INDEX
· INTRODUCTION
· BACKGROUND
· COMPETITORS
· TELECOMMUNICATION: OLIGOPLOY MARKET
· MARKET SHARE
· MERGERS & ACQUISITIONS
· FUTURE OF INDUSTRY
· REVENUE GENERATION & FDI
· NEW CHALLENGES
· GOVERNMENT ROLE
· ELEVENTH FIVE YEARS PLAN: RECOMMENDATION
INTRODUCTION:
· TheIndian telecommunication industry, with about 506.04 million mobile phone connections is the third largest telecommunication network in the world and the second largest in terms of number of wireless connections.
· The Indian telecom industry is one of the fastest growing in the world and is projected that India will have 'billion plus' mobile users by 2015.
· The mobile services were commercially launched in August 1995 in India. In the initial 5–6 years the average monthly subscribers additions were around 0.05 to 0.1 million only and the total mobile subscribers base in December 2002 stood at 10.5 millions.
· After the number of proactive initiatives taken by regulator and licensor, the monthly mobile subscriber additions increased to around 2 million per month in the year 2003-04 and 2004-05.
· The number of mobile phones added throughout the country in 2003 was 16 million, followed by 22 million in 2004, 32 million in 2005 and 65 million in 2006. As of January 2009, total mobile phone subscribers numbered 362 million, having added 15 million that month alone & in November 2009, it was 506 millions.
BACKGROUND:
Reforms (liberalisation) started in telecom in 1994
· Telecom a national priority for increased economic development.
· Plan targets revised to have telephone on demand and all villages covered.
· All services available internationally to be available in India by 1996.
· Value-added services opened in 1992 (cellular mobile, radio paging, email, etc.)
· Resource gap of Rs 23,000 cr to meet the revised targets necessitated private sector participation.
· Tendering process for selection of private players for Basic and Cellular services.
1991-96: Pre-privatisation scenario
Go-ahead to the CDMA technology
National Telecom Policy (NTP) was formulated
1992
1994
1997
Independent regulator, TRAI, was established
NTP-99 led to migration from high-cost fixed license fee to low-cost revenue sharing regime
1999
2000
2002
BSNL was established by DoT
ILDservices was opened
Decision on 3G services (awaited)
Reduction of licence fees
2003
Calling Party Pays (CPP) was implemented
Unified Access Licensing (UASL) regime was introduced
Reference Interconnect order was issued
2004
Intra-circle merger guidelines were established
Broadband policy 2004 was formulated—targeting 20 million subscribers by 2010
2005
FDI limit was increased from 49 to 74 percent
Attempted to boost Rural telephony
2006
2007
Private players were allowed in Value Added Services
Number portability was proposed (pending)
2001: Mobile revolution triggered
2008-09: Picture completely change
COMPETITORS:
· Aircel
Popular provider in Tamil Nadu, recently launch in Mumbai circle. Aircel expanding their area of service in western region.
AirTel
AirTel comes to you from Bharti Cellular Limited - a part of the biggest private integrated telecom conglomerate, Bharti Enterprises. Bharti Enterprises has been at the forefront of technology and has revolutionized telecommunications with its world class products and services. Bharati-AirTel is a GSM mobile phone service provider in worldwide and the surrounding areas. It offers various pre-paid and post-paid plans, as well as value added services.
Alcatel
Alcatel provides communications solutions to telecommunication carriers, Internet service providers and enterprises for delivery of voice, data and video applications to their customers or employees. Alcatel brings its leading position in fixed and mobile broadband networks, applications and services, to help its partners and customers build a user-centric broadband world.
Bharat Sanchar Nigam
BSNL is the largest Public Sector Undertaking of India and its responsibilities include improvement of the already impeccable quality of telecom services, expansion of telecom network, introduction of new telecom services in all villages and instilling confidence among itscustomers.
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Loop Mobile
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Having started its services in 1995, BPL Mobile operates in Mumbai, Maharashtra, Goa, Kerala, Tamil Nadu and Pondicherry- with a network spanning across 209 cities currently. Today, BPL Mobile, India's premier mobilephone service provider serves over 2 million happy and satisfied wirefree citizens across all our markets. It provides cutting-edge solutions, services and products in the broader areas of Enterprise Communications, Digital Consumer Electronics and Information Technology, with a dedicated focus towards hardware and software solutions for highly competitive global markets.
Vodafone
One of the bigger players in India. Vodafone has tie up with Essargroup.
Idea Cellular
Major player in Indian telecom market.
MTNL
MTNL was set up on 1st April, 1986 by the Government of India to upgrade the quality of telecom services, expand the telecom network, and introduce new services and to raise revenue for telecom development needs of India’s key metros – Delhi, the political capital and Mumbai, the business capital of India.
RelianceCommunication
The Reliance Group founded by Dhirubhai H. Ambani (1932-2002) is India's largest business house. Reliance communication will offer a complete range of telecom services, covering mobile and fixed line telephony including broadband, national and international long distance services.
ShyamTelecom
Shyam Telecom is pioneer in telecom industry. It has revolutionized the industry with development of innovative products. Shyam group commenced its operations in 1974 to introduce up-to-date telecommunication technology.
SpiceTelecom
Spice Telecom the brand name of Spice communications Limited is presently operating Cellular Phone Services in the states of Punjab and Karnataka. Considered as one of the best providers of mobile telephony in India. Spice brings you quality cellular services at attractive prices. These include Auto Roaming facility, special services like voice-mail, and Spice Plus, and the option of charging your cell phone account with pre-paid Spice currency, the easiest way to pay.
TataIndicom
Tata Teleservices ltd offers its products and services to customers across India under the name of "Tata Indicom". TATA Teleservices limited is India's leading Private Basic Service Operator.
Established in 1993, the TEPL network spans across the Central / Western India, with service and distribution centres of its own.
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TELECOMMUNICATION: AN OLIGOPOLY MARKET
· An oligopoly is market form in which a market is dominated by a small number of sellers (oligopolists). Oligopolistic markets are characterised by interactivity. The decisions of one firm influence, and are influenced by, the decisions of other firms.
· Strategic planning by oligopolists always involves taking into account the likely responses of the other market participants. An oligopy is a form of economy. As a quantitative description of oligopoly, the four-firm concentration ratio is often utilized.
· This measure expresses the market share of the four largest firms in an industry as a percentage. Using this measure, an oligopoly is defined as a market in which the four-firm concentration ratio is above 40%.
· An example would be Indian mobile industry, with a four-firm concentration ratio of over 70% and the cold drink industry also in the U.S.A has a two firm concentration ratio of a staggering 85%.
· In an oligopoly, firms operate under imperfect competition, the demand curve is kinked to reflect inelasticity below market price and elasticity above market price, the product or service firms offer are differentiated and barriers to entry are strong.
· Following from the fierce price competitiveness created by this sticky-upward demand curve, firms utilize non-price competition in order to accrue greater revenue and market share.
Rule of three
In rule of three oligopoly 3 major firms control of 70 to 90 percent of a particular industry, with the remaining companies being relegated to the level of niche players. To illustrate this, in the 19th century there were more than 200 cars manufacturers in the U.S.A but now there are only 3 major players, viz., general motors, ford and chrysler.
Strengths of the Rule of Three:
§ Rule of thumb.
§ Identifying the position of a company with respect to competitors.
It helps to find a way to improve or change the strategy if required before companies fall in the ditch.
Kinked Demand Curve
The dependency and uncertainty aspect of the oligopoly leads to the indeterminateness of the demand curve. The rigid price in oligopoly leading to Kink in demand curve of an oligopolist was put forward independently by Paul Swerzy, an American economist and Hall and Hitch, Oxford economists. Taking an example of an extremely limited case of oligopoly i.e. a case of duopoly were there are only two firms, we can explain an oligopolists demand curve- known as Kinky demand curve.
Fig 1 explains the derivation of Kinky demand curve.