TELECOMMUNICATIONS
The telecommunication and internet in India has made phenomenal progress in recent past. At present the telephone network in India is one of the largest in the world. India stands at no three position in terms of telecom subscriber base, having 441.47 million subscribers.
Telecom Segments
Telecommunication sector can be classified into wire line and wireless services.
Wire line Services
It includes the basic service that is fixed line. It includes the mobile, WLL (F) and WLL (M).Public sector enterprise like BSNL and MTNL have significant market share over the fixed wire line market. Together they account for 92 per cent of the total subscriber base. Service from private sector is available in certain urban areas and account for 8 per cent of the subscriptions. Private sector usually focus on business/corporate sector and provide reliable, high end services like leased lines, ISDN, closed user group and video conferencing. They are also Internet Service Provider (ISP), Very Small Aperture Terminal (VSAT), Radio Paging Services, Public Mobile Radio Trunked Services (PMRTS), Internet Telephony and Cable TV services.
Wireless service can be further classified as:
Global System for Mobile Communications (GSM) and Code Division Multiple Access (CDMA0.The WLL (F) is operated under the CDMA technology. Some of the dominant players in the GSM sector are Airtel, Vodafone-Essar and Idea Cellular. Reliance and Tata Indicom are dominant in CDMA.
Major Players
There are three categories of players in telecom industry:
• State owned companies (BSNL and MTNL)
• Private Indian owned companies (Reliance Infocomm, Tata Teleservices0
• International invested companies (Hutchison-Essar, Bharti Tele-Ventures, Escotel, Idea Cellular, BPL Mobile, and Spice Communications).
BSNL
The Department of Telecom Operations, Government of India was constituted as a corporation on October 1, 2000 and came to be known as Bharat Sanchar Nigam Limited (BSNL).Today BSNL is not only the leading telecommunications company but also the largest public sector undertaking. Its asset includes a network of 45 million lines spread across 5000 towns and having 35 million telephone connections. BSNL operates basic, cellular (GSM and CDMA) mobile, Internet and long distance services throughout India (except Delhi and Mumbai).BSNL which was the third operator to provide GSM mobile services in most cities, aims to supersede Bharti to become the largest GSN operator in the country. It is the single largest operator in the Internet market, with a share of 21 per cent of the complete subscriber base.
Bharti
Bharti was started in 1985; today it is one of the leading players in the telecom sector with many achievements to its credit. It was the first mobile service provider in Delhi, it was the first private telephone service provider in the country, the first company to start detailed telecom services in a foreign country in Seychelles and the first private sector service provider to launch National Long Distance Services in India. Bharti's operations are managed by two companies: the Mobility group which takes care of mobile services in 16 circles off the total available 23 circles and Infotel group which takes care of NLD, ILD, fixed line, broadband, data and satellite based services. The company has up till now laid 23,000km of optical fiber cables throughout the country, along with 1500 nodes and business interest in 200 places.
MTNL
It was started on April 1st 1986 to improve the quality of telecom services, increase the telecom network, introduce new services and generate revenue for telecom expansion in major cities. Today it is amongst some of the biggest telecom operating companies in Asia. The company today has 100% digital mode for its entire telephone exchange network.
Reliance Infocomm
It provides a whole range of telecom services, covering mobile and fixed line telephony including broadband, national and international long distance services ,data services and a wide range of value added services and applications. The company plans to extend its services to the farmers, businesses, hospitals, government and public sector organizations.
Tata Tele service
It was started in 1996; the company pioneered the CDMA 1x technology platform in India. It has acquired Hughes Telecom (India) Ltd in 2002.It initiated mobile services in 2005 and today it has a nationwide presence through operations in all 22 circles. It leads the market in the fixed wireless telephony market. It has ventures into the GSM space through its joint venture with NTT DOCOMO of Japan. Today the company provides service to over 36 million customers in over 320,000 towns and villages all over India. The service provided by the company are mobile services, wireless desktop phones, public booth, telephony and wire line services and other value added services like voice portal, roaming, post paid internet services, three way conferencing, group calling, Wi-Fi Internet, USB Modem, Data cards, Calling Card services and Enterprise services.
VSNL
It started its operation on April 1, 1986 as a wholly government owned corporation and as a successor to OCS. It operates a network of earth stations, switches, submarine cable systems and value added service nodes to provide a range of basic and value added services. Its main gateways centers are in Mumbai, New Delhi, Kolkata and Chennai. The International telecommunication circuits are derived through I ntelsat and Inmarsat satellites and wide band submarine cable systems. E.g. FLAG, SEA_ME_WE_2 and SEA-ME-WE-3.
Vodafone Essar Limited
It is the Indian subsidiary of Vodafone Group and started its operations in 1994 when its predecessor Hutchison Telecom acquired the cellular license for Mumbai. It has a customer base exceeding 74.08 million customers and its operations are spread throughout the country. It has got recognition like "Most Respected Telecom Company" "The Best Mobile Service in the Country" and the Most Creative and Most Effective Advertiser of the Year" over a period of time.
Idea Cellular
It is a public limited company. It is listed in the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).It is one of the leading GSM mobile services provider spread across the country. It has a customer base of 44 million in 17 service centers. It expects to start operations soon in Chennai, Kolkata and West Bengal, North East and J&K. The services it offers are basic voice & short message service (SMS) to high value service like Mobile TV, Games etc. It was the first to launch GPRS and EDGE in India.
India and Internet
The Internet has made the world a global village. During the early years internet access was limited to certain big cities and it was controlled by the Government. VSNL was given the responsible for internet activities and Department Of Telecommunications (DOT) provided inefficient service.
In 1998 the private sector was given permission to be Internet Service Providers. In the interest of the customer, the Government has set certain guidelines to grant license to prospective service providers. Any company in India with a maximum foreign equity of 74% is eligible for license. The segment has seen tremendous technological advancements.
The growth of internet has also helped e commerce. Business to Business (B2B) transactions have shown remarkable positive growth. For Indian entrepreneurs having business interest outside the country, the internet has provided an efficient, reliable, quick and cost effective mode of communication. The internet is here to stay.
Opportunity
• The market is expected to grow to about US$ 8 billion by 2012.
• The National Telecom Policy targets tele density at 15 per cent by 2010.
• It is forecasted that by the year 2010 there would be 500 million subscribers in the Indian telecom market. Cellular subscriber base is expected to reach 88 million in 2012.
Telecom is the exchange of information between two distant points in space. The telecom industry is very important for the socio economic development of a nation. It is one of the main architects for accelerated growth and progress of different segments of the economy. Post liberalization the telecommunication industry has grown by leaps and bounds.
Evolution Of Indian Telecom
Year Event
1851 First operational landlines were laid by the government near Calcutta
1881 Telephone service introduced in India
1883 Merger with the postal system
1923 Formation of Indian Radio Telegraph Company (IRT)
1932 Merger of ETC and IRT into the Indian Radio and Cable Communication Company(IRCC)
1947 Nationalization of all foreign telecommunication companies to form the Posts, Telephone and Telegraph (PTT),a monopoly run by the government’s Ministry of Communications
1986 Conversion of DOT into two wholly government-owned companies: the Videsh Sanchar Nigam Limited (VSNL) for international telecommunications and Mahanagar Telephone Nigam Limited (MTNL) for service in metropolitan areas.
1997 Telecom Regulatory Authority Of India (TRAI) was created.
1999 Cellular Services are launched in India. New National Telecom Policy is adopted.
2000 DoT becomes a corporation, BSNL
Liberalization
As part of the policy of liberalization, telecom equipment manufacturing was delicensed in 1991 and value added services were accessible to the private sector in 1992.As a result a number of manufacturing units were established across the country. The National Telecom Policy resolution of 1994 further liberalized the telecom sector for private initiative.
National Telecom Policy 1994
In 1994,the government came up with the National Telecom Policy which set certain important goals like availability of telephone on demand, providing International standard infrastructure and services at affordable prices, enhancing India's competitiveness in global market and encouraging exports, create environment conducive for both FDI and domestic investment, accelerate India's growth as a major manufacturer and exporter of telecom equipment and availability of telecom services to every village.
Telecom Regulatory Authority Of India (TRAI)
The opening up of the Indian telecom sector for private enterprises resulted in the need for independent regulation. In 1997 The Telecom Regulatory Authority Of India (TRAI) was initiated by an act of Parliament. The purpose of this act was to regulate telecom services, fix/revise tariffs for telecom services which till then was under the control of the central government. The objective of TRAI was to create an environment which would enable Indian Telecomm to play an important role globally. Another important objective for TRAI was to provide equal opportunity for all and ensure fair competition. To ensure these objectives, TRAI has issued a large number of regulations, orders and directives and strategized the plan to direct the telecom industry from a government controlled monopoly to multi operator multi service competitive market. In January 2000, TRAI was modified by an act resulting in Telecommunications Dispute Settlement and Appellate Tribunal (TDSAT) to settle disputes between a licensor and a licensee, between two or more service providers, between a service provider and consumers and to settle appeals against any direction, decision or order of TRAI.
National Long Distance
In 2000 the government created guidelines for the entry of private sector in National Long Distance without restricting the number of operators. Some of the salient features of NLD are:
• Unlimited entry for both inter circle and intra circle calls.
• Total foreign equity must not exceed 74%.Promoters must have a net worth of Rs 25 million.
• Private operators will have to enter into an arrangement with fixed service providers within a circle for traffic between long distance and short distance charging centers.
• Private operators allowed to set up landing facilities that access submarine cables and use excess bandwidth available.
• License period would be for 20 years and extendable by 10 years.
International Long Distance
• India had accepted under the GATS to open up ILD in 2004.But India allowed competition in ILD in the year 2002 itself.
• There can be any number of service providers. The license for ILD service is issued for a period of 20 years, with automatic extension of the license by a period of 5 years.
• The private applicant would have to pay a onetime non refundable fee of Rs 25 million plus a bank guarantee of Rs 250 million, which will be given back on honoring of the commitment.
• The annual license fee is at 6% of the Adjusted Gross Revenue and the fee for use of spectrum is to be paid separately.
Internet service Providers (ISPs)
In 1998 the private sector was given permission to be internet service providers. In the interest of the customer, the government has set certain guidelines to grant license to prospective service providers. Any company in India with a maximum foreign equity of 74% is eligible for license. The segment has seen tremendous technological advancements.
Broad band Policy 2004
Realizing the immense potential of Broadband service in the growth of economy and the improvement in quality of life due to various functions like tele education, tele medicine, e-governance, entertainment and in job creation, the government came up with the Broadband policy in 2004.The main aim was to create infrastructure to enhance the progress of broadband. Some of the technology applicable for broadband would be Optical Fibre, Asymmetric Digital Subscriber Lines (ADSL), Cable Network, DTH etc.
Foreign Direct Investment
• In Basic, Cellular, Paging and Value Added Service and Global Mobile Personal Communications by Satellite, FDI of 74% is allowed subject to license granted by Department Of Telecommunication.
• FDI up to 74% is also permitted in Radio Paging Service and Internet Service Provider.
• FDI up to 100% is allowed for Infrastructure Providers of dark fibre, electronic and voice mail. The condition set was that these companies would divest 26% of their equity in favor of Indian companies in five years, provided they were listed in other parts of the world.
• FDI of 100% was allowed in telecom manufacturing.
The Indian telecommunications industry is one of the fastest growing in the world and India is projected to become the second largest telecom market globally by 2010.
India added 113.26 million new customers in 2008, the largest globally. The country’s cellular base witnessed close to 50 per cent growth in 2008, with an average 9.5 million customers added every month.
According to the Telecom Regulatory Authority of India (TRAI), approximately 14.25 million telephone connections, including wireline and wireless, were added during July 2009, taking the total number of telecom subscriber base at the end of July 2009 to 479.07 million from 464.82 million a month before.
According to Business Monitor International, India is currently adding 8-10 million mobile subscribers every month. It is estimated that by mid 2012, around half the country's population will own a mobile phone. This would translate into 612 million mobile subscribers, accounting for a tele-density of around 51 per cent by 2012.
It is projected that the industry will generate revenues worth US$ 43 billion in 2009-10.
Moreover, according to a study conducted by Nokia, the communications sector is expected to emerge as the single largest component of the country’s GDP with 15.4 per cent by 2014.
The Indian equipment market is estimated at US$ 24 billion in FY09. Finnish giant Nokia is the market leader, with over US$ 3.4 billion revenues last fiscal, followed by Ericsson at US$ 2.11 billion.
Growth
According to a Frost & Sullivan industry analyst, by 2012, fixed line revenues are expected to touch US$ 12.2 billion while mobile revenues will reach US$ 39.8 billion in India.
India has become the second country in the world to have more than 100 million CDMA-based (code division multiple access) mobile phone subscribers after the US, which has 157 million CDMA users.
Telecom operators on the popular GSM-based platform added 9.3 million subscribers in August 2009. India continues to be the world’s fastest-growing mobile market and the total number of GSM users in the country has risen to 335.4 million as of August-end as per data released by the Cellular Operators’ Association of India (COAI).
Value-Added Services Market
Currently, mobile value-added services (MVAS) in India accounts for 10 per cent of the operator's revenue, which is expected to reach 18 per cent by 2010. According to a study by Stanford University and consulting firm BDA, the Indian MVAS is poised to touch US$ 2.74 billion by 2010.
Major Investments
The booming domestic telecom market has been attracting huge amounts of investment which is likely to accelerate with the entry of new players and launch of new services.
• Norway-based telecom operator Telenor has bought a 60 per cent stake in Unitech Wireless for US$ 1.23 billion.
• BSNL, India's leading telecom company in revenue terms, will put in about US$ 1.16 billion in its WiMax project.
• Vodafone Essar will invest US$ 6 billion over the next three years in a bid to increase its mobile subscriber base from 40 million at present to over 100 million.
• Telecom operator Aircel, which launched GSM mobile services in Bangalore in February 2009, plans to invest US$ 220.58 million over the next year to set up base stations across the state.
• The American Tower Corporation (ATC) has made an offer to acquire Aircel’s tower business, which has about 12,000 towers.
• Reliance Communications has signed a telecom infrastructure sharing agreement with S Tel, a new telecom operator. The deal, which covers telecom towers, transmission and fibre backbone, will be executed by RCom through its tower subsidiary, Reliance Infratel.
• Bharti Airtel will invest US$ 126.5 million to ramp up its networks in the Assam and Northeast circles in 2009-10.
• Etisalat DB Telecom India (erstwhile Swan Telecom) and Reliance Communications have entered into a long-term passive infrastructure sharing agreement worth over US$ 2.1 billion, spread over a period of ten years.
• Loop Mobile, formerly known as BPL Mobile plans to invest around US$ 75 million in its Mumbai operations.
Manufacturing
India's telecom equipment manufacturing sector is set to become one of the largest globally by 2010.
Mobile phone production is estimated to grow at a CAGR of 28.3 per cent from 2006 to 2011, totalling 107 million handsets by 2010. Revenues are estimated to grow at a CAGR of 26.6 per cent from 2006 to 2011, touching US$ 13.6 billion.
Rural Telephony
Rural India had 76.65 million fixed and Wireless in Local Loop (WLL) connections and 551,064 Village Public Telephones (VPT) as on September 2008. Therefore, 92 per cent of the villages in India have been covered by the VPTs. Universal Service Obligation (USO) subsidy support scheme is also being used for sharing wireless infrastructure in rural areas with around 18,000 towers by 2010.
Policy Initiatives
The government has taken many proactive initiatives to facilitate the rapid growth of the Indian telecom industry.
• 100 per cent foreign direct investment (FDI) is permitted through the automatic route in telecom equipment manufacturing.
• FDI ceiling in telecom services has been raised to 74 per cent.
• Introduction of a unified access licensing regime for telecom services on a pan-India basis.
• Introduction of mobile number portability in a phased manner, starting in the fourth quarter of 2008.
• The government is implementing a program of connecting 66,822 uncovered villages under the Bharat Nirman programme. The government will invest US$ 2 billion to set up 112,000 community service centres in rural India to provide broadband connectivity in 2008-09.
• The Department of Telecommunications (DoT) has stated that foreign telecom companies can bid for 3G spectrum without partnering with Indian companies. Only after winning a bid, would they need to apply for unified access service licence (UASL) and partner with an Indian company in accordance with the FDI regulations.
The Road Ahead
The target for the 11th Plan period (2007-12) is 600 million phone connections with an investment of US$ 73 billion. Apart from the basic telephone service, there is an enormous potential for various value-added services. In fact, the real potential for telecom service growth is still lying untapped.
According to the CII Ernst & Young report titled 'India 2012: Telecom growth continues', revenue from India's telecom services industry is projected to reach US$ 54 billion in 2012, as against US$ 31 billion in 2008.
At 110.01 million connections ' Indian Telecom Industry' is the fifth largest and fastest growing in the world. The subscriber base has grown by 40% in 2005 and is expected to reach 250 million in 2007.
Over the last 3 years, two out of every three new telephone connections were wireless. Consequently, wireless now accounts for 54.6% of the total telephone subscriber base, as compared to only 40% in 2003. Wireless subscriber growth is expected to grow at 2.5 million new subscribers every month in 2007. The wireless subscriber base skyrocketed from 33.69 million in 2004 to 62.57 million in FY 2004 -2005. The wireless technologies currently in use ' Indian Telecom Industry ' are Global System for Mobile Communications (GSM) and Code Division Multiple Access (CDMA). There are primarily 9 GSM and 5 CDMA operators providing mobile services in 19 telecommunication circles and 4 metro cities, covering more than 2000 towns across the country. And the numbers are still growing for ' Indian Telecom Industry '. ' Telecom Industry in India ' is regulated by 'Telecom Regulatory Authority of India' (TRAI). It has earned good reputation for transparency and competence. Three types of players exists in ' Telecom Industry India ' community -
• State owned companies like - BSNL and MTNL.
• Private Indian owned companies like - Reliance Infocomm and Tata Teleservices.
• Foreign invested companies like – Hutchison-Essar, Bharti Tele-Ventures, Escotel, Idea Cellular, BPL Mobile, Spice Communications etc.
The ' Indian Telecom Industry ' services is not confined to basic telephone but it also extends to internet, broadband (both wireless and fixed), cable TV, SMS, IPTV, soft switches etc. The bottlenecks for ' Indian Telecom Industry ' are:
Slow reform process.
Low penetration. Service providers bears huge initial cost to make inroads and achieving break-even is difficult.
Huge initial investments.
Limited spectrum availability and interconnection charges between the private and state operators.
The Government Broadband Policy 2004, aims at 9 million broadband connections and 18 million internet connections in 2007. ' Indian Telecom Industry ' is currently expected to contribute nearly 1% to India's GDP which is heartening and estimated to grow further and brighten the ' Scenario of Indian Telecom Industry '.
Telecom Industry in India
Telecom industry in India has a big market potentiality and is a fast growing sector. Government of India is eager to reconstitute this telecom industry by enacting effective policies for more investments from foreign companies, which results in a very competitive and deregulated market in the world.
Policies of telecom industry in India
Government of India implemented the unified access licensing regime, which enables basic and cellular mobile service to use any modern technology. In 1997, Telecom Regulatory Authority of India (TRAI) was formed to facilitate the growth of the telecom sector in India.
Major services and market potentiality of Telecom industry in India
Telecommunication sector in India is primarily subdivided into two segments, which are Fixed Service Provider (FSPs) and Cellular Services. Telecom industry in India constitutes some essential telecom services like telephone, radio, television and Internet. Telecom industry in India is specifically emphasizing on latest technologies like GSM( Global System for Mobile Communications), CDMA(Code Division Multiple Access), PMRTS(Public Mobile Radio Trunking Services), Fixed Line and WLL(Wireless Local Loop ). India has a prospering market specifically in GSM mobile service and the number of subscribers is growing very fast.
Economic perspective of telecom industry in India
Telecom industry in India has a major role in Indian economy. The Indian government is also enforcing some effective telecom policies and regulations for the infrastructural growth of this industry. Indian telecom market provides a tele-density of 8.5 percent as registered in the year 2004. A number of leading multinational telecommunication companies are approaching and showing their interest to invest for thetelecom industry in India . Telecommunication industry of India ranked sixth among all the telecommunication sectors in the world. In the year 2004, the total number of telephone subscriptions were US$93.2.
Leading telecommunication service providers of telecom industry in India
Bharat Sanchar Nigam Limited, Mahanagar Telephone Nigam Limited (MTNL), Videsh Sanchar Nigam Limited (VSNL), Bharti Airtel, Tata Teleservices, SIFY Ltd. are the major telecommunications service providers in India.
Best practices:
Airtel launches per second plan for US customers
Telecom major Bharti Airtel announced the pay-per-second plan on its virtual calling card service, 'Airtel CallHome', for its customers in the US.
Airtel CallHome has so far been available in the UK, Canada and Singapore.
"With this, Bharti Airtel becomes the first to offer pay per second plans for the US to India calling card market," Airtel said in a statement.
HISTORY(sun) The telecom industry is one of the fastest growing industries in India. India has nearly 200 million telephone lines making it the third largest network in the world after China and USA. With a growth rate of 45%, Indian telecom industry has the highest growth rate in the world.
History of Indian Telecommunications started in 1851 when the first operational land lines were laid by the government near Calcutta (seat of British power). Telephone services were introduced in India in 1881. In 1883 telephone services were merged with the postal system. Indian Radio Telegraph Company (IRT) was formed in 1923. After independence in 1947, all the foreign telecommunication companies were nationalized to form the Posts, Telephone and Telegraph (PTT), a monopoly run by the government's Ministry of Communications. Telecom sector was considered as a strategic service and the government considered it best to bring under state's control.
The first wind of reforms in telecommunications sector began to flow in 1980s when the private sector was allowed in telecommunications equipment manufacturing. In 1985, Department of Telecommunications (DOT) was established. It was an exclusive provider of domestic and long-distance service that would be its own regulator (separate from the postal system). In 1986, two wholly government-owned companies were created: the Videsh Sanchar Nigam Limited (VSNL) for international telecommunications and Mahanagar Telephone Nigam Limited (MTNL) for service in metropolitan areas.
In 1990s, telecommunications sector benefited from the general opening up of the economy. Also, examples of telecom revolution in many other countries, which resulted in better quality of service and lower tariffs, led Indian policy makers to initiate a change process finally resulting in opening up of telecom services sector for the private sector. National Telecom Policy (NTP) 1994 was the first attempt to give a comprehensive roadmap for the Indian telecommunications sector. In 1997, Telecom Regulatory Authority of India (TRAI) was created. TRAI was formed to act as a regulator to facilitate the growth of the telecom sector. New National Telecom Policy was adopted in 1999 and cellular services were also launched in the same year.
Telecommunication sector in India can be divided into two segments: Fixed Service Provider (FSPs), and Cellular Services. Fixed line services consist of basic services, national or domestic long distance and international long distance services. The state operators (BSNL and MTNL), account for almost 90 per cent of revenues from basic services. Private sector services are presently available in selective urban areas, and collectively account for less than 5 per cent of subscriptions. However, private services focus on the business/corporate sector, and offer reliable, high- end services, such as leased lines, ISDN, closed user group and videoconferencing.
Cellular services can be further divided into two categories: Global System for Mobile Communications (GSM) and Code Division Multiple Access (CDMA). The GSM sector is dominated by Airtel, Vodfone-Hutch, and Idea Cellular, while the CDMA sector is dominated by Reliance and Tata Indicom. Opening up of international and domestic long distance telephony services are the major growth drivers for cellular industry. Cellular operators get substantial revenue from these services, and compensate them for reduction in tariffs on airtime, which along with rental was the main source of revenue. The reduction in tariffs for airtime, national long distance, international long distance, and handset prices has driven demand.
The telecommunication and internet in India has made phenomenal progress in recent past. At present the telephone network in India is one of the largest in the world. India stands at no three position in terms of telecom subscriber base, having 441.47 million subscribers.
Telecom Segments
Telecommunication sector can be classified into wire line and wireless services.
Wire line Services
It includes the basic service that is fixed line. It includes the mobile, WLL (F) and WLL (M).Public sector enterprise like BSNL and MTNL have significant market share over the fixed wire line market. Together they account for 92 per cent of the total subscriber base. Service from private sector is available in certain urban areas and account for 8 per cent of the subscriptions. Private sector usually focus on business/corporate sector and provide reliable, high end services like leased lines, ISDN, closed user group and video conferencing. They are also Internet Service Provider (ISP), Very Small Aperture Terminal (VSAT), Radio Paging Services, Public Mobile Radio Trunked Services (PMRTS), Internet Telephony and Cable TV services.
Wireless service can be further classified as:
Global System for Mobile Communications (GSM) and Code Division Multiple Access (CDMA0.The WLL (F) is operated under the CDMA technology. Some of the dominant players in the GSM sector are Airtel, Vodafone-Essar and Idea Cellular. Reliance and Tata Indicom are dominant in CDMA.
Major Players
There are three categories of players in telecom industry:
• State owned companies (BSNL and MTNL)
• Private Indian owned companies (Reliance Infocomm, Tata Teleservices0
• International invested companies (Hutchison-Essar, Bharti Tele-Ventures, Escotel, Idea Cellular, BPL Mobile, and Spice Communications).
BSNL
The Department of Telecom Operations, Government of India was constituted as a corporation on October 1, 2000 and came to be known as Bharat Sanchar Nigam Limited (BSNL).Today BSNL is not only the leading telecommunications company but also the largest public sector undertaking. Its asset includes a network of 45 million lines spread across 5000 towns and having 35 million telephone connections. BSNL operates basic, cellular (GSM and CDMA) mobile, Internet and long distance services throughout India (except Delhi and Mumbai).BSNL which was the third operator to provide GSM mobile services in most cities, aims to supersede Bharti to become the largest GSN operator in the country. It is the single largest operator in the Internet market, with a share of 21 per cent of the complete subscriber base.
Bharti
Bharti was started in 1985; today it is one of the leading players in the telecom sector with many achievements to its credit. It was the first mobile service provider in Delhi, it was the first private telephone service provider in the country, the first company to start detailed telecom services in a foreign country in Seychelles and the first private sector service provider to launch National Long Distance Services in India. Bharti's operations are managed by two companies: the Mobility group which takes care of mobile services in 16 circles off the total available 23 circles and Infotel group which takes care of NLD, ILD, fixed line, broadband, data and satellite based services. The company has up till now laid 23,000km of optical fiber cables throughout the country, along with 1500 nodes and business interest in 200 places.
MTNL
It was started on April 1st 1986 to improve the quality of telecom services, increase the telecom network, introduce new services and generate revenue for telecom expansion in major cities. Today it is amongst some of the biggest telecom operating companies in Asia. The company today has 100% digital mode for its entire telephone exchange network.
Reliance Infocomm
It provides a whole range of telecom services, covering mobile and fixed line telephony including broadband, national and international long distance services ,data services and a wide range of value added services and applications. The company plans to extend its services to the farmers, businesses, hospitals, government and public sector organizations.
Tata Tele service
It was started in 1996; the company pioneered the CDMA 1x technology platform in India. It has acquired Hughes Telecom (India) Ltd in 2002.It initiated mobile services in 2005 and today it has a nationwide presence through operations in all 22 circles. It leads the market in the fixed wireless telephony market. It has ventures into the GSM space through its joint venture with NTT DOCOMO of Japan. Today the company provides service to over 36 million customers in over 320,000 towns and villages all over India. The service provided by the company are mobile services, wireless desktop phones, public booth, telephony and wire line services and other value added services like voice portal, roaming, post paid internet services, three way conferencing, group calling, Wi-Fi Internet, USB Modem, Data cards, Calling Card services and Enterprise services.
VSNL
It started its operation on April 1, 1986 as a wholly government owned corporation and as a successor to OCS. It operates a network of earth stations, switches, submarine cable systems and value added service nodes to provide a range of basic and value added services. Its main gateways centers are in Mumbai, New Delhi, Kolkata and Chennai. The International telecommunication circuits are derived through I ntelsat and Inmarsat satellites and wide band submarine cable systems. E.g. FLAG, SEA_ME_WE_2 and SEA-ME-WE-3.
Vodafone Essar Limited
It is the Indian subsidiary of Vodafone Group and started its operations in 1994 when its predecessor Hutchison Telecom acquired the cellular license for Mumbai. It has a customer base exceeding 74.08 million customers and its operations are spread throughout the country. It has got recognition like "Most Respected Telecom Company" "The Best Mobile Service in the Country" and the Most Creative and Most Effective Advertiser of the Year" over a period of time.
Idea Cellular
It is a public limited company. It is listed in the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).It is one of the leading GSM mobile services provider spread across the country. It has a customer base of 44 million in 17 service centers. It expects to start operations soon in Chennai, Kolkata and West Bengal, North East and J&K. The services it offers are basic voice & short message service (SMS) to high value service like Mobile TV, Games etc. It was the first to launch GPRS and EDGE in India.
India and Internet
The Internet has made the world a global village. During the early years internet access was limited to certain big cities and it was controlled by the Government. VSNL was given the responsible for internet activities and Department Of Telecommunications (DOT) provided inefficient service.
In 1998 the private sector was given permission to be Internet Service Providers. In the interest of the customer, the Government has set certain guidelines to grant license to prospective service providers. Any company in India with a maximum foreign equity of 74% is eligible for license. The segment has seen tremendous technological advancements.
The growth of internet has also helped e commerce. Business to Business (B2B) transactions have shown remarkable positive growth. For Indian entrepreneurs having business interest outside the country, the internet has provided an efficient, reliable, quick and cost effective mode of communication. The internet is here to stay.
Opportunity
• The market is expected to grow to about US$ 8 billion by 2012.
• The National Telecom Policy targets tele density at 15 per cent by 2010.
• It is forecasted that by the year 2010 there would be 500 million subscribers in the Indian telecom market. Cellular subscriber base is expected to reach 88 million in 2012.
Telecom is the exchange of information between two distant points in space. The telecom industry is very important for the socio economic development of a nation. It is one of the main architects for accelerated growth and progress of different segments of the economy. Post liberalization the telecommunication industry has grown by leaps and bounds.
Evolution Of Indian Telecom
Year Event
1851 First operational landlines were laid by the government near Calcutta
1881 Telephone service introduced in India
1883 Merger with the postal system
1923 Formation of Indian Radio Telegraph Company (IRT)
1932 Merger of ETC and IRT into the Indian Radio and Cable Communication Company(IRCC)
1947 Nationalization of all foreign telecommunication companies to form the Posts, Telephone and Telegraph (PTT),a monopoly run by the government’s Ministry of Communications
1986 Conversion of DOT into two wholly government-owned companies: the Videsh Sanchar Nigam Limited (VSNL) for international telecommunications and Mahanagar Telephone Nigam Limited (MTNL) for service in metropolitan areas.
1997 Telecom Regulatory Authority Of India (TRAI) was created.
1999 Cellular Services are launched in India. New National Telecom Policy is adopted.
2000 DoT becomes a corporation, BSNL
Liberalization
As part of the policy of liberalization, telecom equipment manufacturing was delicensed in 1991 and value added services were accessible to the private sector in 1992.As a result a number of manufacturing units were established across the country. The National Telecom Policy resolution of 1994 further liberalized the telecom sector for private initiative.
National Telecom Policy 1994
In 1994,the government came up with the National Telecom Policy which set certain important goals like availability of telephone on demand, providing International standard infrastructure and services at affordable prices, enhancing India's competitiveness in global market and encouraging exports, create environment conducive for both FDI and domestic investment, accelerate India's growth as a major manufacturer and exporter of telecom equipment and availability of telecom services to every village.
Telecom Regulatory Authority Of India (TRAI)
The opening up of the Indian telecom sector for private enterprises resulted in the need for independent regulation. In 1997 The Telecom Regulatory Authority Of India (TRAI) was initiated by an act of Parliament. The purpose of this act was to regulate telecom services, fix/revise tariffs for telecom services which till then was under the control of the central government. The objective of TRAI was to create an environment which would enable Indian Telecomm to play an important role globally. Another important objective for TRAI was to provide equal opportunity for all and ensure fair competition. To ensure these objectives, TRAI has issued a large number of regulations, orders and directives and strategized the plan to direct the telecom industry from a government controlled monopoly to multi operator multi service competitive market. In January 2000, TRAI was modified by an act resulting in Telecommunications Dispute Settlement and Appellate Tribunal (TDSAT) to settle disputes between a licensor and a licensee, between two or more service providers, between a service provider and consumers and to settle appeals against any direction, decision or order of TRAI.
National Long Distance
In 2000 the government created guidelines for the entry of private sector in National Long Distance without restricting the number of operators. Some of the salient features of NLD are:
• Unlimited entry for both inter circle and intra circle calls.
• Total foreign equity must not exceed 74%.Promoters must have a net worth of Rs 25 million.
• Private operators will have to enter into an arrangement with fixed service providers within a circle for traffic between long distance and short distance charging centers.
• Private operators allowed to set up landing facilities that access submarine cables and use excess bandwidth available.
• License period would be for 20 years and extendable by 10 years.
International Long Distance
• India had accepted under the GATS to open up ILD in 2004.But India allowed competition in ILD in the year 2002 itself.
• There can be any number of service providers. The license for ILD service is issued for a period of 20 years, with automatic extension of the license by a period of 5 years.
• The private applicant would have to pay a onetime non refundable fee of Rs 25 million plus a bank guarantee of Rs 250 million, which will be given back on honoring of the commitment.
• The annual license fee is at 6% of the Adjusted Gross Revenue and the fee for use of spectrum is to be paid separately.
Internet service Providers (ISPs)
In 1998 the private sector was given permission to be internet service providers. In the interest of the customer, the government has set certain guidelines to grant license to prospective service providers. Any company in India with a maximum foreign equity of 74% is eligible for license. The segment has seen tremendous technological advancements.
Broad band Policy 2004
Realizing the immense potential of Broadband service in the growth of economy and the improvement in quality of life due to various functions like tele education, tele medicine, e-governance, entertainment and in job creation, the government came up with the Broadband policy in 2004.The main aim was to create infrastructure to enhance the progress of broadband. Some of the technology applicable for broadband would be Optical Fibre, Asymmetric Digital Subscriber Lines (ADSL), Cable Network, DTH etc.
Foreign Direct Investment
• In Basic, Cellular, Paging and Value Added Service and Global Mobile Personal Communications by Satellite, FDI of 74% is allowed subject to license granted by Department Of Telecommunication.
• FDI up to 74% is also permitted in Radio Paging Service and Internet Service Provider.
• FDI up to 100% is allowed for Infrastructure Providers of dark fibre, electronic and voice mail. The condition set was that these companies would divest 26% of their equity in favor of Indian companies in five years, provided they were listed in other parts of the world.
• FDI of 100% was allowed in telecom manufacturing.
The Indian telecommunications industry is one of the fastest growing in the world and India is projected to become the second largest telecom market globally by 2010.
India added 113.26 million new customers in 2008, the largest globally. The country’s cellular base witnessed close to 50 per cent growth in 2008, with an average 9.5 million customers added every month.
According to the Telecom Regulatory Authority of India (TRAI), approximately 14.25 million telephone connections, including wireline and wireless, were added during July 2009, taking the total number of telecom subscriber base at the end of July 2009 to 479.07 million from 464.82 million a month before.
According to Business Monitor International, India is currently adding 8-10 million mobile subscribers every month. It is estimated that by mid 2012, around half the country's population will own a mobile phone. This would translate into 612 million mobile subscribers, accounting for a tele-density of around 51 per cent by 2012.
It is projected that the industry will generate revenues worth US$ 43 billion in 2009-10.
Moreover, according to a study conducted by Nokia, the communications sector is expected to emerge as the single largest component of the country’s GDP with 15.4 per cent by 2014.
The Indian equipment market is estimated at US$ 24 billion in FY09. Finnish giant Nokia is the market leader, with over US$ 3.4 billion revenues last fiscal, followed by Ericsson at US$ 2.11 billion.
Growth
According to a Frost & Sullivan industry analyst, by 2012, fixed line revenues are expected to touch US$ 12.2 billion while mobile revenues will reach US$ 39.8 billion in India.
India has become the second country in the world to have more than 100 million CDMA-based (code division multiple access) mobile phone subscribers after the US, which has 157 million CDMA users.
Telecom operators on the popular GSM-based platform added 9.3 million subscribers in August 2009. India continues to be the world’s fastest-growing mobile market and the total number of GSM users in the country has risen to 335.4 million as of August-end as per data released by the Cellular Operators’ Association of India (COAI).
Value-Added Services Market
Currently, mobile value-added services (MVAS) in India accounts for 10 per cent of the operator's revenue, which is expected to reach 18 per cent by 2010. According to a study by Stanford University and consulting firm BDA, the Indian MVAS is poised to touch US$ 2.74 billion by 2010.
Major Investments
The booming domestic telecom market has been attracting huge amounts of investment which is likely to accelerate with the entry of new players and launch of new services.
• Norway-based telecom operator Telenor has bought a 60 per cent stake in Unitech Wireless for US$ 1.23 billion.
• BSNL, India's leading telecom company in revenue terms, will put in about US$ 1.16 billion in its WiMax project.
• Vodafone Essar will invest US$ 6 billion over the next three years in a bid to increase its mobile subscriber base from 40 million at present to over 100 million.
• Telecom operator Aircel, which launched GSM mobile services in Bangalore in February 2009, plans to invest US$ 220.58 million over the next year to set up base stations across the state.
• The American Tower Corporation (ATC) has made an offer to acquire Aircel’s tower business, which has about 12,000 towers.
• Reliance Communications has signed a telecom infrastructure sharing agreement with S Tel, a new telecom operator. The deal, which covers telecom towers, transmission and fibre backbone, will be executed by RCom through its tower subsidiary, Reliance Infratel.
• Bharti Airtel will invest US$ 126.5 million to ramp up its networks in the Assam and Northeast circles in 2009-10.
• Etisalat DB Telecom India (erstwhile Swan Telecom) and Reliance Communications have entered into a long-term passive infrastructure sharing agreement worth over US$ 2.1 billion, spread over a period of ten years.
• Loop Mobile, formerly known as BPL Mobile plans to invest around US$ 75 million in its Mumbai operations.
Manufacturing
India's telecom equipment manufacturing sector is set to become one of the largest globally by 2010.
Mobile phone production is estimated to grow at a CAGR of 28.3 per cent from 2006 to 2011, totalling 107 million handsets by 2010. Revenues are estimated to grow at a CAGR of 26.6 per cent from 2006 to 2011, touching US$ 13.6 billion.
Rural Telephony
Rural India had 76.65 million fixed and Wireless in Local Loop (WLL) connections and 551,064 Village Public Telephones (VPT) as on September 2008. Therefore, 92 per cent of the villages in India have been covered by the VPTs. Universal Service Obligation (USO) subsidy support scheme is also being used for sharing wireless infrastructure in rural areas with around 18,000 towers by 2010.
Policy Initiatives
The government has taken many proactive initiatives to facilitate the rapid growth of the Indian telecom industry.
• 100 per cent foreign direct investment (FDI) is permitted through the automatic route in telecom equipment manufacturing.
• FDI ceiling in telecom services has been raised to 74 per cent.
• Introduction of a unified access licensing regime for telecom services on a pan-India basis.
• Introduction of mobile number portability in a phased manner, starting in the fourth quarter of 2008.
• The government is implementing a program of connecting 66,822 uncovered villages under the Bharat Nirman programme. The government will invest US$ 2 billion to set up 112,000 community service centres in rural India to provide broadband connectivity in 2008-09.
• The Department of Telecommunications (DoT) has stated that foreign telecom companies can bid for 3G spectrum without partnering with Indian companies. Only after winning a bid, would they need to apply for unified access service licence (UASL) and partner with an Indian company in accordance with the FDI regulations.
The Road Ahead
The target for the 11th Plan period (2007-12) is 600 million phone connections with an investment of US$ 73 billion. Apart from the basic telephone service, there is an enormous potential for various value-added services. In fact, the real potential for telecom service growth is still lying untapped.
According to the CII Ernst & Young report titled 'India 2012: Telecom growth continues', revenue from India's telecom services industry is projected to reach US$ 54 billion in 2012, as against US$ 31 billion in 2008.
At 110.01 million connections ' Indian Telecom Industry' is the fifth largest and fastest growing in the world. The subscriber base has grown by 40% in 2005 and is expected to reach 250 million in 2007.
Over the last 3 years, two out of every three new telephone connections were wireless. Consequently, wireless now accounts for 54.6% of the total telephone subscriber base, as compared to only 40% in 2003. Wireless subscriber growth is expected to grow at 2.5 million new subscribers every month in 2007. The wireless subscriber base skyrocketed from 33.69 million in 2004 to 62.57 million in FY 2004 -2005. The wireless technologies currently in use ' Indian Telecom Industry ' are Global System for Mobile Communications (GSM) and Code Division Multiple Access (CDMA). There are primarily 9 GSM and 5 CDMA operators providing mobile services in 19 telecommunication circles and 4 metro cities, covering more than 2000 towns across the country. And the numbers are still growing for ' Indian Telecom Industry '. ' Telecom Industry in India ' is regulated by 'Telecom Regulatory Authority of India' (TRAI). It has earned good reputation for transparency and competence. Three types of players exists in ' Telecom Industry India ' community -
• State owned companies like - BSNL and MTNL.
• Private Indian owned companies like - Reliance Infocomm and Tata Teleservices.
• Foreign invested companies like – Hutchison-Essar, Bharti Tele-Ventures, Escotel, Idea Cellular, BPL Mobile, Spice Communications etc.
The ' Indian Telecom Industry ' services is not confined to basic telephone but it also extends to internet, broadband (both wireless and fixed), cable TV, SMS, IPTV, soft switches etc. The bottlenecks for ' Indian Telecom Industry ' are:
Slow reform process.
Low penetration. Service providers bears huge initial cost to make inroads and achieving break-even is difficult.
Huge initial investments.
Limited spectrum availability and interconnection charges between the private and state operators.
The Government Broadband Policy 2004, aims at 9 million broadband connections and 18 million internet connections in 2007. ' Indian Telecom Industry ' is currently expected to contribute nearly 1% to India's GDP which is heartening and estimated to grow further and brighten the ' Scenario of Indian Telecom Industry '.
Telecom Industry in India
Telecom industry in India has a big market potentiality and is a fast growing sector. Government of India is eager to reconstitute this telecom industry by enacting effective policies for more investments from foreign companies, which results in a very competitive and deregulated market in the world.
Policies of telecom industry in India
Government of India implemented the unified access licensing regime, which enables basic and cellular mobile service to use any modern technology. In 1997, Telecom Regulatory Authority of India (TRAI) was formed to facilitate the growth of the telecom sector in India.
Major services and market potentiality of Telecom industry in India
Telecommunication sector in India is primarily subdivided into two segments, which are Fixed Service Provider (FSPs) and Cellular Services. Telecom industry in India constitutes some essential telecom services like telephone, radio, television and Internet. Telecom industry in India is specifically emphasizing on latest technologies like GSM( Global System for Mobile Communications), CDMA(Code Division Multiple Access), PMRTS(Public Mobile Radio Trunking Services), Fixed Line and WLL(Wireless Local Loop ). India has a prospering market specifically in GSM mobile service and the number of subscribers is growing very fast.
Economic perspective of telecom industry in India
Telecom industry in India has a major role in Indian economy. The Indian government is also enforcing some effective telecom policies and regulations for the infrastructural growth of this industry. Indian telecom market provides a tele-density of 8.5 percent as registered in the year 2004. A number of leading multinational telecommunication companies are approaching and showing their interest to invest for thetelecom industry in India . Telecommunication industry of India ranked sixth among all the telecommunication sectors in the world. In the year 2004, the total number of telephone subscriptions were US$93.2.
Leading telecommunication service providers of telecom industry in India
Bharat Sanchar Nigam Limited, Mahanagar Telephone Nigam Limited (MTNL), Videsh Sanchar Nigam Limited (VSNL), Bharti Airtel, Tata Teleservices, SIFY Ltd. are the major telecommunications service providers in India.
Best practices:
Airtel launches per second plan for US customers
Telecom major Bharti Airtel announced the pay-per-second plan on its virtual calling card service, 'Airtel CallHome', for its customers in the US.
Airtel CallHome has so far been available in the UK, Canada and Singapore.
"With this, Bharti Airtel becomes the first to offer pay per second plans for the US to India calling card market," Airtel said in a statement.
HISTORY(sun) The telecom industry is one of the fastest growing industries in India. India has nearly 200 million telephone lines making it the third largest network in the world after China and USA. With a growth rate of 45%, Indian telecom industry has the highest growth rate in the world.
History of Indian Telecommunications started in 1851 when the first operational land lines were laid by the government near Calcutta (seat of British power). Telephone services were introduced in India in 1881. In 1883 telephone services were merged with the postal system. Indian Radio Telegraph Company (IRT) was formed in 1923. After independence in 1947, all the foreign telecommunication companies were nationalized to form the Posts, Telephone and Telegraph (PTT), a monopoly run by the government's Ministry of Communications. Telecom sector was considered as a strategic service and the government considered it best to bring under state's control.
The first wind of reforms in telecommunications sector began to flow in 1980s when the private sector was allowed in telecommunications equipment manufacturing. In 1985, Department of Telecommunications (DOT) was established. It was an exclusive provider of domestic and long-distance service that would be its own regulator (separate from the postal system). In 1986, two wholly government-owned companies were created: the Videsh Sanchar Nigam Limited (VSNL) for international telecommunications and Mahanagar Telephone Nigam Limited (MTNL) for service in metropolitan areas.
In 1990s, telecommunications sector benefited from the general opening up of the economy. Also, examples of telecom revolution in many other countries, which resulted in better quality of service and lower tariffs, led Indian policy makers to initiate a change process finally resulting in opening up of telecom services sector for the private sector. National Telecom Policy (NTP) 1994 was the first attempt to give a comprehensive roadmap for the Indian telecommunications sector. In 1997, Telecom Regulatory Authority of India (TRAI) was created. TRAI was formed to act as a regulator to facilitate the growth of the telecom sector. New National Telecom Policy was adopted in 1999 and cellular services were also launched in the same year.
Telecommunication sector in India can be divided into two segments: Fixed Service Provider (FSPs), and Cellular Services. Fixed line services consist of basic services, national or domestic long distance and international long distance services. The state operators (BSNL and MTNL), account for almost 90 per cent of revenues from basic services. Private sector services are presently available in selective urban areas, and collectively account for less than 5 per cent of subscriptions. However, private services focus on the business/corporate sector, and offer reliable, high- end services, such as leased lines, ISDN, closed user group and videoconferencing.
Cellular services can be further divided into two categories: Global System for Mobile Communications (GSM) and Code Division Multiple Access (CDMA). The GSM sector is dominated by Airtel, Vodfone-Hutch, and Idea Cellular, while the CDMA sector is dominated by Reliance and Tata Indicom. Opening up of international and domestic long distance telephony services are the major growth drivers for cellular industry. Cellular operators get substantial revenue from these services, and compensate them for reduction in tariffs on airtime, which along with rental was the main source of revenue. The reduction in tariffs for airtime, national long distance, international long distance, and handset prices has driven demand.