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• Introduction to Department of Telecommunications:

• Telecommunication services started in India in the year 1851 with the First Electric telegraph line between Calcutta and Diamond Harbour. The telecommunication

services were provided and controlled by the Government.

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• Legislative Acts: The Indian Telegraph Act, 1885 came into force from October 1885. The Act provides exclusive privilege of establishing, maintaining and working telecom systems to the Central Government. The word ‘telegraph’ means any appliance, instrument, material or apparatus used or capable of use for transmission or reception of signs, signals, writing, images and sounds or intelligence of any nature by wire, visual or other electro-magnetic means.

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• Indian Wireless Telegraphy Act, 1933 came into effect from the year 1933. It was enacted to regulate the possession of wireless telegraphy or wireless communication apparatus in India. It empowers the Central Government to issue licences to possess wireless telegraphy apparatus. ‘Wireless communication’

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• In 1994, the Government announced the National Telecom Policy which defined certain important objectives, including availability of telephone on demand, provision of world class services at reasonable pries and ensuring universal availability of basic telecom services to all villages.

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• Public Sector Undertakings under the Ministry of Communications: In the year 1986, the Mahanagar Telephone Nigam Limited (MTNL) was formed to take over the telecom services in the two Metropolitan cities and adjoining areas of Delhi and Mumbai from the DoT.

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• The telecommunication operations of the entire country except the areas served by MTNL were handed over to the newly formed PSU viz. Bharat Sanchar Nigam Limited (BSNL) in October 2000.

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• The operations of these PSUs are controlled by respective Board of Directors who are appointed by the President of India.

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• The main source of revenue for MTNL and BSNL is from rental and call charges for telephones. The other sources of revenue are : Cellular mobile service, WLL connections, Value Added Services like internet, leased circuits – data and voice telephony. MTNL earned a revenue of Rs.5850 crore in 2002-03 from basic services as compared to Rs.112 crore from cellular service during the same

year.

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• Items of expenditure: The PSUs incur a large amount of capital expenditure on the construction of the telephone exchange buildings, installation of exchanges and transmission media. The operation expenditure consists mainly of establishment expenditure and maintenance of assets.

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• Evolution of TRAI:

• Even after the induction of the private sector into telecom services, the Department of Telecommunications continued its two fold functions – issue of licences to service providers and functioning as a service provider.

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• As this arrangement was not conducive, the DoT was split into Department of Telecom (the licensor) and Department of Telecom Services (the service provider arm). The regulatory functions were entrusted to a new body formed in 1997 - Telecom Regulatory Authority of India (TRAI) formed in January 1997 with to provide an effective regulatory framework and adequate safeguards to ensure fair competition and protection of consumer interests.

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• TRAI is an independent regulator with comprehensive powers and clear authority to effectively perform its functions. After the formation of TRAI, the Government retained its functions of only licensor and policy maker.

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• Section 13 of the TRAI Act gives adequate powers to TRAI to issue directions to service providers including the Government (in its role as service provider – as DoT was under the Government).

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• Initially TRAI had the power under Section 14 of the TRAI Act to adjudicate all disputes arising between the Government (in its role as service provider) and any other service provider. With the amendment of the TRAI Act in 2000, a separate dispute settlement mechanism called Telecom Disputes Settlement and Appellate Tribunal (TDSAT) was established under Section 14 the Act. The Appellate Tribunal came into existence in May 2000 and started hearing cases from January 2001.

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• Functions of TDSAT:Adjudicate any dispute between licensor;

between service providers; between service provider and a group of consumers.

Hear and dispose of appeal against any direction, decision or order of TRAI.

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• TRAI published the Interconnect Usage Charges (IUC) order in January 2003 laying down the method of distribution of the revenue among the originators, transit operators. The IUC came into effect from 1st May 2003.