It hoped the limited mobility service would lure firms with the prospect of being able to operate wireless and landline services and boost telephone penetration. But the cellular industry, which has been the mainstay of private and foreign investment in the telecoms sector, was livid. They feared the cheaper mobile service, charging 1.2 rupees for a three-minute call against their tariff of eight rupees, would siphon off customers and hurt revenues. Now, the industry, which had started seeing revived interest after the government unveiled a new telecoms policy in 1999, is again in turmoil and investors are cautious. Industry analysts said the government's decision amounted to introducing competition through the back door and violated the licence conditions of the cellular industry.
Telecoms is a highly regulation-driven business.
You can get the world's smartest guys doing your marketing but you can't make a 100th of the money which you can otherwise make by just one change in a rule. Investment bankers said many private equity investors, who were looking to invest in Indian telecoms ventures, lured by the promise of fast growth in a virgin market place, had backed out. Mobility allowed for fixed-line firms is in a limited area today. Regulatory stability is very important for funding telecoms projects. The uncertainty has cast a cloud over bidding for the fourth cellular operator licence which the government announced earlier this year.