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He also introduced private capital into the manufacturing of telecommunications equipment, which had previously been a DOT monopoly. Another, perhaps even more significant, problem with India’s initial attempts to introduce competition was the lack of regulatory clarity. Private operators complained that the licensor – the DOT – was also the incumbent operator...

The many stringent conditions attached to licenses were thus seen by many as the DOT’s attempt to limit competition. It was in response to such concerns that the government in 1997 set up the Telecom Regulatory Authority of India (TRAI), the nation’s first independent telecom regulator. The corporatization of the DOT and the creation of a new state-owned telecom company, Bharat Sanchar Nigam Ltd (BSNL), in 2000;

• The opening up of India’s internal long-distance market in 2000, and the subsequent drop in long-distance rates as part of TRAI’s tariff rebalancing exercise;
• The termination of VSNL’s monopoly over international traffic in 2002, and the partial privatization of the company that same year, with the Tata group assuming a 25% stake and management control;
• The gradual easing of the original duopoly licensing policy, allowing a greater number of operators in each circle;
• The legalization, in 2002, of IP telephony (a move that many believe was held up due to lobbying by VSNL, which feared the consequences on its international monopoly);
• The introduction in 2003 of a Calling Party Pays (CPP) system for cell phones, despite considerable opposition (including litigation) by fixed operators;
• And, more generally, the commencement of more stringent interconnection regulation by TRAI, which has moved from an interoperator “negotiations-based” approach (often used by the stronger operator to negotiate ad infinitum) to a more rules-based approach...

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