Telecom

INDIA N TEL ECO M SECT OR

The word “ Telecom ” (which is an abbreviated version of ' teleco mmunic ati on' ) in real sense refers to the transfer of information between two distant points in space. This meaning however, has been subjected to modifications in accordance with further innovations made be the Teleco m Industr y.

His tor y of T elecommun ica tion in Ind ia In 1880, two telephone companies namely “The Oriental Telephone Company Limited” and “The Anglo-Indian

Telephone Company Limited” approached the Government of India with the objective of establishing Telephone Ex changes across the country. Initially, the Government denied the permission as it wanted to exercise its monopoly power over the promising industry once it emerged. By the following year, it changed its decision and finally on 28 th January,1882, license was granted to The Oriental Telephone Company Limited of England for opening telephone exchanges at Kolkata, Mumbai, Chennai and Ahmedabad. The opening of exchanges was followed by further innovations and improvements in all sections of the teleco m i ndus tr y . However, while telephones were introduced in the major towns and cities across the country during the British period, total number of telephones in India in 1948 was merely 80,000. The growth was negligible even after independence and the telephone was used as a status symbol by the rich despite being an extremely essential device of public utility. This sluggish rate of growth continued till 1991 when the number of telephones was 5.07 million. The period post 1975 saw an resurgence in the Ind ia Telecom Mar ket by virtue of a series of fruitful decisions initiated by the Government which included: •

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The separation of Depar tment of Telecom (DoT) from Post and Tele g raph (P&T) in 1975. The formation of Mahana gar Telephone N igam Li mi ted (MT NL) out of DoT to provide teleco m services exclusively to Delhi and Mumbai.

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In the 1990s, the te lecom sec tor was opened up by the Government for private investment as a part of Liberalization-Privatization-Globalization Policy. On 1 st October, 2000, the Government corporatized its operations wing under the name of Bhar at S anc har Nigam Lim ited ( BSN L).

To top it all, the introduction of mobile communication is undeniably the biggest success story scripted by the teleco m i ndus tr y.

Ear l y commun ica tion sys tems Al mo st 5,000 year s ago , our ance stor s rel ied on sm ok e signal s for visual - or opt ica l - tr ans mi ssi on syste ms , es ta bl is hing one of t he oldes t f or ms of commun ica tion i n recor ded hi stor y. T he next de velopment , so meti me ar ound 300BC , u sed car rie r pigeon s to de li ver hand writ ten me ss ages . Be yond tha t, the on l y other mean s of commun ica tion w as to phy si cal l y de li ver me ssa ge s to friend s, f ami l y and as soc ia te s loc ated af ar. It w asn't unt il 1792 tha t a new for m of optica l teleco mmunic ati ons came along : the Se ma phor e. De veloped by t he Frenc hman Cl aude Cha ppe , the se wi ndmi ll- lik e st r uctur es ena bled people to rela y mes sa ge s at di stance s of up to 20 mi le s. Ho wever,

as with man y of today 's connect ions , band width was an i ssue becau se the Sema phor e cou ld tr an sm it onl y 15 c har acter s per mi nute.

19 th -cen tur y ac hi evemen t T he phenomenal tec hno logica l advance s of the 19th centur y br ought pr of ound changes , man y of whi ch wer e made pos si ble by the i ntr oduct ion of mec han ical l y gener ated electr ic it y in 1832. W ith the abil it y to flo w electr on s down copper wir e, Eur opean in ventor s W hea ts tone and C ook e and r ight behind them , M or se and Vail in the Un ited Sta tes , de veloped the te le g raph, and the teleco mmunic ati ons indus tr y was bor n. Al mo st im med ia te l y, people sa w the need f or under sea ca bles . T he fir st was a ca ble under nea th the R iver T hame s in London i n 1840. Ten year s late r, the B rett br other s succe ss ful l y laid a ca ble acr oss the E ng li sh Channe l connect ing E ng land and France , but i t br ok e wi thi n hour s w hen i t was sna gged by a fi sher man . A year la ter , the y i ns ta lled an ar mor ed ca ble, ena bl ing tele g raph ser vice betw een London and Pari s to st ar t in 1851 . O nce the Old Wor ld was wi red, attent ion sh ifted to connect ing to the Ne w Wor ld.

Band wi dth and ca ble t ec hno log y

Dur ing t hi s period , mo st of the resear ch in under sea and long-hau l telecom munic ation s was focu sed on incr ea si ng the number of elec trica l signa ls suppor ted in a single tr an sm is sion . Once again , T yco Telecommun ica tion s pla yed an i mpor tant r ole. In 1960, Wes ter n E lectr ic founded w ha t is no w T yco Under sea Photon ics i n Cl ar k, Ne w J er se y. W or king wi th T yco Inte g rated Ca ble Sy st ems , for mer l y Si mple x Technolog ies , the tw o fi r ms developed se ver al i mpo r tant te chnolog ies . In 1962 , the y in vented SD ana log te chnolog y, whi ch ena bled b i- dir ect ional tr an sm is sion s rather than requir ing a separ ate ca ble f or eac h "d ir ecti on" of tr af fic . T his t ec hnolog y, whi ch a ls o i ncr eased band width , w as used by T yco Telecommun ica tion s t o bui ld TAT-3, the th ir d tr an sa tlanti c te lephone ca ble , and allo wed s imu ltaneous tr an smi ssion of 148 cir cu its . Ne xt came S F coax ial ca ble , in 1968, whi ch w as ca pable of s uppor ting 845 cir cu its . T hi s tec hno log y was im pl emented w ith the in sta ll ation of TAT-5 tw o year s later . Yet another sign ificant br eakthr ough came wi th the de velopment of S G coaxia l ca ble i n 1975. T his ca ble, whic h suppor ted 4 ,000 c ir cui ts , was used to bu ild TAT-6 in 1976. Automa tic redunda nc y: 1996 In 1996 , T yco Telecommun ica tion s de si gned, manuf actur ed and depl oyed the fir st tr ansocean ic

se lf -heal ing ring , TP C-5 . T his ca ble, whi ch s tr et ches fr om the coa st of Or e gon i n the U .S . to Tok yo, Japan, was the fir st fault -to ler ant s ystem tha t cou ld automa tica ll y switc h a cal l fr om one fiber to another in the event of pr oblem s.

T he In ter ne t e xp los ion As the u se of the Inter net f or com munic ation s sk yr oc ket s, Tyco T el ecommun ica tions ha s expanded it s ef for ts i n equal mea sur e. Towar d tha t end , t he company demon str ated the fir st I P pac ket tr anspor t acr os s a tr an soceanic D WDM ca ble in 1999 ; not onl y did the tes t tr an sm is sion co ver 7,500 ki lome ter s (4,680 mi le s) , i t did i t at the rate of 2.5 giga bit s per second , us ing onl y opt ical amp li fier s. In 2000 , T yco Telecommun ica tion s l ever aged it s de velopment s in h igh-per for mance opt ica l equ ipment to i mpr ove on the pr eviou s y ear' s tes t b y a f ac tor of four . In thi s te st , our resear cher s succe ss ful l y tr ans mi tted 10 giga bits per se cond, us ing IP pa cket tr anspor t, over a d is tance of mor e than 6,000 ki lometer s (3,700 m ile s) wi thout an y pac ket re gener ati on. Si nce 2000 , w e ha ve been de sign ing , m anuf acturing and imp lement ing s ystem s oper ating with 10 giga bits per se cond channe ls . We h ave dr ama tical l y incr ea sed our

ca pa bil it ie s to tr an sm it wavelengths

fr om 32 wavelengths per fiber pa ir in 2000 to

128

wavelengths per fiber pa ir in 2003. Coup led w ith our

ca pabi li ty to i ns tal l systems w ith eight f iber pair s, the to tal ca pacit y of a s ystem can no w reac h 10 ter abits , a mor e than fiv e fol d i ncr ease in ca pacit y since 1999. T he onl y fu ll -s pect r um pr ovi der of global opt ical netw or ks Tyco Teleco mmunic ati ons has been the l eading pr ovider of under sea s ystem s for near ly half a centur y, ha ving de signed , bui lt and ins tal led near ly 100 under sea ca ble netw or ks sp anning so me 350,000 ki lometer s and inc luding over 7,000 repea ter s and a mpl ifi er s. W e ha ve con str ucted our own netw or k, the Tyco G lobal Ne tw or k, whic h s pan s mor e t han 60 ,000km and connects 3 cont inent s. Toda y, w e ar e le ver aging th at exper tis e to de velop rel ia ble , cost -ef fic ient under sea fiber-opt ic commun ica tions s ystem s. F rom ST M-1 se r vice s up to tur nk ey syst ems , onl y Tyco T eleco mmunic ati ons ha s the ca pa bi li ty to meet al l of y ou r global connecti vi ty requir ement s, al l fr om a single s our ce.

Tyco Telecommun ica tions to mor r ow W ith st ate -of -the-ar t f ac il it ie s and ded ica ted empl oyee s inc lud ing our w or ld- ren owned R &D team , Tyco Teleco mmunic ati ons is bu ild ing the infr astr uctur e for the i nf or ma tion superh ighw ay. Ha ving accompl ished so mu ch and set so many recor ds i n the pr oce ss , our team has bu il t a so lid founda tion f or fur ther succes s.

Telecom munic ation C ompan ies in Ind ia

The stupendous growth of the te lecommun ica tion compan ies i n India over the last fifteen years can be attributed to the liberal government of India, economic policy. The economic renaissance effected in the early 1990s brought around a paradigm shift on the overall business scenario of India. The telecommunication companies in India went through a huge make-over during the implementation of the open-market policy of India. The erstwhile closed market policy was replaced by a more liberal form of economic policy. A whole new form of Indian Telecommunication Policy was drafted to compliment the change effected in the economic policy of India. The amendment effected the new telecommunication policy of India made huge changes with respect to investments and entry of Foreign Direct Investments (FDI) and Foreign Institution Investors (FII) respectively, into the virgin Indian telecommunication market. This resulted entry of private, domestic and foreign telecommunication companies in India. The economic contribution made by these newly formed telecommunication companies of India is really mentioned worthy and this industry witnessed highest growth after the Indian Information Technology industry. The robust growth of Indian economy after the economic liberalization in the 1990s induced massive change in the telecom policy and new draft was framed and implemented by the 'Telecom Regulatory Authority of India' (TRAI) and 'Department of Telecommunication' (DOT), under the Ministry of Telecommunication government of India. The main aim of these telecommunication companies in India is to provide basic telephony services to each and every Indian.

Telecommun ica tions One of the fas tes t g rowing sec tor s in the countr y, teleco mmunic ati ons ha s been zoo ming up t he g rowth cur ve at a f everi sh pace in the pa st few year s. T he year 2007 sa w India ac hie ve the di st inct ion of ha ving the wor ld 's lo west cal l rate s (2-3 US cent s) , t he faste st g rowth i n the nu mber of sub scr iber s (15.31 mil lion in 4 month s), the fas tes t sa le of a mi lli on m obi le phones (1 w eek), the wor ld 's chea pest mob il e hand set ( US$ 17.2) and the wor ld' s mos t af for da ble co lour phone (U S$ 27 .42).

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Indian teleco mmunic ati on fir ms ad de d 5.19 mi llion new s ubs criber s in A pri l 2007 , tak ing t he total u ser base abo ve 212 .02 m ill ion . W ir eles s se r vice pr ovider s continued to domi na te user g rowth by ad ding 5.15 mil lion sub scr iber s in A pr il , w hile 40 ,000 new fi xed-l ine user s signed u p. At 500 m inute s a m onth, Ind ia ha s t he highes t monthl y 'm inute s of usa ge ' (M OU ) per su bsc riber in the As ia-P acif ic re gion. India is emer ging as a for er unner in u si ng the cel l phone as a too l to acce ss the Inter net, w ith one in e ver y 11 peop le l og ging on to the web acr os s the w or ld thr ough mob il es tur ning out to be an Indian . T he countr y's te lecom se ctor w ill see in vest ments up to US$ 25 bi ll ion over the next

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fi ve y ear s, pr ojects global consu ltanc y fi r m Er nst & Y oung . India is expected to r e gis ter hand set pr oduction of over 51 m ill ion un its i n 2007 to recor d the highe st g rowth i n the A sia -P acif ic r e gion, accor ding to tec hno log y resear ch fi r m Ga r tner . India pr oduced near ly 31 m ill ion mob il e phone s in 2006 w or th about US $ 5 bil lion. T he pr oduction of handset s is s et to incr ea se b y 68 per cent in un it s and 65 per cent in value ter ms in 2007. By 2011, pr oduct ion volume s ar e exp ected to r eac h near l y 95 mi lli on un it s at a compound annual g rowth rate (CA GR) of 25 per cent. T he retai l ma r ket for mob il e phone s - - hand set s, acces sor ies and ai r ti me - - is over US $ 15 .6 bi ll ion and g rowing at the rate of 15-20 per cent . Mas siv e i nfr ast r uctur e need s i n India mi ght pr ovide a potenti al pr iv ate equit y role . A recent st udy by t elecom re gula to r T eleco m R e gul ator y Authorit y of Ind ia (T RAI) ha s es ti ma ted tha t the countr y wil l need a bout 350,000 telecom to wer s by 2010 , a s agains t 125 ,000 i n 2007. W ith a C AGR of 46 per cent , Ind ia ha s emer ged as the fas tes t g rowing mar ket in the da ta centr e-s tr uctur ed ca bl ing m ar ket in the As ia Pac ific re gion , accor ding to Acces s Ma r kets Inter na tional (AMI) Par tner s, a US- based consu ltanc y agenc y. T he da ta centr e s tr uctur ed ca bli ng ma r ket i s expected to g row fr om U S$ 19 mi llion in 2005 to US $ 125 mil lion in 2010 . T he over al l st r uctur e ca bling ma r ket is e xpected to

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g row fr om US $ 127 mil lion in 2005 t o U S$ 345 mi llion by 2010 a t a CA GR of 22 per cent. . In Ma y 2007, Indian GS M mobi le phone ser vice pr ovider s signed up 5 .1 m illi on cu stomer s, taking tota l user s to 130 .6 m ill ion , the C el lu lar Oper ator s' Assoc ia tion of India sa id . T he combined revenue of a ll oper ator s fr om thei r m obi le bus ines se s wou ld mor e than double to U S$ 33 .1 b il lion by 2010, fr om about US $ 12.8 bi ll ion in 2006 . T he total r evenue of al l tel ecom oper ator s i s al so se t to near l y doub le to US $ 43.6 bi ll ion in four year s, fr om U S$ 22.5 bil li on i n 2006. T he revenue sh ar e of m obi le bus ines s would ri se to 76 per cent i n the s ame per iod, fr om 57 per cent cur rentl y. Ind ia, w hic h is ad ding o ver s ix m illi on mobi le su bsc riber s e ver y month, ha s su r pas sed Russi a t o become the t hir d lar ge st m obi le mar ket in the wor ld after Ch ina and the US . T he total m obi le sub scr iber base in the countr y is lik el y to r eac h 425 m illi on b y Mar ch 2010 wi th Bhar ti Ai r te l (GS M) and R eli ance (C DMA and GS M) e mer ging a s the t op two m obi le oper ator s in ter ms of nu mber of s ub scr iber s.

De st ina tion Ind ia T he g rowth s ta ti st ic s of the sec tor comb ined wi th the G over nment's dec is ion to incr ea se the f or eign dir ect in ves tment (FDI) ca p i n the s ector to 74 per cent ha s gener ated huge i nter est among global in vestor s. T he s har e of teleco m i n FDI r ose fr om 3 -4

per cent to 12-15 per cent in the ca lendar year 2006. TR AI ha s pr oposed tha t in view of the con ver gence of se r vice s, ca ble TV oper ator s be allo wed to incr ea se t heir FDI ca p fr om the e xi st ing 49 per cent to 74 per cent to br ing the m a t par with the t elecom sec tor . •

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Br it is h g iant Vodaf one , the wor ld' s lar ge st mobi le pl ay er, has announced its dec is ion to in vest US$ 2 b il lion in India in 2007 . T hi s is near ly one-f ifth of it s globa l expendi tur e, reflect ing the impor tance it a ttac he s t o Ind ia, the f aste st -g rowing te lecom ma r ket. Ri char d Br an son' s V ir gin Mobi le is enter ing the Indian mar ket thr ough a 50:50 jo int ventur e wi th the T ata g roup . Es sar T el ecom T ower and Inf rastr uctur e, G TL Infr astr uctur e and Sr ei Gr oup 's Quip o, the lead ing p la yer s i n the te lecom to wer bu sine ss , ar e co llect iv el y i nvest ing ar ound US$ 1.1-b il lion to r oll out clo se to 18 ,000 to wer s duri ng 2007 . UK- bas ed Intec Telecom Sy stems , w hic h of fer s oper ationa l suppor t, acces s bi lli ng and retai l bi ll ing ser vice s for tel ecommun ica tions oper ator s wor ld wide, ha s lined up a US $ 12 mi llion expan sion plan for it s B angalor e of fice . Ce llu lar se r vice pr ovider Air ce l wi ll embar k on an o ver US$ 400-m il lion pan-Ind ia net wor k exp an sion to double it s subs criber ba se of 5 mi llion over 18 -24 m onths . Sw edi sh teleco m equ ipment giant Er ic ss on p lans to i nvest US $ 100 mi llion ever y year in Ind ia wi th an opti on to enhance it depending upon it s

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g rowth. It plan s to pr oduc e it s mob il e hand sets in Sr ipe r umbudur i n Tam il N adu thr ough manuf actur ing a g reement s wi th Fle xtr onic s and Foxconn -- globa l manuf acturi ng out sour cing par tner s of Son y Er ics son . Ci sco i s s ta r ting a tri al factor y in Chenna i f or maki ng Inter net pr otocol -bas ed phone s, as par t of it s U S$ 1. 1-b il lion in vest ment p lan for the countr y. India of fer s an unpr ecede nted oppor tunit y for teleco m s er vi ce oper ator s, infr ast r uctur e vendor s, manuf actur er s and a ss oci ated s er vi ces companie s. Not to be l eft behind , Ind ian ce ll ular oper ator s ha ve lined up i nvest ments of a bout US $ 20 bi ll ion o ver the ne xt tw o y ear s t o br ing over 80 per cent of the popu la tion under mob ile co ver a ge . T he p lanned i nvestment for the ne xt couple of year s i s 50 per cent h igher t han wha t has been i nvested in the la st 12 y ear s.

Ex ecut iv e sum mar y

T he fas t g rowth of i ndi a te lecom

indu str y has made

it a key contr ibutor to i ndi a’ s pr og ress .ind ia a bopted a pha sed a ppr oac h f or r efor mi ng the tel ecom s ector ri ght fr om the be ginning . P ri va ti sation w as g radull y in tr oduce d,fir st in va lue -ad ded se r vice s, fol lo wed by cel lul ar and bas ic se r vice s. A n i ndepent r e gul ator y body ,T elecom Re gu la tor y Authori ty of Ind ia (TR AI).w as e sta bl is ed t o dea l w ith compet it ion i n a balanced

manner . T his g radual and thoughfu

l r ef or m

pr oces s in in dia has f avour ed i ndus tr y g rowth. Toda y,ther e ar e mor e than 225 m ill ion te lecom sub scr iber s in i ndi a. Ev er y month , 6 -7 mi llion new sub scr iber s ar e ad ded. Upcomi ng s er vice s su ch as 3G wil l he lp to fyuther aug ment the

g rowth rate.

Futher mor e, the ind ia economy i s s lated to su sta in it s 7-9 per cent g rowth r ate in t he near futur e .thi s is su ppor ted b y the the

po itic ia l sta bil it y tha t the

countr y is e xperienc ing cu r rentl y.ind ia’ s demog raphic out l ook mak es it one oft t 5he lar gest mar ket s i n the w or ld . A conduciv e bus ine ss en vior ment

is al so cr ea ted by a favour able

re gu la tor y r e gime. T her e exis ts enor mou s bus ine ss potent ia l f or teleco m compan ies on account of

t he countr y’ s lo w

teleden si ty, whic h i s clos e to 19 per cent T he ind ian telecom

pr esentl y.

indus tr y is g rowing at fas tes t

paces

in the wor ld

and in dia is pr ojected to be the

second lar est te lecom mar ket globa ll y b y 2010.

Telecom

indus tr y-

A benc hma r k for othe r s.

IN DIAN T ELEC OM IND UST RY FACT BOOK 1. Tota l telecom

subs criber s:225 .21 mi lli on (J une

2008) 2. Teleden si ty :19 .86 per

cent (J une 2008)

3. Ad diti on of new mob il e s ubs cri br es per month (J une 2008)

: 7.34 m ill ion

4. Annua l g rowth r ate otf t elecom subsc riber s (2007 08):46 .82 per

cent

5. One of the fas tes t g r owing ce ll ular te lephony mar ket s in the wor ld 6. Aver age R evenue Per U ser (ARP U) for GS M:

US $

17,100 mi llon 7. Hand set m ar ket s (2007 -08): US$ 4,750 mi llon .

T he ind ian telecom

indus tr y withne ss ed a CA GR of

appr oxima te l y 22b per cent

fr om 2002 -03 to 2006 -07.

T he CA GR fr om 2006-07 t o 2009 -10 is e xpected to sta bil ise at 21 per cent .

T he ind ian telecom

ma r kets gener ated r evenue s of

appr oxima te l y US$ 20 m ill ion in 2006 -07. T he mar ket s wi tnes sed a g rowth rate of 33 per cent the l as t year and recor ded

ovr e

a CA GR of 22 per cent

for the per iod 2002 -03 to 2007-08 . T his g rowth has resu lted in doubl ing the r evenue s of the te lecom se gment in the pas t 3 year s. Futher ,i t is expected tha t the indu str y wi ll gener ate r evenue 43 b il lon

wor th U S$

by 2009-10 .

T he ind ian telecom

indus tr y can be div ided in to

bas ic , m obi le and inter net ser vices . T her e ar e also so me s ma ll er se gment su ch as radio pa ging ser vices , ver y sma ll A per tur e Ter mi nal s

(VSA Ts)Publ ic Mobi le Rad io T r unk ed Ser vice s(PM RTS)

TELEC OM SE RVICES Basic ser vices Ba si c s er vice s encompas s fix ed w ir e line and wi rele ss i n loca l loop se r vice s .B SN L and Relinace ar e two l ar ges t oper ator in th is se gment . Reli ance and BSNL is pr esent in al l over ind ia .T hough pri va te pla yer s, s uc h as B har ti and MT NL, Ha ve re gis ter ed nota ble g rowth, the go ver nment- o wned B SN L domi na te s t he se gment i n ter ms of su bsc iber base .

Indian maj or s uc h as B har tI ,R eli nace and

the T ata

g roup h ave for ay ed i nto bas ic teleco m s er vi ces . In 2006 , the tota l nu mber of

bas ic ser vi ce

sub scr iber s exceeded 50 mi lion . fix ed w ir e line user s made up

a l ar ge s har e of thi s. W ith a

contribu tion of 38 per cent .

Mobile ser vice – stay connected Mobi le se r vice s h ave led the spectacu lar g rowth of the i ndi an te lecom indu str y. 12 p la yer ar e act iv e in thi s se gment. T he tota l number of

wir ele ss

sub scr iber s escal ated to 185 .13 mil lion by the end of June 2007, wi th the m onthl y ad dition of mor e than a6

mi llion wir ele ss s ub scri ber s.G SM continue s

to do min ates th is se gment by a lar ge mar gin as compar ed to CD MA ,w hi ch ha s a s har e of onl y 23 pr e cent.

India is one of the f ew contr ie s in the wor ld to ha ve mor e G SM s ubs cri ber s than a fi xed Line su bscr iber s . Al l the oper ator s pr edom inal l y pr ovide voice ser vices ,va lue ad ded and

da ta se r vice s s uc h as

SMS , mob ile inter net ,e mai l, c ha tt ing ,conf er encing ,GP RS se r vice s , etc . T he commod iti sation pof v oice ser vice s ha s been a maj or ma gnet foe sr evi ces pr ovider s,compe ll ing them to i nten si ty

thei r focu s on da ta se r vice s. Revenues fr om v al ue ad de d ser vi ces ar e g rowing at 30 -40 per cent annuall y. T he se tr ends ha ve pa ved the way for 3G ser vices i n ind ia. Indian pla yer s ha ve cons tantl y r educed t arif fs , whic h in tu r n ha s led to a con stant reduction

in

Aver age Revenue Per User (A RPU) .ho wever ,t hough the A RP U in dec lini ng g radua ll y,it r ema in wel l suppor ted by t he incr ease in s ubs cribe r ba se. T he AR PU f or G SM ser vices i n ind ia is muc h higher than tha t for CD MA ser vice s.

T he dec lin ing AP RU im pl ie s tha t ind ia inc .i s ta pp ing the huge

mar ket at the bottom of the pyrami d b y

reducing

tarif fs, ther e b y enhancing

af foda bi li ty.

GL OBAL MOBI LE PE RSO NAL COM MUN ICA TI ON B Y S ATELLITE. GM PC S s er vice s wer e launc hed i n India in 1999. T he se s er vi ces allo w a s ub scri ber to com munica te fr om an y point on ear th thr ough a hand -held ter minal . Mor eo ver, thte lephone unc hanged,

ir respect iv e of the

number rema ins sub scr iber’ s

loc ation . Irid ium India Telecom Lim ited pioneer ed G MP CS ser vices i n India . T he G over nment ha s rest ricted for eign equi ty par tici pa tion i n thi s se gment to

49

per cent . IN TER NET SER VICE S- ROAD TO A H I- TE CH INDIA A ppr oxim atel y 400 in ter net ser vi ce pr ovider (ISP s) ar e of fering in ter net ser vi ces i n ind ia. De spi te a slo w penetr ation rate , thi s se gment embodie s huge g r owth potenti al in Ind ia. In J une 2007, ther e w er e 2 .52 mi lli on br oadband connect in India . BS NL is 2.52 m ill ion br oadband

ions

connection s

in India . BS NL is the im ple menta tion of Br oadband Pol ic y in 2004 , the Go ver nment has sent out s ignal s of it s po si ti ve in tent to

boos t i nter net penetr ation i n

the countr y. Ear li er in 2002, the Go ver nment opened in ter net te lephon y and issued l icense s in th is domain .

HAN DSETS MARK ETS India is evol ving fr om m er el y be ing a handset

ma r ket

to r epo si ti oning it se lf a s a m anuf acturing des tin ation as w ell . W ith the sub scr iber base su r pas si ng a ll est im ate s, hand set m anuf actur er s ar e pr esented

wi th a g reat oppor tun it y to m axi mi se

retur ns fr om the mar ket . In ad dit ion, the incr ea si ng replacement

rate (cur rent r ep lacement

ti me i s

ar ound 18 m onths) tr ans la tes i nto a s ignif icant potentia l for the de velopment

and s al e of incr ea sing

number of handset s. Compet it iv e pr icing ha s t rig ger ed the g rowth of colour ed handset s and the y command 65

per cent of

the m ar ket today , wher eas t he shar e of monoc hr ome handset s has shr unk to 35 per cent. T he se phones ar e ava ila ble at price s as lo w a s US $ 45 . Fur ther , camer a phone s cur rent l y occup y 15 per cent of

the

sa le s vol ume In the wake of the g rowing need for loca li sing pr oducts In the wak e of the g rowing need for loca li sing pr oducts compan ies ha ve e sta bl ished thei r m anuf acturing

faci lit ies i n India . T hi s ha s al so

helped them in reducing

cos ts and widen ing the

mar ket pr esence T he CD MS ca te gor y is g rowing ca ptur ed 25 per cent of

the m ar ket s v olu me i n 2005-

06 a s agains t 20 .5 per cent T he Indian handset per cent

fas ter than G SM .i t

in the pr evious year .

ma r ket g rew at the rate of 50

in 2006 -07, pr opel led by the sa le of

appr oxima te l y 44 mi lli on hand set s. G SM hand sets accounted

for appr oxima tel y thr ee -f our th of the

sa le s vol ume. T hi s g rowth can be attr ibuted to both new hand set sa le s and replace ment s al es .

T he top thr ee GS M mobi le vendor s ar e Nok ia, Sam sung, Son y Er ics son , LG, Sa msung lead the race in the CD MA ca te gor y. In the GS M ca te gor y, N ok ia do min ates the ma r ket wi th 72 .5 per cent

ma r ket sh ar e in t er ms of volume .

LG i s the m ar ket leader in the CD MA sp ace, command ing 60 per cent

sh ar e.

T he mobi le su bsc riber bas e i n ind ia i s lik el y to r eac h 500 mil lion 2010. T he Indian teleco m s ector is witne ss ing an im pr es si ve g rowth rate t ha t wi ll ena ble i t to sca le the s econd po si ti on

in the globa l

teleco mmunic ati on ma r ket b y 2010. In tandem

with

thi s, the g rowing mar ket is cr ea ting ample oppor tunit ie s for ever y pl ay er in the mar ket . T he teleco m s ubs cri ber ba se is expa nd ing dr ama tica ll y and the soa ring indu str y revenues ar e a clear pr oof of th is . T he ad dit ion s i n sub scr iber base in 2007 re gis ter ed a g rowth of appr oxi ma tel y 47 per cent over the pr eviou s y ear. T he CA GR witne ss ed b y the sub scr iber base for the period 2002-03 st ood

at 40.4 per cent. T he bur geoning

to 2006-07 sub scr iber

base has a ls o play ed i ts par t in in cr eas ing the teleden si ty i n the countr y. Teledens it y in Ind ia i s st ill lo w as compar ed t o s ome other

m ar ket s, whi ch

is an i nd ica tion of the e xten si ve s cope of bus ine ss oppor tunit y and g rowth. In 2006 -07, India had a teleden si ty of 18.31 per cent , as compar ed to the pr evi ous

year’ s f igur e of 12.80 per cent , sign ify ing a

g rowth of 43 per cent. From 2002 -03 to 2006-07 , the te lecom sub scr iber base and te leden si ty in i nd ia r e gi ster ed a C AGR a t 40.4 per cent and 37.6 per cent , respect iv el y.

In ter ne t subsc ri ber T he total number

of i nter net su bsc riber s i ncr esed at

a C AGR of appr oxima te l y 60 per cent

fr om 1997-98

t0 2006 -07 Inter net and

br oadband

ser vices h ave al so sho wn

im pr es si ve g rowth . T he e mer ge nce of pri va te pla yer s and adv ent of new tec hno logie s ha ve pr ovided a st rong impetu s to the indus tr y. W ith sign ificant

impr ovement s i n under gone s ignif icant

im pr ovements .

Bhar ti Tele ventur e l eads the Indian te lecom mar ket . T he company

had mor e than 40 m ill ion ce llu lar

sub scr iber s in Ma y 2007. De sp ite st if f compet it ion, Bhar ti has been s ucce ssfu l in reta ining it s po si ti on of le ader shi p. It has the lar ge st ma r ket sh ar e in t he GS M se gment

T he pri va te p la yer s occup y 75 per cent of the sub scr iber base , wher eas, the publ ic sec tor oper ator s (BS NL and MT NL) shar e the r emain ing p ie . CD MA se r vice s w er e intr oduced in India in 2002 . Reliance C ommun ica tion s do min ates the Indian CD MA mob ile ser vice s se gment .

T he Go ver nment- owne d ser vi ce pr ovider s, B SN L and MT NL, together

hold clo se to t wo-thir ds of the

in ter net s er vi ces ma r ket in Ind ia. Ho wever, the pri va te oper ator s ar e al so ca tching up f as t.

IN VEST IN INDI A INDIA – AN IDEAL INVESTMENT DESTIN ATION • Wor ld’ s l ar gest democr ac y • Indepen dent jud ici ar y • Ski lled and compet it iv e la bour for ce • Fifth -l ar gest tel ecom net wor k in the wor ld; second lar ge st among the emer ging econom ies after Ch ina • On an aver age, ar ound 6 mi lli on new user s ad ded per month , m aking India the w or ld’ s fas tes t g rowing wi rele ss ser vices m ar ket • Liber al F or eign In ves tment Re gime : FDI lim it incr ea sed fr om 49 per cent to 74 per cent ; the r ur al telecom equipment ma r ket a ls o open to l ar ge i nvestment s • Among the countrie s of fer ing the h ighes t r ates of retur n on i nvestment • T he lar ge unta pped potent ia l in India’ s r ur al mar ket s revealed by the 1.9 per cent te ledens it y in r ur al mar ket s as compar ed to the na tiona l l evel of 19.9 per cent

• Expected to become the s econd-l ar ges t te lecom mar ket by 2010 • T he Go ver nment is pr omoti ng te lecom manuf actur ing by pr ovid ing tax sops and es ta bli sh ing telecom spec ifi c Specia l Econom ic Z ones • Ful l y repa tria ble div idend inco me and ca pital in vested in te lecom equip ment m anuf acturing Si nce india’ s tel ecom s ector tr ail s tha t of other as ian economic s by ar ound 10

year s,g r owth is a

cer tain ty. India is cur rentl y the t hir d-lar ge st m obi le mar ket in the w or ld in ter ms of m obi le sub scr iber s. T he Indian teleco m m ar ket gener ated revenues of appr oxima te l y US$ 20 b il lion in 2006-07 . Fur ther , the indu str y is expected

to r e gis ter a CA GR of

appr oxima te l y 21 per cent

fr om 2006-07 t o 2009 -10

and scale US$ 43 b il lion by 2010. It is thu s not su r pri sing tha t se ver al f or eign companie s ar e maki ng lar ge in ves tment s in India . Not to be l eft behind , Ind ian ce ll ular oper ator s ha ve a ls o pr oposed in vest ments w or th US $ 14 .78 b il lion in 2007 - 08 to fuel thei r m as siv e in ves tment plan s. Ev en though the Indian teleco m i ndus tr y ha s cr os sed a subsc riber base of 225 mi lli on, i ts teleden si ty i s a mer e 19.9 per cent . T hu s, the Indian ma r ket pr ovide s t elecom

ser vice pr ovi der s wi th a lar ge unta ppe d potentia l, gi ven the countr y’s incr eas ing popula tion and its lo w teleden si ty. T he G over nment ha s plan s to r aise teleden si ty t o 40 -45 per

cent by 2010, ther eby

of fer ing g rea ter g rowth oppor tunit ie s for ser vi ce pr ovider s. T he fact th at the Ind ian te lecom ma r ket wi tnes se s an ad di tion of appr oxim atel y 6 mil lion sub scr iber s ever y m onth i s pr oo f of the countr y’ s im men se g rowth potent ial .

Gr owth Avenues T he Indian teleco m s ector of fers unpr ecedented oppor tunit ie s for for eign compan ies in v ar ious ar ea s, su ch a s 3G , vir tual pri va te netw or k, in ter na tional long di stance cal ls, v al ue ad ded s er vi ces , etc.

3G Se r vices – T he Ne w B uzz Wor d In the conduciv e business en india inc. aw

vir noment,

aits the r ollout of

3G

ser vices. T he Indian go ver nment plan s to auct ion the spect r um for 3G s er vice s by i nvit ing bid s fr om

domes tic , as w ell as for eign pla yer s and cr ea ting a competi ti ve en vi ronment t ha t of fer s bette r s er vice s to con sumer s. T her ef or e, the 3 G spect r um is among the m ajor inves tment oppor tuni tie s and g r owth dri ver s of the te lecom indu str y. • T he im men se potent ia l f or 3 G is reflected by the 30-40 per cent annua l g rowth in v al ue ad ded s er vice s • T he globa l r evenue f or 3 G is 60 per cent higher than th at of other ser vices • Ce llphone manuf actur er s ar e s tr ivi ng to de velop US $ 100 -pri ced 3G hand sets f or t he Ind ian ma r ket • India exp ect s to r ep lic ate it s 2G g rowth in 3 G ser vices . T he ind ian mar ket s is wel l poi sed to l ever age the ser vice of fer ing i n content c ate gor ies s uc h as spo r ts , game s and mu si c.

3G 

3G trend MT NL/ BS NL w on t he bid ding for Spect r um for 3G . O ther play er s st ill in the row.

 Launc hed in D elh i & Mu mbai .  Br and name

‘Jadoo”- M TNL

India exp ect s to r ep lic ate it s 2G g rowth in 3 G ser vices

In the pr esent conte xt, 3G te chnolog y is e xtr emel y rele vant f or Ind ia. • It of fer s voice ca pac ity th at i s four to f iv e ti me s higher than th at of 2G ser vice s. T her ef or e, it is an i dea l pl atf or m for lo w-cos t ce ll ular ser vice s • It can fulf il the need of fas t de veloping mob ile penetr ation in r ur al ar eas • It can meet the de mand for high-s peed d ata and contentri ch ser vices i n the urban land sca pe • It can pla y a v ita l role in augment ing the competi ti venes s of the countr y’ s lar ge BP O se gment • It can be a way forw ar d to ac hie ve t he Go ver nment’ s br oadban d object iv es. In ad dit ion, i t wi ll be a good so lut ion for educa tion , tele medic ine, etc . Ev en if 2 per cent

of the 180 mil lion cel lu lar

sub scr iber s adopt 3G tec hno log y as soon a s it i s laun ched, it i s lik el y t o cr ea te an in it ial s ubs cribe r base of 3 .6 m illi on. T he ma r ket i s s lated to ca ptur e mor e t han 11 .3 per cent of

al l mob ile subsc riber s b y

2010, i.e ., 21 .3 mi lli on peop le. T her ef or e, it w ould not be inco r rect to as su me th at 3G is po is ed to cr ea te the ne xt m obi le revolut ion i n India .

In the race to war d l owering the entr y bar rier for 3G ser vices , compan ies p lan to of fer bund led s er vi ces pac ka ges wi th s ub sci ber hand sets . W ith re ga r d to its bu si nes s potent ial , man y na ti onal pla yer s ha ve alr ead y comple ted 3G t ria ls. B SN L ha s char ted out a pl an for launc hi ng 3G s er vi ces in 250 ci tie s. P ri va te pla yer s, s uc h as B har ti , Rel iance and Idea, ar e als o r ead y to of fer th is ser vice in 10-20 maj or Ind ian c it ies . Ho wever, Air te l and M TNL ar e ver y kee n on le ver aging the ir fir st mo ver adv anta ge in th is f iel d.

Wor ldwide In ter oper abi li ty f or Micr owave Acce ss (W iMAX) – Bridge the Digital Divide W iMax has been one

of the mo st sign ificant

de velopment s in wi rele ss commun ica tion i n the recent pa st. S ince thi s mode of com munica tion pr ovides net wor k acces s in inacces si ble ter rains a t a s peed of

mor e t han 4 Mbps , it i s exp ected to be a

maj or f actor te lecom se r vice s in India , espec ial l y the w ir eles s ser vice s. T hus , it wi ll lead to the incr ea sed u se of te lecom ser vi ces , in ter net, v al ue ad de d s er vi ces and ente r pri se se r vice s.

Mor e than 600,000 vill ages in Ind ia do not h ave acces s to bas ic commun ica tion s er vi ces T her e wer e mor e t han 9.27 m ill ion inter net user s i n India at the end of Mar ch 2007 • T her e is a r equ ir ement for br oadba nd da ta connecti vi ty, espec ial l y t o the bus ine ss c las s • Ce llu lar tec hno log y is una ble to fu lfi l th is need due to co st and comp le xit y • W iMax wi ll acceler ate econom ic g rowth and a ss ist in pr oviding better educa tion, hea lthcar e and enter tai nment ser vices T he use of W iMax w ill be adv anta geo us f or Ind ia, gi ven i ts va st geog raphica l s ize. Ind ia i s t he se venth -l ar gest countr y i n the w or ld wi th a land ar ea of 1 .27 m illi on s quar e m ile s. T her ef or e, pr oviding comp lete br oadband connect

iv it y to thi s

va st land m as s se ems a unr eal is ti c ta sk . Si nce it in vol ves lay ing wi res and ca bles under the g round for thousand s of mil es , it is a ta sk tha t is enor mous wi th r e gar d to both co st and comp le xit y. Fur ther , thi s exer ci se is not to be lim ited to a one ti me ef for t, but neces sari l y requir es futur e mai ntenance and upg rada tion

A ma jor hur dle f or l as t- mi le acce ss thr ough t he exis ti ng infr ast r uctur e i s i ts qual it y, r elia bil ity and su ita bil it y for higher speed, comb ined w ith the cost of upg rad ing and m ain tain ing i t. T her ef or e, Ind ia need s an eas ier me chani sm to pr ovide i nter net connecti vi ty to i ts mas ses . W iMax see ms an economica ll y feas ib le option in th is scenar io since it doe s not r equ ir e signif icant resour ce r equ ir ement . In sta ll ing W iMax wi ll faci li ta te br oadband

acce ss ib il it y with in a radiu s of

25 k il ometr es . W iMax has se ver al potenti al ar eas of g rowth: • T he IT i ndu str y can expan d to other citi es as well • It can suppor t the na tion -wi de liter ac y pr og ram me wi th videoconf er encing pla ying a vital r ole i n the educa ti on of r ur al s tudent s • Voice o ver Inter net Pr otoco l ( VoIP) wil l mak e it pos si bl e to teleca st enter ta inment pr og ramme s in remote ar eas • Impr oved com munic ation cou ld inte g rate remote villa ge s wi th t he wor ld econom y • It can enhance la bour pr oducti vi ty t hr ough rapid commun ica tion, e .g. ea sy and fr equent in ter action s betw een pr oduce rs and su ppl ier s cou ld incr ease the demand f or Ind ian pr oduct s

It i s es ti ma ted tha t India wi ll ha ve 13 mi llion W iMax sub scr iber s by 2012 . Air ce l is the pioneer

in W iMax

tec hno log y in India . T he st ate -o wned pla yer, BS NL, ai ms to connect 74 ,000 v illa ge s thr ough W iMax . Un wi ll ing to be l eft behind , B har ti , Rel iance , and VS NL ha ve al ready acquir ed licen ses in t he 3.3G Hz range.

In fr ast r uc tur e Shari ng – O pt im is ing Co sts In the mi ds t of the te lecom boom , co mmon infr astr uctur e wi ll im pr ove co ver age and qual it y of cal ls and reduce cos ts . In or der to cur ta il the ir netw or k deplo ymen t co st s, many s er vi ce pr ovider s ar e cons ider ing infr astr uctur e sha ring . It i s a giant l ea p to war ds India’ s ambi tiou s tar get of 500 mi llion sub scr iber s by 2010 . Infr ast r uctur e s har ing pr omi se s se ver al advanta ge s: • • • • • •

Si gnif icant r educt ion i n in it ia l s et up cost s Incr eased en vi ronmental ae stheti cs Lo wer oper ating cos ts for ser vice pr ovider s Impr oved s er vi ce qua li ty Incr eased af for da bil it y for cus tomer s Faster rol l out of se r vice s i n r ur al and remote

ar eas

Si nce one to wer cost s ar ound US$ 77,500 , t he indu str y can re gi ster cons ider able sa ving s by sha ring infr astr uctur e. Pass ive Infr astr uctur e (f or sha ring) • Phy sica l site s and bu ild ing s • Shel ter s • Tower s • Power s uppl y and b atter y bac k-up . Act iv e Infr ast r uctur e (f or sh aring) • Antenna system s • Ca ble s and tr an sm is sion syste ms • Bac khau l (cor e infr astr uctur e wi th s wi tc he s and netw or king) A st ep f orw ar d in infr ast r uctur e sh aring is T RAI’ s pr oposa l t o i nc lude those r ur al and remote ar eas in it s pur vie w th at ar e not co ver ed by w ir eles s signal s wi th a ss istance fr om the U ni ver sal Ser vi ce Ob li ga tion Fund (U SOF) . T he r e gu la tor has als o recommended s

har ing both

infr astr uctur e though the

pas siv e and acti ve cur rent licens ing

ag reement does not a llo w shari ng of act iv e infr astr uctur e. Mana ged Ser vice – Outs our cing i n Telecom Nok ia of fer s d if fer ent se r vice s su ch a s remote car e, remote inte g ration , con sul ti ng, plann ing and opti mi sa ti on thr ough i ts mana ged ser vice di visi on.

Mana ged se r vice is another s e gment tha t is attr act ing te lecom compan ies . On account of

the

rapidl y g rowing sub scr iber base , ser vi ce pr ovider s find it d if ficul t to mana ge

the ir infr astr uctur e and

netw or k. In s uc h ca ses , the y co mplete l y or par tial l y outsour ce thei r i nfr ast r uctur e or net wor k mana gement oper ation s.

A case in po int is No kia whi ch i s m ana ging t he netw or k f or H utc his on E ssar Lim ited in 19 c ir cle s i n India . H aving succe ss ful l y ca pita li sed on the bus ine ss potent ial of mana ged se r vice , N ok ia i s alr ead y ear ning 30 per cent of

it s tota l revenue fr om

thi s se gment. T he compan y ha s al so sh ifted it s f ir st Globa l N et wor k Sol ution s Centr e (G NS C) to India . T he company

mana ge s 39 cel lu lar netw or ks in 30

countrie s. Its Ind ian centr e w ill act a s a global

hub

for other N ok ia oper ation centr es . Ad vanta ges of Mana ged Ser vi ce • Smooth mana gement of tec hno logica l comple xity • Oppor tunit y to str engthen cor e competenc y • Reduct ion in financia l out la y • Tou ching base with new pr oce ss es and tec hno logie s Another di mens ion of mana ged s er vice is te lecom , commun ica tion and netw or k m ana gement sol ution s for enter pri se s. Bhar ti Tele ventur es and IBM , together of fer teleco m and IT s ol ut ions in Ind ia. T he so lut ions and se r vice s por tf ol io compr is es of the remote moni toring of s er ver s, s ecuri ty oper ation s and net wor k oper ation s, pr ovi ding da ta centr e ser vices ( inc lud ing s er ver ho sti ng, se r ver mana gement and st or age mana gement), IT help desk ser vices and end-to -end connectiv ity and fulf il li ng al l tel ecom and commun ica tion requir ement s. .

V ir tua l P ri va te N et wor k (VP N) – Cr ea te Y our Community V ir tual P ri va te N et wor k is a pri va te d ata net wor k tha t pr ovides connect iv it y with in c losed us er g roups via publ ic teleco mmunic ati on i nfr ast r uctur e. It is sim ilar to lea si ng/o wning line s and yet gett ing exclus iv e acce ss . Shar ing of publ ic infr astr uctur e mak es it a l es s e xpens iv e opti on and it i s a ls o kn own as Clo sed User Gr oup (C UG ).

Compet it ion is lik el y to he at up in the VP N se gment as the Depar tment of Telecommun ica tions ha s rela xed the nor ms Depar tment of Telecommun ica tion s has rela xed the nor ms T his s er vi ce w as f ir st a va il ed i n India by cor por ate unit s tha t r equ ir ed VPN ser vice s to connect to thei r br anc h of fices . T he ser vice pr ovider s in th is case ar e BSO s, ILDO s VS AT oper ator s, IS Ps , etc . In the light of the de velop ing t elecom ma r ket, va riou s CU G ta rif f pl ans ha ve been launc hed in the voice te lephon y se gment, whic h p ri mari l y tar get g roup s comp ri si ng of a l ar ge fam il y, friend s or col lea gues . Ho wever, t hi s dif fer s slight l y fr om the orig ina l C UG concept a s it doe s not h ave rest rict iv e connecti vi ty w ith in the g roup . T he dec is ion about whether or not to i nc lude rest rict iv e connect iv it y

wi thin the pur view of CUG benefit s is cur rentl y under con sider ation . Ear li er, BS NL and M TNL cu stomer s w er e r equ ir ed to tak e Do T’ s per miss ion for acce ss ing lea se line s fr om pri va te oper ator s. Ho wever, th is r estr ict ion has no w been lif ted.

Value Ad ded Ser vice (V AS) – Higher V alue f or Buy er s and Seller

s

T he commod iti sation of va lue ad ded s er vi ces is pa ving the way for the exponentia l g rowth of va lue ad de d ser vi ces i n India . T he m ajor par t of the VAS revenue, 60 per cent, goe s i nto the s er vi ce pr ovider’ s account . T he a gg re ga te de veloper and cop yri ght o wner onl y r ece iv e 25 and 15 per cent, respect iv el y. T her ef or e, ser vice pr ovi der s ar e ver y keen on bu il ding thi s se gment a s it of fer s oppor tunit ie s to incr ease the A RP U. W ith mobi le sub scr iber s also incr eas ing l y a va il ing the se ser vices , oper ator s i n tur n ar e encour aged to del iv er qual it y ser vi ces T he V AS indus tr y was w or th US $ 632 mil lion in 2006 T he indu str y was es ti ma ted to swel l by 60 per cent in 2007 and become an U S$ 1,011 mi llion oppor tunit y. T hough v al ue ad ded s er vi ces ar e cu r rentl y f ocu si ng mor e on the enter tain ment s ecto r, s uc h as the Mumba i f il m indu str y and cr ic ket , t her e is s cope f or g rowth i n other avenues as w ell . T her ef or e, ther e is a po ss ib il ity of the s pot li ght s hi fting to uti lit y- based

ser vices s uc h as l oca tion tr ansact ions .

i nf or ma tion and mob il e

Rur al T elephony – the Rea l Ind ia

R eac hing O ut t o

T he r ur al ma r ket ho lds g rea t potentia l for tel ecom companie s. Rur al te lephon y w il l r equ ir e m ajor in vest ments i n the near futur e a s the G over nment is plann ing to incr ease r ur al te leden si ty fr om the cur rent l evel of 4-6 per cent. T his se gment wi ll boost the demand f or te lecom se r vice s, equ ipment , in ter net s er vi ces and other val ue ad ded ser vice s, ther eby of fer ing a g rea t ma r ket oppor tun it y for teleco m p la yer s. A sur ge is expected in r ur al teleden si ty w ith re ga r d to infr astr uctur e sha ring , US O and A DC .

Telecom pol ic ies ha ve r eiter ated the need for exp and ing te lecom co ver age t o i nc lude even inacce ss ib le and as yet unconn ected r ur al ar ea s. Fur ther , the G over nment’ s specia l mec han is ms , s uc h as Uni ver sa l Ser vice s Ob li ga tion (US O) fund and Acce ss D efic it Char ges (A DC), ar e making a se riou s ef for t to empo wer r ur al Ind ia w ith mob il e te lephon y. Shari ng of i nfr as tr uctur e is a c r ucia l in it ia ti ve to war ds accomp li sh ing t hi s goal .

Ind ia’ s C ompe ti ti ve Ad vanta ge – Rac ing Ahead An anal ysis of the Indian telecom indus tr y under the Por ter’ s D ia mond Mode l r evea ls t ha t India of fer s a competi ti ve advanta ge f or f ir ms oper ati ng i n the countr y.

India is the fas tes t g rowing fr ee mar ket democr ac y in the wor ld . It ha s a m atur e and dynami c pr iv ate sec tor , whic h accounts for 75 per cent of India’ s GD P, and a ma r ket wi th enor mous potent ial due to it s lar ge size and d iv er si ty. It is als o e xpected to ac hie ve the highe st g rowth rate a mong the BRI C countrie s (Br az il , R us sia , India and Ch ina) . Ind ia of fer s s ignif icant bus ines s oppor tun iti es to the ser vices , as well a s the m anuf acturing sector s. T his is because India of fer s benefits s uc h as cost advanta ge in pr oduct de velopment and bac k-of fice pr oces si ng and the l ar ge-s cal e a va ila bil ity of s ki lled Eng lis h-s peak ing pr of ess iona ls . T he m id dl e c la ss popula tion is als o a sign ificant ma r ket f or an y bus ine ss ent it y. AT Kear ne y r ank ed Ind ia a s the second -mo st attr act iv e democr ac y i n it s F DI confidence i nde x in 2006 . T he s ucce ss of M NC s i s a pr oof tha t India is an attr act iv e in ves tments des tin ation . India’ s huge dome sti c m ar ket and buo yant econom ic g rowth h ave alw ays a ttr acted for eign in ves tor s. Some of the key advanta ge s of in vest ing in India ar e out li ned be lo w.

Sta ble Econom ic Ou tl ook A decade of r ef or ms ha s opened the countr y to g rea te r compet it ion and sp ur red i ndus tri es to become m or e ef ficien t.

India is cur rentl y the f our th- lar ge st econom y on P PP bas is and is w ell po si tioned on a continuou sl y incr ea si ng g rowth cur ve. Ind ia’ s emer gence a s a lead ing de st ina tion for for eign in ves tment is a resu lt of pos it iv e i ndi ca tor s suc h as a sta ble 8 per cent annual g rowth, ris ing for eign e xchange reser ves of over US$ 212 bi ll ion , a boom ing ca pital m ar ket w ith the popu lar BSE sense x topping the maje st ic 15,000 mar k, and F or eign Dir ect In vest ment (F DI) of U S$ 15 bi ll ion. Go ldman Sac hs had ea r lier pr edicted tha t India wil l become the th ir d-l ar gest economy i n the w or ld . Ho wever, it ha s no w revi sed it s pr eviou s es ti ma te s and cla im s tha t by 2050, India wi ll even sur pa ss the US and become the second-l ar gest econom y after Ch ina. T he countr y’ s econom ic g rowth ha s become mor e a ttr act iv e due to the ris ing shar e of the ser vices s ector in the GDP.

Lar ge Ma r ket Poten ti al Ar ound 30 -40 m illi on peop le i n India jo in the m id dl e clas s e ver y year. T he countr y’ s upper mid dle clas s spend s 6 per cent of it s ear nings on teleco m ser vices . India is one of the l ar gest con sumer mar ket s in the wor ld . Due to r apid econom ic g rowth and r ise in di spo sa ble inco me, the spend ing po wer of consu mer s is incr ea si ng r apid l y. It has been for ecas ted tha t 15 year s do wn the line , Indians w il l

be a ppr oxim atel y four ti mes r ic her than they ar e today . As per thi s for eca st, Ind ians wi ll pur cha se fi ve t ime s mor e car s and con sume thr ee time s mor e cr ude oi l than the y do toda y.

Accor ding to t he 2001 cen sus , a bout 54 per cent of the countr y’ s total popu la tion w as be lo w 25 year s of age. By 2013, another 200 mi lli on peop le w ill be jo in ing the lea gue , r epr esenti ng an exponent ial g rowth i n the ‘ consu ming cla ss ’. India wi ll become a lar ge consumer of w or ld resour ce s - be i t na tur al or man- made, ther eby of fer ing numer ous oppor tuni tie s to m ar keter s ar ound the globe

A ppr oxim atel y 33 per cent of India’ s popu la tion wi ll be r esi ding in urban ar eas by 2026 , a s agains t 28 per cent i n 2001.

.

Go ver nmen t po li cies Faci li ta ting indus tr y g r owth T he Indian teleco mmunic ati on system is go ver ned b y the Ind ian T ele g raph A ct, 1885 (IT A 1885) and the Indian W ir el es s Act , 1933. T he Depar tment of Telecommun ica tion s (DoT) go ver ns the Indian teleco m i ndus tr y. D oT, in coor dina tion wi th i ts ar m, Telecom Com mi ssi on, l ooks after licenc ing, po li cy maki ng, and fr equenc y m ana gement. A pr ime mi ni ste ria l council , the Gr oup on T el ecom and IT (Go T-IT), handle s im por tant ad-hoc issue s if any . To st reaml ine pol ic y ref or ms and s af e guar d consu mer in ter est s, DoT es ta bli shed the Telecom Re gu la tor y Authorit y of Ind ia (T RAI) i n 1997. T he Telecom Di sputes Set tle ment and A ppel la te Tribuna l (T DSA T) was al so es ta bl is hed at the sa me ti me. A nother re gu la tor y body is the W ir eles s Pl anning Co mmi ssion (WP C) under the ae gi s of the Min istr y of Com munic ation s

Independent

Re gu la ti ons

Ti me and again , the Ind ian go ver nment ha s devi sed va riou s re gu la tions a imed at augmenti ng the indu str y competi ti venes s. W hil e s ome of the se re gu la tions ha ve been in st r umenta l in ending the licence r e gi me, other ha ve pa ved the way for indu str y g rowth

Pol ic y I mpac t At pr esen t, India is the thir d lar ge st der e gu la ted teleco m m ar ket i n the w or ld . T he Indian go ver nment has conti nuousl y la id st rong focus on the de velopment of wor ld-c las s tel ecom infr astr uctur e and the indu str y has w itne ss ed syn chr onous pol ic y change s 1999 onw ar ds . Buo yed by thi s, the entr y of numer ou s pr iva te pla yer s has tr ig ger ed an i mpr ovement i n the qua li ty of se r vice s; a reduction in the tar if f le vel acr os s al l se gment s and the de velopment of i nfr as tr uctur e. Cur rent l y, pri va te par tic ipa tion is per mitted in a ll se gment s of the teleco m i ndus tr y, inc luding in ter na tional lo ng dis tance, dome sti c l ong d is tance , bas ic cel lul ar, in ter net, radio pa ging , e tc

Key Tr ends i n the Indus tr y A Dynam ic Ma r ket Mer ge rs and Acqu is it ion s (M&A) T he mar ket is witne ss ing M&A act iv it ie s tha t ar e lead ing

to conso li da tions i n the i ndus tr y. T hi s tr end

has ass isted compan ies in e xpanding

thei r r eac h in

the Ind ian te lecom ma r ket to of fer better se r vice s to cus tomer s. M&A and P E T ran sact ions

Manuf ac tur ing Setup – Stay Close r to the Ma r ket W ith sta ble macr oeconomic

impetu s and numer ou s

other ad vanta ges , India has the potenti al to become the e lectr on ics manuf actur ing hub of the wor ld. Ex cited by the recor d-br eaking indu str y g rowth, in vestor s ha ve outla id US $ 1 .5 bi ll ion in the pa st tw o and a half year s in the Indian tel ecom s ector . India wi ll recei ve an ad dit ional US $ 2 bil lion in vest ment i n

the ne xt one year . W ith the w or ld now recogni si ng India’ s manuf acturi ng potent ial , the Indian telecom handset

manuf actur ing mar ket is lik el y touc h US $ 7

bi ll ion by 2010.

Advanta ge of Manuf acturing

Base in

India Ad vanta ge of Manuf actur ing Ba se i n India • Ca ter s better to the g rowing demand for handset s • Pr ovide s bet ter cu stom isa tion of pr oduct s to su it Indian needs • He lp s in fr equent launc h of new pr oduct s • Ena bleAcce ss to l ar ge number of h ighl y sk il led engineer s • Suppor ts w ider ma r ket co ver age • Incr eases e xpor t oppor tunit ie s – India as a manuf actur ing hub for the Asi a P acif ic s lo w- cos t manuf actu ring An apt example is N okia . T he compan y ha s alr ead y pr oduced 25 m ill ion hand sets in i ts Chenna i f ac il ity. It w ill pu mp i n an ad dit iona l U S$ 150 m ill ion to thi s se t u p. T he compan y e xpor ts ar ound 20 per cent of it s volume to South -eas t A sia , the M id dle Ea st and Afr ica. Loca l manuf actu ring al lo ws compan ies to avoid 4 per cent counter va il ing dutie s on i mpo r ted handset s, ther eby fur ther reducing

the co st .

Deta il ed inf or mati on r e gar ding a ll m anuf acturing in vest ments i s gi ven in t he ta ble abo ve.

Co mpet it iv e landsca peSuccess s tor ies Mobile Ser vices Pr ovider s

Bha r ti Air te l Bhar ti Ai r te l, a par t of Bhar ti Enter pri se , i s India’ s fir st and lar gest pri vate ser vi ce pr ovide r w ith a na tion-w ide oper ati onal pr esence . W hi le it was founded in 1995 as B har ti T ele ventur e Ltd. ( BTVL) , i n A pri l 2006, the company

changed it s name to Bhar ti

Ai r te l. Toda y, i t is one of the fas tes t g r owing te lecom companie s in the wor ld with mor e than 40 mi lli on sub scr iber s. T he company ha s st r uctur ed i ts bus ine ss i n thr ee se gments – mob il e s er vi ces br oadban d and te lephone ser vices . Bu si nes s Str ate gies

Bu si nes s Al liance s

ser vice s, and enter pr is e

In or der to impr ove cos t and qual it y, the compan y outsour ce s non -cor e act iv itie s thr ough bu si nes s al li ances T he se al li ances pr ovide acces s to new tec hno logie s and allo w the co mpany to adopt the bes t pr act ices of enhancing

cus tomer experience.

In

fact, A ir tel ha s e sta bli shed al li ances wi th Si ng Tel , Er ics son , Nok ia, S ie mens , No r tel , Cor ning, IB M.

Un ifi ed Br and Str ate gy Bhar ti has dec ided to use Air tel as the single br and name acr oss a ll it s ca te gor ies su ch as ce llu lar , fix ed and inter net ser vices . T he compan y bel ie ves th at an in te g rated appr oac h s uc h as O ne Ai r te l w ill he lp it in better ad dr es si ng cu stomer needs thr ough bundled

ser vi ce of fer ings . T his in it ia tiv e is s lated to

incr ea se A ir tel ’s ROI.

Bhar at Sanc ha r N igam Ltd BS NL , a sta te-o wned s er vice pr ovider in Ind ia, is the se venth -l ar gest te lecommun ica tion co mpany in the wor ld It of fer s a wi de r ange of su ch a s wi rel ine

ser vi ces i n India ,

C DM A m obi le, G SM mob il e,

in ter net, br oadband,

car ri er M PLS -VP N, VSA T, V oIP,

IN , etc. BS NL is the lar ge st oper ato r i n bas ic ser vi ces i n India wi th i ts cel lu lar ser vi ces he lping it to es ta bli sh its pr esence a s the l ar ges t oper ator in r ur al ar ea s.

Bu si nes s Str ate gies

Rur al Penetr ation BS NL is pl ay ing a l eader sh ip r ole in de velop ing t he teleco m i nfr ast r uctur e i n r ur al ar ea s. It has been succe ss ful in i ncr eas ing it s ce llu lar su bsc riber bas e by pioneering

it s s er vi ces in the r ur al t er rain . Its

ser vices co ver the whole of India , except De lh i and Mumba i, whic h ar e co ver ed b y MT NL, the other st ate -o wned pla yer.

Lo w Co st Str ate gy BS NL is a lo w- cost ser vice pr ovider of man y ser vices . T hi s st rate gy ha s helped BS NL in penetr ating the mar ket .

Reli ance C om munica ti ons Reliance C ommun ica tion s, pr eviou sl y kn own as Reliance Inf ocom , br ought a bout a di gita l revolut ion in the Indian teleco m i ndus tr y b y pr ovi ding India’ s va st popu la tion w ith af for da ble mean s of in for ma tion and com munic ation Reliance Inf ocom, wi th the aim of mak ing m obi le cal ls c hea per than pos tcar ds, bu il t a 60,000 -k ilo metr e-l ong fibr e optic bac kbone, cri sscr oss ing the entir e countr y. Reliance cur rent l y of fer s it s s er vice s in 340 to wns wi th i ts eight cir cle f ootprin ts ; it a ls o i ni ti ated mobi le da ta se r vice s thr ough it s R -wor ld mob ile

por tal . T his por tal le ver ages t he da ta ca pa bil it y of the C DM A 1 X net wor k.

Lar ge Di str ibution Netw or k Reliance ha s cr ea ted t he lar gest cha in of dig ita l enter tai nment and commun ica tion st or es – Reliance Web W or ld . T he compan y i s al so expanding

it s r eac h

a gg ress ivel y thr ough reta il out let s, s al es a gent s and electr on ic r echar ge outlet s.

Handse t Manuf ac tur er s Nokia As in the rest of the wor ld, hand set m ajor Nokia is al so the m ar ket leader in the Indian mob ile hand set se gment . Des pi te tough

competi tion , Nok ia has been

succe ss ful in r eta ini ng i ts mar ket leader ship wi th mor e t han 50 per cent

shar e. T he company

ha s a ls o

figur ed in the top-f iv e Indian br ands in the Br and Equi ty s ur vey thi s year . Nok ia’ s m anuf acturing

hub

in Chenna i, Ind ia, pr oduces handset s.

Ra pid Inno va tion T he company

fr equentl y l aunc he s new hand sets i n

the m ar ket . It s focus on de velop ing new

and e xcit ing

fea tur es thr ough conti nuous inno va tion is pri mar il y dri ven b y it s goa l t o ac hie ve mar ket shar e supr emac y. N okia ha s i ntr oduced phone

s a t al l price

point s, whic h inc lude entr y le vel phones for the mas ses , mi d- mar ket colour and ca mer a phones , high end phone s, etc .

Mas s Cu sto mi sa tion – Made for Indian Model s Nok ia often cu stom is es its handset s acco r ding to Indian requir ement s. It ha s de veloped v ar ious s tur dy and af for dable handse ts suc h as Nokia 1100 and Nok ia 1108 for the sub conti nental ter rain. No kia 1100 became the l ar gest lar gest se lli ng m odel in the Indian GS M hand set mar ket , attr act ing te ch s avvy young urban ite s and the cor por ate c las s

Mo tor ola Motor ola is a mong the lead ing hand set br ands of India . the compan y function s i n thr ee bu si nes s se gment s mobi le de vices , net wor ks and enter pr is e, and connected

home so lut ions . It has also esta bl is hed

six resear ch and de velopment A ppr oxim atel y, 40 per cent

centr es in Ind ia.

of the sof tw ar e used in

Motor ola phones wor ld wide is de signed in Ind ia.

Compet it iv e Pr ic ing Motor ola aim s at ‘Connect ing the U nconnected’. company , on account has adopted penetr

T he

of it s m ar ket penetr ation plan ,

ation pric ing str ate gie s. Motor ola

has concentr ated m or e on the l ower-t ier pr oducts wi th i ts entr y l evel phone s pr iced as lo w as U S$ 40 . T his s e gment actuall y accounts

for mo st of the

company’ s ma r ket g rowth .

LG M obi le LG f or ay ed into t he Ind ian hand set m ar ket b y par tneri ng with Reliance Inf oco m i n the C DM A se gment . LG i s the b ig gest pr oducer of

CD MA

handset s in the wor ld . La te r, the Kor ean maj or, LG, , al so laun ched GSM handset s in the Indian ma r ket.

Bu si nes s Str ate gies

Mar ket Penetr ation T he company

want s to become the m ar ket leader in

the G SM hand set s e gment in India . T her ef or e, i t is focus sing on the entr y- and m id -le vel ma r ket se gment s. L G i s of fer ing hand sets a t 30-50 per cent lo wer pr ice s than tho se of Sam sung and No kia .

Ra pid Inno va tion T he company

is p lanning

fr equent hand set l aunc he s

in India . In 2007 , i t wi ll of fer 21 new hand sets of whic h 7 wi ll be 3 G tec hno log y- ena bled one s.

Gs m (g lobal sy stem for mob il e commun ica tion ) • The most popular standard for mobile phones in the world. • Its promoter, the gsm association, estimates that 82% of the global mobile market uses this standard. • Gsm is used by over 2 billion people across more than 212 countries •

Is considered a second generation (2g) mobile phone system.

GSM •A ugus t, 1995 : GS M enter ed India . •H isto ric fir st cel l phone-ca ll w as m ade by Mobi le Net- jo int ventur e betw een Telstr a (A ustr al ia) & B .K . Mod ig rou p. •Mob ile revolution be gan in Kolka ta. •H andset co sts -40,000 & Ca ll tarif f-17 r s/m in.

CDMA (code divi sion mu lt ip le access ) •

One of the basic concepts in data com munic ation is the i dea of al lo wing se ver al tr ans mi tter s to send in for ma tion sim ul taneousl y over a s ing le commun ica tion c hannel .

• T his a llo ws se ver al user s t o s har e a band width of fr equencies . • T his concept •

is cal led mu lti ple xing.

CD MA emp lo ys s pr ead -spect r um tec hno log y and a s peci al coding scheme (w her e eac h tr ans mi tter i s as signed a

code) to al lo w mul tip le

user s to be mu lti ple xed over the s ame phy sica l channel

Tata Tele ser vi ces was set up in 1996 and is under the Tata Group, which is a group worth around US$ 22 billion and has more than 96 companies. The company Tata Teleservices Limited has been formed with an investment of around US$ 7.5 billion. The company Tata Teleservices has helped the Tata Group to have a strong presence in the telecom sector in India and the chairman of the company is Mr. Ratan N. Tata. The company was the 1st company in the country to launch the CDMA mobile services within the state of Andhra Pradesh. Tata Teleservices Limited offers various kinds of telephone services to its customers such as wireless desktop phones, wire line services, mobile services, and public booth telephony. Further the company also offers other services like value added services such as roaming, group calling, voice portal, data cards, Internet post paid services, 3- way conferencing, enterprise services, USB modem, Wi- Fi Internet, and calling card services. Tata Teleservices Company provides certain other products to its customers like new data and voice services which include picture messaging, ring tones, polyphonic, and interactive applications. The company pioneered the CDMA technology in the country and has reliable infrastructure that ensures the quality services received by the customers. The Company Tata Teleservices Limited has provided only high quality services to its customers and this has helped

the company to become a market leader in the telephony fixed wireless market. The total subscriber base of Tata Teleservices is more than 3.8 million. The company Tata Teleservices Limited in order to expand its domain, has acquired the Company Hughes Telecoms (India) Limited in December 2002. Further the company has made a total investment of around Rs.19, 924 crore in making an all India presence in around 20 telecom circle. The major telecom circles where the Company Tata Teleservices has its presence are Gujarat, West Bengal, Uttar Pradesh, Himachal Pradesh, Rajasthan, Haryana, Punjab, Madhya Pradesh, and Tamil Nadu. The company provides employment to more than 6000 people and as the company is expanding it is going to create over 20,000 jobs in the near future. Tata Teleservices Limited launched the scheme of non-stop mobile that allows a subscriber to receive incoming calls free of cost. The company has become the biggest telecom branded retail chain and is also the 1st telecom service provider in India that offers postpaid mobile connections on line. The company Tata Teleservices Limited in order to expand its operations has partnered with Ericsson, ECI Telecom, Lucent, and Motorola so that it can deploy reliable network that is technologically very advanced. The company has become a leading company in the telecom sector in India for the quality of its services that it provides to its

customers. And as the company Tata Teleservices Limited is expanding and upgrading its technology it sure will help the company to provide even better services to its customers. Tata Teleservices must continue to provide the best quality of services to its customers for this will lead to customer satisfaction and loyalty and this in turn will help the company to grow and prosper.

BPL Mob il e C om munic ations Li mi ted

BPL M obi le Com munica tion s Li mi ted popularly known as BPL Mobile is an India-based telecommunication service providing company. BPL Mobile Communications Limited is an offshoot of the legendary business conglomerate ESSAR group. BPL Mobile Communications Limited was established in the year 1995 and it is presently operating in only in the city of Mumbai. BPL Mobile Communications Limited has revolutionized the Indian mobile telecommunication industry. Within a short span of time the subscriber base of BPL Mobile Communications Limited has reached the 1 million mark. This gigantic mobile telecommunication company of India has grown in leaps and bounds and it offers seamless service to its customers spread across Mumbai. Further, BPL Mobile has gained tremendous popularity due to its competitive pricing of tariffs. BPL Mobile offers high-class mobile service to its wide pool of Mumbai subscribers. Further, it ranks very high on parameters like, customer satisfaction, billing performance, voice quality etc and was thus ranked first in the category of Global System for Mobile Communications (GSM) and Code Division Multiple Access (CDMA) of mobile service providers, operating in Mumbai. Superior coverage and optimum sound clarity are the strengths of BPL Mobile. BPL Mobile Communications Limited provides its customers with world class mobile services, through the use of state-of-the-art technology and network and this includes use of unique network design, the Qualnet, Camel Phase 2 Intelligent Network (IN) platform and GPRS facilitating ultra modern services like Multimedia Messaging Services (MMS), mobile browsing and Java based mobile phone games. Mr S.

WORLDWIDE INTEROPERABILITY FOR MICROWAVE ACCESS “Wireless at maximum”  WiMAX can provide broadband wireless access (BWA) up to 30 miles (50 km).  It is estimated that India will have 19 million WiMAX subscribers by 2012 (TRAI).  Aircel is the pioneer in WiMAX technology in India.  The state-owned player, BSNL, aims to connect 74,000 villages through WiMAX.  Bharti, Reliance and VSNL(now TATA)have acquired licenses in the 3.3GHz range to utilise the opportunities. Tata Teleservices Ltd has announced a major WiMAX deployment, including a Rs.1,968.26 crore ($500 million) investment over the next five years. The new network will cover more than 130 cities, intensifying competition across India

Emer ging tr end “4g  One standard known as IEEE 802.16e (belonging to the Mobile WiMax family) is now commercially available and is a precursor to 4G.  Comprehensive IP SOLUTION on “Anytime Anywhere” basis.  BSNL has license in India. 

To mak e India a leader i n teleco m te chnolog y TeNet cr ea ted Ce W iT ( Centr e of E xcel lence in W ir eles s Technolog y) to do r esear ch in 4G.

VENTURE OUTSIDE INDIA • BHARTI AIRTEL in SRI LANKA has 2G 3G service since 2006. • TATA communications has a stake of 53% with NEOTEL S. Africa. • MTNL is working with Nepal communications. • “ business outside land serves in sharing risk and increasing market asset”