The history of telecommunication in India can be traced back to 1851 when the first operational land lines were laid by the British government near Calcutta. Telephone services which were introduced in 1881, were merged with the postal system in 1883. the Indian Radio Telegraph Company was formed in 1923 and after independence in 1947, all the foreign telecom companies were nationalized to form the Posts, Telephone and Telegraph. The telecom sector was then considered a strategic service and hence it was brought under government control.
The system showed first signs of development when in the 1980s, the private sector was allowed to manufacture telecommunication equipments. The Department of Telecommunications was established in 1985 that exclusively provided domestic and long distance services. 1986 was a landmark for the telecom industry in India as two wholly owned government companies were formed: the Videsh Sanchar Nigam Limited (VSNL) and Mahanagar Telephone Nigam Limited (MTNL).
The former was for international telecommunication while the latter was for service in metropolitan areas. In the early 90s, the revolution in the telecom industry in many countries of the world and the general policy of liberalization in our country further lead to the development of the telecom sector in India.
The telecom sector witnessed major policy changes in 1994 with the implementation of the National Telecom Policy. Telecom Regulatory Authority of India (TRAI) was formed in 1997 which acts as the regulatory authority for the telecom companies in India. In 1999, cellular service was introduced in India.
The telecom companies in India can be divided into 2 categories: Fixed Service Provider and Cellular Services. The first one provides the basic services like national and long distance and international long distance services. The state owned BSNL and MTNL account for almost 90% of revenues from these basic services. The private sector is still clustered in the relatively urban areas and accounts for only about 5% of subscriptions. The private sector provides some more high-end services like leased lines, ISDN, videoconferencing and closed user groups. It focuses mainly on the private, corporate sector.
The cellular sector can be divided into the Global System for Mobile Communications (GSM) and Code Division Multiple Access (CDMA). The GSM sector is dominated by Airtel, Vodafone-Hutch and Idea Cellular while the CDMA sector is dominated by Tata Indicom and Reliance. The domestic and long distance services in India has opened up and this generates a lot of revenue for the cellular operator companies which compensates for the reduced tariffs on airtime.
