Indian Telecom Presentation

INDIAN TELECOM INDUSTRY A BRIEF OVERVIEW  The telecom network in India is the fifth largest network in the world.  World’s fastest growing telecom market  Contributes estimated 1% to India’s GDP.  Services in ~ 5000 cities & towns & ~1 lakh villages Major Players • -State owned companies (BSNL and MTNL) • -Private Indian owned companies (Reliance Infocomm, Tata Teleservices,) • -Foreign invested companies (Vodafone, Bharti Airtel , Idea Cellular, BPL Mobile)

Current Industry Structure Ministry of Communication & Information Technology Licensor Dept of Telecom Regulator Telecom Regulatory Authority of India

Unified License Operators Fixed Line Operators National Long Distance Operators International Long Distance Operators

Judiciary Telecom Dispute Wireless Operators Settlement Appellate Tribunal FDI in telecom recently revised to 74%.

Government gets 15% of revenues from Unified Licensing

CDMA 1800M hz GSM 900

Market Structure



Divided into 22 circles

Jammu & Kashmir

• 4 metros • 19 circles o



Further divided into A, B and C category based on economic parameters and revenue potential

Each circle has a licenses • Four operators per circle are allowed • Licenses are saleable

Himachal Pradesh Punjab Haryana

North Eastern States

Uttar Pradesh W

DELHI Rajasthan

Uttar Pradesh E Bihar West Bengal

Madhya Pradesh

Gujarat

Orissa

Maharashtra

KOLKATA

MUMBAI Andhra Pradesh Karnataka

METRO Circles CHENNAI Tamil Nadu Kerala

A Circles B Circles C Circles

Source :COAI

MOBILE – MAJOR CONTRIBUTOR TO TELEDENSITY

TRAI 2007 TELECOM REPORT  TRAI released the 2007 telecom report and here are a few key findings:  The total number of telephone subscribers has reached 241.02 million  The overall teledensity has increased to 21.20% in August 2007  The total wireless subscribers (GSM, CDMA & WLL(F)) base reaches 201.29 million  The wireline segment subscriber base stood at 39.73 million (decrease of 0.16 million at the end of August 2007)  Total Broadband connections in the country have reached 2.56 million by the end of August 2007.

Evolution of the industry-Important Milestones History of Indian Telecommunications Year 

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1851 First operational land lines were laid by the government near Calcutta (seat of British power) 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 1985 Department of Telecommunications (DOT) established, an exclusive provider of domestic and long-distance service that would be its own regulator (separate from the postal system) 1986 Conversion of DOT into two wholly government-owned companies: the Videsh Sanchar Nigam Limited (VSNL) for international telecommunications 3 and Mahanagar Telephone Nigam Limited (MTNL) for service in metropolitan areas. 1997 Telecom Regulatory Authority of India created. 1999 Cellular Services are launched in India. New National Telecom Policy is adopted. 2000 DoT becomes a corporation, BSNL

GSM TECHNOLOGY 

GSM (Global System for Mobile communications) is the most popular standard for mobile phones in the world. GSM is considered a second generation (2G) mobile phone system. GSM also pioneered Short message service (SMS). One of the key features of GSM is the Subscriber Identity Module (SIM). The GSM standard has been an advantage to both consumers (who benefit from the ability to roam and switch carriers without switching phones) and also to network operators (who can choose equipment from any of the many vendors implementing GSM. GSM was designed with a moderate level of security.

CDMA TECHNOLOGY 

CDMA2000 is a hybrid 2.5G / 3G technology of mobile telecommunications standards that use CDMA, a multiple access scheme for digital radio, to send voice, data, and signalling data (such as a dialed telephone number) between mobile phones and cell sites. CDMA permits many simultaneous transmitters on the same frequency channel. Since more phones can be served by fewer cell sites, CDMA-based standards have a significant economic advantage over TDMA based standards.

TECHNOLOGY GENERATIONS  2G (or 2-G) is short for Second-generation wireless telephone technology. Three primary benefits of 2G networks over their predecessors were that phone conversations were digitally encrypted, 2G systems were significantly more efficient on the spectrum allowing for far greater mobile phone penetration levels; and 2G introduced data services for mobile, starting with SMS text messages.  3G is the Third generation of mobile phone standards and technology. 3G technologies enable network operators to offer users a wider range of more advanced services while achieving greater network capacity through improved spectral efficiency. Services include wide-area wireless voice telephony, video calls, and broadband wireless data, all in a mobile environment. Additional features also include HSPA(High Speed Packet Access) data transmission capabilities. 3G networks offer a greater degree of security than 2G predecessors.  4G or Fourth-Generation, A 4G system will be able to provide a comprehensive IP solution where voice, data and streamed multimedia can be given to users on an "Anytime, Anywhere" basis, and at higher data rates than previous generations. 4G is being developed to accommodate the quality of service (QoS) and rate requirements set by forthcoming applications like wireless broadband access, Multimedia Messaging Service (MMS), video chat, mobile TV, HDTV content, Digital Video Broadcasting (DVB), minimal service like voice and data, and other streaming services".

3G ISSUES  Expensive input fees for the 3G service licenses  Numerous differences in the licensing terms  Large amount of debt currently sustained by many telecommunication companies, which makes it a challenge to build the necessary infrastructure for 3G  Lack of member state support for financially troubled operators  Expense of 3G phones  Lack of buy-in by 2G mobile users for the new 3G wireless services  Lack of coverage, because it is still a new service  High prices of 3G mobile services in some countries, including Internet access (see flat rate)  Current lack of user need for 3G voice and data services in a hand-held device  High power usage  BSNL along with Mahanagar Telephone Nigam Ltd (MTNL) was given a head-start by the department of Telecom to roll out 3G services in the country.  While the private telecom companies have to acquire 3G spectrum through a process of bidding, both the public sector units have already been allotted spectrum on a pro-rata basis.

ISSUES IN SPECTRUM ALLOCATION AND PRICING IN INDIA.  Radio frequency spectrum is a limited natural resource.  9kHz and 3000 GHz and are being used for 40 different types of services  GSM technology works in the frequency bands of 900 and 1800 MHz in India and CDMA technology works in the 800 MHz band.  larger number of subscribers requires, either a larger amount of spectrum or an increase in the number of base stations.  Department of Telecommunications has evolved guidelines for the allotment of extra spectrum, based on subscriber base and roll out. The subscriber-based criteria have been formulated taking into account demographic characteristics of different categories of service areas, average traffic per subscriber, number of base stations in a specified area etc. Spectrum is allotted subject to completion of coordination and availability at a particular location.

FUTURE GROWTH POTENTIAL   

India is getting younger. Amongst the fastest growing economies. Era of mergers and acquisitions in Indian Telecom

 Promoters have begun selling off stakes to long time players of telecom operations.  Unlimited usage with fixed monthly charge.  Unlimited plans both In basic and cellular.  Revenue through VAS and Broadband.  Emergence of Indian MNC’s in telecom sector.  Due to heavy competition, pressure is also mounting on usage charges.

Teledensity Levels

20

Teledensity (%)

18 16

• Urban Telephony surpasses targets

12 8.2

8

2 0

12.2

10.4

10

4

14.3

• Rural left far behind

14

6

19.7

4.8

5.8

4 1.3 0.3 1996

1.6 0.3 1997

1.9 0.4 1998

7.0

6.9

2.3 0.5 1999 Rural

2.9 0.7 2000 Urban

3.6 0.9 2001 Total

4.3 1.2 2002

5.1

1.5

2003

1.7

2004

Rural India

 As per DoT statistics 500,000 villages have telephone access. • However, teledensity patterns reveal the low penetration of communication services

 India has a 700 million people living in 638,000 villages • Per-capita income of $ 0.40 per day) Number of HH in millions

120

102.1

135 million rural households

100 80 60 40 17

20

10

3.9

1.9

1

0.3

0.3

360

520

840

1300

2240

0 60

180

260

HH Incom e in $ per m onth

The question is : Is connectivity relevant to the rural populace of India?

REFERENCES  http://en.wikipedia.org/wiki/  http://www.pluggd.in/wp-content/uploads/2007/09/telecommarket-share.PNG  http://newshopper.sulekha.com/postnewslink.aspx  http://www.naukrihub.com/india/telecom/recentdevelopments/3g.html  What’s 3G all about?Amit Tripathi/ DNA MONEY | Saturday, 02 August , 2008, 09:12  DNA MONEY issue September 11th and 12th year 2008.  Report on The Indian Telecom Industry By:Consulting Club,IIM Calcutta  Issues in spectrum allocation and pricing in india.: (Deepak Ashish Kaul, Jt. CCA.) India  A Telecom Destination: Bharat Bhatia, Regional Director, Asia GGA , Motorola  Indian Mobile Industry: S D Saxena, Director (Finance), Bharat Sanchar Nigam Limited

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