Firm figures on India?s cellular subscriber base will have to wait. But 2004 will be remembered as the year when India?s stock of cellular phone subscribers overtook the fixed-line subscriber base of around 40 million. This is in the aggregate and there are indeed variations across circles. For instance, in Delhi, the cellular base is double the fixed, while in Mumbai it is one -and-a-half times. But in the North-east, the cellular base is still only 10 per cent of the fixed. There is no reason why India?s cellular base shouldn?t be 100 million by 2006, and, in the process, its tele-density should increase from the present 8 per cent to 15 per cent. This is telephone penetration expressed per capita. Expressed per household, the penetration figure is higher and has crossed 25 per cent in Delhi. In per capita terms, India?s penetration ratio is still low. Countries with comparable purchasing power parity per capita income levels have penetration ratios between 25 and 30 per cent. The Chinese growth has been phenomenal and China?s 2003 figures show a penetration ratio of 42 per cent. The multiplier effects of increased connectivity are obvious, and indeed, this explosion is pro-poor. Certainly in the pre-paid segment, it is the relatively poor, like plumbers, carpenters, vegetable-vendors and drivers, who have opted for mobile phones.

Given a tele-density of 20 per cent plus in urban areas and less than 2 per cent in rural areas, it is tempting to argue that a digital divide exists and therefore, an universal service obligation should be imposed. This reflects an inadequate comprehension of how competition and market forces work. Indeed, Bharat Sanchar Nigam Limited?s cellular base has extended in areas one would have presumed to be deprived, thanks to the digital divide. The ?fixed versus mobile? comparison is unfavourable partly because fixed-line policy has been delayed and warped. In addition, competition through the 3rd and 4th cellular operators and the introduction of wireless in limited loop drove down effective charges, contributing to increased usage.

The contrast between growth in the first eight years from 1994-95 to 2002-03 and the last two years (2003-04 and 2004-05) is obvious. Procedural requirements are also simpler for the pre-paid category. It is a separate matter that revenue streams of many existing providers are questionable and further shake-outs inevitable. Infrastructure is a constraint to growth, and policies and problems vary from one infrastructure sector to another. However, with unbundling, natural monopolies are non-existent in most infrastructure sectors. Hence, the telecom message of competition, better quality, lower prices and increased penetration has more general applicability. Mandatory USOs and public sector provisioning are not the answer.