The Telecom Regulatory Authority of India (Trai) has said allowing private sector entry into domestic long-distance telephony would not affect the profitability of the operators.
Recommending a licence period of 15 to 20 years for domestic long distance operators in a consultation paper on `Introduction of competition in domestic long distance communications' released yesterday, Trai has projected Rs 23,916 crore revenue by the end of 2005 through the opening up of this service.
Based on a sample study of 40 cities and a private share of 15 per cent, the paper points out that return on capital increases as the number of cities increase, but shows a decline beyond 23-city markets.
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The paper is based on the new telecom policy which envisages opening up of the domestic long distance services from January 1.
The paper identifies the type and degree of competition, the areas of operation as well as the time frame for implementation as the key determinants for the policy.
The paper raises several issues, including the number of entities to be licensed and whether these entities can compete on facilities or on services or both. It also identifies geographical boundaries within which these entities will be allowed to operate and the transitional stages.
Trai has invited responses to the paper by August 13.
The consultation paper has projected a 25 per cent annual increase in the domestic long distance traffic and a six per cent increase in revenues per annum by the end of 2002.
The paper also opens a discussion on whether various organisations should be allowed to build and manage long distance fibreoptic cable networks and whether infrastructure owners should be permitted to become service providers.
The department of telecommunications owns about a 76,000-km fibreoptic cable network for long distance telephony. In comparison, 3,000 km of fibreoptic cable network is owned by other agencies such as Indian Railways.
Bright Future
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FY 2002 FY 2005
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Traffic 3,72,070 15,105
(Erlangs)
Revenue 5,94,720 23,916
(Rs crore)
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