Chapter 1 Introduction

Telecommunication is very important in the information age and is evolving rapidly. Telecommunications can provide communities with an opportunity to compete in the fast growing service sector. As an electronic highway, customers can access remotely located products, services and markets easily. Communities can benefit by having access to up-to-date information through databases, information services, and computer networks. Telecommunications system can be helpful in overcoming the geographic boundaries. It can be a useful tool to make markets more competitive in globalised economy and promote their participation in it (Dokeniya, 1999; Chakraborty, 2003).

In Telecommunications, there are two kinds of services fixed-line and mobile phone. The number of fixed line telecommunication subscribers is increasing at a low rate because of the line fixation and maintenance problems. The technological advances have made mobile technologies, a cost effective and high quality alternative to fixed line networks. The technology that gives a person the power to communicate anytime, anywhere - has spawned an entire industry in mobile telecommunication. Mobile phones have become an integral part of the growth, success and efficiency of any business/economy. The access to the communication instrument is a factor that is responsible for the growth in economy of the country (Farley, 1995; Hossain & Kathuria, 2003).

The unit for measuring the number of telephones accessibility in a country or state is known as teledensity. Teledensity refers to the number of telephone lines per hundred persons. Earlier, before the entry of the cellular phone, the teledensity was defined as the number of telephones per hundred households (Farley, 1995).

The telecommunications facility in the country is an important factor for the economic growth. It is the responsibility of the government to provide and maintain

Chapter 1: Introduction

telecommunications to the people. Hence for the regulation of this sector, the government enacts some laws (Achar, 1999).

1.1

Telecom Law - Its Scope and Objectives

The first Indian Telegraph Act, 1885 is a law in India that governs the use of telegraphy, phones, communication, radio, telext and fax in India. It gives the Government of India exclusive privileges of establishing, maintaining and working communication equipments. The latest amendment in the Indian Telegraph (Amendment) Act was done in 2003. The main objective of the telecom law is the establishment of a legal framework to allow and guarantee the expansion and modernization of the national telecommunications system. It ensures the provision of quality telecommunication services, at affordable prices and offer access to a progressively larger number of citizens in the national territory. The other objectives of this law are to

promote public and private investment, encouraging the exercise of the activity in a regime of sound competition, based on transparent rules for the licensing of the activity and extending basic services to rural and remote areas with adequate quality standards on affordable prices;

guarantee competition among service operators based on the principle of equal opportunity, without special or exclusive rights; privilege the expansion of the national telecommunications infrastructure, promoting the introduction of new operators; determine and guarantee compliance with the obligations of universal service;

promote the development and use of new services and networks, ensuring they are developed using the best technology available and in a cost efficient manner, aiming at promoting territorial, economic and social cohesion;

ensure the efficient use of limited telecommunication resources such as numbering and the radio spectrum (Sinha, 2005).

The telecom law is meant to defend the users interests, ensuring their right to access telecommunication services without discrimination, in addition to that respect their constitutional rights, especially the right to honour the privacy and confidentiality in telecommunications.

1.2

Technological Developments of Telecommunications

Telephone history began, perhaps, at the start of human history. Human beings have always wanted to communicate with each other from long distances. People have used smoke signals, mirrors, jungle drums, carrier pigeons and semaphores to get a message from one point to another. But a phone is something novel and more effective.

Telephone comes from the Greek word tele, meaning from far, and phone, meaning voice or voiced sound. Generally, a telephone is any device which conveys sound over a distance. A telephone reproduces sound by electrical means. The Websters standard dictionary defines the telephone as "an apparatus for reproducing sound, especially that of the voice, at a great distance, by means of electricity; consisting of transmitting and receiving instruments connected by a line or wire which conveys the electric current." Electricity operates the telephone and it carries the voice (Farley, 1995).

Early Telephone Development

In 1729, English chemist Stephen Gray transmitted electricity over a wire. In 1753 an anonymous writer, possibly physician Charles Morrison, suggested in The Scot's Magazine that electricity might transmit messages.

In 1830 the great American scientist Professor Joseph Henry invented the first efficient electromagnet. Henry Ist built an electromagnet by winding an iron bar with several feet of wire.

Chapter 1: Introduction

In 1837 Samuel Morse invented the first workable telegraph, applied for its patent in 1838, and was finally granted it in 1848. Joseph Henry helped Morse to build a telegraph relay or repeater that allowed long distance operation. The telegraph later emerged as an efficient instrument in uniting the country and eventually the world (Farley, 1995).

The principle of the telephone was uncovered in 1874, which was a unique combination of electricity and voice that led to Bell's actual invention of the telephone in 1876. The first permanent outdoor telephone wire, strung in 1877, covered a distance of three miles. The workable exchange was developed in 1878 that enabled calls to be switched among any number of subscribers rather than requiring direct lines. The dial phone was invented in 1880 by Almond Brown Stroger and automatic exchanges were installed in the US and Europe (Farley, 1995).

Dr. Lee De Forest invented a three element vacuum tube in 1906 that could amplify radio waves. It was used to install repeaters on telephone lines to amplify the sound waves at mid-points along the wires. Theodore Vail of Bell Systems developed a new circuit in 1921, called phantom circuit that allowed three telephone conversations to be conducted on two pairs of wires. The first Electronic Switching System was installed by the Bell Labs in 1936 (Ghosh, 2000).

The first mobile phone service was put in service in 1946, linking moving vehicles to telephone networks by radio. The same year brought transmission via coaxial cables, resulting in major improvement in service as they were less likely to be interrupted by other electric interference. Microwave radio transmission was used for long distance telephony in 1947 (Ghosh, 2000).

Fiber optic cables, developed in the early 1980s, offered the potential to carry greater volumes of calls than satellite or microwave links. Electrical telephone signals are fed into tiny semiconductor lasers, which produce pulses of light in response to incoming signals and are bounced down inside of extremely thin glass fibers (Farley, 1995).

Today's cellular mobile phones rely upon a series of "cells," each with its own central radio transmitter and receiver. Each mobile phone unit also has its own central transmitter-receiver, permitting it to receive seamless transmission as they enter and exit from a cell (Ghosh, 2000).

Mobile Phone Telecommunications

Mobile phones have become personal phones with high quality full service mobile telephones and radio trans-receivers. Its widespread use began in the beginning of 1980s. There has been phenomenal growth in mobile telephone subscribers in the recent past and is increasing day by day.

There are two kinds of standards for mobile communications, one is Global System for Mobile communications (GSM) and the other is Code Division Multiple Access (CDMA). The former is the largest standard in the world and is also the most commonly used in China. The latter is a new standard developed in the United States.

The GSM Association was instituted in 1987 to promote and expedite the adoption, development and deployment of the GSM standard for digital mobile communications. The GSM Association was formed as a result of a European Community agreement on the need to adopt common standards suitable for cross border European mobile communications. Starting off primarily as a European standard, the Groupe Speciale Mobile as it was then called, soon came to represent the Global System for Mobile Communications as it achieved the status of a world-wide standard. In late 1980s digital radio technology was developed and is now the base for GSM (Gupta, 1999).

The GSM uses a break-before-make concept; a hard handoff between cells and the network switches. When a subscriber moves from one cell to another, it breaks the first cell link momentarily, switches the call, and then makes the new connection on another channel to the new cell. A credit card size SIM (Subscriber Identity Module) identifies the user to the GSM network. A SIM can be used with any GSM handset providing secure

Chapter 1: Introduction

telephone access and billing the subscribers network usage to his home network (Gupta, 1999).

CDMA is another mobile communications standard. This standard was being extended to provide fixed wireless service. In a Wireless in Local Loop (WLL) scenario, it is inherently possible to receive and make calls within the service area, subject to possibility of mobility of telephone instruments. Unlike GSM, CDMA uses a make-beforebreak soft handoff between calls. It connects mobile unit to the new channel, and only then disconnects the previous connection (Gupta, 1999).

1.3

Brief History of Telecommunications in India

The history of Indian telecommunications is divided in two periods: preindependence and post-independence.

Pre-Independence Period

The first experimental electric telegraph line was started between Calcutta (now Kolkata) and Diamond Harbour in November 1850. A regular Telegraph Department was set up in 1854 when the Telegraph Act was enacted and telegraph facilities were thrown open to public traffic (Gupta, 2001).

The first India-Ceylon cable for communication was laid in 1858. In 1873, Duplex telegraphy was introduced between Bombay and Calcutta. In 1880 the Indian Telegraph Department (ITD) transferred the responsibility of the Ceylon Telegraph System to the Ceylon (now Sri Lanka) Government (Gupta, 2001).

The telecommunications in India were introduced in 1881 near Calcutta by the British government. The Oriental telephone company was set up in 1881 and was given license to establish telephone exchanges in big cities.

In 1881, licenses were granted to private companies to operate telephone systems and in 1882 a telephone exchange was opened in Bombay. The year 1885 saw the introduction of quadruplex telegraphy and provision of copper wire, instead of iron wire, for transmission between Bombay and Madras. In 1887, the ITD provided facilities to the India Meteorological Department (IMD) to communicate storm signals to all places. The year 1888 marked an important milestone. In this year the Indo-European Telegraph Department, which was later known as Overseas Communications, was merged with the ITD. In 1895, phonograms were introduced for the first time. And in 1902, the first wireless telegraph station was established and a year later the departmental wireless telegraph was introduced (Gupta, 2001).

The next important year was 1905 when the control of the Telegraph Department was transferred from the Public Works Department (PWD) to the Commerce & Industry Department except for matters related with buildings and electricity. In 1914, the Posts and Telegraph (P&T) Departments were amalgamated under a single Director-General (Gupta, 2001).

A major reorganization of the department took place in 1925 when the accounts of the Indian Posts and Telegraphs were reconstituted to examine its true fiscal profile. It was also examined whether the rates charged from the public were inadequate or excessive. The P&T Department was a victim of the universal financial and economic depression of 1930. The Eastern Telegraph Co. (ETC) of 1872 and the Indian Radio Telegraph Co. (IRT) of 1927 merged in the Indian Radio and Cable Communications Co. (IRCC) in 1932. The High Frequency Radio Telegraph made its appearance in 1927, followed by Radio Telephony in 1933 (Gupta, 2001).

Meanwhile, several events took place, Radio telephone communications between England and India were opened in 1933; the Indo-Burma Radio Telephone service started functioning between Madras and Rangoon in 1936; the Burma and Aden telegraph systems, which were a part of the Indian telegraph system, got separated in 1937; deluxe telegrams with foreign countries were introduced in 1937; the Bombay-Australian wireless

Chapter 1: Introduction

telegraph service and Bombay-China wireless service were inaugurated in 1942; the Bombay, Calcutta and Madras Telephone Systems were taken over by the ITD in 1943; a Telecommunications Development Board was set up; the Bombay-New York Wireless Telegraph Service was commissioned in 1944; Hindi telegram in Devnagari script was introduced a year later (Padmanabhan, 1999).

Post-Independence Period

As a corollary to Indias Independence in 1947, there was phenomenal development in the communication system and technology. The Government of India took over the IRCC and established a government department named Overseas Communication Service (OCS). After partition, the country had 321 switching centers (telephone exchanges) in urban areas and a teledensity of 0.25 per thousand people (Ghosh, 2000).

In 1950, the India-Afghanistan Wireless Telegraph service, radio telephone service between India and Nepal, wireless telephone service between India and Indonesia and private priority telegram were inaugurated. The Own Your Telephone (OYT) Exchange scheme began to operate in 1950. In the following year, the radio telephoto service was started and wireless telegraph links to Thailand, the Soviet Union, Egypt and Iceland were provided. These were followed by wireless telephone links to Iran and Japan and the launch of the telex services in Bombay. Later, the first coaxial route between Delhi and Agra and the first Subscriber Trunk Dialing (STD) route between Kanpur and Lucknow were commissioned (Padmanabhan, 1999).

Under the able leadership of Pandit Jawahar Lal Nehru, the task of nation building promptly started. The first five-year plan in 1951 had an outlay of Rs 47 crores for telecom sector. The OCS was formed to establish radio telephony to USSR, Iran, Hong Kong, Switzerland, Bahrain, Singapore, Indonesia, China and Poland. The most important development took place during the first five year plan was the formation of Indian Telephone Industries (ITI) and Hindustan Cables Limited (HCL) in 1953. The formation of these two bodies was very necessary for estimating the potential of telecommunications,

which even at that time was immense. Round about this time, the Institute of Telecommunication Engineers (ITE), which later became the Institute of Electronics and Telecommunications (IETE) and the Telecommunication Research Centre (TRC) were formed. The TRC functioned for over 30 years till it was split. The developmental function was transferred to the Centre for Development of Telematics (C-DOT) and the engineering functions to Telecom Engineering Centre (TEC). According to the suggestions of Extraordinary Administrative Radio Conference (EARC) of International

Telecommunication Union (ITU), the Wireless Planning and Coordination (WPC) wing was constituted in 1951 to manage and monitor radio spectrum. It was to fulfill the international obligations of the country in the field of telecommunications and orbit/frequency coordination in respect of all types of satellite systems (Mody, 1995).

The National Subscriber Dialing was introduced in 1960 due to increased long distance telephone communications. The point to point Subscriber Trunk Dialing (STD) was introduced. The first microwave route between Calcutta and Asansol was opened in 1960 itself, the first crossbar local exchange was commissioned at Mambalam (Madras) and the first crossbar trunk automatic exchange was put into service in Madras. The 1970s witnessed the installation of the gateway telex exchange and introduction of the international subscriber dialed telex service, the introduction of the first digital microwave system in the Calcutta Junction network, the setting up of Telecommunications Consultants India Limited (TCIL), and the commissioning of the first optical fibre system for local junction in Pune (Padmanabhan, 1999).

In the 1980s, the first satellite earth station for domestic communications was set up at Secundrabad. At the same time the Troposcatter system link with the Soviet Union was inaugurated. The first electronic digital telex exchange and the first analogue electronic trunk automatic exchange were commissioned in Bombay. The C-DOT was established and the first mobile telephone service and the first radio paging service were introduced in Delhi. The Mahanagar Telephone Nigam Ltd. (MTNL) and Videsh Sanchar Nigam Ltd. (VSNL) were set up, and the international gateway packet switch system was commissioned in Bombay. The 1980s also saw the restructuring of the P&T Department

Chapter 1: Introduction

into the Department of Posts and the Department of Telecommunications, the constitution of Telecom Commission, and the reorganisation of telecommunication circles with the Secondary Switching Areas as the basic units (Bagchi, 2000).

The

Telecommunication

Commission

came

into

being

in

1989

for

telecommunication growth in the country. The first step in deregulation was taken when Intellectual Property Right (IPR) 1956 was scrapped with regard to telecom equipment manufacturing and was opened to private companies (Padmanabhan, 1999).

The 1990s witnessed the commissioning of the I-Net Exchange, introduction of the voice mail service in Delhi, the announcement of a National Telecom Policy (NTP), the setting up of the Telecom Regulatory Authority of India (TRAI), the introduction of the WLL telephone system in Delhi, the commissioning of the Indo-Nepal Optical Fibre link, the opening up of basic telephone services to the private sector, the announcement of the new ISP policy, and the separation of the Department of Telecommunications into the Department of Telecom Services (DTS) and the Department of Telecom Operations (DTO) (Gupta, 2001).

The visionary DoT secretary played a major role in the formulation of the National Telecom Policy (NTP) of 1994. The policy announced in May 1994 paved the way for the introduction of all value-added services and the start of privatisation of basic services. As the private services took off, the government formed a third party regulatory body (Gupta, 1999).

1.4

Brief History of Telecommunications in China

The People's Republic was founded in 1949, at that time the telecommunications systems and facilities in China were outdated and rudimentary, and many of them had been damaged or destroyed during the war years. Those that did exist were largely limited to the eastern coastal cities and a few interior cities. In the 1950s, existing facilities were repaired, and, with Soviet assistance, considerable progress was made towards establishing

10

a long-distance telephone wire network connecting Beijing to provincial-level capitals (Harwit, 1998).

Communications in China were established rapidly in the early 1950s. By 1952 the principal telecommunications network centered in Beijing, and linked all large cities. The works quickly got under way to repair, renovate and expand the system, and from 1956 telecommunications routes were extended more rapidly. To increase the efficiency of the communications system, the same lines were used for both telegraphic and telephone service, later on teletype and television (broadcasting) services were also added (Harwit, 1998).

In addition, conference telephone service was initiated, radio communications were improved, and the production of telecommunications equipment was accelerated. Growth in telecommunications halted with the general economic collapse after the Great Leap Forward (1958-60) but revived in the 1960s after the telephone network was expanded and improved equipment was introduced, including imports from western countries (Horsley, 2001).

By 1963 telephone wire was laid from Beijing to the capitals of all provinces, autonomous regions and large cities, while in turn provincial capitals and autonomous regions were connected to the administrative seats of the counties. Microwave and satellite transmissions were introduced and became operational in 1970s (Horsley, 2001).

An important component of the Fourth Five-Year Plan (1971-75) was a major development programme for the telecommunications system. The program allotted top priority to scarce electronics and construction resources. It dramatically improved all aspects of China's telecommunications capabilities. Microwave radio relay lines and buried cable lines were constructed to create a network of wideband carrier trunk lines, which covered the entire country. China was linked to the international telecommunications network by the installation of communications satellite ground stations and the construction of coaxial cables linking Guangdong Province with Hong Kong and Macau.

11

Chapter 1: Introduction

The provincial-level units and municipalities rapidly expanded local telephone and wire broadcasting networks. Expansion and modernization of the telecommunications system continued throughout the late-1970s and early 1980s, giving particular emphasis to the production of radio and television sets and expanded broadcasting capabilities (Horsley, 2001). Marked improvements occurred by the mid-1980s with an influx of foreign technology and increased domestic production capabilities. International and long-distance telephone links by cable and satellite of high quality multiplied. Telegraph, facsimile and telex were all in use. International satellite ground stations in Beijing and Shanghai were built and a domestic satellite communication network was operational in 1986 (Lai, 2004).

In 1987, China possessed a diversified telecommunications system that linked all the parts of the country by telephone, telegraph, radio and television. None of the telecommunications forms was as prevalent or as advanced as those in modern Western countries, but the system included some of the most sophisticated technology in the world and constituted a foundation for further development of a modern network (Lu, 2002).
State Council State Planning Commission

MPT

DGT

MEI

MOR

MOP

PLA

PTA's

PTBs

Other Equity Holders

Lian Tong (Unicom)

Ji Tong

Figure-1.1: Oragnisation of Telecom Sector Source: www.stats.gov.cn

12

Right from its inception, Ministry of Posts and Telecom (MPT) handled all the telecom administration and service related matters of the telecom services. The People's Republic of China felt the need for a proper telecom law to be followed by all administrative and service providers in order to bring healthy competition amongst the public and private, telecom service providers and manufacturing equipment units. The organisation structure of Chinese Telecom sector is given in Figure-1.1 (Nathan & Parekh, 2000).

1.5

Regulatory Bodies

The existence of an independent and effective regulatory body is crucial for ensuring optimum growth and free and fair competition. The independence of the regulator depends to a large extent on the funding mechanism. The constitution and the principles of the regulatory body guides its functioning. To ensure efficient functioning of the regulatory body, two crucial inputs are continuous up-gradation of the skills of its staff and regular flow of all relevant information including the one relating to latest technological developments. A structured approach needs to be developed to achieve these objectives. Besides ensuring that the competent personnel are attracted by the regulator, adequate training facilities and a framework of research and information service need to be developed. Depending upon the administrative setup of the country, the responsibilities of the regulatory authorities differ too. The setup of the regulatory bodies in both India and China is defined in the following paragraphs (Wu, 2004).

1.5.1

Regulatories in India

The DoT under the MPT was the only responsible authority for the regulations in the telecom sector. This public sector enterprise made it possible to install, operate and maintain the telecommunication services in the country. The private operators were allowed to enter only after the new telecom policy in 1994 (Virmani, 2004).

13

Chapter 1: Introduction

The NTP-94 recommended a third party regulatory body, but it was formed only after the private services took off. Though all the Value Added Services (VAS) had commenced and a few basic service operators licensed, there were many gaps in the process. The licensing process was too complicated and time consuming. Financing the projects became difficult for many of the operators as per the rules defined in the telecom policy. The confidence of the licensee on the Department dipped down to a record low. The regulatory environment improved with the time. The amendments in it from time to time led to the formation of the Telecom Regulatory Authority in India (TRAI) in 1997 (Sethi, 2006).

TRAI is a quasi-judicial body with independent charge and control over tariff fixing and settlement of inter-company disputes apart from other powers. The tariffs in this sector are still regulated to an extent by the TRAI (ITU, 2002). The conflict amongst private and public telecom companies started deepening as the new millennium dawned, the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) was set up to resolve the disputes. Spectrum management and equipment standards are areas that are also under the regulators purview as usual in many countries. TRAI Amendment Ordinance 2000 gave the TRAI only a recommendatory role for spectrum management and standards.

1.5.2

Regulatories in China

The

involvement

of

bureaucracy

in

policy

decisions

in

the

Chinese

telecommunications industry is of very complex nature. The hierarchy initiates with the Chinese Communist Party and its State Council (SC) and the State Planning Commission (SPC), which conducts the long-term planning for the country including the five and ten year plans (Xiongjian, 2003).

The ministries involved in the policies for the telecommunication industry are the Ministry of Information Industry (MII) and the Ministry of Foreign Economic Relations and Trade (MOFTEC). MII is the formal regulator of all telecommunications activity in China. It was created in 1988 through the merger of the MPT and the Ministry of

14

Electronics Industry (MEI). The MII has taken over the regulator function from its predecessors but has separated itself from the service operations. The complaints over the way MPT rules were great prior to the creation of MII but, there has been no change because the top management of MII formerly belonged to MPT. MOFTEC is the principal body of the SC and deals with business and trade activities that entail foreign companies. It is involved in large infrastructure projects and in conjunction with the SPC, the ministry sets the rule for imports and exports, technology transfer, granting of import licenses (Paglee, 1996).

There are three different levels of operation within its hierarchy; a) The central level, which is run from Beijing; b) The provincial level, under the responsibility of the respective provincial capitals; c) The local level, representing each county within the individual provinces (Xiongjian, 2003).

1.6

Globalilsation and Telecommunications Scene in India

In 1991, the Government of India decided to liberalise telecommunications and allow foreign companies to come into operation to ensure rapid growth. There was also a strong move to introduce mobile phone and paging services entirely through private sector. In 1994, deregulation entered a dynamic phase and the telecom sector was opened up for private sector participation and new NTP 1994 was announced. Mobile phone service licences to private sector were also started in 1994. In 1995, licences were awarded in 19 telecom circles (Virmani, 2004).

In July 1995, Cellular Operators Association of India (COAI) was set up to promote and upgrade Cellular Mobile Telecom Services (CMTS) operators in India and to look after the collective interests of its members (Virmani, 2004).

In October 1999, DOT was bifurcated into two departments; the DOT, as the licensor & policy maker and BSNL to provide telecommunications services in the entire

15

Chapter 1: Introduction

country except in Delhi and Mumbai, where MTNL continued to be the Government controlled service provider (Sethi, 2006). On 15th May 2000, Telecom Disputes Settlement and Appellate Tribunal (TDSAT) was set up to resolve the conflicts amongst COAI members and TRAI recommendations. The exponential growth in telecom subscribers as seen in Table-1.1 continued due the competitive policy of the country starting from 1.94 percent in 1998 to 2.86 percent in the year 2000 and 36.9 percent in March 2009 (TRAI, 2009). It is comparable with the growth in China's telecom subscribers in the initial periods. Table-1.1: Teledensity in India Year 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: www.trai.gov.in Fixed Line (Mn) 14.5 17.8 21.6 26.5 32.4 37.9 40.6 42.6 45.9 46.8 40.8 39.4 38.0 Cellular (Mn) Teledensity

0.3 1.6 0.9 1.9 1.2 2.3 1.9 2.9 3.6 3.6 6.4 4.7 12.7 5.1 33.6 7.0 52.2 9.1 98.8 12.2 165.1 18.3 261.1 25.8 391.8 36.9 st Year ending 31 March

1.7

Globalisation and Telecommunications Scene in China

In the last two decades, China has shown extraordinary high rates of economic growth that have transformed Chinese society and gave a long way to undermine Beijings control. With the ever increasing linkages to the global economy, China is beset by dilemma of decentralization. Gradual devolution of power to provinces and the localities, once seen as an avenue to build up power appeared as a chaotic mess of competing markets. The changes were seen in telecommunications sector too. The monopoly of the

16

telecommunications service provider was broken into Post and Telegraph Enterprises (PTEs) (Harris, 2001).

China followed a strategy of gradual deregulation and limited liberalization. It was the aim and objective of policies to promote a fast growth in telecommunications sector that could help to increase Chinas Gross Domestic Product (GDP) (Wancherkuhn, 2001).

The MII was created in March 1998 by merging MPT and MEI. It was done to speedup the development of individual service sectors, technological advancement and increase in integration of operations for major restructuring efforts. MII divided the basic telecom service into four specializing in different types of services, state-owned companies China Telecom, China Mobile, China Satellite and China Unicom (Xiongjian, 1998).

The national regulatory telecom policy of China is managed by MPT, the Ministry of Machine and Electronic Industries (MMEI), the State Planning Commission, and the Ministry of Foreign Economic Regulations and Trade (MOFERT). The MPT continues to dictate telecom policy largely through its control of network standards and public network interconnection. The MPT also oversees the planning, coordination, and development of inter-provincial trunk facilities (Xiongjian, 1998). Table-1.2: Teledensity in China Year Fixed Line (Mn) 1997 70.3 1998 87.4 1999 108.7 2000 144.8 2001 180.9 2002 214.2 2003 262.8 2004 312.0 2005 325.4 2006 359.3 2007 368.8 2008 (March) 361.1 2009 (March) 335.3 Source: http://www.stats.gov.cn/enGliSH/ Cellular (Mn) Teledensity 13.2 5.7 23.9 7.0 43.3 8.6 84.5 11.5 145.2 14.1 206.0 18.1 270.0 25.3 335.2 32.5 390.1 41.0 410.4 49.4 500.7 56.5 574.6 62.6 670.3 67.2 st Year ending 31 December

17

Chapter 1: Introduction

By the end of 1998, China boasted of 7.0 teledensity (Table-1.2). In the Ninth five year plan (1996-2000), Chinas telecommunications growth was maintained and there was telephone density of 11.45 percent. By the end of 2005 China had a teledensity of 41 percent (Table-1.2).

By March 2009, the teledensity was 67.2 and the growth is still continuing (STATS, 2009). It turns out that unlike many developing countries, China has resisted adopting a standard package in order to liberalise its telecommunication markets.

It will be pertinent to study the facts involved in the burgeoning growth of telecommunication services that directly leaves an impact on the economy of the country. This study sets out to examine the evolution and growth of Chinas telecommunications, regulatory policy and comparing it with the second largest populated neighbour country India. The study covers the era from the start of reforms (economic) in 1978 and runs all the way through 2008 (Xing, 2008). The telecommunications industries in both India and China have much in common. The rates in the number of telecommunication lines (both fixed and mobile) have been growing quite significantly, teledensities have been steadily improving and ratio of mobile to fixed communications have crossed unity in both the countries. The distribution of telecommunications services have been reformed, restructured and privatised in some cases. China has become the largest country of the world with maximum subscribers both in fixed line and mobile phone sector. This has attracted the attention of the researchers worldwide. The researcher took the initiative to analyse and compare the trends in telecom service sector of both the countries.

1.8

Objectives of the Study The present study has the following specific objectives:

a) b)

To study the growth of Telecommunications in India and China; To identify the factors determining growth of Telecommunications in these countries;

18

c) d)

To analyse the policies on Telecommunications being followed in these countries; To study the impact of telecom policies on the growth and development of Cellular Telecommunications;

e)

To develop a policy framework for Telecommunications in India.

1.9

Organisation of the Study Chapter one introduces the importance of communication in the globalised era. The

terms like telecom law are defined here. The developments in the telecommunication technologies since its inception are discussed. The brief history of telecom and the regulation authorities in both the countries is discussed here.

Chapter two presents a brief description of studies conducted on development of telecommunications in India and China. The review of the literature pertaining to various studies sponsored under projects funded by International Telecommunications Union and other independent bodies is discussed here. The gap in the already conducted studies and available literature is reviewed and attempts are made to cover it.

Chapter three addresses the methodology adopted to make comparative analysis of telecom policies of the most populated developing countries India and China.

Chapter four describes Indias telecommunication growth, policy and impact of reforms proposed and implemented through national telecom policies. The impact of foreign direct investment for better telecommunications services is discussed. The contribution of public and private telecom service providers is also analysed.

Chapter five presents Chinas telecommunication growth, policy-making framework, the reforms and history and development of telecommunications market. The plans for capital formulation from inside the country and foreign direct investment for the telecom infrastructure are analysed. The growth trend of fixed line and mobile telecommunications subscribers has also been analysed. The impact of increasing teledensity on the economies of the countries is discussed.

19

Chapter 1: Introduction

Chapter six specifically analyses the impact of reforms in telecommunications laws of both the countries. The trend of growth in telecom service subscribers is discussed. The evaluation of reforms is presented and discussed in international context. The comparative analysis of various parameters responsible for growth in service of telecommunication in both the countries is presented.

Chapter seven summarises the main findings and discusses future avenues for the research.

References Achar, A. (1999), Untagling a Telecom Revolution, Telecommunication, Vol. 33 No.10, pp. 181-183. www.telecommagazine.com/issues/199910/tci/india.html.

Bagchi, P. (2000), Telecommunications. Reform and the State in. India: The Contradiction of Private Control and. Government Competition, Centre for Advanced Study of India, University of Pennsylvania, PA (CASI Paper), December, pp. 1-58. www.casi.ssc.upenn.edu/research/papers/Bagchi_2000.pdf. Chakraborty, P. (2003). India's Telecom Rules May Hinder Growth, Wireless Week, June, pp.1-2.

Dokeniya A.(1999), Reforming the State: Telecommunication Liberalisation in India, Telecommunications Policy, Vol.23 No.2, pp.111-122.

Farley, T. (1995), Telephone History Series, pp.1-3. http://www.privateline.com/ TelephoneHistory/ History1.htm.

Ghosh, A. (2000). Telecom. www.arindam-ghosh.com/Telecom.aspx.

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