The year 2004 was a turning point in India's telecom history when mobile phones surpassed the fixed line phones, but the sector witnessed legal battles over grey traffic.
The consumer was still on the top with mobile phone tariffs touching nadir with schemes like "talk more pay less" virtually breaking all the barriers and the tele density zoomed to over 8 per cent at the end of the year from about six per cent in the beginning.
The year saw a new initiative from the government, which came out with a first-ever broadband policy to push Internet penetration in the country and that too at an extremely attractive tariff of about Rs 500 a month for a 256 kbps Internet speed for broadband services.
The Finance Minister's budgetary announcement on increasing the foreign direct investment limit to 74 per cent from the existing 49 per cent met with opposition from the Left parties, supporting the UPA government from outside, but the government is confident of sorting out the issue.
The strategy of consolidation of public sector undertakings also gathered momentum as the government appointed advisors to suggest ways of synergising operations of MTNL and BSNL, together accounting for more than 90 per cent of basic telephone operations and nearly one-fourth of mobile connections.
Meanwhile, both the PSUs have also started their own preparations for the possible scenario or to be guided through the synergies by appointing their own advisors. MTNL has appointed HSBC while BSNL is in the process of appointing one.
Another major issue which continued to be a matter of intense debate among the service providers was reduction in the Access Deficit Charge levied on private operators to pass on to the public sector Bharat Sanchar Nigam Ltd for undertaking non-remunerative operations, especially in the rural areas.
The Telecom Regulatory Authority of India and department of telecom in fact locked horns over the issue with both sticking to their guns -- TRAI for reduction in ADC and DoT for continuation of the regime unchanged for a period of three years.
Though TRAI is ready to come out with revised norms with a proposed reduction of up to 30 per cent in ADC levied on the private operators, strong opposition from BSNL has delayed the announcement by the regulator.
TRAI favoured reduction in ADC, saying this would resolve the problem of grey traffic in international calls which was causing loss of revenue to BSNL as more and more private operators were evading payment of ADC.
In the process, Reliance Infocomm got into trouble when BSNL and MTNL alleged that the private operator was routing international calls as local ones and consequently the two PSUs lost nearly Rs 550 crore (Rs 5.5 billion). The matter is still in the courts.
The matter of routing of international calls as local ones also saw the intervention of DoT when it slapped a penalty of Rs 150 crore (Rs 1.5 billion) on Reliance Infocomm after issuing a number of show cause notices to the company.
Even as the private operator has contested DoT's decision saying it (Reliance Infocomm) has not violated any clause of the licence, it has yet to take a final decision on whether to pay up the penalty or take to legal recourse.
So much so that the Left parties protested the role of TRAI chairman Pradip Baijal in the matter saying he had failed to perform his duty by not taking action against Reliance Infocomm for violating licence and thus asked for his removal.
Baijal, who is known for his skills in resolving the most controversial matter 'cellular vs WLL' imbroglio and also known as an expert in reducing telecom tariffs, came under severe attack form the Left parties.
Nevertheless, TRAI continues its efforts to reduce tariffs not as a regulator but merely as a facilitator and thereby allowing market forces to take over which resulted in drastic reduction in tariffs especially in the mobile telephony.
The result was for everybody to see when mobile connections exceeded the number of fixed telephone line subscribers. About 90 per cent of the additional phones during the current year came from the mobile segment and with a major contribution from the private sector.
The year ended on a happy note when the largest GSM mobile operator in the country Bharti group chief Sunil Mittal said there was still a potential of tariffs coming down by as much as 30 per cent, provided the taxes levied were rationalised.
"There is a scope for about 30 per cent cut at present. Licence fee at 15 per cent, five per cent wireless charges and nearly 10 per cent ADC makes it 30 per cent besides the service tax of 10 per cent", Mittal said adding total tax liability of 40 per cent for an essential service like telecom was very high.
He said "the question we have to ask is whether it (mobile telephony) is a five-star service or an essential service, which is developing the country's economy. If telecom is serving the nation, it cannot be taxed at five-star rates."
In other words consumers should expect further tariff reductions in mobile telephony in the days to come.
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