Categorisation of Telecom Circles in India: Do We Need to Have a Relook from the Mobile Diffusion Perspective?

Ever since mobile has revolutionized the telecom scenario in India, experts often ask a pertinent question: is the old assignment of twenty-two telecom circles into four categories valid even now? It has become important in the light of variable rates of revenue sharing in different circles as per the policy of the Government of India (GoI). The extant literature is silent on the exact procedure followed by the GoI in classifying the circles, apart from mentioning the rationale of decreasing attractiveness. So we revisit the categorization process afresh from two perspectives: gross domestic product (GDP) and diffusion of mobile telephony. The GDP based clustering of the circles is quite straightforward. However, for the mobile diffusion based method, we take help of a dynamic model based on revenue potential. Interestingly, both the methods generate results, which are almost similar to the existing classification done by the GoI way back in 1999. Thus, our exercise provides a big relief to the policy-makers, thereby pre-empting the demands for immediate relook at the categorization.