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 Unified License
Operators
Fixed Line Operators
Regulator
Telecom National Long Distance
Regulatory Operators CDMA
Authority of India International Long
1800M
Judiciary Distance Operators
hz
Telecom Dispute
Wireless Operators
Settlement
Appellate GSM
Tribunal
FDI in telecom recently revised to 74%.
900
Government gets 15% of revenues from Unified Licensing
 Market Structure
 Divided into 22
circles Jammu &
Kashmir

• 4 metros
Himachal
Pradesh
Punjab
North Eastern

• 19 circles
Uttar States
Haryana Pradesh
W

o Further divided into Rajasthan

DELHI
Uttar Pradesh E

A, B and C category Bihar

based on economic Gujarat Madhya

Pradesh
West
Bengal

parameters and
revenue potential Maharashtra
Orissa KOLKATA

MUMBAI

 Each circle has a Andhra

Pradesh

licenses Karnataka
METRO Circles

• Four operators per CHENNAI

A Circles

circle are allowed Kerala

Tamil Nadu
B Circles

• Licenses are C Circles

saleable 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
 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 19.7
20

18
• Urban Telephony surpasses targets
16 14.3
• Rural left far behind
Teledensity (%)

14 12.2
12 10.4
10
8.2
8 7.0
6.9
5.8
4.8 5.1
6 4.3
4
2.9 3.6
4 2.3
1.6 1.9 1.5
1.3 1.2 1.7
2 0.7 0.9
0.3 0.3 0.4 0.5
0
1996 1997 1998 1999 2000 2001 2002 2003 2004

Rural Urban Total

 Rural India  As per DoT
statistics 500,000
 India has a 700 villages have
million people living telephone access.
in 638,000 villages • However,
• Per-capita income of teledensity
$ 0.40 per day) patterns reveal
the low
120
102.1 penetration of
135 million rural
Number of HH in millions

communication
100

80 households
60 services
40

20
17
10
3.9 1.9 1 0.3 0.3
The question is :
0
60 180 260 360 520 840 1300 2240
Is connectivity
HH Incom e in $ per m onth relevant to the
rural populace of
India?
 REFERENCES
 http://en.wikipedia.org/wiki/
 http://www.pluggd.in/wp-content/uploads/2007/09/telecom-
market-share.PNG
 http://newshopper.sulekha.com/postnewslink.aspx
 http://www.naukrihub.com/india/telecom/recent-
developments/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
HAVE A NICE DAY