Gartner’s prescription for telecom: Strong regulator, higher FDI cap

Our eFE Bureau in New Delhi

If Indians thought they had managed to put in place a strong telecom regulator, they need to think again. Gartner analysts feel that India still needs to work towards a “strong and independent regulator which can ensure a level playing field between the incumbent and the new players”.

“The regulator needs to be rich (well-financed), have high-level executives and a powerful head (who can stand up to political pressures) who will not be fired every week,” said Bertrand Bidaud, research director, telecommunications, Gartner Asia-Pacific.
The regulator should not be the license issuing authority or be involved with policy making, added Kobita Desai, director and principal analyst with Gartner India.

Beefing up the regulatory regime is being increasingly seen as essential to attract foreign investments in the Indian telecom sector. The need to hike the foreign direct investment (FDI) limit in telecom services from the current 49 per cent to attract investments also came up in a big way. “International investors have been burned by not having control of the company,” Mr Bidaud said. “Even a hike in the FDI limit to 51 per cent (which would ensure management control) would be a step in the right direction,” he added.

India requires huge investments to increase mobile and fixed-line teledensity. Gartner’s telecom analysts expect the Indian cellular subscribers to grow to about 31 million by 2005 from 4 million at present, making it the the third-largest mobile market in the Asia-Pacific region, after China and Japan.

The number of fixed-line phones (including the Wireless in Local Loop based limited mobility phones) is expected to jump to 83 million by 2005 from about 30 million lines in December 2000.