Report On Telecom Sector In India

Contents:1

Introduction

2 Telecom Sector in India

3 History of Indian Telecommunication

4 Telecom Service Available in India

5 Restraints on Telecom Sector

6 Conclusion 7 References

INTRODUCTION The world is waiting at our doorsteps, waiting for us to open the gates to an economy bubbling with opportunities. The India growth story has already got the world to sit up and take a note of the changing economic scenario. The Indian government is doing everything that is possible to ensure that this story remains intact. Factors, like the liberalization in the government stance and the daring entrepreneurs of the Indian soils, have helped the sectors achieve the highs like never before. And currently, the flavour of the month seems to be the telecom industry.

TELECOM SECTOR IN INDIA 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. A record 5.9 Million new mobile phone subscribers were drawn by the Telecom sector in India in the month of August 2006, according to the COAI (Cellular Operators Association of India). India, which is seeing over 8 million wireless subscribers being added every month (8.62 million in May 2008), is the fastest growing telephone market in the world. No wonder the whole world has set its eyes on India, a glimpse of which can seen from the recent acquisition of Hutch by Vodafone and consolidation phase which has just begun. The government has reiterated the target

of 500 million telecom subscribers and 20 million broadband connections by 2010. Undoubtedly, the Indian telecom industry is at an inflexion point and everyone wants to have a slice of this lucrative market, given the under-penetrated market and untapped potential.

From a monopolistic market in 1995 to more than 10 operators now… India has come a long way The August of 1995 saw the launch of the first mobile service in India, ‘Modi Telstra’ in Calcutta. However, the call rate structure; with an outgoing call rate of Rs.16 a minute, incoming call rate of Rs.8 a minute and cell phones costing around Rs.15,000 were the prime reasons why the cellular communication did not get the desired popularity. The New Telecom Policy in 1999 introduced several consumer-friendly initiatives. Only after the entry of private operators like Bharti Airtel, Hutch, Reliance, Tata, BPL, Idea, etc., who created a competitive market which further reduced operational costs, did the upward trend in the number of mobile subscribers started. The tariffs have come down substantially with Indian Mobile rates being the lowest in the world. The number of wireless subscribers rose from 16 million in 2003 to 317 million at the end of May 2008. With this, India has become one of the fastest growing mobile markets in the world. Already, The Indian market leader, Bharti Airtel has already crossed the 50 million customer mark to become one of the world’s top 10 operators and has become the fastest private telecom company in the world to achieve this milestone.

HISTORY OF INDIAN TELECOMMUNICATION 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.

Indian Telecom Industry is one of the fastest growing telecom markets in the world with the telecom subscriber base standing at ~ 300.48 million as of 31st March 2008.

TELECOM SERVICE AVAILABLE IN INDIA The telecom services available in India include1. 2. 3. 4. 5. 6.

Basic Fixed Line Services Mobile Services (GSM & CDMA) Internet Services International Long Distance Services National Long Distance Service Pager Services The telecom subscriber base as of 31st March 2008 was 300.48 million compared to 6.4 million and 3.6 million at the end of the March of 2002 and 2001 respectively. Telecom subscriber as on 31st march 20081.

Wireline subs 39.42 mn

2.

Wireless subs 261.07 mn - GSM 192.7mn - CDMA 68.37mn

GSM vs. CDMA GSM and CDMA are the two main competing network technologies deployed by cellular service provider’s world over. GSM (Global System for Mobile Communications) originated in Europe in 1990. The GSM Association is an international organization founded in 1987, dedicated to developing, providing and overseeing the worldwide wireless standard of GSM While CDMA (Code Division Multiple Access) is a proprietary standard designed by Qualcomm Inc in United States and has been the dominant network standard for North America and parts of Asia. It became an international standard in 1995. However now, GSM networks have penetrated the United States and the CDMA networks have spread in other parts of the world. People of both the camps claim that their architecture is superior to the other.

RESTRAINTS ON TELECOM SECTOR  Sluggish pace of reform process 



Lack of infrastructure in semi-rural and rural areas, which makes it difficult to make inroads into this market segment Limited Spectrum availability

CONCLUSION India is huge market and none of service providers can dare to ignore its potential. That’s why Indian mobile service provider industry is growing leap and bounce for the last decade. This journey of 1 million to 50 million will keep it pace until each citizen in India will have his own mobile. Industry has many phases in its growth. Now mobile doesn’t mean a only a medium of communication. Services providers are now willing to provide varies facilities like entertainment (music, video etc.) and even banking also. We can say that business is transforming in e-commerce to mcommerce (mobile-commerce). In short we can say drastic change has came in the industry along with expanding its base in subscribers, they are keeping eye not only to offer new facilities but also to be the first to provide it.