Memorandum submitted by BT
INTRODUCTION
1. BT is one of the world's leading providers
of communications solutions and services operating in 170 countries,
including India. BT consists principally of four lines of business:
BT Global Services, Openreach, BT Retail and BT Wholesale. BT
Global Services is the line of business with direct operations
in India and India is one of the key markets for BT. We welcome
the opportunity to provide input into this Inquiry.
BT IN INDIA
2. In September 2006 BT announced strong
growth plans, predicting that its revenues from India will be
US$250 million by 2009. BT is also looking to hire an additional
6,000 people in India within the next two years and plans to add
additional resources to support its already substantial capabilities
in outsourcing and systems integration services.
3. Over the past year BT has announced a
number of developments which significantly increase its capabilities
and presence in India:
— in November 2006, BT announced that
it had reached a joint venture agreement with Jubilant Enpro Pvt.
Ltd, a New Delhi-based company engaged in the businesses of oil
and gas, food and services. The formation of the Joint Venture
enabled the Joint Venture Entity (BT India Telecom Pvt ltd), in
which BT holds 74% equity, to apply for telecommunications licences;
— in February 2007, BT was granted
International Long Distance (ILD) and National Long Distance (NLD)
licences by the Department of Telecommunications in India. These
licences mean BT is now able to offer services directly to multi-site
corporate customers in India;
— in February 2007, BT signed an agreement
for the acquisition of i2i Enterprise Pvt Ltd, a Mumbai-based
enterprise services company specialising in internet protocol
(IP) communications services for major Indian and global multinational
companies. i2i has a significant customer base in the IT, ITES
and BFSI segments and has network operating centres and offices
in all major commercial cities in India; and
— in March 2007, BT announced the activation
of a new multi-protocol label switching (MPLS) node in Chennai,
India at a ceremony attended by The Honourable Mr Dayanidhi Maran,
the now former Minister of Communication and IT.
RECENT DEVELOPMENTS
IN THE
TELECOMMUNICATIONS SECTOR
4. BT is pleased with recent developments
in the telecommunications sector in India, particularly the change
in the Foreign Direct Investment (FDI) requirement for obtaining
both NLD and ILD licences. In Press Note Five of November 2005,
the conditions applying to ILD and NLD licences in India were
amended and the permitted FDI for licence holders was increased
from 49% to 74%. The overall cost of licences was also reduced.
5. As a result of these changes, BT established
a Joint Venture with 26% of equity being held by a resident India
Company (Jubilant Enpro Pvt. Ltd) and 74% held by BT, and obtained
both NLD and ILD licences.
6. Despite the increase in FDI permitted,
BT continued to have a number of concerns around the security
conditions applicable to the licences which would make it extremely
difficult and costly for foreign carriers to offer services in
India. In particular, the security conditions included restrictions
on:
— remote management (from outside India)
of the network in India;
— passing network and customer detail
to parties outside India; and
— routing delivery of domestic traffic
via points overseas.
7. After significant input from the Industry
and with assistance from the British High Commission in Delhi,
the Indian government made amendments to the security conditions
which, in BT's view, better reflect the balance between addressing
security concerns and allowing foreign carriers to operate in
India. These amendments are still quite recent and we will be
monitoring their implementation to ensure that they are not used
to discriminate unfairly against foreign carriers and form a barrier
to entry into the market.
8. There have been recent indications that
the entire regime around FDI may be reviewed. It is important
that there is no regression, either through direct or indirect
measures. BT would like to see the remaining limits on FDI in
the telecoms sector reduced or eliminated. Furthermore, the fixed
telecoms market in India continues to be dominated by incumbent
state owned carriers and more needs to be done to regulate these
operators to create a fair and open market. Some of the areas
that cause concern include: excessive licence fees, revenue share
and Universal Service Obligation (USO) contributions and the lack
of mandatory wholesale pricing.
UK-INDIA JETCO
AND UKTI
9. The Committee has asked about progress
with the UK-India Jetco and about the UKTI. BT has been pleased
to participate in some UK-India Jetco meetings and will continue
to support this initiative in the future. On the UKTI, we have
had a number of contacts with them that have been helpful, but
have no comment on the extent to which the new UKTI strategy has
changed the landscape.
10. We also meet regularly with the UK High
Commission in India and they have been very supportive over the
past year, particularly in regard to issues relating to licence
conditions.
CONCLUSION
11. BT has been encouraged by developments
in the telecoms sector in India. Further liberalisation is needed
and it is important to ensure that the ability of British companies
to be active in the sector is not curtailed. If there are to be
changes to the FDI regime then they should be to continue the
positive trend for foreign investment in telecoms.
23 May 2007
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