who have assembled here for this conference and I hope to have a fruitful discussion on this sector.”
In the telecommunication sector we have been able to provide state of the art world class infrastructure at globally competitive tariffs and reduce the digital divide by extending connectivity to the unconnected areas. We are adding over 8 million subscribers per month and in the last month we have added more than 10 million subscribers. Handsets are being sold at a price which are within the reach of common man and has made this country one of the most sought after telecom manufacturing destination. Some broad indices of the telecom development during the last two years are witness to what I have said above. The total number of connections have gone up from 142 million in March, 2006 to 353 million in September 2008. What is more important is that rural telephones have gone up from 18.5 millions in March, 2006 to 105 million in September, 2008. The massive thrust in rural telephony is finally bearing fruit as more and more rural areas get connected to the telecom growth story. The Government is also actively encouraging rural telephony by releasing funds form the Universal Service Obligation Fund. Upto 31.03.2008 approximately Rs. 6,400 crores have been released for rural telephony and during the last one and half years Rs. 1646 crores have been released from USOF. The focused programme to provide VPTs in 66,822 uncovered villages have also been undertaken and till 31st October 2008 nearly 55,420 villages have been provided with telephones. The overall tele density has gone up from 7 per cent in March, 2004 to 30.64 per cent in September, 2008. While rural tele density has gone up from 5.9 per cent in March, 2007 to 12.89 per cent in September, 2008. Thus, the target set by National Telecom Policy 1999 for teledensity at 15 per cent by 2010 and 4 per cent in rural density by 2010 have already been achieved.
I will now turn on, to some of the major achievements in the Telecom Sector in the last 18 months.
1. You are aware that USO Fund has been set up with the objective of subsidizing telecom infrastructure in rural and remote areas. So far the USO mandate was restricted to supporting wirelines and by providing Village Public Telephones (VPTs) and Rural Direct Exchange Lines. In the recent past USOF has floated schemes to provide support for about 19,000 shared towers by providing mobile telephone services in rural areas. These towers are spread out over more than 500 districts in the country and each will be shared by at least 3 service providers to give choice to consumers. I have also enlarged the mandate of USO Fund for providing support for broadband services. This will enable good quality broad band services even in rural areas and help our rural brethren access e-governance and other facilities being provided under various programmers of the Government. The USO Fund rules have been amended to enable it to compensate BSNL to the tune of Rs. 2000 crores per year for 3 years in lieu of Access Deficit Charges. This will help BSNL sustain their rural wirelines which because of fixed tariffs mandated by TRAI are not economically viable.
2. With a view to enhance availability of wireless services in rural areas I have taken a decision to exempt rural wirelines from license fees from 1st October 2008. This will give a boost to rural telephony and will also encourage extension of broadband services in rural areas.
3. In order to reduce input cost of Telecom Access Providers and thereby facilitating reduction in tariff and enhanced teledensity particularly in rural areas new guidelines on sharing of infrastructure have been announced. These guidelines provide for sharing of active infrastructure amongst service providers based on mutual agreement entered amongst them. Financial incentives have also been given for sharing of infrastructure in rural areas to all eligible service providers.
4. New Guidelines for intra service area merger of Cellular Mobile Access Services and Unified Access Services have also been announced. Under these guidelines the prior approval of the Department of Telecommunications would be required for merger of licenses and any permission for merger shall be accorded only after completion of three years from effective date of the licenses. The market share of the merged entity in the relevant market shall not be greater than 40 per cent either in terms of subscriber based separately for wireless as well as wireline subscriber base or in terms adjusted gross revenue. The post merger licensee entity shall be entitled to the total amount of the spectrum held by the merged entities and will have to fulfill all the conditions applicable for holding such spectrum within 3 months of the merger. In case of failure to meet the spectrum allocation criterion within 3 months the excess spectrum would have to be surrendered.
5. The Government has in a pioneering decision, decided to auction 3G and BWA spectrum in January, 2009. Broad guidelines have been issued and independent auctioneer M/s N.M. Rothschild has been selected. Spectrum will be allotted through simultaneous ascending e-auction. The Reserve Price for one block of Pan India spectrum is Rs. 2020 crores. On an average 5 blocks will be auctioned. The Reserve Price for auction of 5 blocks will be Rs. 10100 crores. Government expects to realize significantly higher amounts. BWA spectrum is to be auctioned in a similar fashion. Four blocks will be auctioned, each having a Pan India Reserve Price of Rs. 1010 crores. The auction of BWA spectrum will bring Wi-Max services to rural areas and will help in broadband roll out. I have allotted 3G and Wi-Max Spectrum to both BSNL and MTNL in the month of September 2008 with a view to ensure early roll out of 3G and Wi-Max services in the country. MTNL will be launching services in December 2008 in Delhi and BSNL in January 2009 in Chennai. They will pay the same price for the spectrum as discovered through the auction.
6. Another major decision which I have taken recently is the introduction of Mobile Number Portability. This policy decision will enable customers to change their service provider without changing their mobile numbers and thereby provide increased choice to the consumers. It will encourage service providers to give better quality services at competitive rates so as to retain their customers. Mobile Number Portability will be available by June 2009 in four metros and thereafter will be extended in phases to the rest of the country.
7. The Department of Telecom is also actively considering increasing revenue from various sources. The license fee and spectrum charges of more than Rs. 55,000 crores have been collected since 2003 when the UASL regime came into effect. Every year telecom revenues are growing by about 15%. In addition, the Telecom Commission has taken a decision for increasing annual spectrum charges for 2G Spectrum. This decision, when implemented, will realize additional revenue of about Rs. 1200 crores per year.
8. As per the New Telecom Policy 1999 Government decided to foster more competition in the telecom sector so as to reduce tariffs for consumers and increase teledensity. TRAI has also recommended issue of new licenses. Consequent to this recommendation, Government has issued new licenses and when these operators roll out their network within three years, rural teledensity as well as revenue receipts of the Government will increase sharply.
9. Due to various measures taken by the Government the Telecom sector in India has become more vibrant and the Foreign Direct Investment inflow has gone up form US$ 478 million in 2006-07 to US$ 1261 million in 2007-08. This two and half times increase is unprecedented.
10. All the above policy initiatives would go a long way in helping the consumer to utilize the telecom services to the full.
10. With regard to the Postal Department, I have launched a freighter aircraft connecting Kolkata-Guwahati-Imphal-Agartala-Kolkata in August, 2007 which has expedited the delivery of mails and parcels in and from the North Eastern States of India. I propose to acquire three more freighter aircraft to provide connectivity throughout the country under the 11th Plan.
11. Through my initiatives the India Post Network has been collaborating with 11 State Governments for rolling out social welfare schemes under National Rural Employment Guarantee Scheme through Post Office Savings Bank Schemes.
12. I have opened the booking of Railway tickets through Post Offices through joint cooperation with Railways for the people who reside in far off places away from the railway stations. Money Orders are being sent through electronic transmission, which enables the remittances to reach distant locations very fast.
13. Sale of Gold Coins from Post Offices was launched this year on 15th October in association with Reliance Money and World Gold Council. Gold in small quantities like 0.5 gms, 1 gms, 4 gms, 8 gms are available for sale at 108 Post Offices. This has been a hit with the small investors and very soon it will be extended to other post offices.
14. Finally we have launched our ambitious Project Arrow as all of you might be aware. In the first phase the Project was introduced in 50 Post Offices and in the next phase it is being introduced in 450 Post Offices. 4500 Post Offices will be taken up shortly. We have upgraded infrastructure and business processes of Post Offices as part of the project. We have also, with this reason in mind, redesigned the logo of the India Post to make it more flexible and dynamic.
15. In the midst of turbulence in global markets, the IT sector in India continues to maintain a healthy growth rate both in the IT software and IT enabled services as well as in the IT and Electronics hardware sectors. A number of pro-active steps were taken by the Government to sustain and facilitate growth of the sector. These include extension of the benefits of income-tax exemption under Section 10 A and 10 B to the industry and introduction of a new IT Investment Regions Scheme to develop infrastructure facilities in tier II and tier III cities. Three States have already shown strong interest and have begun taking steps to set up such IT Investment Regions.
16. Last year we had also announced the Special Incentive Package Scheme (SIPS) to encourage investment for setting up of Semiconductor Fabrication and other micro and nano technology manufacture industries in India. The scheme has received very positive response from prospective investors. Seventeen proposals involving an investment of the order of Rs.1, 55,000 crores (over a period of 10 years) covering setting up of Semiconductor fab., LCD and solar photovoltaic industries have been received under the Scheme. As a result of the various measures taken by Government as well as stepped up investment by Government in e-Governance, the IT and electronics hardware and the software and services sectors are expected to continue to grow at a rate of over 20% per annum. Foreign Direct Investment (FDI) in the Electronics Hardware sector has shown phenomenal growth. I would like to mention that FDI during the last one year (May 2007 to July 2008) was 183 million US $ as against the cumulative FDI of US $ 160 million during the three year period from May 2004 to April 2007.In case of Software sector FDI during May 2007 to July 2008 has been 2400 million US $. During the period May 2004 to April 2007 the FDI in this sector had been 4568 million US $. With this robust growth in the IT Sector, the IT industry is expected to continue to employ professionals at a similar incremental rate.
17. A key step being taken to facilitate the growth and penetration of IT services and to curb misuse and Cyber Crime is the Amendment of the IT Act of 2000 taking into account further developments and emerging needs. The Cabinet has very recently approved the proposed amendments and we will be introducing them in Parliament shortly.
18. Under the National e-Governance Plan (NeGP), the establishment of Common Service Centres (CSCs) is proceeding briskly and out of the 1,00,000 CSCs envisaged by the Government, 20,000 have already been established and we expect most of the remaining CSCs to come up by the middle of next year. Investment by the private sector in this scheme is 2-3 times the Rs.5742 crores originally estimated. Six States have already implemented State Wide Area Networks (SWAN) and most of the remaining States are at an advanced stage of implementation. Similarly, the State Data Centres (SDCs) being set up to host government information and services in States are expected to be operational by next year. We have also initiated a fast-track action plan for making available a minimum level of Government services to the common man in rural and urban areas through CSCs within the next 6-9 months. A number of major e-Governance projects have been awarded to implementing agencies by the Departments and Ministries concerned such as the Passports project of MEA. Many of these projects have been facilitated and supported by the Department of Information Technology. Cumulatively, these measures are not only improving governance but are also contributing to the continued high demand growth in the domestic sector.
19. In the last few minutes I have tried to explain some of the important achievements and policy initiatives of the government which has taken this sector to great heights. I would like once again to thank all the editors who have assembled here for this conference and I hope to have a fruitful discussion on this sector.”
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