1. ABOUT THE INDUSTRY
The Indian telecom industry consists of incumbent players such as BSNL, MTNL, andVSNL; and private operators licensed for various services since the mid-1990s. Themajor players in the various sub-segments are detailed below:According to TRAI, the overall revenue for the telecom sector for all the operators for FY2003 was estimated at Rs. 456,722 million or Rs. 456.72 billion. With revenues of Rs. 311 billion, BSNL and MTNL together accounted for almost 68% of the totalrevenues. Among the private operators, Bharti group had a turnover of Rs. 31.72 billion, accounting for around 7% of total sector revenue. VSNL had a turnover of Rs.45.38 billion, representing 10% of total sector revenues.
Fixed/Basic Network Services
Although nearly a decade has elapsed since India laid out a regulatory framework for the liberalization of basic telecom services, competition in fixed local loop telephoneservices, so far, extends to only a fraction of the total population. Competitive entryhas focused principally on services for urban customers in relatively affluent areas.Even the pattern of switching capacity (which indicates the capacity in a circle)indicates that around 57% of the switching capacity of the private operators at end-September 2003 was in metros and Category A circles. Further, an estimated 68% of the fixed network telephone connections of private operators at end-March 2004 werein metros and Category A circles.In terms of subscriber connections, private operators had a market share of around5.5% at end-FY2004, as compared with 2.3% at end-FY2003, and 1.5% at end-FY2002. While private operators accounted for 25% of subscriptions in urban areas atend-March 2004 (17% at end-September 2003), their market share in rural areas wasnegligible at 0.2% (0.2% at end-September 2003). Because subscriber density andincome (and ability to pay) are low, providing access in rural areas is unprofitable because of the higher costs and lower revenues. The cost of providing telephoneservice in rural areas is much higher than in urban or suburban areas. The demand for profitable long distance services and value -added fax and Internet services isinsignificant in rural areas. Above -cost long distance services are often bundled withcheaper local services in urban areas.