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Mobile Phones Drive India's Telecommunications Expansion - 2004-08-01

India's telecommunications industry is expanding rapidly, largely due to the advent of the mobile telephone. When Suhasini Sood got married and set up home in New Delhi eight years ago, the state-owned telephone company put her on a year-long wait list for a phone connection.

Last month, when she moved to another home, Ms. Sood did not bother rushing to the phone company.

"With the mobile you don't really need to look at getting a land line immediately, or getting into the hassle of 'we don't have a phone, we can't be in touch with others,'" she said.

Ms. Sood is benefiting from the furious growth of what was once among India's slowest growing sectors. The telecommunications industry grew at 40 percent in the last financial year, largely due to a surge in popularity of mobile phones.

Telecommunication officials say by the end of the year, mobiles will overtake fixed lines. In fact, more than two-thirds of the phones added last year were mobile connections. The mobile is racing ahead even though fixed lines are now also readily available to customers.

The mobile revolution has been fueled by private operators, who entered the market in the 1990s after India began dismantling its state telecommunications monopoly.

In the past year, both state-owned and private companies have slashed phone rates, encouraging millions of new customers to snap up mobiles.

Call charges in India are now among the cheapest in the world, dropping to as little as one cent a minute today from 30 cents a minute a decade ago.

Deepak Jolly, a director at the privately owned Bharati Tele-Ventures says this has enabled many more people, such as blue-collar workers and students, to enter the market.

"India today has the most reasonable rates across the world in long-distance tariffs as well as short-distance tariffs, and entry barrier to get a mobile is much, much cheaper," he said.

India has also become one of the world's largest markets for mobile handsets as one and a half million connections are added every month. Mr. Jolly says customers are waiting to snatch up the latest trendy brands, which have become a must-have style statement.

"Today you have [the] world's biggest vendors who are queuing up in India who want to make sure that their latest model is sold in India," said Mr. Jolly.

The Indian telecommunication sector still has plenty of room to expand. Telephone density in the country is a meager seven percent, with a total of 79 million phone connections for a population of more than one billion.