Adoption of liberalization policy by India in 1991 opened up doors for many private and foreign entrepreneurs in various sectors of business, including telecommunication services. With the opening up of global trade, telecommunication infrastructure started gaining importance as an essential means of communication across the borders. In the telecommunication sector too, the entry of private operators was encouraged. A National Telecom Policy (NTP) was announced for the first time in 1994 with an objective to regulate the entry of private service providers. Subsequently, many loopholes were identified in the NTP 1994 and a new policy was announced in 1999 after making substantial revisions in the NTP 1994. Despite this, the NTP 1994 can be considered to be a milestone in the history of telecommunication regulation. This paper examines the shift in growth rate, if any, in the telecommunication sector of Gujarat after adoption of the NTP 1994. This has been done by undertaking Chow Breakpoint Test and Dummy Variable Analysis on yearly time series of number of telephone connections in Gujarat state from 1975 to 2004. The results of Chow Breakpoint Test as well as that of dummy variable analysis show that the NTP 1994 was a turning point in the telecommunication sector.

In the recent past, telecommunication sector has received major attention from policymakers. In the five-year plans too, the allocation for telecommunication sector has increased. With the proliferation of service sector, telecommunications infrastructure has become the backbone of many industries. Industries, such as Business Process Outsourcing (BPO), Knowledge Process Outsourcing (KPO), and Information Technology Enabled Services (ITES) make extensive use of telecommunications infrastructure. Since the industries and trade have become global, the manufacturing industries have also started using telecommunications infrastructure. Even a large number of households have started availing telecommunication services.

The liberalization policy adopted by India in 1991 initiated several reforms in the telecommunication sector. Private participation was introduced in handset manufacturing business as well as provision of services. In 1994, a National Telecom Policy (NTP) was announced with an objective of deploying telecommunication services of world class quality at affordable rates. The policy was reviewed and some drawbacks were identified, thereafter the policy was subsequently revised. A new telecom policy was announced in 1999. However, since the announcement of NTP, 1994, several remarkable changes took place in regulatory framework of the telecommunication sector.

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