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Industry inputs for National Telecom Policy 2011
Enabling the next wave of telecom growth in India
The Federation of Indian Chambers of Commerce and Industry (FICCI) and Ernst & Young have collaborated on this deep review of the telecoms sector in India. The National Telecom Policy 1999 (NTP 1999) has served the sector in India for well over a decade, in which time we have witnessed significant changes in the socioeconomic environment, technological advancements and business dynamics. The telecom industry in India is ready to take the next leap forward with new developments such as launch of third generation (3G) services by private operators, 3G and broadband wireless access (BWA) auctions, launch of mobile number portability (MNP), and the emergence of mobile commerce (m-commerce). In the future, rural and semi-rural markets are expected to drive growth, especially in the wireless segment. The Ministry of Communications & Information Technology has released the 100-day agenda for the Indian telecom sector, and announced formulation of a new and comprehensive National Telecom Policy 2011 (NTP’11). Therefore, the time is ripe for a comprehensive review to build a forward looking and transparent policy that will be the backbone to achieve the ”India telecom vision 2020.” This report focuses on specific areas where the Government of India (GoI) needs to intervene and move the policy to the next generation of reforms. It aims to capture developments witnessed in the telecom sector in the last decade and analyze historical performance to estimate growth over the next ten years. It includes inputs from stakeholders in the telecom industry, encompassing operators, telecom equipment manufacturers, infrastructure providers, industry associations and industry practitioners. We would like to extend our gratitude to the industry leaders who participated in the report and helped us to present the industry’s perspective.
Amit Mitra Secretary General FICCI, India
Virat Bhatia Chairman FICCI Committee on Communications and Digital Economy
Prashant Singhal Telecom Industry Leader Ernst & Young, India
Enabling the next wave of telecom growth in India
After embracing a closed. resulted in an improved business climate and in an increase in investment across the country. promoting India’s emergence as a major manufacturing and export base of telecom equipment and universal availability of basic telecom services to all villages. centralized economic model for four decades. Connecting such a vibrant economy of more than a billion people together and with the rest of the globe is an extraordinary achievement in terms of a nation’s socioeconomic development. India shifted to a market-oriented model. the sector requires much attention and a robust policy framework to address the challenges that exist in the present scenario as well as help to capture the opportunities that the sector holds for the country. Government.” the provision of leading class services at reasonable prices. Liberalization initiatives. iv Enabling the next wave of telecom growth in India . The announcement of the National Telecom Policy (NTP) in 1994 marked the first steps toward the new model. India has faced challenges in liberalizing its telecom industry from a monopoly to a decentralized competitive model. boosting the industrial growth over the past decade.Executive summary The liberalization of the domestic economy and increasing integration with the global economy has positioned India as the second fastest expanding economy of the world. especially in the 1990s. which had played a key role in shaping the sector. Indian telecom is an economic miracle in the making. It aimed at making available “telephone on demand. there are more than 700 million subscribers in India. issued the NTP 1999. India has reached the goals set in NTP 1999 far ahead of time. Presently. and the overall teledensity has reached more than 60%. recognizing the need to overhaul its policy framework. In 1999. With plenty of strong potential value remaining. with the market evolving into the world’s second largest in terms of subscribers.
The present challenges include the spectrum and licensing framework. broadband. reasons for refusal to renew and appeals to regulatory decisions Enabling the next wave of telecom growth in India v . renewal procedures. equipment manufacturing. The major recommendations for the policy framework for the Indian telecom industry are as follows: Focus areas Licensing Recommendations Need to have a single universal license for all telecom services There should be a uniform fee structure across all telecom circles Pure internet service providers should continue to be allowed without payment of any license fees Provide a clear license renewal regime that includes legislation. m-commerce and convergence. The opportunities around which the policy initiatives need to be designed include financial inclusion. mergers and acquisitions scenario. taxation and aspects of foreign direct investment (FDI). infrastructure segment. Universal Service Obligation Fund (USOF) structure.
Focus areas Spectrum Recommendations Need to re-farm available spectrum Spectrum up to contracted limit should be ensured as initial spectrum to the existing players Spectrum usage charge should be identified upfront at the time of spectrum allocation USOF The USOF should be utilized for the following in rural and remote areas: • Provision of public telecom and information services • Provision of household telephones • Creation of infrastructure for provision of mobile services • Provision of broadband connectivity to villages in a phased manner • Creation of general infrastructure for development of telecommunication facilities • Induction of new technological developments in the telecom sector Subsidies should be distributed through transparent marketoriented allocation strategy Broadband Backhaul connectivity and optic fiber communication (OFC) should be provided to all telecom towers. base station controllers (BSCs) and base transceiver stations (BTS) from nearest block headquarters Make available more spectrum for wireless broadband Make broadband connectivity mandatory for all buildings to get completion certificate on the lines of water and power connectivity Create content and applications in regional languages to promote rural broadband Mergers and acquisition Merger should not result in less than six operators in a circle The share of a merged entity should not be greater than 30% in terms of sub-base or adjusted gross revenue (AGR) vi Enabling the next wave of telecom growth in India .
ease in state-wise compliances Equipment manufacturing There is a need to set up hardware manufacturing cluster parks (HMCP) across the country and upgrade localized infrastructure to support large volume contract manufacturing R&D should be the key focus Need to lay down a National Telecom Critical Infrastructure Policy on the lines of NTP 1999 elaborating uniform procedures for land acquisition. a uniform system of taxation and subsidies and other incentives designed to create an environment that encourages the build-out of the national telecom infrastructure and the increased participation of all stakeholders There is a need for a national right of way (ROW) policy for the rollout of backhaul network Telecom infrastructure Enterprise data Upgrading encryption levels in international long distance (ILD) and national long distance (NLD) licenses to allow strong encryption of up to 256 bits to protect confidential information in accordance with international best practices Telecom Regulatory Authority of India (TRAI) and Department of Telecommunications (DOT) should eliminate the cumulative assessment of licensing fees on the purchase of inputs. However. Enabling the next wave of telecom growth in India vii . there is no unique. with all services and goods being taxed at a standard rate Special consideration needs to be given on certain areas in the backdrop of the peculiarities of the telecom sector such as “place of supply rules” i.e.Focus areas Taxation Recommendations The upcoming goods and service tax (GST) regime should aim to simplify the tax structure for the industry. security concerns and consumer affordability. convergence.. which imposes double taxation on ILD and NLD license holders FDI Given the importance of foreign investment. m-commerce. the state where GST will be paid for different kind of telecom services. the policy should consider raising the upper limit on foreign investment to encourage more foreign players to invest in the capex-intensive telecom sector Policies should also cover areas like financial inclusion. perfect model accepted globally which can be implemented in India and leading practices across the globe should be adopted for transforming the Indian telecom sector into the greatest possible success story.
These interviews provided a firsthand perspective on the opportunities and challenges faced by various stakeholders in the sector. These findings have been combined with secondary research.Methodology In 2010. licensing framework. which is used by the Government of India (GoI) as a decisionmaking guide for the Indian telecom sector. The research program studies in detail all the key segments of the telecom landscape — wireless. viii . Ernst & Young conducted a research study on the Indian telecom sector in collaboration with one of the leading business organizations in India — FICCI. It examines the NTP 1999. outlining the phenomenal growth witnessed by the sector and recommendations for the existing policy framework that will enable the next level of growth. FDI. As a part of the research program. consumer affordability and the role of the regulator. infrastructure. It identifies and evaluates the critical success factors that are applicable across all telecom segments such as spectrum. security. ILD. The study gives a detailed perspective on the telecom sector in India. USOF. wireline. infrastructure and convergence. analysis and insights provided by Ernst & Young. NLD. This report reflects the key conclusions of that wider study. equipment manufacturing. broadband. Ernst & Young conducted comprehensive interviews with senior executives in the Indian telecom sector. value-added services (VAS).
HS Bedi. External Affairs. Parag Kar Senior Director — Government Affairs Qualcomm India Pvt. Mathews Director General Cellular Operators Association of India Rajat Mukarji Chief Corporate Affairs Officer Idea Cellular Ltd. ix . Anil Sardana Managing Director Tata Teleservices Ltd. Sanjay Kapoor Chief Executive Officer Bharti Airtel (India & South Asia) Mahesh Uppal Director Com First (India) Pvt. Ltd. India Ericsson India Vsevolod Rozanov President and Chief Executive Officer Sistema Shyam TeleServices Ltd. Col. Ltd.Syed Safawi President Reliance Communications Ltd. Brijendra K Syngal Senior Principal Dua Consulting Pvt. South Asia AT&T Communication Services India Pvt. Lt. Ltd. Ltd. Corporate Affairs & Business Development. B S Shantharaju Chief Executive Officer Indus Towers Ltd. VSM Chairman and Managing Director Tulip Telecom Ltd. Ashok Sharma National Head — Regulatory Aircel Ltd. Mahendra Nahata Managing Director Himachal Futuristic Communication Shamik Das Chief Executive Officer S Tel Pvt. Rajiv Mehrotra Chief Executive Officer Vihaan Networks Ltd. List of participants Virat Bhatia President. SC Khanna Secretary General Association of Unified Telecom Service Providers of India Himanshu Kapania Deputy Managing Director Idea Cellular CS Rao Head of Corporate Affairs and Regulatory Division Reliance Communications Naresh Ajwani Chief Regulatory & Corporate Affairs Viom Networks Ltd. Ltd. P Balaji Head of Communications. TV Ramachandran Resident Director Vodafone Essar Rajan S.
and its stand on policy issues is sought after by think tanks. non-governmental society dedicated to the advancement of modern communication through the establishment of a world-class cellular infrastructure. who share a common interest in the development of cellular mobile telephony. Home to 400 professionals. FICCI is active in 39 sectors of the economy. nonprofit. policy-makers. .Industry associations Federation of Indian Chambers of Commerce and Industry (FICCI): established in 1927. COAI has emerged as the official voice for the Indian GSM industry and interacts directly with ministries. Cellular Operators Association of India (COAI): established in 1995. COAI is a registered. AUSPI is the representative industry body of unified access service licensees providing CDMA and GSM mobile services. The organizations’ publications are widely read for their in-depth research and policy prescriptions. fixed–line services and VAS across the country. coverage and teledensity in India. regulators. AUSPI is a registered society that works as a non-profit organization with the aim of delivering improved access. Association of Unified Telecom Service Providers of India (AUSPI): constituted in 1997. Over the years. It provides a forum for discussion and exchange of the ideas between these bodies and service providers. financial institutions and technical bodies. It plays a leading role in policy debates that are at the forefront of Indian social. governments and academia. FICCI is one of the largest and oldest apex business organizations in India. it has joint business councils with 79 countries across the world. economic and political change.
foreign agencies. It plays an active role in the dissemination and exchange of information among the GoI. creating platforms for its members. The association’s activities include promoting the digital economy. Indian missions abroad and leading national and international trade associations. business process outsourcing and multinational company segments. TEMA is an industry association for telecom equipment manufacturers as well as component and cable manufacturers. information technology (IT). embassies. The association was formed by several leading non-integrated long-distance carriers that provide service to the enterprise market segment. financial services. which includes IT-enabled services. tele-trading. functioning as an association of companies operating in areas such as domestic and international call centers. It has helped in shaping telecom policies for ISPs and internet entrepreneurs to grow their services in a supportive and enabling environment. conducting research. OSPAI is the representative industry body. It acts as an interface with government bodies for the growth of all services covered under the registration of other service providers. trade missions. tele-education. billing services and network operating centers. IAMAI is an industry body representing the interests of online and mobile VAS industry. Internet & Mobile Association of India (IAMAI): founded in January 2004. with the mission of promoting internet for the benefit of all. tele-medicine. Telecom Equipment Manufacturers Association (TEMA): established in 1990. medical transcription. business process outsourcing. ACTO is an industry body that focuses on policies that enhance enterprise telecommunications in India. Internet Service Providers Association of India (ISPAI): founded in 1998. knowledge process outsourcing. Other Service Providers Association of India (OSPAI): established in 2008. evaluating and recommending industry standards and practices. . ISPAI acts as a collective voice of the ISP community. communicating on behalf of the industry and helping to create a favorable business environment for the industry.Association of Competitive Telecom Operators (ACTO): established in 2008.
3. Overview of the Indian telecom industry 2. Importance of telecom 3 3 5 2.3.11. Achievements and setbacks of NTP 1999 3. Outlook 9 10 12 14 15 16 17 19 21 22 27 28 3.8. Wireline 2.1.10. Wireless 2.3.Contents 1.2 Licensing Spectrum 45 46 47 48 48 50 1 Enabling the next wave of telecom growth in India .1. History of the Indian telecom industry 2. Key achievements of NTP 1999 3.2.4. Indian telecom sector 1.1.7. Key enablers under existing scenario 4. Internet and broadband subscribers 2. Infrastructure 2.2.5. Key challenges of NTP 1999 31 34 41 4 Key enablers 4.2. Regulatory framework 2. Connected Indian: telecom mission 2020 4.3. National long distance and international long distance 2. Evolution of the telecom sector in India 2.1. Connected India: telecom vision 2020 4. Value-added services 2.2. Telecom equipment manufacturing in India 2. Overview 1.9.1 4.6.
3.14 Security 4.4. Global practices Conclusion Glossary 75 87 89 Enabling the next wave of telecom growth in India 2 . Key enablers for potential opportunities 220.127.116.11.3.3.2 4.3.1 18.104.22.168 22.214.171.124 Equipment manufacturing 4.3.13 Convergence 4.3.4 4.9 Universal Service Obligation Fund (USOF) Broadband Mergers and acquisition Taxation Foreign direct investment (FDI) Consumer affordability and rural penetration Human resource 53 55 57 58 60 61 63 64 66 69 70 71 72 72 73 73 73 74 74 74 4.7 126.96.36.199 4.3 4.3 4.4.6 4.11 Telecom infrastructure 4.5 188.8.131.52 m-commerce M2M communication Mobile money M-health M-education Financial inclusion MNREGA and UID 5.4 4.3.12 Enterprise data 4.5 4.3.
the telecom sector has been the major contributor to India’s growth.6%4 of total GDP in FY10.12 April 2004. http://www.6%. India 2012: telecom growth continues. 13 October 2010.eximbankindia. India’s GDP has been rising by more than 7%1 annually in the past decade.5% and 14. Overview Over the past two decades.” The Financial Express. In less than a decade. accessed 10 October 2010. compared with 3. DBS Group Research.1. intense competition among multiple operators.com/news/redefining-the-hindu-rate-ofgrowth/104268/0. The Indian economy maintained a growth rate of more than 5% even during the global recession.5%2 annually from 1950 to 1980.financialexpress. November 2008. 3 Enabling the next wave of telecom growth in India .” Export-Import Bank of India website. to GDP. respectively. 26 August 2010. accounting for nearly 3. India has grown rapidly from a “command and control” economy to a market-based economy. Within the services sector. while the industrial sector and agriculture sector contributed 28. low-priced handsets. “Redefining The Hindu Rate Of Growth. The process of liberalization started in the mid-1980s and gathered momentum in the 1990s.1 Indian telecom sector 1. with the further opening of the economy and the creation of regulatory institutions to march toward fully competitive markets.9%3 of GDP. India’s service sector was estimated to account for 56. Ernst & Young report. http://www. As a result of liberalization.com/ind-eco. The easy access to mobile services is the outcome of positive regulatory changes. In FY10 (financial year ended 31 March 2010). “India’s Macroeconomic Indicators. 1 2 3 4 India: Rising growth potential. page 8. accessed 19 October 2010. the mobile phone has been transformed from being a luxury that few could own into one of the essentials of an average Indian’s existence.pdf. India is now closely integrated with the global economy and is considered one of the pillars of global economic growth. low tariffs and significant investments in telecom infrastructure and networks.
e-Charge Economies of scale Low acquisition cost (no handset subsidy) Source: “How can carriers make 40% EBIDTA margin at 2 cents/min tariff?.Indian telecom model Outsourcing non-core activities like IT.com/2009/02/carriers-ebidta/.” http://www.telecomcircle. accessed 25 October 2010. Enabling the next wave of telecom growth in India 4 . network Infrastructure sharing Paradigm shift from average revenue per user (ARPU) to revenue per min Focus on prepaid Low cost distribution.
It is one of the main architects of the accelerated growth and progress of different segments of the economy.2% faster. The advantages of the advent of telecommunications are manifold and explicitly verifiable from the phenomenal success of the sector.livemint. a 10%5 increase in teledensity is known to boost GDP growth by 0. Bihar could have witnessed 4% faster growth if it had enjoyed the same teledensity as Punjab. Importance of telecom Telecommunication is pivotal to a country’s socioeconomic growth. The usage of mobile phones has enabled fishermen to respond quickly to market demand and prevent wastage. has partnered with a leading telecom equipment and service provider to provide “Fisher friend. registering a consistent overall growth rate of more than 35% over the past decade in terms of subscribers.1. accessed 10 October 2010.2. Increasing connectivity is highly instrumental in improving governance. 5 6 Unfinished Business: Mobilizing new efforts to achieve the 2015 millennium development goals. The MS Swaminathan Research Foundation (MSSRF).http://www. According to a study by the Indian Council for Research on International Economic Relations (ICRIER).” LiveMint.” through which fishermen are provided free mobile handsets. September 2010. mobile telephony has made the rural and underdeveloped markets much more efficient. shared on a rotating basis. along with free access to information service. Samar Srivastava. Mobile telephony had a profound impact on the fishing community in the southern state of Kerala. There is a substantial relationship between increase in teledensity and the economic development of a region.1 Economic growth Indian telecom has emerged as one of the greatest economic success stories. a government organization. World Bank. 19 January 2009.2. 5 Enabling the next wave of telecom growth in India . According to a World Bank study. a 1% increase in mobile subscribers is estimated to increase per capita GDP by about US$200. response to emergencies and in the overall strengthening of the sociocultural ethos of the country. lowers transaction costs and is an effective substitute for infeasible physical transport. states with a higher teledensity have grown faster than those with lower teledensity. page 17.6% points. for instance. creates efficient information flows. In other words. security. Mobiles have helped to co–ordinate demand and supply.html. and have helped those who catch the fish communicate with merchants and transporters in an efficient and effective manner. It has helped to reduce the time spent by agents and owners waiting for boats. The well-distributed network of telecommunication services results in widening markets. “High-teledensity states grew faster.com/2009/01/19224316/ Highteledensity-states-grew-f. reduced business risk and made those involved with fishing feel much safer at sea. says study. Narrowing access gaps and removing barriers to information dissemination are prerequisites for promoting equitable and sustainable development as well as political and social cohesion. 1. business communication. By virtue of being a carrier and disseminator of information. States with 10%6 higher teledensity have grown 1.
Indian villages account for 70%7 of the country’s total population.4 Rural development According to FICCI and Nielsen study. The telecom sector has led to the growth of a range of communication technology-enabled activities and services.3 Social development Connectivity fosters social development. • • • Helping to stem urban migration by generating greater income and employment potential in rural areas Facilitating emergency response and access to health care and allied services Facilitating m–commerce and e-commerce through trade along the agriculture supply chain. generating awareness. Communication facilities in rural areas are critical for the development of rural India. RuralShores is an initiative that aims to reverse the trend. the quality of life in rural area improves. It aims to introduce rural youth to BPO and to provide employment in their village. call center operations. As a result. 56% of the country’s income. 64% of consumption expenditure and 33% of national savings. Moreover. RuralShores: bringing jobs to rural India Over the years. guaranteed service levels. corporations benefit through cost-effectiveness due to the lower costs associated with a rural ecosystem. software development. the spread of telecom and information services to rural areas is enabling the setup of rural business process outsourcing (BPO).2. customer support centers. The provision of telecom services in rural areas and the obscure hinterland has made previously abandoned areas highly accessible. This represents an innovative approach in providing quality health care whenever and wherever needed.2. the hitherto dormant economic potential is being increasingly tapped. With more untapped territories being connected through telecom. Participation in the initiative is an act of corporate social responsibility. low employee attrition and the potential for scalability. the lack of employment opportunities in rural India has forced people belonging to villages to move to the cities. It helps combat epidemics such as HIV/AIDS and malaria by supplying information on treatment and control. Enabling the next wave of telecom growth in India 6 . However. Further. providing the following advantages: • • • 7 Challenges Before An Integrated India: Bridging The Urban . telecom is also a major creator of jobs. technology transfer and entrepreneurship Facilitating national and regional integration. revenue accounting. processing of insurance claims.2 Job creation Besides being one of the largest revenue generators. health and increased citizen participation in civil society. Telecommunication helps provide access to health care and allied services. The current synergy between health reform initiatives and advantages in technologies has resulted in the proliferation of e-medicine projects. 1.2. Operations such as data entry. and establishing the mobile testing of diseases. including improved education. creating an atmosphere of economic diversification. improving access to and connectivity with health centers. leading to the inclusion of rural India in the global economic milieu and reducing the rural-urban divide. thus reducing the pressure of urban migration 1. employment and a strong socio-cultural ethos Open rural areas to foreign investment. August 2010. page 13. human resource services. a committed workforce and business continuity. In return.1.Rural Divide. resulting in the organized aggregation of supply and demand Providing enhancement of microfinancing. systems engineering and systems design and integration are popular examples. it ensures complete information protection. Nielsen.
Since the advent of IT and communication technology.2. rules and regulations.6 Strengthening investments Attractive trade and investment policies have transformed the Indian telecom sector into one of the most investorfriendly markets.1. http://dipp. specifically the development of small and medium enterprises (SMEs). It is facilitating women’s participation in the political and economic processes of the country. the inflow of FDI into India’s telecom sector was approximately INR407. One prime success story of communication technology promoting women’s education is India’s “Distance education for women’s development and empowerment” jointly run by the Department of Women and Child Development • • 8 “Fact Sheet on Foreign Direct Investment (FDI) from August 1991 to March 2010. The four main types of e-governance services provided are as follows: • Government to government (G2G): these services take place at two levels — the local or domestic level and the international level. accessed 10 October 2010. Government to employee (G2E): this includes G2C services as well as specialized services that cover only government employees. Significant progress has been made in the computerization of railway bookings. and between the departments and their agencies and bureaus. Delivering literacy and education to women wherever they live or work: this opens up new avenues and allows for flexible learning times. high illiteracy and negative social norms. G2G services are transactions between the central/national and local governments.” Mobile telephones and the internet can advance gender equality by: • • Empowering women and surmounting gender inequality: this is being achieved by promoting the awareness among women about their social and political status. Most relevant information about these entities is now available on their websites. allocation of the Permanent Account Number (PAN) to income tax payers. memos. 1. making it easily accessible and increasing transparency. 7 Enabling the next wave of telecom growth in India . • Government to citizen (G2C): this comprises information dissemination to the public.nic. registering businesses. as well as citizen assistance for basic services such as education.” Department of Industrial Policy & Promotion. Government to business (G2B): this entails services between government and the business community. Business services offered include obtaining current business information. obtaining permits and the payment of taxes. Achieving gender equality and empowering women is crucial because of its cross-cutting influence. Indian ministries and government departments are working to computerize their operations to make them simpler and increasingly accessible for Indian citizens. Between FY00 and FY10. health care. ordering of birth/death/marriage certificates and filing of income taxes. and can be used as an instrument of international relations and diplomacy. processing of passport application.1 billion (US$8.2. Simplifying the application and approval procedures process for SME requests would encourage business development. such as the provision of human resource training and development that could improve the day-to-day functions of the bureaucracy and dealings with citizens. and creating new economic opportunities for women through digital empowerment.5 E-governance E-governance that helps exploit the power of information and communication technology to transform accessibility.2. including the dissemination of policies.in/. among others. The services offered through G2B transactions also assist in business development. downloading application forms. hospital information and libraries.8 accounting for more than 8% of approved FDI. conduct of public examination and customs clearance. including the “Millennium Development Goals.7 Gender equality The advent of communications technology has helped overcome institutional and social barriers of mobility. G2G services are transactions between governments. 1.9 billion). quality and the cost-effectiveness of public services has been made possible by the telecom revolution. On a global footing. renewing licenses. as well as basic citizen services such as license renewals. It is an irreplaceable component for achieving most developmental goals.
and the Indira Gandhi National Open University.8 m–commerce This is the next revolution that is expected to emerge through the use of mobile phones. taking relevant education that is well aligned to the needs of the communities to their doorstep. In India. the generation of intellectual property right (IPR). the telecom industry and the Government for the creation of new services and applications. The challenges surrounding these programs include job cards for those demanding work. an integrated system for taking biometric attendance through handheld devices and transmitting it through mobile phones for authentication is expected to solve the challenge of attendance.9 Facilitating research and development The growth in high-speed communication and advances in internet technology are making India a major R&D hub. This program provides a multimedia training package to make women’s self-help groups sustainable by developing their decision-making ability and resource management skills in 150 low-literacy districts. as these become a tool for commerce. paying bills for utilities such as power and gas. (R&D). The integration of such programs with mobile telephony is expected to benefit such programs of national importance. monitoring health trends and provisioning primary health care. the development of manufacturing capability. organizations such as Telecom Centers of Excellence (TCOE). m-commerce finds its applications across various end markets such as banking and financial institutions.com/News/News/News-Reports/Nokia-to-rollout-mobile-banking-in-India/134910/0/.9 1. 1. transfer funds. leading class services and a global presence. These organizations have helped to create synergy among academia. This is one of the most befitting instances of the telecom and internet revolution. making sure the worker is paid for the day..2. Efforts are constantly being made to devise more affordable technology for the masses. According to Cybermedia India Online Limited. 14 April 2010. the introduction of GPS-enabled biometric systems at the grass-roots level continues to remain a challenge. http://www. Enabling the next wave of telecom growth in India 8 .10 Provide impetus to initiatives such as MNREGA and Aadhaar The GoI has undertaken programs such as the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) and AadhaaR — Unique Identification Authority of India (UIDAI). wage payments and the authorization of wages electronically. the introduction of electronic muster rolls. Once a worker has logged in. focus on global telecom standardization activities and the promotion of entrepreneurship. For instance. the elimination of ghost workers. booking tickets for transportation services such as trains and taxis and online shopping. • Helping lower child mortality and improve maternal health: this is done by providing information on nutrition. NTP 1999. thus overcoming cultural and language barriers.” CyberMedia India Online Ltd. Mobile banking enables customers of banks and other financial institutions to access their account information. Furthermore. strengthening health networks. which aim to provide inclusive growth. places great emphasis on research and development 9 “Nokia to rollout mobile banking in India. Mobile phones provide consumers an opportunity to transact anytime and anywhere. the TCOEs have focused on the technological and management challenges that Indian operators face in reaching all sections of society while offering affordable solutions. the Center of Excellence in Wireless Technology (CEWIT) and the Broadband Wireless Consortium of India (BWCI) have been established. trade stocks and purchase financial products such as insurance. there is a significant focus on technology with the potential to improve rural connectivity.2. 1. In pursuance of the NTP 1999’s objective toward R&D. formulated by the GoI. the value of mobile payment transactions in India is expected to reach approximately US$1.2. accessed 12 October 2010. For instance.ciol. this data could be transmitted to MNREGA.3 billion by 2013.
2 9 Evolution of the telecom sector in India Enabling the next wave of telecom growth in India .
1. the sector underwent its first wave of change. In 1881. and guidelines for intra-circle M&A 2005–11 2000–05 1990–2000 1980–90 1947–80 Enabling the next wave of telecom growth in India 10 . in 1986. growth in the initial years was very slow due to high mobile handset prices as well as the high tariff structure of service providers. The introduction of NTP 1999 heralded pro-consumer policies. and the TRAI was established in 1997. Karachi and Ahmedabad. The introduction of the New Industrial Policy 1991 initiated the liberalization process in India. respectively. and the NTP was announced in 1994. NTP 1999 enabled the telecom sector to reach an average subscriber growth rate of more than 35%. and were under government control. In January 2000. However. all foreign telecommunication companies in India were nationalized to constitute the Posts. Telephone and Telegraph (PTT). to set up 5 million lines per year • 1985: Establishment of DoT • 1986: Establishment of VSNL and MTNL • 1991: Telecom equipment manufacturing completely deregulated • 1992: VAS opened to private sector participation • 1994: NTP 1994 • 1997: Establishment of TRAI • 1999: NTP 1999 • 2000: Establishment of TDSAT • 2003: Uniﬁed Access Service License (UASL). telephone services were introduced. Further. Chennai. Brief history of the Indian telecom sector • 2006: DoT announces criteria for additional spectrum • 2007: Cap on number of players in a circle removed • 2008: New licenses granted by DoT • 2010: 3G and BWA spectrum auction • 2011: MNP launched Pan-India • 1947: Nationalization of all foreign telecommunication companies to constitute the posts and telegraph • 1950: Telephone exchanges taken over from the princely states • 1981: Contracts with a French company to merge with the state-owned ITI. Interconnect Usage Charges (IUC). DoT was established in 1985 to provide domestic and long-distance services in India.2. VSNL and MTNL aimed at providing services to international and metropolitan areas. In the early 1980s. primarily due to initiatives taken by the regulator and service providers. History of the Indian telecom industry The Indian telecom sector has evolved from the bygone days of “telephone on demand” to the advent of 3G telephony. Following independence. The liberalization of the sector resulted in the need for a regulator. universal licensing regime. and calling party pays (CPP) • 2004: Broadband policy. The formulation of NTP 1994 was followed by the launch of mobile telephony in India in 1995. Mumbai. Its history begins with the laying down of the first experimental electric telegraph line in Kolkata. two wholly government-owned companies — Videsh Sanchar Nigam Limited (VSNL). Telecom equipment manufacturing was also de–licensed in 1991. and Mahanagar Telephone Nigam Limited (MTNL) were formed. the Telecommunications Dispute Settlement and Appellate Tribunal (TDSAT) was established to take over the adjudicatory and disputes functions from TRAI. with exchanges being opened in Kolkata. which is now known as Tata Communications.
in case UASL was not allocated spectrum due to non-availability. in February 2004. Additionally. During the same year. In July 2010. raising INR385. the Government concluded the auction of BWA services across India. The bidding process continued for 34 days. entertainment. The GoI subsequently issued licenses in November 2003. which recognized the ubiquitous potential of broadband services and their contribution toward the GDP growth and improved quality of life through e–governance. the DoT issued guidelines for the intra-circle merger of cellular mobile telephone service (CMTS)/UAS licenses. December 2006. e–commerce. BSNL. The seven winners were required to pay INR509. through which all local incoming calls were made free. FDI limit in the telecom sector was increased from 49% to 74%. which covered the levy paid by mobile operators to the state–run operator. Allocation of spectrum and grant of wireless license was subject to availability and. mobile services had outpaced fixed-line services with nearly 45 million mobile subscribers.2 billion for the more populated A and Metro circles. education and medicine. and INR300 million for the rural C circles. The auction aimed at allotting three to four 3G licenses for each of the 22 regional circles. the GoI introduced the Unified Access Service (UAS) licensing regime. In May 2003. INR1.2 billion (US$14. the licensee was required to endeavor to rollout services using wireline technology. the amount payable by BSNL and MTNL for 3G services pushed the total auction revenue to INR677. In February 2008. using any technology. Further. The bidding process continued for a period of 16 days.3GHz range in each of the country’s 22 circles. The Broadband Policy 2004 specified targets in terms of subscribers. the DoT approved the sharing of infrastructure among mobile operators. the Universal Service Support Policy came into effect. In November 2005.In 2002. reaching the final stage in May 2010. The reserve price for 3G services was categorized on the basis of circles — INR3. 11 Enabling the next wave of telecom growth in India . the TRAI abolished the access deficit charge (ADC). which permitted an access service provider to offer both fixed and/or mobile services under the same license. the calling party pays (CPP) regime was introduced. Thus. In 2004. Operators were allowed to share infrastructure in their tower installations. The GoI commenced the auction for 2x5MHz in the 2100MHz band for 3G services in April 2010.6 billion). ADC was the fee paid by private mobile operators to the state-owned BSNL. The fund was introduced to provide access to telegraph services to people in rural and remote areas at affordable prices. among others.2 billion for the B circles. the GoI raised in excess of INR1 trillion from the auction of 3G and BWA services. telecom towers were accorded “Infrastructure Status” by the Reserve Bank of India (RBI). which mainly used the proceeds of ADC to develop rural telephony services. March 2007 and January 2008. as these constitute an essential and possibly the most expensive component in the entire telecom service delivery infrastructure. new UASL guidelines were issued. providing statutory status to the USOF in December 2003.4 billion (US$8. January 2004. The GoI offered two 20MHz blocks in the 2. which witnessed fierce bidding for spectrum. In March 2008. The GoI also introduced the Broadband Policy 2004. Following the auction of 3G mobile services.7 billion to the GoI. The licenses were to be issued on continuous basis without any restriction on the number of entrants in a circle and applications were to be processed within 30 days of submission.2 billion) in auction revenues.
The key stakeholders as a part of the regulatory environment in the telecom ecosystem include the Ministry of Communications & Information Technology (MICT). 1885. the Telecom Commission. licensing and coordination matters relating to telegraphs. The key departments of the ministry include the Department of Telecommunications. the Department of Information Technology. Department of Telecommunications (DoT).2. MICT • • • The MICT is part of the Indian Government. The key feature of India’s regulatory regime is transparency in industry information. and four part-time members that are secretaries to the GoI of the concerned departments The Telecom Commission is responsible for policy formulation. telephones. wireless spectrum management. Regulatory framework A number of positive regulatory changes have driven growth in the sector. data. among other matters Enabling the next wave of telecom growth in India 12 . the Telecom Regulatory Authority of India (TRAI) and the Telecom Dispute Settlement & Appellate Tribunal (TDSAT). 1933. R&D and standardization and validation of equipment. Its key responsibilities include: • • • • Policy. administrative monitoring of public sector undertakings (PSUs). 1997 DoT • The DoT is a part of the MICT. telegraph and other means of communication The laws governing the telecom sector include the Indian Telegraph Act. the Indian Wireless Telegraphy Act. wireless. an open approach and encouragement of consultation with stakeholders. facsimile and telematic services and other like forms of communications International cooperation Promotion of standardization and R&D Promotion of private investment Telecom Commission • • • The Telecom Commission was set up in 1989 by the GoI to deal with various aspects of telecommunications The commission consist of four full-time members that are ex-officio Secretary to the GoI in the DoT. and the Telecom Regulatory Authority of India Act. post. and the Department of Posts The MICT formulates policies with respect to telecom.2. licensing.
and the terms and conditions of license to a service provider Ensuring technical compatibility and effective inter-connection between different service providers Regulating revenue-sharing arrangements among service providers Ensuring compliance with the terms and conditions of license Setting and enforcing the time frames for providing local and long-distance telecommunication circuits Recommending revocation of licenses for non-compliance of their terms and conditions Facilitating competition and promoting efficiency in the operation of telecommunication services Protecting the interests of the consumers Monitoring the quality of service and conducting periodical surveys Inspecting the equipment used in the network and recommending the type of equipment to be used by service providers Settling disputes between service providers Advising the central government in matters related to the development of telecommunication technology and the telecom industry Levying fees and other charges Ensuring compliance with universal service obligations Performing other functions. such as administrative and financial functions. the GoI established the Telecom Dispute Settlement & Appellate Tribunal (TDSAT). that may be entrusted to TRAI by the central government. as an authority separate from the TRAI to handle disputes in the telecom sector The functions of TDSAT are to adjudicate any dispute between a licensor and licensee. The key powers and functions of the authority include: • • • • • • • • • • • • • • • Recommending the need for a new service provider. or as may be necessary to carry out the provisions of the TRAI act TDSAT • • • In April 2000. between two or more service providers. and between a service provider and a group of consumers.TRAI • TRAI was established as an independent statutory regulatory authority under the TRAI Act in 1997. and to hear and dispose of appeals against any decision or order of TRAI The appellate tribunal consists of a chairperson and two other members 13 Enabling the next wave of telecom growth in India .
html. com/2010/05/30230743/Telcos-to-recoup-3G-bid-money.2% 205.5 FY00 61. wireless subscribers constitute the majority of the total subscriber base. affordable handsets. The total subscriber base (including wireline and wireless) reached 723.0% 98.9%. 12 Ernst & Young analysis.”TRAI website. December 2009.6 FY03 7.7 FY08 FY09 FY10 Sep-10 0% Total subscribers Source: TRAI Teledensity According to TRAI.in/Default. In the past decade. accessed 10 December 2010. high economic growth. Enabling the next wave of telecom growth in India 14 . Urban and rural subscriber base.7% 37.13 in comparison with US$200–US$350 per subscriber for wireline. However. Such phenomenal growth can be attributed primarily to the country’s large population. “Telcos to recoup 3G bid money in 5-6 years: Analysys Mason.0 FY02 5.2.7% Source: TRAI 10 “TRAI Press Release No. reduced tariffs. accessed 10 October 2010. As of September 2010.3 million subscribers. The telecom revolution in the country has impacted both the urban and rural population. 11 Shauvik Ghosh. 30 May 2010.9% 28.0% 26. accessed 12 October 2010.3 621. accounting for 95.3 million10 in September 2010. Lower costs and the additional benefit of mobility that is associated with wireless subscribers have led to the stagnation of the wireline subscriber base.” LiveMint.livemint.3% 45. http://www.5 FY04 9. hypercompetition in the sector.trai.3% Urban 67. http://pppinindia.3. Overview of the Indian telecom industry India is the world’s second-largest telecom market.5 429.2% 12. 13 “Position paper on the Telecom sector in India. September 2010 100%= 723. with the mobile segment leading this growth. 63 /2010.3 million Teledensity (%) 50% Rural 32.1% 54.3 FY06 70% 60% 723.0% 52.1%. urban subscribers account for more than 65% of the overall subscriber base.asp. The wireless segment has been registering monthly mobile additions of about 15 to 2011 million subscribers. the total teledensity has risen above 50%. Subscriber base and teledensity (wireless and wireline) 800 Total subscribers (million) 700 600 500 400 300 200 100 0 2. leading toward a huge urban–rural digital divide. the total subscriber base grew from FY00 through FY10 at a compound annual growth rate (CAGR) of 36.9% 140.3% FY01 4.” Department of Economic Affairs – Ministry of Finance.9 FY07 3.gov. http://www.com/ pdf/ppp_position_paper_telecom_122k9. The capital cost to provide mobile service varies in the range of US$50–US$90 per subscriber.1% to reach 621. infrastructure sharing and the introduction of positive and enabling regulatory reforms.0% 76.6% 36.3 40% 30% 20% 10% 18.pdf. page 4.4 FY05 300.12 whereas wireline subscribers account for 4.
2% 3.5%14 to reach 584.0% 70% 60% 50% Teledensity (%) 40% 30% 20% 10% 0% FY10. http://www.3 million15 subscribers in Wireless subscribers in India 800 700 Wireless subscribers (millions) 600 500 400 300 200 100 0 1. The road ahead for the Indian telecom sector is expected to be more eventful.5 13.2 14. accessed 15 October 2010. the gap between GSM and CDMA has widened as the GSM subscriber base has grown more rapidly. July 2010. primarily due to the advent of new services such as 3G. Mobile services were commercially launched in India in 1995. September 2010 100% = 687.8 165.1 261. Wireless India has emerged as one of the world’s fastest-growing telecom markets. FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 Sep-10 Wireless subscribers Teledensity Source: TRAI Wireless subscribers: GSM vs. and this growth is primarily attributed to the growth in wireless services.1% of the total wireless subscriber base.4.0 33.6% 9.” Zinnov Research and Consulting.gov. 15 “TRAI: The Indian Telecom Services Performance Indicators (January .2. the growth in the number of subscribers was very low. Over an extended period.trai. VAS.7% 687.7 584.7 4.6% 58.05–0. India’s mobile market is the second largest in terms of subscribers in the world after China.6 0. mobile number portability (MNP) and the growth of manufacturing.0% 98.zinnov. October 2006.8% 391.1 million16 subscribers.9 0.” TRAI website.1 22.9% GSM GSM subscribers constitute about 84.8% 52. CDMA.1% Source: TRAI 14 Ernst & Young analysis.March 2010).asp.7 million CDMA 15.4% 3.com/presentation/Mobile_VAS. accessed 10 October 2010. The wireless subscriber base in India grew from FY00 through FY10 at a compound annual growth rate (CAGR) of 77.pdf. 15 Enabling the next wave of telecom growth in India .8 33. 16 “Penetration of Mobile Telephony in India & Value added services in Indian Mobile Telephony market. 84.2% 6.6% 1.in/Default. page 2. http://www. with average monthly subscriber additions in the range of 0.3 49. In the initial years of mobile telephony. The advent of NTP 1999 paved the way for aggressive growth in the wireless subscriber base.
in FY10.1% 22.0 25% 20% 35.1%.7% 38.1% of the subscribers in FY10.March 2010). the emergence of new technologies such as fiber to the home is expected to drive the growth of the wireline market in India. http://www. July 2010. Although fixed-line operators are trying to offer VAS such as high-speed internet access. Apart from these two players. http://www.4% of the subscribers.6% 40. Furthermore.5. the wireline subscriber base was 37 million. the major wireline operators in India also operate mobile networks.gov.1 41.September 2010).9% -3. DoT In FY00.asp. accessed 10 October 2010. In the recent past.9% 94. Wireline The Indian wireline market grew at a CAGR of 3. Over the years.6% FY00 Wireless FY10 Wireline 93. accounting for 73.7% -2.8 39.4 38. 19 “TRAI: The Indian Telecom Services Performance Indicators (July . Although wireline infrastructure in India is not as extensive as wireless infrastructure.3% -1. additional private players have also ventured into the fixed-line market.1% Source: TRAI. The wireline market is dominated by the governmentcontrolled incumbent players. the advantage of mobility among wireless networks and inadequate infrastructure of the wireline network. In the future. 17 Ernst & Young analysis.3 7.2.5 million19 public call offices (PCOs) and 0. wireline service continues to face stiff competition from wireless services.3% 41. there is a significant opportunity for future growth. where they see higher revenue growth and continue to invest extensively.asp. video on demand and videoconferencing. improved mobile coverage. Wireline subscribers 50 45 Wire line subscribers (million) 40 35 30 25 20 15 10 5 0 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 Sep-10 -3. In FY10. January 2010.gov.4% 5.9%.trai.7 17.3% -3. the urban market has dominated the wireline subscriber base.4 41.9% 3.0% 26.6 Growth rate (%) 15% 10% 5% 0% -5% -10% Wire line subscribers Source: TRAI Growth rate Change in the composition of subscribers 100% 80% 60% 40% 20% 0% 6. As of September 2010.7 18.18 with a teledensity of 3.in/Default. Enabling the next wave of telecom growth in India 16 . cheaper handsets. besides other new technologies. the wireline market accounted for 93.trai.” TRAI website. the wireline subscriber base has declined due to lower mobile tariffs. driven by the immense potential for data growth. it accounted for 5.6 million village public telephones (VPTs) in India.3%17 during the period between FY00 and FY10.” TRAI website.0 37.3% 0. 18 “TRAI: The Indian Telecom Services Performance Indicators (January . there were 3. accessed 15 January 2011.9% 32.5 40.in/Default.
3 6. employment and the delivery of services. June 2010. whereas traditional internet connections have a speed of less than 256 kbps. Internet and broadband The internet has revolutionized the lifestyle of many Indians by creating a new means of communication.9%20 and 117. accessed 25 October 2010. the evolution of technology and increase in bandwidth has given rise to internet connections at speeds faster than traditional dial–up connections.2.5% to reach 16. respectively in FY10. which envisions the creation of a framework through various access technologies such as optical fiber.9 1. 21 Bringing Mass Broadband to India: Roles for Government and Industry. governance.9 11. a 10%22 increase in broadband penetration leads to a 1. 22 “Broadband Commission Presents Report to United Nations. terrestrial wireless and future technologies.6. The minimum threshold speed for a broadband connection is 256 kilobits per second (kbps) or more. Further. September 2010. digital subscriber lines (DSL) on copper loop.2 FY05 9.” International Telecommunications Users Group website.4 2. FY06 FY07 Internet subscribers FY08 FY09 Broadband subscribers FY10 Sep 10 Source: TRAI 20 Ernst &Young analysis. satellite media.5% increase in labor productivity in a country. knowledge sharing. Although the internet is a function of various factors such as literacy.5 10. Broadband infrastructure plays a vital role in a country’s achievement across domains such as social progress and economic development.3 17.8 6. http://intug. The opportunities hold a much larger promise for India’s large low-income population and a growing economy.3% increase in GDP. The DoT formulated the Broadband Policy 2004. such as opportunities for education. Also. org/2010/10/09/international-insights-%E2%80%93-september/.2 broadband subscribers has increased at a CAGR of 23.6 5 0 0. cable television networks. This falls short of a Broadband Policy’s goals of 40 million internet subscribers and 20 million broadband subscribers by the end of 2010.8 million. entrepreneurship and services. it is estimated that a 10%21 increase in broadband penetration translates to a 1. From FY05 through FY10.1 8. it has made significant inroads in the urban market. 17 Enabling the next wave of telecom growth in India . access to personal computers and electricity. governance.3 3. Booz & Company.9 16. According to Booz & Company.2 million and 8. Broadband brings a number of benefits.3 13. the number of internet and Internet and broadband subscribers (million) 20 15 10 5.
Currently. broadband users are concentrated in urban areas. The share of wireless technology continues to be negligible and remains to be fully exploited. As of September 2010.6% 0.5% DSL Cable modem Ethernet Wireless Others 86. and 86. despite a structured framework that included ambitious goals to be met in 2010. The key factors responsible for the widespread adoption of broadband include affordability and availability.6% Source: TRAI Source: TRAI Digital subscriber line (DSL) is the preferred technology among service providers for both internet access and broadband services. DSL constituted 50.5% 31. Broadband penetration continues to be very low in India. September 2010 3.8% 4. September 2010 1. especially in the case of broadband services.Market share by subscribers of technologies in internet access.5% DSL Dial-up Wireless Cable modem Ethernet Others 50.0% 10.6% 4.9% of the market share in broadband access. primarily in business districts or high–end residential areas of the larger cities.3% 0.0% Market share by subscribers of technologies in broadband.5% 6.5% of the market share in internet access. .
19 Enabling the next wave of telecom growth in India .169 23 Industry estimates. National long distance and international long distance The Indian enterprise data connectivity market is growing at 10% annually and annual revenue is expected to near the US$10 billion mark in the next five years. managed services and network security services are provided by global operators in partnership with Indian IT companies. internet connectivity. the financial services sector and the government.200 510 130 150 80 350 600 180 52 72 2. It has spurred the demand for IP-based virtual private network (IP-VPN) services in India. Most large global players have set up operations in India to cater to the connectivity needs of their customers. network integration.251 39 5.064 495 92 125 75 260 370 150 45 61 2. The growing demand for connectivity is coming primarily from the IT and IT-enabled services sectors (ITeS). With telecom and IT converging.2.556 FY09 930 480 70 110 65 210 250 130 30 56 1. The other services relevant to this segment are international private leased circuits. Enterprise segment revenues23 Activity Private line VPN Ethernet Managed business VoIP Managed IP telephony Hosting services Application services Security Continuity and recovery Managed storage Outsource task Contact center Total (US$ million) FY08 829 423 40 92 51 161 170 110 20 40 1.900 31 4. multiprotocol label switching (MPLS) based IP-VPN services.600 20 3. A majority of global operators in this space are also offering VAS such as network security.7. network storage and enterprise voice solutions. network management. Voice over Internet Protocol (VoIP) is considered a key enterprise application for lowering operating costs.262 FY10 1.800 45 6. and national and international data connectivity.027 FY11E 1.
Department of Telecommunications. 26 “India among the Top Few Fastest Growing Telecom Markets. http://voicendata.0 17. ILD has witnessed steady growth.25 However.asp.2% 150. India’s ILD services were opened up for private players.com/content/vnd100_2010vol-II/110070520. primarily due to a decline in ARPU across all operators.1 1. As of December 2009.0% 115.0% 35% 30% 25% 20% 15% 10% 10% 0% FY07 FY08 FY09 Market size (INR billion) FY10 Growth (%) Source: Voice and Data 24 DoT Annual Report 2009–10.NTP 1999 opened up the NLD service for private operators. FY10. Market size of ILD 200 Market size (INR billion) 150 100 50 0 115. with the sale of the strategic stake in VSNL to the Tata Group.com/content/vnd100_2010vol-II/110070519.3% 35.7% to reach total revenues of INR164 billion. FY10.” Voice & Data. with the annual license fee being reduced to 6% of the AGR.” Voice & Data.3% 176. the Indian market for NLD grew by 13. with its revenues reaching INR176 billion26 in FY10.0 144.0% 40% 30% 20% 10% 0% 71. without any restriction on the number of operators. Enabling the next wave of telecom growth in India 20 . accessed 18 October 2010. the GoI had issued 29 NLD24 service licenses. 27 DoT Annual Report 2009–10. 25 “India’s NLD market has grown by 13.7% FY08 FY09 FY10 Growth (%) Growth (%) Market size (INR billion) 48. In FY10. http://voicendata.ciol.ciol. the market slowed in FY10.3 97. Market size of NLD 180 160 140 120 100 80 60 40 20 0 60% 50% 164. As of December 2009.9 FY07 Market size (INR billion) Source: Voice and Data Growth (%) In 2002.3 13.3 0.asp.6% in FY 2009-10.0 30.Department of Telecommunications.3% 25. the GoI had issued 24 ILD27 service licenses. accessed 18 October 2010.
Manufacturers in India face challenges such as high logistics costs. http://www.2 2008 2009 8. 29 Ernst & Young analysis.html. Ministry of Communications and IT. accessed 12 October 2010. only 40% of the requirement for equipment is met through local sourcing.8. the market for wireless infrastructure equipment is estimated to be US$8–10 billion. From 2005-09.org/telecomequipment-manufacturing-in-india-needs-help-urgently-21-july-2010-t. with the exception of telecom towers and cables.0 100 4.0 140 Exports (INR billion) 110. the demand for telecom equipment is expected to be worth US$70–100 billion28 in 2015. http://www. Source: International Trade Centre Although a few Indian mobile operators have a significant presence globally.climatechallengeindia.0 412.7 81.1% Sweden US Singapore Hong Kong Others According to industry estimates.9% 4.9% and 112. India is a strong market for global telecom equipment vendors. 21 Enabling the next wave of telecom growth in India .3 518.” 19. an unreliable power supply. accessed 10 October 2020. 28 “Telecom equipment manufacturing in India needs help urgently. 2009 100%=US$8.6 19.9 billion FY07 Note: Includes both indigenous and offshore production Source: DoT.3 2005 1.2.9 15. 02 September 2010.0 160. according to a leading telecom equipment manufacturer. “Indian telecom ﬁrms may get DoT boost. companies in the manufacturing segment are yet to feature in the global telecom landscape. Telecom equipment manufacturing The telecom equipment industry comprises products such as cell phones.livemint.” LiveMint.4% 3. Despite the growth of a localized manufacturing environment in India. 21 July 2010.4% China South Korea 59. http://www.” CyberMedia India Online. Telecom equipment manufacturing and exports Production (INR billion) 600 500 400 300 178. GOI.7 1.3% 3.0 2.30 and equipment worth INR190 billion was imported in 2009.5 0 FY04 FY05 FY06 Production 236. wireless and landline infrastructure equipment.0 120 100 80 60 40 20 FY08 FY09 Exports 0 Value of telecom equipment imports to India 10 Imports (US$ billion) 8 6 4 2 0 1. Furthermore.1%. The majority of telecom segments are highly dependent on imports. inadequate tax benefits and competition from low-cost Chinese equipment.5% 6.4% 3.9 Source: International Trade Centre Share of imports by country of origin. “Policy recommendations to increase domestic telecom growth and exports of telecom equipment and service.” “Telecom Equipment & Services Export Promotion Council (TEPC).com/News/News/News-Reports/ Time-to-go-local-in-telecom-equipment-purchase/140758/0/.29 respectively. the manufacturing and exports of telecom equipment grew at a CAGR of 33. accessed 02 August 2010. 30 “Time to go local in telecom equipment purchase. with the remainder coming from global companies manufacturing in India.com/2010/04/01215017/Indian-telecomﬁrms-may-get-D. including routers and switches.” India Climate Portal.7 2006 2007 3. DSL and cable modems and networking devices.3 200 140.ciol. chipsets.
The radius of each BTS varies from 500 meters to as much as 8-10 km. The BTSs are installed in a contiguous manner.” Lok Sabha. Telecom infrastructure industry in India. However. Telecom towers and allied infrastructure. March 2009. Telecom infrastructure industry in India. Falling prices of telecom services will help to increase their affordability. civil infrastructure forms about 60% of the cost of setting up a network. so as to facilitate the handing over of signals from one BTS to another like a chain. radio antennas. page 9. ROW. Ground-based towers (GBT) are 200 to 40035 feet high and are mostly used in rural and semi-urban areas because of the easy availability of real estate. ICRA Rating Feature. duct space and tower through simple registration without paying any license fee.9. Typically. Competition will give further impetus to the development of infrastructure. and the demand for more services will translate into the development of more telecom infrastructure. shelter room. frequency band of operation and spectrum 31 32 33 34 35 2. there were 425.33 depending upon subscriber usage. Backhaul consists of the intermediate links between the core of the network and the various sub-networks. a mobile network in a circle consists of mobile switching centers (MSCs). hurdles to the erection of cellular towers and value added tax (VAT) levies on broadband services delivered through fiber media. while electronic infrastructure forms the remaining 40%. whether it is GSM. The policy should clearly define the role of the Central Government and the states to help catalyze telecom sector growth. It connects the electronic infrastructure at the tower site with the BSC and MSC. December 2008. “Growth of Telecom Sector. radio access network.9. Rooftop towers (RTTs) are placed on the roofs of high-rise buildings.2. it does not play any role in carrying wireless signals. The National Telecom Critical Infrastructure Policy is expected to address these concerns as well as the issues affecting telecom providers on the state level. including ROW related issues. 2. Civil infrastructure includes components such as tower site. The wireless sector has charted an impressive growth trajectory. As of March 2010. power regulation equipment. with each BSC being connected to a base transceiver station (BTS). It can also create active infrastructure. 3G or BWA. topography. the number of operators providing their services from a particular site influences the extent of civil infrastructure installed at the site. The components of mobile networks include the electronic infrastructure. and safety and aesthetic concerns.34 Electronic infrastructure consists of the electronics needed to run a wireless network such as a BTS or cell site.in/. Infrastructure Provider-I (IP-I) can provide assets such as dark fiber. growing at a CAGR of more than 75%31 in the past decade in terms of the number of subscribers.9. competition. as the safety and aesthetic issues related to the setup of towers are addressed. steel tower. core network and other transmission equipment. The high level of growth in the Indian wireless telecommunications market will continue to drive huge investment in infrastructure as well as a speedy rollout of networks into new areas.4 to 2. fire extinguisher. node B. page 6. CDMA. http://loksabha.nic. GBTs can accommodate up to six tenants. GBTs involve a capital expenditure in the range of INR2. Finally. diesel generator set and security cabin. feeders. each of which is connected to base station controllers (BSCs). the civil infrastructure and backhaul.2 Towers and in-building solutions Telecom towers are broadly classified as ground-based and rooftop towers. accessed 28 October 2010. March 2009. Civil infrastructure includes the complementary elements of a cellular network that ensure that the electronic components are operational.45532 telecom towers in the country. Crisil Research. ICRA Rating Feature. the rollout of infrastructure will become easier. Ernst & Young analysis. on behalf of the licensee. battery backup. air conditioner. depending on the height of the tower. Infrastructure The Indian telecom success story is built around the wireless segment. The rollout of services by operators takes place only on the back of robust telecom infrastructure. page 5. availability. The development of the telecom infrastructure depends on four key factors: rollout. Infrastructure development plays a crucial role in the development of the wireless sector. price. Enabling the next wave of telecom growth in India 22 . cables. It is not influenced by the type of the communication technology being used. However.8 million.1 Mobile network Typically.
028 2.455 telecom towers in India. 2. accessed 28 October 2010.rbi. Haryana and Chandigarh Uttar Pradesh and Uttarakhand Andhra Pradesh Punjab and Himachal Pradesh Jammu and Kashmir Tamil Nadu and Pondicherry Bihar and Jharkhand Nagaland. asp. In recent years. implying a subscriber-per-tower ratio of 1.” Reserve Bank of India.350 28. Over the past couple of years. there are three types of tower companies — pure-play tower companies.are shorter than GBTs and are common in urban and highly populated areas. these involve a capital expenditure of INR1.899 6.in/.242 17.766 21. which need reliable communications for efficient incident management and personal safety. State-wise number of towers States Rajasthan Gujarat.nic. Extending Infrastructure Status to telecom towers and the resultant income tax benefits should certainly encourage tower companies to expeditiously set up more towers in underserved areas. the leading operators have opted to share their infrastructure.396 18.634 4.090 52.752 1.323 38.460.177 41.207 34. mass transit systems. which expects its mobile phones to work at all times. 23 Enabling the next wave of telecom growth in India .154 1.321 20.455 Source: “Growth of Telecom Sector. 36 “TRAI: Consultaion paper on issues related to telecommunication infrastructure policy. operators used their tower infrastructure for competitive advantage.577 2.995 25.854 3.121 41.in/scripts/BS_ViewMasterCirculardetails. accessed 01 February 2011.037 Private sector 23.337 720 2. operators with towers and operator-owned tower companies.184 391.071 1. http://loksabha. Andaman and Nicobar Assam and Arunachal Pradesh Delhi. The GoI provides certain benefits specifically to infrastructure companies.5-2 million. In-building solutions are designed to improve the reception of radio frequency signals indoors to meet the increasing demand for high-quality mobile services.392 22.271 3.102 38.494 24. RTTs can accommodate two to three tenants.371 8.418 Towers 25. Daman and Diu Maharashtra and Goa Karnataka Madhya Pradesh and Chhattisgarh West Bengal. Coverage is required to meet the needs of both the general public.098 57.3 Telecom infrastructure in India Initially. This constitutes an essential and possibly the most expensive component in the entire telecom service delivery infrastructure. stadiums and office buildings an essential requirement. telecom towers were accorded Infrastructure Status37 by the RBI.614 35.275 23. The tax benefit encourages the participation of private sector through investment. and emergency services. telecom operators have hived off their telecom towers into separate entities.gov.trai. accessed 20 September 2010.102 26. Mizoram and Tripura Kerala and Lakshadweep Total Public sector 2.” TRAI website January 2011. Typically. shopping malls. Today.008 4.920 23.” Lok Sabha.322 26.aspx. 37 “Master Circular .611 18.in/Default.794 369 1. there are an estimated 425.494 34.678 425.428 4. Currently.36 In July 2010.512 488 3. However. http://www. over the past few years.608 2.387 5. Manipur.392 45. Meghalaya. Orissa. the growth of mobile communications has made the provision of radio coverage within airports. http://www. where there is paucity of real-estate space. As a result.708 8. Sikkim.Exposure norms.9.55. tenancy level for the industry stands at 1.644 17.630 31.org.
This translates to consumption of more than 2 billion liters of diesel per year for cell sites. Average diesel consumption per site per hour is about 2. Such an arrangement works well for both partners. 10. It is estimated that infrastructure sharing in its current form has helped achieve savings of INR557. additional security. Spectrum constraints and network quality: for operators in urban areas. fuel cells or wind power by treating these toward renewal effort as a part of the overall effort to reduce greenhouse gases and the country’s carbon footprint.9. A significant part of the network rollout is likely to come in the untapped rural areas.6 Reduction in execution risks: erecting towers carries with it significant execution risks and requires as many as 40 clearances from separate authorities such as the Standing Advisory Committee on Radio Frequency Allocation (SACFA). The dependence on diesel could be reduced if the Government utilized that subsidy to support a move toward renewable energy options such as solar.5 liters. a higher proportion of ground-based towers. Tower sharing could help operators maintain quality network coverage throughout the city. Due to higher costs of land development. further increasing capex requirements. Rollouts in rural and semi-urban areas: as wireless service providers penetrate rural and semi-urban areas.4 Savings (INR billion) 476. translating to 6 million liters of diesel per day. It is estimated that tenancy levels will rise to between 2–2. capital and interest costs. On average. Infrastructure sharing serves the following goals: Optimal use of scarce resources: infrastructure sharing in its simpler forms will lead to better use of scarce national resources. Overall. With sharing. Enabling the next wave of telecom growth in India 24 . where mobile teledensity is barely in the double digits. Against this background. energy. which is subsidized by GoI. service providers have strong incentives to share infrastructure. the concept of infrastructure sharing assumes special importance.5x in the course of this decade.5 Future growth potential.9. 2. Since many rural areas are far-flung. significant investments will be required. it will allow a better use of spectrum. land owners and so on before the tower and electronic infrastructure can be completed.38 Estimated cost savings resulting from infrastructure sharing39 Component Capex (including interest) Opex saving as a result of infrastructure provisioning fee savings Opex saving as a result of shared energy costs Total opex savings Total savings (capex and opex) 71. more groundbased towers will be needed. state electricity boards. insurance costs.2 81. In its more complex forms. investments required and emerging trends The industry faces low profitability. unclear land ownership and expensive backhaul connectivity costs in the rural areas.6 Goals of infrastructure sharing The key beneficiary of infrastructure sharing is the subscriber. 38 Industry estimates. and infrastructure sharing will act as an important tool to achieve faster rollouts and save operating and capital expenditure in these areas. 27 million units of electricity are consumed per day.6 557. such as land and energy. 39 Industry estimates. the industry has pumped in INR1 trillion and another INR400–500 billion is expected to be invested in the next two years. while the tower company earns revenues.2. Capital expenditure (capex) and operating expenditure (opex) savings: the setting up of a countrywide cellular network requires substantial capex. superior network quality is a sustainable differentiating factor that helps to reduce customer churn and command premium prices. and newer operators can build an assetlight model.4 Energy requirements Currently.0 2. telecom towers consume an average of about 5-6 kilo watt of energy coupled with an average of 8 hours of diesel generator running time due to power outages. and has a pre-tax margin of 7%–8%.6 billion resulting from savings in infrastructure provisioning fee (IPF). massive amounts of funds can be saved.9. power shortages. as the tenant paying a higher rent to the tower company accelerates the time-to-market process.
Commercial considerations appear to be driving the increasing trend to adopt a variety of infrastructure models. 25 Enabling the next wave of telecom growth in India . RAN sharing: this is the simplest type of electronic infrastructure sharing. Operators have realized that the industry needs significant capital expenditure. cables. including radio equipment. towers. There are many government initiatives that support infrastructure sharing. zoning regulations may start to play an important role in driving service providers to share civil infrastructure. Infrastructure sharing can take the following forms40: Civil infrastructure sharing: this refers to the sharing of physical sites. Electronic infrastructure sharing: this refers to the sharing of electronic elements such as antennas.9. The separation of the core network also allows each service provider to offer differentiated services to its subscribers. infrastructure sharing reduces operating costs and provides additional capacity in congested areas where space for sites and towers is limited. power supply and battery backup. so that each service provider can maintain control of its equipment and spectrum use. it provides an opportunity to reduce capital and operational expenditure by sharing infrastructure from the start of the build-out. Service providers can agree to provide mobile services to each other’s subscribers to ensure converage wherever their own network signal is not available or weak.Revenue stream for incumbents: sharing enables incumbents to earn revenues from a new source. This can increase the coverage area and improve the quality of service. It helps to expand coverage into previously unserved geographic areas. apart from improving capex and opex efficiencies. The tower business can become a profit center by itself. mast and site. page 12. thus contributing to the growth of the industry as a whole. shelters. Government initiatives on infrastructure sharing: regulators favor faster deployment and investment optimization in the telecom sector.7 Models of infrastructure sharing As India’s mobile networks have expanded over the past few years. Less negative environmental impact: although environmentalists show limited support for telecom network deployment. product innovation and improved customer service.” GSMA. 40 “Mobile infrastructure sharing. coverage is no longer a source of competitive advantage. For operators who have been awarded 3G licenses and will be launching 3G operations. infrastructure sharing typically receives the backing of many conservation groups because less network buildup means fewer negative environmental impacts. Local restrictions and environmental benefits: as local authorities become more concerned about the environmental and aesthetic effects of the number and location of antennas in an area. Thus. rather than just leading to cost savings. masts. buildings. This is by far the most common form of infrastructure sharing in India now. radio access network (RAN). 2. node B and transmission equipment. one physical unit is shared by two distinct nodes B. Node B sharing: in the Node B sharing model. as operators can dramatically reduce site acquisition times and load their electronics and electronic network elements onto the civil infrastructure of incumbent operators in a civil sharing model. The level of sharing among wireless service providers varies depending on the complexity of the arrangements and the interdependence of the wireless service providers. Usually. Infrastructure sharing limits duplication and gears investment toward underserved areas. An extended version of RAN can be in the form of intra-circle roaming. It also provides an additional source of revenue but may be limited by differing strategic objectives. What started off as arrangements between two telecom operators has evolved into the creation of tower companies. freeing up significant resources and management time to focus on their core business. which can be reduced by sharing their networks. It involves all the access network elements to the point of connection with the core network. The radio network controller (RNC) and core network are not shared in this model. Expeditious time-to-market for new players: sharing significantly speeds up the time-to-market. operators either establish a joint venture company to operate the shared network or establish an agreement on the use of each other’s networks. feeders. These provide incentives for companies to participate in infrastructure sharing.
Radio and core sharing: all electronic components in the access and core network as well as civil infrastructure are shared. Backhaul sharing: common backhaul sharing will be very useful in rural environments where traffic from BTS to BSC is very low. Distributed antennae sharing (DAS): over the past few years. The regulator permitted this level of sharing.Core network: the most complex form of network sharing involves both radio and core network elements. there are five operators. DAS is a collection of small antennas spread over a specific geographic area and connected by fiber to a central location or power source. four of whom have formed two consortiums of two operators each. reducing cost and maintenance efforts. radio links. it helps add much-needed capacity to operators’ networks. permitting one or more partner service providers to access some or all of the mobile network. to provide wireless service within a geographic area or structure. usually a base station. This can be implemented to various levels depending on which platforms operators wish to share. but required each operator to maintain 30% of its network separately. Enabling the next wave of telecom growth in India 26 . In Sweden. A common RF or optical fiber medium can be utilized. Exits from such sharing arrangements can easily be provided if warranted due to an increase of traffic or other reasons. Mobile virtual network operators (MVNOs): these typically do not have their own network and have no rights to spectrum. National roaming accelerates competition by allowing new players to launch their services within a shorter time frame. antenna and transmission equipment. Essentially. National roaming: mandatory national roaming is a form of infrastructure sharing that allows new operators. by breaking down the macro cell site into smaller pieces. The benefits of DAS are twofold — the technology allows carriers to fill in coverage gaps and dead spots in their macro network and. They typically rely on operator network sharing to get access to subscribers and offer services. network elements. stadiums and shopping malls as well as for outdoor purposes. backhaul. who have yet to complete their network deployment to provide national service coverage through sharing incumbents’ networks in specific areas. DAS has emerged as a powerful tool for wireless carriers to bolster their coverage and boost their capacity. DAS technology can be used to boost signal coverage in large buildings. especially with the advent of smartphones and 3G. including electronic components such as optic and feeder fiber cables. Each consortium has built out a joint network.
person-to-application (P2A) SMS. is also expected to drive the market for mobile VAS. short-code providers. July 2010. The mobile VAS revenues in the country are driven by the P2P SMS service. media companies. games and services such as m–commerce and m–radio. Value-added services (VAS) According to the Internet and Mobile Association of India (IAMAI).in/Default. technology enablers. Mobile VAS in India: 2010. the decline in ARPU has compelled mobile operators to focus on mobile VAS to generate additional revenues. Mobile VAS in India: 2010. approximately 60%–80%43 is captured by mobile operators. monotones.gov.1 93. with India being one of the leading mobile markets for the young. application-to-person (A2P) SMS. followed by technology enablers (10%–20%) and content aggregators (10%–15%).trai. accessed 10 October 2010. The growth of m–commerce.asp. mobile payments and money transfer. 63 /2010. IAMAI. The demand for mobile VAS is driven by the increase in the mobile subscriber base.5 45. Entertainment mobile VAS constitutes 57% of the overall revenues followed by information mobile VAS (39%) and m-commerce (4%). 27 Enabling the next wave of telecom growth in India . http://www. The rollout of 3G services in the near future is expected to provide consumers with new and improved services such as highspeed data transfer.10. In terms of revenue distribution among various market participants.6 75.0 Revenue distribution of VAS services (%) 100 15 15 60 10 2006 2007 2008 2009 2010F Operator revenue Technology enabler Content aggregator Content owner Total Source: Mobile VAS in India: 2010. content aggregators or developers. out of the total amount paid by end users (excluding P2P SMS). July 2010 41 42 43 44 Mobile VAS in India: 2010. IAMAI. Market size of VAS 160 Market size (INR billion) 140 120 Growth (%) 100 80 60 40 20 0 28. The demand for mobile VAS is mostly driven by the youth.0 145. Moreover. July 2010. followed by music. Content owners end up getting approximately 5%–10% of the overall revenues. polytones and truetones as well as caller ring-back tones (CRBT).42 The key mobile VAS include person-to-person (P2P) SMS. July 2010. creating opportunities for both telecom operators and companies engaged in VAS. IAMAI. July 2010 Source: Mobile VAS in India: 2010. the mobile VAS in India was estimated to be worth INR145. growing at a CAGR of more than 50% during 2006–10. which has exceeded the 700 million44 mark. “TRAI Press Release No. IAMAI. handset manufacturers and content converters.2.” TRAI website. The rollout of 3G services is expected to drive the mobile VAS market in the future. which provides services such as mobile banking. IAMAI. as well as aggressive marketing efforts by telecom operators to spread awareness about their services such as updates and alerts.0 billion41 in 2010. The key participants in the mobile VAS market include content owners.
Ernst & Young analysis Teledensity 2. July 2010. Further. Further. the ARPU continues to shrink.185. 3G services will drive the expansion of wireless services in future.0 2011F 2012F 2013F 2014F 2015F 2020F 3G subscribers 3G subscribers as a % of wireless subscribers Source: Ovum. Outlook 2.217.0 6. video on demand.200 1.0 72. the country’s wireless teledensity is expected reach 97.9% 120% 100% Enabling the next wave of telecom growth in India 28 . According to Ovum. accounting for 20% of the total wireless subscriber base.9% 10. Wireless subscribers in India Wireless subscribers (million) 1. location based services and remote access/ VPN applications.0% 101.11.000 800 600 400 200 0 77. Future subscriber growth is likely to hinge upon rural and low-income users. 47 Ovum: Mobile regional and country forecast pack: 2010–15.400 1.3 1.7% 752. accounting for 12% of the total wireless subscriber base.8 60% 40% 20% 0% 1.1% 92. accessed 10 October 2010.com/.049.7% 63.2% 44. 3G subscribers forecast 350 300 250 200 150 100 50 0 3.0 5% 0% 20.” TRAI website.5 1. during the period 2010–15.4 10% 142.1 2009 2010 2011F 2012F 2013F 2014F 2015F 2020F Wireless subscribers Source: TRAI.2 3G subscribers 3G subscribers as a percentage of wirless subscribers (%) 3G subscribers (million) 3G is the next generation mobile technology which is capable of delivering broadband content.1%.1 1.1 Wireless At the end of December 2010.217. 46 Ernst & Young analysis.ovumkc.134.9% 97. Teledensity (%) 87. The presence of as many as 14 mobile operators in certain parts of the country and rising financial pressures are expected to drive consolidation in the sector. Ovum. http://www.0 118.600 1.9% 8.8% 35.2. 3G subscribers are expected to be more than 300 million by 2020. DoT. http://www.46 to reach 1.9% 95. leading to falling profit margins of mobile operators.trai. Ernst & Young analysis 45 “TRAI: The Indian Telecom Services Performance Indicators (January . Ovum website. accessed 16 October 2010.in/Default.0% 11.7% 25% 20% 15% 303.2% and 110% in 2015 and 2020. the number of wireless subscribers in India is expected to increase at a CAGR of 10.8 80% 1.2 923. Although the telecom sector is witnessing strong customer additions every month.516. respectively.2% 109. including a host of rich multimedia services such as video calling. 3G subscribers are expected to reach 142 million by 2015. there were 752.1 525.11.asp. with a significant number of multiple and inactive Subscriber Identity Module (SIM) owners.1 million47 subscribers in 2015.2 million45 mobile subscribers.March 2010).11.gov.
during the period 2010–15.gov. the wireline subscribers are forecasted to reach 26. the broadband connections are estimated to reach 150 million by 2020.11.1 26.1 30. 49 Ernst & Young analysis. accessed 10 October 2010. 50 Ovum: Fixed voice connections forecast pack: 2008–15. http://www. Ernst & Young analysis 37.trai.com/. June 2010. Ernst & Young analysis 48 “TRAI: The Indian Telecom Services Performance Indicators (January .9 33. Ovum website. According to Ovum.1 million50 by 2015.49 to reach 29.11.ovumkc.2. 29 Enabling the next wave of telecom growth in India . http://www.1 35.asp. Further. the number of wireline subscribers in India is expected to decrease at a CAGR of nearly 4%.asp.” TRAI website. The wireline market is in decline. http://www.trai. Wireline subscribers in India Wire line subscribers (million) 40 35 30 25 20 15 10 5 0 2009 2010 2011F 2012F 2013F 2014F 2015F 2020F Source: TRAI. Broadband subscribers forecastc Year 2010 2012 2014 2020 Number of households 236 241 250 275 % of households to be covered for broadband 5% 20% 40% 55% Number of broadband connections (million) 11.4 Broadband As of September 2010.in/Default.3 million broadband subscribers in India.” TRAI website.3 2.5 29.5 32. page 16.1 million48 wireline subscribers at the end of December 2010. July 2010.in/Default.March 2010). Considering increasing broadband demand.3 Wireline There were 35. there were 10. The growth of broadband is expected to increase with uptake of 3G and BWA services. The growth in the mobile market is seen as the cause of the decline. DoT.gov. accessed 16 October 2010. Ovum.1 34. accessed 10 October 2010.3 million in 2020.5 48 100 150 Source: “TRAI: Consultation Paper on National Broadband Plan. a trend that is expected to continue.
2009-2014.1%51and 7.0 10.4 14. 52 Ovum: Forecast of service provider revenue and capex. and the adoption of VAS. http://www.8 51.3 38. Enabling the next wave of telecom growth in India 30 .0 57.5 7.2 billion and US$ 13. the Indian telecom sector has witnessed an increase in revenues and contribution toward GDP. According to Ovum.9 2009 2010F 2011F Revenues 2012F 2013F 2014F Capex 2015F 2020F Source: Ovum. lower tariffs. accessed 16 October 2010.0 34.8 45. Revenue break-up: voice and non-voice 10% 17% 22% 27% 32% 38% 90% 83% 78% 73% 68% 62% 2011F 2012F 2013F Voice 2014F 2015F Non-voice 2020F Source: Pyramid Research.11. Ovum website. respectively by 2020.0452 billion and US$14.9 15.1 13. Ernst & Young analysis Over the years. industry revenues and capex are expected to increase to US$57. Further.5 Revenue and capex Over the years. with the introduction of 3G and BWA services. Ernst & Young analysis 51 Ernst & Young analysis. NLD and VAS are also expected to drive revenue growth. the increase in mobile penetration in both urban and rural areas.1 48. industry revenues and capital expenditure are expected to increase at CAGR of 8. during the period 2009–15.8 43.2. to reach US$51.7 11. The future revenue growth and increase in capex is expected to be driven by the rollout of 3G services and the increase in broadband penetration across the country.0%.9 billion. including BWA penetration. Other services such as ILD.97 billion by 2015. Revenue and capex forecast Revenue and capex (US$ billion) 70 60 50 40 30 20 10 0 32.0 13.com/. The growth in revenues is driven by cheaper mobile handsets.ovumkc.2 15. respectively. the contribution of non-voice services towards the industry revenues is expected to reach 38% by 2020.
3 31 Achievements and setbacks of NTP 1999 Enabling the next wave of telecom growth in India .
and provide reliable transmission media in all rural areas Achieve telecom coverage of all villages in the country and provide reliable media to all exchanges by 2002 Provide internet access to all district headquarters by 2000 Provide high-speed data and multimedia capability. achieving universal service across all villages. for all cities with a population greater than 200.4% to 4% by 2010.The NTP 1999 aims at making India competitive in the global telecom market through growth in exports. using technologies including international services digital network (ISDN). The key objectives of the policy include telecommunication for all and within the reach of all. global standards in the quality of service. FDI and domestic investment. The policy includes specific targets: • • Make available telephone on demand by 2002 and sustain it thereafter so as to achieve a teledensity of 7% by 2005 and 15% by 2010 Encourage the development of telecom in rural areas. making it more affordable by fixing a suitable tariff structure and making rural communication mandatory for all fixed service providers Increase rural teledensity from 0.000 by 2002 • • • • Enabling the next wave of telecom growth in India 32 . and protection of the country’s security interests. the emergence of India as a major manufacturing base and a major exporter of telecom equipment.
especially reliability. aggregators and technology enablers Sector still faces challenges for growth: • Spectrum re-farming and effective management of spectrum in a transparent manner • Creation of an effective licensing framework where amendments are carried out in consultation with service providers • “Critical” Infrastructure Status along with uniform policy and single window clearance • Energy requirements. resulting in huge operating expenditure • Effective utilization of USOF to increase rural penetration • Increasing broadband penetration and rural connectivity • Overcoming security concerns over the use of mobile handsets and telecom equipment • Limited availability of talent.3 million) and in teledensity (61. R&D and customer care. mobile value-added services (MVAS) encompass mobile operators. among others • Among the lowest tariffs in the world.0%) • Contribution of telecom to overall GDP of almost 3%.g. especially telecom specialists • Fixed mobile convergence (FMC) 33 Enabling the next wave of telecom growth in India . e. providers. technology.5% in 2000 • Creation of jobs across sales and marketing.NTP 1999 has been a catalyst for the telecom sector: • Growth in the subscriber base (723. content creators. up from 1. and the adoption of per-second billing by various operators • Robust growth in revenues — industry revenues recorded at US$35 billion • Increased FDI in the telecom sector — accounts for more than 8% of cumulative FDI inﬂows in the past decade • The promotion of manufacturing of telecom equipment in India and the growth of telecom exports • Growth of the telecom industry has led to the development of new business ecosystems..
9% 4.4% 61. page 76. accessed 10 December 2010.” The Quarterly Journal of Economics. which was set at 4% by 2010.6% 1.” Indian Institute of Kanpur website.2% 9.asp.4% 65.9% 52.ac. Enabling the next wave of telecom growth in India 34 . and its targets have been achieved well in advance. According to a study by Robert Jensen.” TRAI website. 2007. The impact of mobile telephony on rural areas has been profound.pdf. http://www. 54 “TRAI Press Release No. the overall teledensity as of September 2010 stood at 61.iitk.1.asp.7% 37.6% FY04 38.54 Urban teledensity and rural teledensity at the end of September 2010 were 137.3% 28.4% in rural India.3% 26.2% 1. the teledensity level in the country was 0. http://www. about 70% of the population in India lives in rural areas.0% 119. geographical spread.9% 0.7% 137.8% FY07 89. The improvement in rural teledensity Urban and rural teledensity 140% 120% 100% Teledensity (%) 80% 60% 40% 20% 0% 8. Although India has witnessed a steep rise in teledensity over the past few years.56 decreased fish prices by 4% and consumption of fish increased by 6%. Key achievements of NTP 1999 3.3% poses a critical challenge due to low population density. with rural teledensity being far ahead of the NTP 1999 target. Market Performance and Welfare in the South Indian Fisheries Sector.1% 1. As a result. Currently.3. There is a significant opportunity for service providers to increase penetration in rural areas and generate revenues.1. “The Digital Provide: Information (Technology). 55 “TRAI: The Indian Telecom Services Performance Indicators (July – September 2010).4% 2.gov.02%53. NTP 1999 has been instrumental in the growth of telecom in both urban and rural areas. by 1998.. the introduction of mobile telephony in Kerala increased the fishing community’s profits by 8%.gov.9% FY01 14.0%. and mobile penetration stands at a meager 28.2% 5. It has helped reduce the cost and time of transactions and has visibly compensated for the poor infrastructure.2% FY02 FY03 20.3% 4. there is an uneven distribution of teledensity among Indian states resulting in slow economic development of the states and their surrounding regions.1 Teledensity Reforms in the telecom sector have been encouraged by the active participation of the public and private sector.” TRAI website. January 2010. FY09 FY10 Sept 10 Urban teledensity Source: TRAI Rural teledensity Total teledensity 53 “Rural Telecom and IT. accessed 15 January 2011.in/3inetwork/html/reports/IIR2007/04-Rural Telecom.in/Default. a Harvard University economist.3% 3.trai.2% 2. respectively.2% 9. 63 /2010.8% FY05 12.3% 0.8% 5.0% FY06 18.2% FY08 14.in/Default. 56 Jensen. Furthermore.9%.1% 1.0% 26.0% 24.4%.trai. Following independence. the disparity between urban and rural areas in terms of mobile penetration has increased significantly. low per capita income and the cost of maintaining phones in rural areas. the level had increased to only 1.5% 12.7% FY00 10.9% 47. R. http://www. The overall teledensity target of 15% by 2010 was achieved in FY07.3%55 and 28.
Dun & Bradstreet 3.8% 52.0% 89.1.3% 73. The expansion of the Indian BPO industry is a classic example of indirect employment.891 9.3 43. Mix of private and PSU operators. which has resulted in an increase in employment opportunities in the telecom sector.1% 56. technology.and information-based economy.9% 47. Dun & Bradstreet website. 57 Overview of Telecom Industry. 35 Enabling the next wave of telecom growth in India . private telecom players have considerably expanded their operations.4 140. It has paved the way for a knowledge.771 14. December 2009. R&D and customer care.110 The development of telephony in India has played an important role in altering the structure of the economy. R&D and financial services.5% 429. media.7% 85.400 11.2 Teledensity and employment Over the past decade. The ratio of the number of subscribers per employee is very high in the case of private operators in India.3% FY05 429.00057 direct employees. education.7% 90. The sector has created direct employment across various business areas such as sales and marketing. by subscriber base 100%= million 98. Employees of private and PSU operators 100%= 436.5% 205.678 FY07 193 2. which augurs well for sectors such as IT/ITES.0% FY06 432.9 34.3% FY07 PSU operators Private operators Subscribers per employee ratio in India FY05 PSU operators Private operators 132 1. as well as indirect employment.Total teledensity by state in India. FY10 The Indian telecom industry employs more than 430.089 FY06 158 1.7 20. with the majority of these employees being a part of the public sector undertakings (PSU). technology.5% 65.7% 300.2% Low teledensity: 0%–50% Medium teledensity: 50%–100% High teledensity: 100% and above Source: TRAI FY05 FY06 FY07 FY08 PSU operators FY09 Private operators Source: TRAI.5 26.5% 79.
3.1.3 Size of the telecom sector and contribution to GDP
The revenues of the Indian telecom sector have increased by almost fivefold from US$7 billion in FY00 to US$35 billion58 in FY09. The growth in revenues has been driven by favorable factors such as the availability of cheaper mobile handsets, lower tariffs, the increase in mobile penetration in both urban and rural areas and the adoption of VAS. In addition, infrastructure sharing has enabled operators to improve margins by bringing down costs significantly. India’s telecom sector is a voice-centric market characterized by high MoU and ARPU. A sharp decline in call charges and the cost of services has enabled the rise of mobile subscribers and revenues. Indian telecom sector gross revenues
40 35 Revenue (US$ billion) 30 25 20 15 10 5
FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10
The contribution of the telecom sector to India’s GDP is estimated to increase from 1.5% in 2006 to 2.8%59 in 2010. The Indian economy is expected to sustain an 8% or a higher growth rate in the future. As the country aims to achieve higher teledensity, the contribution of the telecom sector in GDP is expected to increase. According to an ICRIER study, a 10%60 increase in mobile penetration results in a 1.2% increase in GDP.
Contribution of telecom to GDP
3.0% 2.5% 2.0% 1.5% 1.0% 0.5% FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 1.5% 1.7% 1.6% 1.6% 2.2% 2.2% 2.3% 2.3% 2.6% 2.8% 2.4%
31 25 17 20
Source: TRAI; Ernst & Young estimates
15 7 8 8 9
Source: TRAI; Ernst & Young analysis
The contribution of the telecom sector also has a multiplier effect on growth, due to associated individuals and businesses. Further, the GoI’s aim to reach rural teledensity of 40%61 by 2014 from the current levels and achieve broadband coverage of all 250,000 village panchayats under the Bharat Nirman Program is expected to enhance the contribution of the telecom sector to India’s GDP.
58 Transfer Pricing Report — Telecom (general), Ernst & Young, 2010. 59 Ernst & Young analysis. 60 “High-teledensity states grew faster, says study,” LiveMint, http://www.livemint.com/2009/01/19224316/Highteledensity-states-grew-f.html, accessed 10 October 2010. 61 “Bharat Nirman: A business plan for rural infrastructure,” Bharat Nirman website, http://www.bharatnirman.gov.in/page2.html, accessed 20 October 2010.
Enabling the next wave of telecom growth in India
3.1.4 FDI in the Indian telecom sector
In the past decade, India has witnessed a considerable rise in FDI. During the last decade, FDI in India increased at a CAGR of 28.0%62 to reach US$37.2 billion63 in FY10. The telecom sector is among the leading sectors attracting FDI, accounting for 8.1% of the cumulative FDI equity inflows from FY00 to FY10. Over the past few years, a number of foreign ownership and equity regulation reforms have been introduced in the telecom sector. These reforms have led to an increase in FDI inflow in the sector.
From FY08 through FY10, FDI equity inflows in the telecom sector increased at a CAGR of 42.3%65 to reach US$2.6 billion. Higher levels of FDI in the telecom sector have intensified competition and strengthened market penetration. They have also opened up opportunities for telecom manufacturing and related business areas in the sector.
3.1.5 Restructuring mobile tariffs
The decline in tariffs has enabled the industry to reach a phenomenal size in terms of subscribers, while at the same time diluting the ARPU. In the early days, mobile tariffs were targeted toward both the calling and receiving party, with the regime popularly known as “receiving party pays.” In January 2003, TRAI announced the implementation of the “calling party pays” regime, with incoming calls being free of charge for the receiving party.
FDI limits in telecom64
• 100% FDI is permissible in the case of infrastructure providers that offer dark fiber, ROW, duct space, tower, email, and voice mail: • FDI of up to 49% can be done on the Automatic Route (without prior government approval); beyond that, prior approval is required • 74% FDI is permissible in the case of basic, cellular, unified access services, NLD/ILD, V-Sat, public mobile radio trunked services (PMRTS), global mobile personal communications services (GMPCS) and other VAS • FDI of up to 49% can be done on the Automatic Route (without prior government approval); beyond that, prior approval is required • 74% FDI is permissible in the case of ISPs with gateways, ISPs not providing gateways, radio paging and end-to-end bandwidth • FDI of up to 49% can be done on the Automatic Route (without prior government approval); beyond that, prior approval is required
Cumulative FDI equity inﬂow in India, FY00-10
Services sector Computer hardware and software Telecommunications
FDI equity inﬂow in the telecom sector (US$ billion)
Housing and real estate Construction activities
38.3% 8.1% 7.6% 7.3% 4.1% 4.2%
Power Automobile Others FY08 1.3
Source: Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce and Industry 62 Ernst & Young analysis. 63 “Fact Sheet on Foreign Direct Investment from August 1999 to July 2010,” Department of Industrial Policy & Promotion, http://dipp.nic.in/, accessed 10 October 2010. 64 Department of Industrial Policy & Promotion: Consolidated FDI policy effective from April 2010, Department of Industrial Policy & Promotion, April 2010, page 58. 65 Ernst & Young analysis.
Enabling the next wave of telecom growth in India
The effective price per minute for an outgoing mobile call has declined from approximately INR16.4066 in 1995 to almost INR0.30 today. Since the formulation of NTP 1999, the industry has experienced a decline of about 95% in mobile tariffs. The entry of new service providers has resulted in a tariff war, as the market entrants have used pricing to grab market share. Per-second billing has emerged as an industry norm, thereby creating a win-win situation for subscribers. The intense competition in the telecom sector has led to declining ARPU among mobile operators. From FY06 through FY10, the ARPU of GSM and CDMA operators decreased by 64.2% and 70.3%, respectively. The average annual decrease for GSM and CDMA operators was 22.1% and 25.8%, respectively. ARPU levels are estimated to continue declining over the next few years, though the rate of decline is expected to be slow. Following the introduction of the NTP 1999, the MoU among telecom service providers have also witnessed an increase. Although India has recorded one of the highest MoU globally in the past few years, the sector has also experienced a decline in MoU, especially in the case of CDMA operators. In addition, the rate per minute (RPM) has declined due to the increase in competition in the sector.
GSM operators: ARPU and MoU
600 500 ARPU (INR) 400 300 200 100 0 FY06 FY07 FY08 FY09 395 366 298 264 205 131 FY10 164 Sep10 471 493 484 410 423 600 500 400 300 200 100 0 MoU (minutes)
CDMA operators: ARPU and MoU
600 500 ARPU (INR) 400 300 200 100 0 FY06 FY07 FY08 MOU FY09 256 202 550 471 364 159 99 352 600 500 400 308 78 300 200 76 100 0
3.1.6 Handset prices
The Indian mobile handset market is estimated to be worth INR500 billion.68 The market has witnessed the entry of a number of mobile manufacturers, raising the total number of manufacturers to about 30 from approximately 5 in 2008. The Indian mobile handset market is dominated by established global brands. The market is characterized by the presence of both high–end and low–end mobile phones, with a wide gap between handset prices. The market is also inundated with unbranded and cheap imported mobile phones, which are primarily Chinese in origin. The growing mobile subscriber base in India has led to the entry into the market of a number of “homegrown” mobile handset manufacturers.
GSM and CDMA operators: RPM
1.0 0.9 0.8 0.7 INR 0.6 0.5 0.4 0.3 0.2 0.1 0.0 FY06 FY07 FY08 GSM
0.6 0.5 0.5 0.4 0.4 0.3 0.2 FY09 FY10 Sep10 0.4 0.3 0.4 0.3
66 “One Minute at a Time,” Outlook India, http://business.outlookindia.com/printarticle.aspx?266748, accessed 21 October 2010. 67 Ernst & Young analysis. 68 “Small handset makers making big strides,” Business Standard, 15 April 2010, http://www.business-standard.com/india/news/small-handset-makersmaking-big-strides/391912/, accessed 5 October 2010.
Enabling the next wave of telecom growth in India
6 71. usually with a minority ownership.7 80 60 40 20 0 33.” Department of Industrial Policy & Promotion. access to niche technologies. from US$0. In line with the change in the pattern of investments. Macquarie Capital In the past decade. 39 Enabling the next wave of telecom growth in India . the structure of ownership has also shifted toward majority and full ownership. Indian companies have reached overseas destinations to tap new markets and have acquired technologies. FDI by firms belonging to developing countries has gained momentum and has become an integral part of globalization. M&A provide benefits such as expansion of global footprint. Over the next few years. and the ASP of smartphones is expected to drop below US$200. a wider customer base and growth momentum. adding numerous features ranging from monochrome screens to touch screens. However.4 7 5. Over the past decade. accessed 10 October 2010.8 billion in FY01.6 billion69 in FY09. and foreign affiliations were formed through joint ventures.4 FY06 FY07 FY08 FY09 FY10 3. Global Positioning System (GPS). The share of manufacturing in the investment activity has Source: Voice & Data 69 “NCAER: FDI in India and its growth linkages.7 Global outreach of Indian telecom companies In the early 1990s. the ASP of feature phones is expected to be US$50. page 13.in/. 3G and an improved user interface. Globally. greenfield investments were a popular mode of overseas investment among Indian firms. India’s FDI outflows (debit) have grown at a CAGR of 47.5 108 6.6 6 5 4 3 2 1 0 Value (US$ billion) 3. India has witnessed prominent diversification in the industry composition of overseas activities of Indian firms. http://dipp. monotone ringtones to MP3 ringtones. Video Graphics Array (VGA) to 8-to-12-megapixel cameras.Average selling price (ASP) of mobile handsets 200 Average selling price (US$) 180 160 140 120 100 80 60 40 20 0 1Q08 Nokia 2Q08 3Q08 Motorola 4Q08 Samsung 1Q09 2Q09 Sony Ericsson 2Q09E 4Q09E Others 1Q10E 2Q10E Source: Company data. the price of feature phones is declining at a faster rate than smartphones.nic. the average selling price (ASP) of both feature phones and smartphones has been on the decline. email. Over the period. new product mix.1.2 95. and the majority of this capital value has been used to acquire companies. August 2009. The market has witnessed investment in the form of greenfield projects. According to the National Council of Applied Economic Research (NCAER).0 5.5% to reach a projected US$18. mobile handsets have evolved rapidly. enhanced memory.8 101. Indian mobile handset market 120 100 Volume (million units) 4.
700. whereas the share of services has increased. leading to the emergence of telecom giants from India. Bangladesh FLAG Telecom Group Ltd Teleglobe International Holdings Ltd.8 177.0 30. Telecom Seychelles Astratel Nusantara PT Acquirer company Bharti Airtel Ltd Bharti Airtel Ltd Reliance Gateway Net Pvt Ltd TCL Bharti Airtel Ltd CDC Capital Partners Deal value (US$ million) 10. Key overseas M&A by Indian firms Year 2010 2010 2003 2005 2010 2000 Target company Zain Africa BV Warid Telecom.0 194.declined considerably.0 Source: Thomson ONE Banker Enabling the next wave of telecom growth in India 40 .0 300. The Indian telecom sector has actively been a part of the global M&A activity.0 62.
htm. the advent of new technologies is expected to create conflicts for spectrum.dot. However.3.September 2010). 74 “TRAI: Spectrum Management and Licensing Framework.in/Default. Globally.2 Growth of broadband As of September 2010.trai. the telecom sector continues to face various issues that act as impediments to its growth. with a CAGR of 77.2. broadband penetration levels in India are far below other emerging countries such as Brazil. page 339. Currently.gov. Although wireline infrastructure in India has been in place for an extended period. Russia and China. wireline and wireless complement each other. http://www.72 in comparison with 33% in Brazil. http://www. Despite being the second-largest market in terms of the subscriber base. page 18.2. According to TRAI. 72 The Internet’s New Billion.3 million broadband subscribers in India. page 7.trai.2.” TRAI website. In line with the growth of subscribers. 41 Enabling the next wave of telecom growth in India .asp. and the number of wireline subscribers has fallen from 41. Boston Consulting Group. the Broadband Policy 2004 had anticipated 40 million71 internet subscribers and 20 million broadband subscribers by 2010. http://www.1 Growth of wireline The wireline segment has added just 10 million users since the introduction of the NTP 1999.” TRAI website. 71 “Broadband Policy 2004.in/ntp/broadbandpolicy2004. cheaper handsets. 3. the affordability and availability of broadband services and inadequate infrastructure. http://www.2. the need for spectrum to service these subscribers has also increased. 70 “TRAI: The Indian Telecom Services Performance Indicators (July . However. India lags behind in terms of availability of spectrum for commercial use. the advantage of mobility among wireless networks and the inadequate infrastructure of the wireline network. May 2010. January 2010. improved mobile coverage. in the absence of a long-term plan to meet future requirements. Furthermore. According to Boston Consulting Group.5% during the period FY00–10. along with the benefit of VAS such as internet for the urban and rural population and the abolition of the digital divide. The sluggish growth in broadband services is attributable to the absence of low-cost devices. broadband penetration is accepted as a measure of a country’s ability to compete as an economic power.5 million in FY06 to 37 million in FY10.in/Default. the Indian telecom industry is expected to reach 1 billion73 wireless subscribers by March 2014.asp. accessed 10 October 2010. inadequate content and applications in regional languages. therefore requiring lesser BTSs density and lower capital and operating expenditure. 3. accessed 15 January 2011. 3.” DoT website.3 Spectrum challenges The Indian telecom industry has witnessed phenomenal growth in the number of subscribers.in/Default.gov. according to TRAI. India has an internet penetration of 7%. there were 17. Key challenges of NTP 1999 NTP 1999 envisaged the affordability and availability of telecommunication services for the common populace. 73 “TRAI: Spectrum Management and Licensing Framework. The availability of spectrum for commercial services in India is below the required levels. May 2010. The Broadband Policy 2004 has failed to keep pace with advances in technology and failed to boost the telecom sector.” TRAI website.9 million70 internet subscribers and 10.gov. Despite India’s status as an IT superpower. the growth of wireline phones is not in sync with the rise in the number of wireless subscribers. 31% in Russia and 28% in China. accessed 10 October 2010. The stagnancy in the growth of wireline networks has an impact on the overall growth of the telecom sector and other services such as internet and broadband services.trai. The decline has been due to lower mobile tariffs. the bandwidth required by 2014 may be as high as 800MHz. September 2010. accessed 10 October 2010.asp.74 Spectrum bands such as the 900MHz band are of great value to mobile operators due to the longer ranges these can support.gov.
the GoI auctioned 2x4. in 2001.in/tnl_jces_Sep_2009/Spectrum%20allocation%20 procedure. the third operator license was awarded.2 billion Following the completion of the 3G auctions. to the government operator on a pro bono basis In 2001. in line with TRAI’s recommendations. Start-up spectrum of 2x4. in addition to 25MHz in the 2. subscriber based norms (SBN) was introduced.3GHz range in each of the country’s 22 service areas. along with 2x4.Spectrum and license allocation timeline in India First stage: 1995–2003 Auctioning scarce spectrum • • • In 1995.800MHz band. It auctioned two 20MHz blocks in the 2.4MHz in 1. The GoI allocated spectrum to new telecom players in service areas across India The defense services agreed to vacate 2x20MHz in the 1.1GHz UMTS band The DoT proposed new 2G spectrum usage charges for all operators.4MHz of start–up spectrum for GSM-based services Two operators were selected for each License Service Area (LSA). It laid down a roadmap for the allotment of 2x12. the fourth operator license was issued using a three-stage auction procedure. the e–auction of 3G mobile services was concluded after 183 rounds of bidding across all service areas. Subsequently.pdf accessed 02 August 2010 Enabling the next wave of telecom growth in India 42 . All operators were expected to pay higher spectrum usage charges. one or two new firms also paid the stipulated entry fee and obtained a license to operate GSM services in certain LSAs 3G services were treated as a separate service from 2G. and incumbents were kept out of fresh allocations. Including the amount paid by state-owned BSNL and MTNL. The GoI raised INR385.800MHz was given to the winning bidder: • • In addition to the entry fees.2MHz per circle in case of GSM players and above 5MHz for CDMA In August 2008. they were given start-up spectrum only as and when available Following the entry of two or three CDMA-based mobile operators in each LSA.4MHz of start-up spectrum in the 900MHz band.5MHz of spectrum per operator in each LSA Second stage: 2003–06 Unified Access Service (UAS) licenses • • In November 2003. the GoI announced the policy for 3G mobile services.4 billion from the broadband wireless auction Source: “A peep into RF spectrum allocation process in India.nic. Although firms were awarded licenses after paying the required entry fee. it totalled to INR677. This differed from the earlier strategy of increasing spectrum charges only for those operators who held more than 6. and opted for the auction of a start–up spectrum of 2x5MHz in the 2. licensees were required to pay a percentage of annual revenue as spectrum charges In 2002. the bandwidth for broadband services (WiMAX) was auctioned by the GoI.7 billion to the GoI within 10 days of the closing of the auction. GoI announced UASL that allowed basic service license holders to provide full mobility-based services with a stipulated entry fee based on the bid price paid by the fourth operator in 2001 The fixed fee-based license allowed any number of mobile licenses to be provided and implicitly de-linked spectrum allocation from licensing. and TRAI continued to maintain that there was a shortage of 2G spectrum A new SBN policy was defined.” Integrated Defense Staff http://ids.1GHz band with reserve prices for different categories of LSAs In May 2010. irrespective of the quantity they held. All of the 71 blocks up for auction across the 22 service areas were sold: • Third stage: 2006–08 Criterion for allocation of spectrum • • • • Fourth stage: 2008–10 Policy on 3G and 3G auctions • • • • All the winners of the auction were required to pay INR509.
using any type of network equipment that met the International Telecommunication Union (ITU) or Telecommunication Engineering Center (TEC) standards. preferential treatment for sharing and incentives in a timely manner. Civic issues: there is a need to address civic issues such as zoning regulation. There are huge gaps in low-income or sparsely populated areas. Inadequate utilization of towers: towers are not fully utilized as no law ensures that no new tower is built in an area where an existing tower is under utilized.4 Licensing challenges NTP 1999 permitted Cellular Mobile Service Providers (CMSPs) to provide all types of mobile services. page 59. there is a limited number of telecom equipment manufacturers and providers tend to be highly dependent on imported equipment during the setup of mobile networks. However. which are highlighted below: Role played by multiple state agencies: there is no uniform approval process across the states. The policy made the cellular license technology neutral. Telecom infrastructure service providers face several challenges. in their service area of operations. including voice and non-voice messages. telecom manufacturing in India has not been able to keep pace. incur huge costs and delays because several state agencies are involved in granting approval for setting up towers.trai. others require dealing with multiple agencies. Several demand prohibitive fees.gov. licensees were required to use GSM technology. 3. In November 2003. despite being a “key infrastructure. data services and PCOs.5 Equipment manufacturing The Indian telecom sector has witnessed rapid growth. single window clearance.” is far from ubiquitous. May 2010.3. especially away from cities and towns.in/Default.asp. http://www.2. in India. 75 “TRAI: Spectrum Management and Licensing Framework. Moreover. the country lags behind in terms of telecom R&D and continues to be reliant on imports.2. 43 Enabling the next wave of telecom growth in India . licenses are bundled with the allotment of a certain amount of spectrum. Tower companies. therefore. the GoI introduced the UAS licensing regime.6 Infrastructure Telecommunications infrastructure.75 Globally. Completing the important task of connecting the remaining areas therefore requires an all-round effort by improving the economics of rolling out networks and addressing any other stakeholders’ concerns that act as a barrier. Since the introduction of the UAS licensing regime. permitting an access service provider to offer either fixed or mobile services or both. 3. some treat infrastructure business in the same way they treat petty commercial undertakings. Currently. and some look at infrastructure companies as a means to finance deficits. accessed 10 October 2010. page 59. Prior to this. However.” TRAI website.2. and also allowed licensees to migrate from a fixed license regime to a revenue-sharing arrangement starting in August 1999. where telecom companies see poor returns on the expensive investment required in setting up the infrastructure. and the biggest barrier to setting up telecom towers and other infrastructure is the wide variation in the approval process adopted by local bodies. the total number of licenses in a circle ranges from 12 to 14. the allocation of spectrum is separate from the grant of license to provide service.
In large parts of India. Delays and cumbersome processes for the SACFA clearances: the SACFA gives siting clearance of all wireless installations in the country. 76 Industry estimates. and there are other options as well. Misplaced apprehensions on health hazards of electromagnetic radiation from mobile antennas: many state governments and municipalities have barred towers in residential areas. the highest tariff is applied to the telecom site.Taxation on towers: multiple levies and high taxes are imposed for setting up mobile towers. Power consumption: one of the major problems faced is the lack of reliable grid power. Secondly.76 The thrust in increasing rural telephony will further aggravate the diesel dependence by telecom towers. which is not only more expensive but also polluting. IS:802 and IS:875. as these are dependent on diesel generators to keep running. the power connection to telecom towers is treated as one to a “commercial establishment. Although the USOF was created with the sole aim of promoting rural telephony.5 million tonnes. while others charge “commercial” rates. there is no clarity on the rates to be paid by infrastructure companies. the Municipal Corporation of Delhi (MCD) charges INR100. The above IS codes are primarily meant for electric/power transmission line tower design. Currently all the telecom operators are following IS codes. Without it.000 tonnes of carbon equivalent. the power is either unavailable or erratic. For instance.” and thus. the fund rules are too cumbersome and lack focus. namely IS:800. Enabling the next wave of telecom growth in India 44 . service providers are forced to use diesel generator sets at tower sites most of the time. The site clearance basically requires examination from the point of safety for flight navigation and interference with existing wireless systems. This adds avoidable uncertainity in an already tough business. there is a need to accelerate the pace of setting up the tower infrastructure in these areas. and the load criteria for telecom towers and transmission line towers are different. Energy consumption: cell sites account for most of the energy consumed by mobile networks. for the design of towers. and it is estimated that India as a country consumes more than 2 billion liters of diesel per year for cell sites.000 per tower as a one-off registration fee in Delhi. Diesel fuel is subsidized. Grievance redressal: there is no clear grievance escalation/ redressal mechanism that infrastructure companies can seek when a conflict arises.000 per tower and the New Delhi Municipal Council (NDMC) charges INR200. Environmental issues: diesel consumed by towers results in about 17. Utilization of USOF and incentives: since the next level of growth is expected to come from rural areas. Safety: the construction of telecom towers is still a self-regulated activity throughout India. They do not reflect the fact that USOF subsidies are perhaps most urgently required to defray the cost of infrastructure creation in rural areas. Further. The cumulative carbon footprint of telecom towers due to diesel consumption in a year is more than 5. citing concerns over alleged health hazards relating to BTS. This increases the dependence on diesel.000 tonnes of CO2 and 24. Some agencies charge them “industry” rates.
providing interested parties with concrete opportunities to navigate the growth of the telecom sector The creation of an efficient mechanism to implement regulatory decisions. and the formulation of a competitively neutral policy that is not discriminatory toward any of the stakeholders 45 Enabling the next wave of telecom growth in India . which witnessed significant changes in the socioeconomic environment. the time is ripe for a comprehensive review to build a forward-looking. This is the appropriate time to look again at the NTP 1999 and customize it to meet current and future needs. efficient. technological advancements and business dynamics of telecommunications. It needs to identify and address barriers to growth The functioning of the regulator in an unbiased manner. The NTP 1999 has served the sector well for more than a decade. strong and transparent policy framework that will be the backbone to achieving the India Telecom Vision 2020. India’s telecom industry is at a crossroad.4 • • • • Key enablers As we enter the second decade of the 21st century. India needs a principle and objective-based.and objective-based policy that provides a clear roadmap of the telecom sector and is reviewed regularly to keep abreast with rapid technological developments in the sector A transparent approach to policy formulation. Therefore. transparent. independent and competitively neutral policy that will accelerate the pace of growth in telecom services and manufacturing. A principle.
broadband and internet services delivery to subscribers with high quality of experience. It should be supported by different metrics of quality of services at affordable tariffs meeting the needs of different segments of society. with inclusive participation from rural India to ensure telecom coverage for all. Connected India: telecom vision 2020 The policy initiatives should focus on achieving the vision for connected Indian Telecom 2020: India should have a convergence services enabled network with voice.4. Enabling the next wave of telecom growth in India 46 .1. video. data. media.
Second. This involves key enablers such as licensing framework. 47 Enabling the next wave of telecom growth in India . First. the existing challenges faced by various stakeholders need to be addressed. USOF. M&As. spectrum. financial inclusion and m-commerce. equipment manufacturing and infrastructure development. among other things. This will.2. broadband penetration.4. Connected India: telecom mission 2020 Connected India: telecom mission 2020 should aim to achieve the following objectives: • To recognize and treat telecom infrastructure as critical infrastructure to accelerate the pace of growth of the sector and increase its contribution to the Indian economy To connect the unconnected at affordable prices to ensure 100% telecom coverage of the country. achieve total broadband connections of 150 million To earn revenues of around US$60 billion • • • A two-pronged strategy is needed to achieve connected India Telecom Mission 2020. include the unique identification number (UID) scheme. achieve rural penetration of 100% and reach overall wireless penetration of 110% To strengthen broadband penetration to reduce the digital divide. the policy should be able to meet future opportunities.
a licensee is entitled to obtain a certain amount of spectrum.1. Key enablers under existing scenario 4.4. VAT. should be fixed. DoT should consider lowering the contribution from 5% of AGR to 1% of AGR. excluding the USOF. mobile or both services under the same license.3. The policy must preserve competition and ensure that no service is given a price arbitrage over others. The GoI has issued many new UAS licenses since the introduction of the UAS regime. Since there is a significant cash reserve lying unutilized in the USOF. However. are currently imposed on the industry.1 Licensing77 The telecom sector has evolved from a monopolistic regime in the early 1990s to 12–14 licensees in a circle now.3. for global practices. A uniform revenue share license fee of 1%. including service tax and license fees (such as universal service obligation fees and spectrum charges). Multiple levies. with the allocation of spectrum separate from the allocation of a license. Enabling the next wave of telecom growth in India 48 . Pure internet service providers should continue to be free of any license fees. Globally. Parameters Spectrum and license Recommendations Need to have a single universal license for all telecom services. under the UAS regime. in India. which let the provider offer fixed. the GoI introduced the UAS licensing regime. Fee There should be a uniform license fee across all telecom circles. states levy additional taxes such as octroi. 77 See 5. entry tax and levies on towers. which aggregate to 30% of the revenues earned by telecom companies. the number of incumbent telecom service providers varies from four to six. stamp duty. subject to its availability and efficient usage. using any technology. Moreover. In November 2003.
reasons for refusal to renew and appeals to regulatory decisions • Provide details along with the license. Service providers should be consulted before provisions in license agreements are amended. renewal procedures.License renewal Ensure regulatory certainty and ease investor concerns: • Provide a clear license renewal regime that includes legislation. 49 Enabling the next wave of telecom growth in India . if the burden is not kept at a manageable level Amendments Currently. if the legislative framework is not comprehensive • Create a balance between certainties in the renewal process • Regulatory discretion to clear parameters of license renewal with appropriate checks and balances Procedures for license renewal: • Initiate renewal process well in advance of expiry • Perform periodic forward review of market and needs • Disclose and publish reasons for non-renewal of licenses • Adopt a public consultation process • Guarantee a right to appeal In the event of non-renewal: • Provide minimum notice period • Delay vacancy of spectrum to give enough time for operators to adapt strategies • Ensure exit strategies for operators and continuity of service to consumers Change in license conditions and obligations: • Renewal process is a good occasion to review license conditions • Ineffective mandatory service obligations create an anti-competitive impact. amendments to license agreements are carried out unilaterally.
in/Default. data and other application services.400 3.805 1.6 78 See 5.010-2.805-1.4.880 1.980 2.8 35-75 35-75 0-20 (after coordination) 0-60 60 40 40 100 (ISPs) 287.785-1.400-3.161MHz79 of identified spectrum by TRAI.2. Enabling the next wave of telecom growth in India 50 . page 22.trai.920-1.500-2.gov.trai. It is estimated that the total requirement of spectrum in the next five years would be of the order of 500-800MHz including 275MHz for voice services alone. 79 “TRAI: Spectrum Management and Licensing Framework.910 1. accessed 10 October 2010.3.6-21.asp.710-1. http://www.600 Total Spectrum available in the band (in MHz) 20 108 18 20 20 25 25 75 20 75 20 10 60 15 60 100 190 100 200 1.2 Spectrum78 Spectrum. the National Frequency Allocation Plan (NFAP) is the basis for spectrum utilization and development and the manufacturing of wireless equipment.161 Spectrum available for telecom sector 20 20 18.” TRAI website.300-3. May 2010.6-21. a minimum of 287MHz and a maximum of 454MHz is currently available.785 1. May 2010. An increasing availability of smart-phones with significant processing capacity and a wide array of applications are resulting in higher requirements of spectrum. accessed 10 October 2010. page 22. A mechanism to ensure transparent and non-discriminatory spectrum management is needed.in/Default.” TRAI website. Spectrum available for telecom operators in different frequency bands80 Frequency band (in MHz) 450-470 698-806 806-824 824-844 869-889 890-915 935-960 1. The next five years are going to see the spread of telecom services enabling subscribers to benefit from voice. being a scarce natural resource. for global practices.400 2.gov.900-1.690 3.900 1.110-2.170 2. In India.880-1. plays a critical role in the provision of mobile telecom services. In line with estimated demand of approximately 500-800MHz spectrum across various bands out of a total 1.8 18. http://www.2-453.asp. 80 “TRAI: Spectrum Management and Licensing Framework.025 2.300-2.
5 31.4 CDMA 15 15 13.5 15 15 12.4 69.25 10 10 10 Total 68.2 78.16 0.Latin America Wireless Roadmap. MHz (2008) 170 200 265 140 120 120 358 353 294 Wireless subscribers.asp.11 0.1 0.3gamericas.Country-wise spectrum availability Country Total licensed spectrum for mobile services.3 49.48 0.9 52.75 13.35 0.5 13.6 66.09 0.48 0.” 3g Americas website.15 79.4 55 53.4 No.3 31 6.6 150.2 6.in/Default. accessed 14 January 2011. 51 Enabling the next wave of telecom growth in India .75 0.49 0.2 49.org/documents/MWC%202009%20Digital%20Dividend%20Pavilion-3G%20Americas%20 Erasmo%20Rojas.08 Subscriber (million) Subscriber/MHz (million) 81 “TRAI: Spectrum Management and Licensing Framework.7 0.63 0.1 44.15 83.55 70.trai.15 84.4 67 61.2 53.22 0.8 41.4 270.57 0.8 61.55 0.75 12.3 Subscriber/MHz (million/MHz) 0.6 80. gov.4 63.4 60.2 76.7 18.31 0.5 0.ICT Statistics 2008.7 0.5 64.49 0.9 83.52 0.8 59.2 62.75 11. http://www.4 69. February 2009.in/Default.14 0.5 150.3 19.6 37.75 15 12. http://www.95 76.8 75.25 67.2 28.1 62.pdf.8 63 53 57.6 77.6 10.” TRAI website.4 60.4 75.3 74.65 65 63.4 74.trai. “TRAI: The Indian Telecom Services Performance Indicators (July-September 2010). May 2010.6 14.2 59.63 0.” TRAI website.27 0.5 11.5 13. http://www.4 72.2 63.asp. 2008 (million) 46.22 0.5 76.2 4.36 0.53 0.6 0.4 69.37 0.7 43. Ernst & Young analysis. January 2010.6 87.75 15 12. Circle-wise spectrum allocated in India81 Circle Allocated spectrum (MHz) GSM Delhi Mumbai Kolkata Maharashtra Gujarat Andhra Pradesh Karnataka Tamil Nadu Kerala Punjab Haryana Uttar Pradesh — West Uttar Pradesh — East Rajasthan Madhya Pradesh West Bengal Himachal Pradesh Bihar Orissa Assam North East Jammu & Kashmir 53.26 0. page 22.2 50.accessed 10 October 2010. ITU . Ernst & Young analysis.2 63.2 37.25 10 13.15 78.gov.6 72. accessed 15 January 2011.3 37. of operators GSM 12 11 10 12 11 12 12 11 11 12 12 11 11 12 11 10 11 12 11 10 10 10 CDMA 4 4 4 4 4 4 4 4 4 5 4 4 4 4 4 4 4 4 4 4 4 4 Total 16 15 14 16 15 16 16 15 15 17 16 15 15 16 15 14 15 16 15 14 14 14 33.78 0.7 38.26 0.1 24 17.92 Argentina Brazil Canada Chile Colombia Mexico Spain UK US Source: “Digital Dividend Pavilion .75 13.
Need to review the present usage of spectrum available with government agencies so as to identify the possible areas where spectrum can be re-farmed.Latin America Wireless Roadmap. http://www. Spectrum allocation to new players Spectrum usage charges Spectrum sharing and trading Enabling the next wave of telecom growth in India 52 . This roadmap should be made available publicly to ensure transparency.” Communications Today. Re-farming Spectrum allocation Spectrum allocation should be based on technology neutrality. Allocation of spectrum beyond the contacted limit should be based on market mechanisms. It should be based on market price and not administered pricing.co. “Presentation to the DoT committee on spectrum allocation criteria. Service providers should be allowed to enter into arrangements for transfer/sharing of spectrum among themselves so as to effectively utilize it and attain maximum spectral efficiency in the sector. http://www. Regular spectrum audits should be carried to oversee the efficient utilization of spectrum. and to draw up a suitable schedule.communicationstoday. accessed 14 January 2011. based on a transparent auction mechanism to determine the price. Identify and vacate new spectrum bands for future use.2 75-96 Source: “Digital Dividend Pavilion .2MHz for GSM operators and 5MHz for CDMA operators.” 3g Americas website.org/documents/MWC%202009%20Digital%20Dividend%20Pavilion-3G%20Americas%20 Erasmo%20Rojas. Parameters Availability Recommendations Align spectrum bands with globally harmonized bands to achieve interference-free coexistence and economies of scale. February 2009. MHz 28-37 118. timely allocation.pdf.Operator spectrum holdings Country/Region/Operator India Denmark EU average France Germany Italy Spain Sweden UK US Spectrum holding per operator. Allocation of spectrum should be based on auctions.6 92 82. The contacted limit of spectrum will be 6.pdf.4 92. Need to bring in additional spectrum for commercial telecom services.3gamericas.6 138. Spectrum allocation to existing players 2G spectrum up to the contracted limit should be ensured as initial spectrum.in/images/1-pdotfinal. National frequency allocation plan should be reviewed every two years.5 65 72. service flexibility. accessed 14 January 2011. Spectrum should be provided to the highest bidder. Need to lay down a clear roadmap for spectrum management which should state the requirement and availability of spectrum for each circle as well as for the whole country.7 100. The criteria for levying spectrum usage charges should be identified upfront at the time of allocation of spectrum. timely spectrum reconciliation and enhanced transparency.
7 18.3.5 55.4 32. voice mail and email. Out of the target of 40.000 VPTs are currently eligible for financial support for operation and maintenance. As of 31 December 2009.500 have been replaced as of 31 December 2009. The USOF has a long way to go to provide impetus to rural telephony and bridge the gap between the funds collected and disbursed in an effective manner. especially those in rural and remote areas. for global practices.694 have been provided as of December 2009. The USOF has enabled telecom development in rural areas through the following key developments: Disbursement of the USO levy to the operators 60 50 54.4.011 broadband connections out of the proposed 888. about 6. 40. with a universal service levy of 5% being levied on the adjusted gross revenue (AGR) earned by all telecom operators except on VAS such as internet service.832 wireline broadband connections have been provided as of 31 December 2009. In 2002.9 16. Multi access radio relay (MARR)-based VPT: out of 185.” Indo-Asian News Service. via Dow Jones Factive.121 MARR-based VPTs installed before April 2002. the Universal Service Support Policy came into effect.3%.1 39.0 12.6 13.0 N/A FY05 Funds collected FY06 Funds disbursed FY07 FY08 FY09 Dec-09 Source: DoT 82 See 5. Rural broadband: 95.302 uncovered villages.705 rural community phones (RCPs).83 at the end of FY10. The USOF is estimated to hold around INR180 billion.2 17. at affordable prices. rural teledensity is at 28.3. (INR billion) 40 30 20 10 0 34.2 VPT and RCP: around 570. 7 March 2010. Tower infrastructure: provide infrastructure support to set up and manage 7. As of 31 December 2009.186 out of 62. BSNL has provided VPTs to 61. resulting in a huge digital divide. 83 “Minister Sachin wants to ‘Pilot’ IT revolution in northeast.1 15.950 towers have been set up under this scheme. whereas urban teledensity is about 137. © 2010 HT Media Limited. However. about 184.3 Universal Service Obligation Fund (USOF)82 NTP 1999 envisaged access to basic telecom services for all.436 infrastructure sites spread over 500 districts in 27 states.4%. The USOF covers rural and remote areas with public access telephones and individual rural household telephones in net high cost rural and remote areas. 53 Enabling the next wave of telecom growth in India .
Parameters Objectives Recommendations The USOF framework needs to be reviewed regularly to effectively utilize the funds to achieve universal service. so DoT should lower the contribution from 5% to 1% of AGR. There is a significant cash reserve lying unutilized in the USOF. Enabling the next wave of telecom growth in India 54 . The USOF should aim to achieve the following: • 100% rural teledensity by 2015 • 25-30 million broadband subscribers in rural areas over the next five years • Data coverage to all villages through cable modem termination system (CMTS) data technology by 2015 • Broadband connectivity for 250.000 gram panchayats by 2012 • At least 20 active public information kiosks with at least 256 kbps speed in every district headquarters by 2015 Potential usages The USOF should be utilized for the following: • Provision of public telecom and information services • Provision of household telephones in rural and remote areas as may be determined by GoI from time to time • Creation of infrastructure for provision of mobile services in rural and remote areas • Provision of broadband connectivity to villages in a phased manner • Creation of general infrastructure in rural and remote areas for development of telecommunication facilities • Induction of new technological developments in the telecom sector in rural and remote areas Method of allocation Fund collection Subsidies should be distributed through transparent market-oriented allocation methodology.
connectivity. 55 Enabling the next wave of telecom growth in India .74%. India lags behind in terms of ITU’s ICT Development Index (IDI). Broadband services should be encouraged using wireless media because the laying of fibers block by block at district headquarters would be costly and time-consuming. Further. with a broadband penetration of just 0.4. application. cost and competition — are essential for improving broadband penetration. 85 “TRAI: Consultation Paper on National Broadband Plan. in order to encourage broadband. deployment of wireless access should be given preference and fiber media should be utilized from the already available fiber capacity across nation. The last mile access issue can be addressed through the deployment of wireless technology.trai. as well as its BRIC counterparts. socioeconomic growth is dependent on the spread of broadband services across the country.in/Default. 86 “TRAI: Consultation Paper on National Broadband Plan. for global practices.asp. and 118 out of 154 countries in terms of ICT access.2 million. 2004. economic. To kick-start the broadband penetration in rural and far-flung areas. http://www. http://www. The net broadband addition per month is just 0.1 to 0. June 2010. page 3. cost of device and affordability.gov. against the target of 20 million by 2010 set in the Broadband Policy of 2004. The 3C’s — customer. behavioral and government initiatives. lack of vernacular content.” TRAI website.3. accessed 10 October 2010. The growth of broadband is restricted by several factors such as its perceived utility. The drivers for broadband services are broadly classified as technological. there should be balanced competition to ensure the quality and affordability of services. respectively. use.trai.” TRAI website. 106.4.86 with a ranking of 129.85 There were just 8. accessed 10 October 2010.4 Broadband84 India trails all developing Asian countries. 84 See 5. and skills. social. page 28. The need to provide broadband services in rural areas should be met with the help of easy financing and the means to share capital expenditures.gov.in/Default. Broadband should be redefined and clauses such as ‘’always on’’ and minimum speed should be removed from National Broadband Policy. Today. India has set a target of 100 million broadband connections by 2014.asp.8 million broadband connections at the end of FY10. This calls for a critical review of the Broadband Policy 2004 and the creation of appropriate infrastructure to support broadband growth. June 2010. connecting 40% of the households in the country.
The support for local access and content delivery to towns should extend beyond the 150 commercially viable towns. PC penetration Workshops by local entrepreneurs should be promoted under the common services centers (CSC) scheme. payment of electric and water bills. This can happen only if there are incentives to build infrastructure and provide broadband services. The tax status for expenditure on connectivity/usage should be similar to policies on other public welfare services such as education and medical allowance. all national and state highway projects should include the laying of an optic fiber backbone. In addition. Discounts should be provided for online payments. The GoI should consider a differential tax to encourage the private sector to set up common access points. building and cooperative society bylaws can be effectively modified to make it mandatory for such entities to invite broadband service providers to broadband-enable buildings by at least 10 Mbps per household. remote and inaccessible areas. which is a part of the National e-Governance Plan (NeGP). Computer usage by government employees should be encouraged. Investments should be made in key content development and services such as e-health and e-education. the government and private sector should collectively work toward developing low-cost mobile applications. Similarly. operate and transfer route. driving licenses. Regional content Content and applications in regional languages should be created to promote rural broadband. Right of way (ROW) ROW procedures should be uniform.Parameters Infrastructure Recommendations Optic fiber communication (OFC). Broadband connectivity should be made mandatory for all buildings requiring a completion certificate. The Government should foster competition to improve the pace of penetration. vehicle registration. Enabling the next wave of telecom growth in India 56 . on the lines of water and power connectivity. More than two service providers with a rollout obligation should be funded. Wireless broadband More spectrum should be made available. Fiscal incentives Tariffs need to come down. high-capacity microwave and satellite connectivity should be extended to rural. Since growth will be through wireless broadband. The development of the customer premises equipment (CPE) model should be supported for the interoperability of broadband. and charges for broadband services should be rationalized across all states. Online fee payments should be encouraged for land records. There is a case for private-public partnership (PPP) in broadband along the lines of highway construction in India through the build. BSCs and BTS from the nearest block headquarters. Backhaul connectivity and OFC should be provided to all telecom towers.
The stipulation regarding the minimum period of three years from the effective date of license for merger or acquisition should be done away with. Parameters Number of operators Service area and license stipulations Recommendations Mergers should not result in less than six operators in the circle. Merger of license(s) shall be permitted in the following category of licenses: cellular mobile telephone service (CMTS) license with CMTS license. and UASL with UASL. The share of a merged entity should not be greater than 30% in terms of sub-base or AGR. Market share of merged entity Lock-in period 87 See 5.3. The TRAI recommendations dated 11 May 2010 should be followed to maintain the balance between the interests of consumers and service providers.5 Mergers and acquisitions87 At present. Merger of licenses shall be restricted to the same circle. intra-circle M&A is allowed subject to the following conditions: • • • The total number of operators in a circle should not fall below four Market share and revenues of the merged entity should be less than 40% in each circle A three-year lock-in for owner’s equity in the new operators that have been given licenses recently (no lock-in if fresh equity) Maximum spectrum of the merged entity will be capped at 15MHz for Metros and A circle and 12. 57 Enabling the next wave of telecom growth in India .4MHz for B circle and C circle No one entity can hold equity stake of 10% or more in more than one licensee company in the same circle • • The Government should continue to follow the policy to permit mergers but at the same time retain enough competition in the market so as to protect the consumer interest. unified access services license (UASL) with UASL.4. Merged licenses in all the categories above shall be in UASL category only.5. CMTS license with UASL. for global practices.
or passed orders demanding VAT/sales tax on the activity of providing broadband connectivity by use of optical fiber cables treating it to be sale of “artificially created light energy” under the respective state VAT legislation. channels and beams. 5% levy for USOF. there are certain key challenges faced by the sector which are outlined below: Recharge coupon vouchers (RCVs): the Indian telecom sector is also characterized by a large prepaid subscriber base. It is important to note that currently industry players are paying service tax on RCVs. with the matter going up to the Supreme Court.3. thereby leading to greater financial burden on the telecom sector.. tower material and shelters has been an industry issue on which even the service tax authorities in different jurisdictions have taken a different stand and have sought to deny credit on these goods treating such goods as not qualifying as “capital goods” under the CENVAT Credit Rules 2004. the bouquet of services has changed. or other services. The levy of VAT on the activity of providing broadband connectivity services would lead to double taxation of such services. the significance of the telecom sector to the Indian economy has grown immensely. January 2010. The Indian telecom sector is subject to numerous taxes and levies. http://www. the sector contributes significantly to GDP.in/Default. as the RCVs are witnessing liberalization in the flexibility of their usage. these goods could be treated as “component/ spare/accessories” of “capital goods” (i. VAT. thereby leading to greater financial burden on the telecom sector. This position has been adopted by industry players.” The Economic Times.” TRAI website. the operators pay up to 30%88 of their total revenues toward different levies. which is 23%–25% higher than their counterparts in other Asian countries.cms. Currently. as well as tax. As of September 2010. Central value-added tax (CENVAT) position on tower materials and shelters: telecom operators are availing CENVAT credit on goods such as angles. BTS etc.indiatimes. This includes the uniform license fee. The issue whether the sale of RCVs should attract service tax or VAT has been a subject of constant debate and discussion. the revenue share license fee (including the USOF) is prescribed as follows: • • • • 6% to 10% of AGR for access services. which are used for building transmission towers. Various states across India have issued show cause notices. 88 “Telecom firms want lower tax burden. Towers and shelters fall under Chapter 73 and 94 respectively of the Central Excise Tariff Act 1985. RCV is one of the most popular ways to pay for telecommunication services. The levy of VAT on the sale of RCVs to subscribers would result in double taxation. Over the years. The issue was first taken up in the case of a leading telecom player by the state of Karnataka. The Supreme Court without going into the merits of the case has ordered a relook at the matter by the state VAT authorities. Denial of credit on such goods would lead to an increase in the financial burden on telecom operators. However. http://economictimes.6 Taxation Over the years. 89 “TRAI: The Indian Telecom Services Performance Indicators (July – September 2010).e. • • Sale of light energy: broadband services also continue to face taxation-related concerns. Currently. According to TRAI.4% of the GSM subscribers and 94.) and accordingly they can be treated as capital goods in the hands of an operating company given that towers and shelters are essential for the provision of telecommunication services. depending on the category of circle 6% of AGR for NLD/ILD services 6% of AGR for internet service providers for revenues accruing from internet telephony service Despite the significant contribution of the Indian telecom sector to the growth of the GDP and the tax revenue of the Indian economy. accessed 15 January 2011.asp. such as to procure merchandise.4.com/news/news-by-industry/telecom/telecom-firms-wantlower-tax-burden/articleshow/2753840.trai.1% of the CDMA subscribers were prepaid subscribers.89 96. Enabling the next wave of telecom growth in India 58 . The classification of tower. while the dominant purpose for selling these RCVs is provision of telecom services to subscribers. accessed 10 January 2011. custom duty and other taxes.gov. It is important to note that currently the industry players are paying service tax on such broadband services. which account for 80%–85% of the operator revenues.
GST should not translate into an ambitious target to generate higher service tax revenues from the telecom sector. In case entertainment tax is levied on VAS products. in view of the exponential growth witnessed by the telecom sector. the state where GST will be paid for different kind of telecom services. entertainment tax is not proposed to be subsumed in goods and services tax (GST). The sector should be provided tax benefits and incentives in recognition of being a key contributor to the socioeconomic development and GDP of the country. with all services and goods being taxed at a standard rate. special consideration has to be given on certain areas in the backdrop of the peculiarities of the telecom sector such as “place of supply rules90” i.e. It is important to note that as per the current proposal. 59 Enabling the next wave of telecom growth in India . Upcoming GST regime: according to industry experts. Further. The upcoming GST regime should. thus.• Levy of entertainment tax on VAS products: there is a proposal in certain states to levy entertainment tax on VAS products as such products to entertain the caller. ease in statewise compliances. The upcoming GST regime should aim to simplify the tax structure for the industry. aim to rationalize the tax structure in the Indian telecom industry. • 90 Place of supply rules define the place (state) which has the right to tax a service transaction. along with the creation of a roadmap for a single unified levy. the non-subsumation of entertainment tax in GST could impose a significant financial impact on the telecom industry..
and enhances market competition.3. The telecom sector has a substantial impact on a nation’s economic development. It results in substantial progress in meeting such countries’ basic telecommunication requirements. many countries control FDI in telecom according to their economic and developmental needs. The telecom sector has been among the sectors that have witnessed substantial growth in FDI. Together. social stability and national security. prosper together. Enabling the next wave of telecom growth in India 60 . Globally. several countries that first privatized their domestic operators in the early 2000s are now preparing for a second round of market openings. telecommunication industries are often state-operated and monopolized in many countries. the balance between economic gains from foreign investment and national telecommunications sovereignty presents a challenging task. the policy should consider raising the upper limit on foreign investment to encourage more foreign players to invest in the capexintensive telecom sector. As a result. In Latin America. thereby enhancing economic growth in developing countries. major FDI in the telecom sector is facilitated by two international organizations — the World Trade Organization (WTO) and the International Telecommunication Union (ITU).4.7 Foreign direct investment (FDI) In the past decade. globalization has led to a rapid increase in FDI. with countries such as the Philippines. and due to its influence on national security. FDI in telecom brings advanced technological skills and large amounts of funds. However. Hence. and the ITU allocates global spectrum to particular services and manages scarce communications resources among countries for the benefit of trade liberalization and to prevent discrimination between domestic and foreign suppliers. Given the importance of foreign investment. the telecommunications market reform has continued. the WTO and the ITU encourage the development of a global telecommunication infrastructure and the formation of an integrated global telecommunication market. Taiwan and Thailand opening their markets to foreign investment. FDI in developing countries enables the development of a local telecommunication infrastructure and universal access. Foreign private investment has entered the developing markets through joint ventures with local telecommunication operators or the sale of equity stakes in state-owned telecommunication entities to private foreign investors. The Indian telecom sector needs to foster a suitable environment where investment and entrepreneurship. In the Asia–Pacific region. including the development of new forms of electronic commerce. The WTO aims to promote foreign and domestic investment.
2 0. giving India some of the lowest tariffs in the world.04 Pakistan 0. with a large majority of people using low-cost mobile handsets.01 India Phillipines Source: DoT. The plan enabled customers to make calls to any phone from one end of the country to the other for INR1 any time during the day. customer friendly and innovative for both local and long distance calls.3 0. It also removed the distinction between fixed-line and cellular tariffs.2 0. Mobile tariffs per minute in US$ 0.3.05 Thailand 0.11 0.23 0. at the same time.1 0.” It was considered affordable. Furthermore.09 Malaysia 0. provide leading class services.03 China 0. The DoT has been successful in providing world-class telecom infrastructure at globally competitive tariffs and has reduced the digital divide by extending connectivity to unconnected areas.0 Belgium UK France Brazil 0. the increase in subscriber base and teledensity has enabled telecom companies to achieve economies of scale and.4.1 0.17 0.19 0.8 Consumer affordability and rural penetration The Indian telecom market has some of the lowest tariffs in the world. This was followed up by incumbent operators introducing cheaper tariffs. a leading operator launched the “One India Plan. 61 Enabling the next wave of telecom growth in India .16 0. India Telecom 2010 brochure In February 2006.
The services will be provided only by the underlying access provider who will continue to address the related compliance requirements. and low risk enable the creation of policy and a regulatory approach that helps to drive down tariffs. increased usage and highly utilized networks also help lower tariffs. operator strategies such as innovative business models. Factors such as transparent regulation. easy market entry. operators in Bangladesh have designed products and services such as micro prepaid topups. There is a need to create a regulatory framework that enables greater sharing. small office. Pakistan has taken initiatives on the policy and regulatory front by removing import duties on mobile handsets and reducing SIM card activation charges to make mobile communication more affordable. The entity will sell the connections to their end customer and contract and bill them in their own capacity for the services provided.Drivers of affordable mobile communication • • • • • Transparent regulation Easy market entry Lower tax burden Low risk License reforms to permit mobile resale Innovative business model Reduction in capex and opex Increased usage Highly utilized networks Policy and regulatory approach Affordable mobile communications Operator strategies • • • • Affordable mobile communication is driven by policy and a regulatory approach and operator strategies. lower tax burden. In order to drive penetration in rural and remote areas. The entity will not replicate the efforts of service provider. Resale of mobile services will allow an entity to resell mobile services after buying connections in wholesale from the underlying service provider. For the service provider. the entity buying connections in wholesale will be the customer. This arrangement will allow SMEs. which are available in very small increments. home offices and other organized/ unorganized groups in rural and remote areas to serve the needs of the population in a holistic way. reduction in capital expenditure and operational expenditure. Similarly. it is important that alternative models such as mobile resale be introduced. Enabling the next wave of telecom growth in India 62 . On the other hand. and also allow consumers to transfer airtime between each other and use it as currency.
4. However.9 Human resource India has the benefit of a huge population. In terms of size and diversity.000 12.213 5 0 Student enrollment in higher education (million) Number of students by ﬁeld of study in India 1% 2% 3% 7% 45% 3% Arts Science Commerce/ Management Engineering/ Technology Medicine Law Agriculture 21% Others 18% Source: Making the Indian higher education system future ready. India lags behind China and the US in terms of student enrollment. 91 Unleashing India’s Innovation.4 30 25 20 15 10 21. COAI. October 2007. World Bank website. Each TCOE is sponsored by a telecom operating company and is hosted by a premier technical or management institute. India possesses a developed higher education system that offers training in many fields. followed by the US and China. 92 Ministry of Human Resource Development. in May 2007.000 Number of higher education institutions 21. As of December 2009.92 there were 504 universities and university-level institutions. page xv. Ernst & Young. including 243 state universities. Number of higher education institutions and student enrollment 30. 2010 In keeping with the NTP 1999’s R&D objective. a committee comprised of the DoT. Ernst & Young. and AUSPI submitted a report that suggested ways to form seven TCOEs across India in a PPP mode. 40 central universities. which is characterized by a dynamic young population base– more than half of which is under 25 years old. India has the largest number of higher education institutions. 2010 0 India US China Source: Making the Indian higher education system future ready. The main funding for a TCOE comes from the sponsoring telecom operators. the Center of Excellence in Wireless Technology (CEWIT) and the Broadband Wireless Consortium of India (BWCI) have been established. Such organizations promote R&D and help in creating a talented workforce. only 17%91 of those in their mid–20s or older have completed their secondary education. However. organizations such as the Telecom Centers of Excellence (TCOE).000 6.3. Ministry of Human Resource Development. 130 deemed universities and 33 institutions of national importance. 63 Enabling the next wave of telecom growth in India .9 10. For instance.706 17. while the GoI provides basic and research infrastructure. Government of India — Annual Report 2009–10. 53 state private universities. FY10.213 20.8 25.
96 Policy Recommendations to Increase Domestic Telecom Growth and Exports of Telecom Equipment & Services . financial institutions should lend money for the capital expenditure and working capital requirements of the telecom equipment manufacturers at the rates they use when lending to telecom service providers or infrastructure providers.4.net/indian-telecom-a-tale-of-stupendousgrowth/. In addition. for global practices. There is a need to align product certification with international standards and to facilitate global accreditation for the testing facility. There should be provision for round-the-clock customs clearance. further strengthening the case for a robust telecom manufacturing industry.livemint. the provision of a single window clearance for all state-level approvals would be a vital fiscal measure. 28 February 2010. page 4.com/2010/04/01215017/Indian-telecom-firms-may-get-D. http://www. The value of telecom equipment exports was INR81 billion in FY09 during the last five years. According to DoT estimates. Parameters Manufacturing hub Recommendations There is a need to set up hardware manufacturing cluster parks (HMCP) across the country and to upgrade localized infrastructure to support large volume contract manufacturing. However. customs clearance for imports and exports should be done on a self-declaration basis. the requirement for telecom equipment in India is expected to be about INR5 trillion95 by 2015. The case for a growing telecom electronics and equipment manufacturing industry is as follows: • Significant export potential: according to the Telecom Equipment and Services Export Promotion Council (TEPC). The policy should provide encouragement to localized manufacturers for products designed and manufactured in India as well as products that are manufactured but not designed in the country. 01 April 2010. In order to encourage technology transfer. 93 See 5. It is necessary to ensure the free movement of the equipment/raw materials.3.10 Equipment manufacturing93 The production of telecom equipment in India has increased at a CAGR of 29% from FY04 to FY09. • • Employment generation: given the right impetus. royalty payments of up to 5% on domestic sales and 8% on exports should be exempted from income tax. resulting in the significant growth of exports to developing nations. localized players can expect to compete globally with established manufacturers and make their own mark in foreign markets in the long run. and policy initiatives should be focused on encouraging localized manufacturing.” LiveMint. 95 “Indian telecom firms may get DoT boost. The tax on the payment of royalty should be as low as possible. Export promotion The Government could create a sizable export promotion fund for the Telecom Equipment and Services Export Promotion Council (TESEPC). supported by the banking system.” The Viewspaper. Enabling the next wave of telecom growth in India 64 . India needs to position itself as a telecom manufacturing hub in the long term. reaching a value of INR518 billion94 in FY09 during the last five years. http://theviewspaper.Telecom Equipment and Services Export Promotion Council (TEPC). the share of locally manufactured equipment has declined to 30% in FY09 from 74% in FY04. the segment holds an export potential of INR450-500 billion96 by FY14. 94 “Indian Telecom: A Tale of Stupendous Growth. In addition. growth in the segment holds the potential to triple the country’s current employment base by FY14. Fiscal incentives Domestic telecom equipment manufacturers may be allowed to have access to external commercial borrowing for capital expenditure and working capital requirements. Thus. Increased competitiveness in the global market: a technologically advanced manufacturing ecosystem in India prospectively offers an international platform to telecom manufacturers.6. accessed 20 October 2010. accessed 02 August 2010. Other significant incentives would encompass the removal of withheld tax on the fee for transfer of technology and software import. In order to reduce transaction costs. html.
Service hubs Telecom equipment manufacturers should be encouraged to create service hubs to develop a global network and strengthen their presence across India.Bilateral trade programs Telecom exports from India may be included in bilateral trade agreements with emerging markets in regions such as South Asia. A fund for R&D and product development for the segment should be created. Russia and Eastern Europe. Africa. Set up an autonomous body. Latin America. similar to the Telecom Finance Corporation. to assist and provide guidance to those who want to set up a manufacturing facility. The active participation of the private sector in multiple projects is expected to lead to R&D benefits that will flow to both the public and the private sector. 65 Enabling the next wave of telecom growth in India . R&D should be the key focus. Taxation Financial support Investments for accessories R&D The current taxation structure for mobile handsets must be maintained for long-term growth. Indian trade missions in these regions should proactively seek opportunities in the telecom electronics and equipment domain and facilitate business interactions. Leading class R&D centers in the PPP mode should be promoted. A detailed program should be created to attract investment in the manufacturing of accessories such as batteries and chargers for mobile handsets.
Parameters State subject Recommendations There is an urgent need for simplification and harmonization of complex rules and processes so that unreasonable barriers do not impede the rollout of infrastructure. but are matters liable to be governed by the GoI or regulatory authority constituted by it in accordance with the NTP. Telecom/broadband connectivity should be considered a necessity such as water and power in every housing facility. Once the existing tower is at capacity. A 70-meter tower could service an area of 2-3 square kilometers. there is a need to lay down a National Telecom Critical Infrastructure Policy on the lines of NTP 1999 elaborating uniform procedures for land acquisition. the tower business is characterized by high initial capital investments.3. Also. Civic issues Civic issues such as zoning regulation. which are directly connected with the growth of tower infrastructure. If an existing tower is not operating at 100% capacity. stable and predictable cash flow. in-building solutions and DAS make it possible to conserve spectrum and reduce the visual impact of towers. For India to achieve 85% teledensity. there is no uniform approval process across states for setting up telecom infrastructure. The rollout subsidy could be fixed at a flat amount based on the approved tower design for a period of five years. Moreover. This mandate should be included in bylaws of the local and state governments. and GoI should declare mobile and tower infrastructure as “Critical Infrastructure Services. The telecom infrastructure service provider needs to apply to the local municipality or panchayats for permission to build a tower. Every tower should be fully utilized. and extending subsidies and other packages to create a conducive environment to boost national telecom infrastructure building and thereby ensure the increased participation of all the stakeholders. The march of technology-IP/converged platforms is leading to integrated technology-neutral host platforms. they should be adopted in a timely manner. low working capital requirements and high incremental profitability. creating a uniform taxation regime. At present.11 Telecom infrastructure97 Infrastructure growth is critical to the rollout of services. These are not matters of local self-government or municipal departments. Given the challenges that the industry faces. If legislative amendments are needed. then no new tower should be allowed in that zone. There is a need for national ROW policy for rollout of backhaul network. Technological approaches that can potentially reduce the direct and indirect costs of creating telecom infrastructure should be encouraged.4. There is also a need for an empowered committee or similar structure to engage with roads and power ministries. But the lack of guidelines or standard procedures results in enormous delays and huge cost implications. the rents charged.7. for global practices. it needs 95% coverage. Such practice is being followed in developed countries such as the US. a new tower could be awarded through a bidding process. Tower infrastructure needs to come under the Indian Telegraph Act. Full utilization of towers— optimum sharing There should be laws governing the rollout of towers. The profitability is dependent on the ability to increase tenancy on the tower. 97 See 5. single window clearance and preferential treatment for sharing and incentives need to be addressed in a timely manner. which avoids duplication of capex. GoI should announce a National Telecom Critical Infrastructure Policy (NTCIP). The biggest barrier to setting up telecom towers and other infrastructure is the wide variation in the approval process adopted by local bodies. the scale and spread of the tower portfolio and the ability to raise capital. and there could be distance guidelines for the same.” Tower infrastructure should be erected in accordance with the NTP and licenses granted by the GoI under the Indian Telegraph Act. Enabling the next wave of telecom growth in India 66 .
Grid power supply should be made available. There should be a method to cash in carbon credits. which would be approved by a “design approving authority. Each tower should have a structural certificate.” The development of specific IS code of telecom towers will help the industry to follow optimized design parameters. Time-related incentives ought to be provided to tower infrastructure providers to speed up deployment. fuel cells or wind power. The energy used by tower companies should fall under a uniform classification in all states. Utilization of USOF and incentives Grievance redressal Safety concerns A broader framework should be created to handle and settle grievances involving infrastructure companies in the event of a conflict. there is no cess on handset manufacturers. and treating these efforts as part of the overall effort to reduce greenhouse gases and the country’s carbon footprint. The immediate cost of infrastructure creation can be brought down significantly by reducing government duties and taxes. a cess should not be levied on them.Taxation on towers Rationalize the tax structure across states in the form of tax cuts. USOF subsidies are required to defray the cost of infrastructure creation in rural areas. The dependence on diesel could be reduced if the Government utilizes the current diesel subsidy to support a move toward renewable energy options such as solar. and the industrial rate structure should be made applicable to towers across all states. which will make towers safer. There could be 6-10 standard designs for a tower. The state electricity boards should be advised to place a priority on applications for utility connections from telecom infrastructure service providers. Energy consumption Indian mobile operators and equipment vendors need to develop energy-efficient networks by designing and deploying low-energy BTSs that are powered by renewable energy. which should be approved by a competent authority. Operators should reduce their existing diesel generator run times by deploying the latest fastcharging batteries and improving their partial-state-of-charge capabilities. The Central Government should not impose a cess on tower operators. Standardized design across operators and geography would further help optimize sharing and potentially reduce cost. There is little justification for imposing costs such as lincense fees on these players. Power tariffs and consumption Telecom services should be treated as a public utility service. 67 Enabling the next wave of telecom growth in India . The SACFA Committee should be revamped as part of a faster and simpler site clearance process. fiscal incentives and subsidies. Since tower operators do not directly serve the end consumer. Tower specification and standardization requirements should be clearly spelled out. Infrastructure companies are akin to players such as equipment vendors and network management companies. The fee levied on tower companies should not be viewed as a source of income to fund the development of a municipality. because they do not interface directly with end users. Currently. SACFA clearances Telecom service providers coordinate with a variety of departments for site clearances which is a time-consuming process. call centers (with about 40.000 employees) and BTS manufacturers. which account for 60% of infrastructure companies’ outgo. The USOF contribution toward the setup of telecom infrastructure and its role for rural rollouts should be specified.
the International Commission on Non Ionizing Radiation Protection (ICNIRP) and the GSM Association have opined that there is no conclusive evidence of any health hazards due to radiation from mobile towers. at similar radio frequency exposure levels. due to their lower frequency. Operators should be encouraged to use green technologies. there should be a joint endeavor between civic agencies and other related departments. Environmental issues If these BTSs can be run on renewable energy resources.Aesthetic concerns There could also be special consideration made for camouflaging towers in and around certain specific urban areas having heritage or other architectural significance. Service providers are using green shelters or deploying outdoor BTS wherever found feasible to reduce power consumption. While the operators are making their best efforts to educate the general public. Furthermore. Misplaced apprehensions on health hazards of electromagnetic radiation from mobile antennae-BTS International institutions like the World Health Organization. there is a need to fix the feed strength to control radiation emissions. annual carbon emissions could be reduced. depending on a variety of factors such as the proximity to the antenna and the surrounding environment. In fact. This is because the frequencies used in FM radio (around 100MHz) and in TV broadcasting (around 300 to 400MHz) are lower than those employed in mobile telephony (900MHz and 1. radio and television broadcast stations have been in operation for the past 50 or more years without any adverse health consequence being established.3 million tonnes. Even for limited camouflaging.800MHz) and because a person’s height makes the body an efficient receiving antenna. Operators are also experimenting with the use of non-conventional sources of energy wherever feasible for meeting energy requirements. Enabling the next wave of telecom growth in India 68 . These measures have the potential to reduce the carbon footprint significantly. Alternative sources of energy need to be developed and deployed wherever found feasible. Local authorities and consumer groups should be made more aware of this. The feasibility of using biofuels is also being studied. There should be incentives for tower companies to optimize fuel and power costs. the British Medical Association. a positive public stand by the regulator would be extremely helpful. the body absorbs up to five times more of the signal from FM radio and television than from base stations. and not for all generic urban areas. Recent surveys have shown that the radio frequency exposure from base stations ranges from 0. 118. Further.002% to 2% of the levels of international exposure guidelines.000 renewable energy base stations could reduce annual carbon emissions by up to 6. increase the energy efficiency of new network equipment and optimize network technology to increase energy efficiency.
including lawful interception and monitoring conditions. specifically LIRC. and service revenue98 by country Rank 1 2 3 4 5 6 7 8 9 10 By subscribers China India US Russia Brazil Indonesia Japan Germany Pakistan Italy By data revenue US Japan China UK Italy Germany France Korea Spain Australia By service revenue US China Japan France Italy UK Germany India Spain Brazil Focus area Encryption Recommendations Encryption levels in ILD and NLD licenses should be upgraded to allow strong encryption of up to 256 bits to protect confidential information in accordance with international best practices.3. International private leased circuit (IPLC) regime Indian BPOs are addressing contact center requirements globally to collect voice calls outside of India and transporting them over an IPLC or MPLS link provided by the authorized service providers. with attention given to MPLS and IP-VPN services. Access charges under new RIOs for accessing new cables should represent only the actual incremental network costs of providing the access services. It should be retail minus and avoid vertical price squeeze by the incumbent. They also do not address the contracting and billing arrangements required by enterprise and multinational customers and do not clearly set forth licensee obligations regarding data services required by customers. a wholesale pricing regime should be introduced. BPO customers need variable per minute usage-based pricing model both for inbound and outbound calls. To promote competition in the IPLC segment.12 Enterprise data The share of data service in India’s total telecom revenue is about 11% as compared with many other countries where it ranges from 20% to 40%. Association of Competitive Telecom Operators. which imposes double taxation on ILD and NLD license holders. Ranking of subscribers. Regulatory restrictions related to interconnection of data and public switched voice networks interfere with the realization of these services’ full potential. Therefore. Taxation 98 Enterprise Sector. The security/lawful monitoring and interception requirements applicable to enterprise data services should be specified. Lawful interception The proper treatment of data services under the ILD and NLD licenses. and are largely premised on the provision of mass market consumer voice services. these licenses do not allow the use of adequate encryption in accordance with current commercial standards to protect confidential information. India does not rank in the top 10 data revenue earning countries. Interconnection regime and cable landing station (CLS) access Access charges under existing Reference Interconnect Offers (RIOs) should be fair. Therefore. 69 Enabling the next wave of telecom growth in India . current ILD and NLD licenses were drafted before the development of current GTS services and technologies.4. non-discriminatory and cost-based. In line with international practice. which do not connect to a public network. most regulations are voice-centric and do not cover issues related to enterprise service providers. Despite the large number of players entering the enterprise data segment. telecom licenses are voice-centric. Need to eliminate the cumulative assessment of licensing fees on the purchase of inputs. The Indian enterprise sector requires the ability to provide sophisticated IP-based and other data communications services to meet needs of enterprise and multinational customers. In the interest of national security. However. should be clarified. Costing should be in place for RIO charges to ensure proper cost-oriented charges. data revenue. the customer should undertake to make its encryption key available to the licensed entity on demand. November 2010.
commercial power lines have been used to provide telecommunication and internet services. data and telephone through separate channels. Hence. 99 See 5. with a service provider offering a bundle of services. a telco provides video.4.8. for global practices. Convergence has evolved due to the processes of digitalization and computerization. Technological convergence has made way for business convergence. impacting both the telecommunications and broadcasting sector as a whole. taking convergence to a new level. Triple play is also used to define the end result of convergence. television and personal computer. Market-related convergence arises due to consumer expectations of one-stop service availability and bundling of services. In the US and Hong Kong. It is essential to create a regulatory framework that addresses the issues arising from both technological and business convergence. Convergence creates opportunities such as the combination of either equipment or businesses to provide multiple telecommunications. Today. telecom and telephone. which refers to the combination of three services — internet. most of the telecom operators provide broadband services in addition to voice communication services. Enabling the next wave of telecom growth in India 70 .3. it poses challenges that need to be addressed from a regulatory perspective. At the same time. the convergence of voice and data has created a trend for tariff plans based on the volume of data transferred with common billing for interchangeable use of voice calls and data services.13 Convergence99 The ITU defines convergence as the integration of customer end terminal equipment. broadcasting and internet-based services by a single operator. Convergence has led to increased competition in the marketplace. whereas another telco provides triple play through a single channel. it is expected that these lines will become an alternate medium for providing information services. As a result. In the near future. or access devices such as the telephone.
along software and facilities at the time of procurement and with a trained workforce. internet service providers and one of the world’s leading internet search engines. issuing guidelines related to the import of network equipment from foreign telecommunications vendors. Although the GoI has initiated these steps to enhance security and curb terrorism with the help of mobile telephony. The management infrastructure that is able to monitor DoT has also mandated thorough inspection of hardware. Know Your Customer (KYC) verification process for a mobile connection faces issues The guidelines mandate the sharing and monitoring of such as forged documents. The key stakeholders associated with security concerns surrounding telecom equipment include the DoT. with the rapid growth in Further. the DoT blocked calls to mobile devices without a 15-digit International Mobile Equipment Identity (IMEI) number.3. As a result. In 2009. with terrorism being primarily attributable to religious communities and radical movements. highly vulnerable. Firstly. the GoI has taken steps regarding telecom infrastructure equipment. virtual private networks (VPNs). with Chinese mobile phones being the major category. other issues remain that continue to raise concerns over security. telecom equipment manufacturers and telecom operators. the Ministry of Home Affairs. Secondly. which is a unique number allotted to every mobile phone for the identification purposes. India has witnessed a series of terrorist attacks. any suspicious equipment periodic review thereafter.4. Indian intelligence agencies. modern data mining and network mobile operator. Thirdly. The IMIE number helps intelligence agencies track mobile phone users and curb anti–national activities. This move is expected to have impacted approximately 25 million users. the guidelines put the onus for compliance on the voice and data traffic. with penalties for non-compliance. The key players that have been impacted by the security concerns include one of the world’s leading mobile handset manufacturers. manufacturers.14 Security In the recent past. as the requested information is considered sensitive and proprietary. 71 Enabling the next wave of telecom growth in India . The guidelines outlined by the that is active in a network should be liable to being disabled GoI impact the commercial viability of telecom equipment via government-approved encryption. terabytes and exabytes of data need to be set up. leaving the telecom system source code and design along with Indian security agencies.
It is forecasted to overtake e-commerce in terms of the number of transactions. Key enablers for potential opportunities Telecom will find its immense use in schemes and initiatives aimed at socioeconomic development in the years to come such as m-commerce. The rollout of 3G services m-commerce Mobile banking • Inter–account fund transfer • Account inquiry • Stock trading • Bill payment Mobile payments • Information services. web-enabled phones and smartphones by mobile subscribers is expected to play an important role in the growth of m-commerce. m–commerce finds its applications across various end markets such as banking and financial institutions. paying bills for utilities such as power and gas. Mobile phones provide the consumer an opportunity to transact anytime and anywhere. tourism and search engines • Ticketing (e. with each broad category providing an array of services. Going forward.4.9. especially in the case of banking and internet-based purchases. the rollout of 3G services and increasing usage of WAP. for global practices. the UID scheme and financial inclusion.1 m-commerce100 The next revolution that is expected through the use of mobile phones is the emergence of m-commerce. booking tickets for transportation services such as trains and taxis and online shopping. 4. train.e.4.. The m-commerce service umbrella in India has been limited primarily to payment and transfer systems. driven by the uptake of services such as mobile web browsing. Enabling the next wave of telecom growth in India 72 . in India is expected to boost market growth.. mobile banking and multimedia messaging service (MMS). purchase of goods and services) Mobile transfer • Prepaid card top-up • Person-to-person transfers • International remittances 100 See 5. cinema) • Shopping (i. including current affairs.4.g. with synergy existing between e–commerce and m–commerce.
education.4 M-health M-health applications include the use of mobile devices in collecting community and clinical health data. Utilities.4. page 2. real-time monitoring of patient vital signs and direct provision of care via mobile tele-medicine. M2M is characterized by small amounts of data between the device and network. delivery of health care information to practitioners. health care. It offers a huge potential for health care delivery in India. finance. 4. Ericsson. government. service quality and security. bill payment related to utility and others will become a major application. Mobile payment technology will transform the nature of physical interaction between consumers. where the ability to conduct transactions from anywhere and at any time inherently lends itself to real-time 101 The World of 50 billion connections. transportation and other emerging industries are expected to be at the forefront in adopting M2M communication. December 2010. mobilized and generated in future. There are a number of government schemes and other initiatives from medical service providers offering tele-medicine services. adoption of other services such as ticketing. This will cause a reduction in the cost of transactions. to look at account information and transfer small amounts of money between various accounts. with mobile money becoming a truly rich and integrated application for consumer convenience. 73 Enabling the next wave of telecom growth in India . and will enable networks to support automated machine communications. the world is expected to witness 50 billion101 connected devices in 2020. monetary settlements. The key advantages provided by M2M include cost and spectrum efficiency.2 M2M communication According to Ericsson. to extend affordable health care to all in the country.4. researchers and patients. disruptive business models and reduced legal and professional fees.4. owing to increased volume.4. It will significantly impact the banking industry. redundancy and coverage. merchants and banks. thereafter. coupons and advertising would pick up. over a period of time. The initial application will focus on mobile banking. 4. with machine– to–machine (M2M) communication being the key driver behind this exponential increase in connected devices.3 Mobile money Mobile communication and secure mobile transaction opportunities will bring a transformation in the manner in which money is managed.
4. MNREGA aims at enhancing the livelihood security of people in rural areas by guaranteeing 100 days of wageemployment in a financial year to a rural household whose adult members volunteer to do unskilled manual work. an integrated system for taking biometric attendance through hand-held devices and transmitting it through mobile phones for authentication is expected to solve the challenge of attendance. Enabling the next wave of telecom growth in India 74 . subsidies and other government programs while also strengthening national security. The integration of such programs with mobile telephony will benefit the nation. MNREGA achieves twin objectives of rural development and employment. The ability of the Indian telecom sector to reach the masses owing to its scale and built-in affordability will help to achieve financial inclusion.5 M-education M-education offers innovative use of mobile and wireless technologies for education. students and peers through collaboration in a distributed environment.6 Financial inclusion Financial inclusion is central to the overall task of inclusive growth. and help them earn their daily wages. The UID program is critical to improving the delivery of social services. It enables a virtual community to facilitate the learning activities of teachers. In India. For instance. It aims to bridge the supplydemand gap of high-quality teachers in the country.4.4. 4. 4. this data could be transmitted to MNREGA. about 80% of households do not have bank accounts.4. Financial inclusion aims to bring the unbanked and under-banked population into the organized financial services framework and assist in growth of the electronic payments market in India. Once workers have logged in.7 MNREGA and UID MNREGA and UID strive for providing inclusive growth.
Global practices 75 Enabling the next wave of telecom growth in India .5.
the Swedish law states that licenses are allocated based on specific criteria. Enabling the next wave of telecom growth in India 76 . • The number of 3G operators was fixed at three per region. the Japanese Ministry of Posts and Telecommunications (MPT) published the draft for the introduction of 3G services and solicited public comment. allotting licenses to operators who best meet stated pre-set criteria). • Since the 3G license allocation in Japan was straightforward. Further. The Government decided to issue four licenses for up to 31 December 2015. with a guaranteed minimum payment. the policy for comparative selection was not invoked. The pre–qualification criteria included investment.. • The selection of applicants was based on the “beauty contest” criteria (i. quality of service and financial capability. The royalty auction included the following: • Bidders were asked to bid for a level of annual royalty of the percentage of turnover from their 3G services network operations. In March 2000. The Government selected a royalty-based proposal that required the bidder to pay a certain percentage of its annual 3G revenue turnover determined by the auction. network rollout.1. which is to the advantage of operators and consumers. the MPT established the technical regulations and publicized the licensing policies. Sweden issued an invitation to provide network capacity for UMTS mobile telecommunications services. with new as well as incumbent opeartors — but not fixed regional operators — being eligible. • Successful bidders were expected to pay a minimum royalty fixed by the Government for the first five years of the license. with the regulator having a total of 60MHz of spectrum for 3G services. Following the pre–qualification exercise. • The three-license limit was driven by a shortage of spectrum. • The Government focused on rapid rollout and nationwide coverage. the Hong Kong Government released its 3G licensing framework.e. the successful bidders were required to pay royalties according to the royalty percentage determined at the time of auction. with the number of applicants matching the number of licenses. Sweden • In May 2000. as operators do not pay expensive fees to the state for the issue of licenses.5. Licensing Hong Kong In February 2001. Japan • In 1998. • Successful bidders were required to provide a five-year rolling guarantee of the minimum royalty payment for the entire license period. with the same royalty percentage applying to all licensees. From the sixth year on. the Government decided to issue four licenses through auctions.
755MHz band paired with the 2.103 the Federal Communications Commission (FCC) concluded the auction of Advanced Wireless Services (AWS) in the 1.710–1. including the use of the SRF to facilitate relocation of federal communications systems. Policy-makers and regulators should focus on creating interest among providers and providing incentives for long-term investment. The 1.0 each 44.0 Note: The “beauty contest” approach purports to allocate licenses to operators who best meet stated pre-set criteria.0 45.0 2.doc. and through promoting regulatory certainty through a fair.070.0 Nominal 4. accessed 22 October 2010. This is done through the principle of renewal expectancy. 5. 77 Enabling the next wave of telecom growth in India .0 35.ntia. transparent and participatory renewal process.870.0 3.0 120.0 351. which provides a funding mechanism through which federal agencies can recover the costs associated with relocating their radio communications systems from certain spectrum bands. The 102 “3G Mobile Licensing Policy.482.4 44. 103 “1710–1755MHz spectrum band relocation. accessed 12 October 2010. In September 2006.int/osg/spu/ni/3G/casestudies/GSM-FINAL.155MHz band. which were authorized to be auctioned for commercial purposes.0 51.pdf. Spectrum Re-farming of spectrum • The US Government created the Spectrum Relocation Fund (SRF) in December 2004. gov/reports/2008/SpectrumRelocation2008. http://www. Public consultation procedures and the right to appeal also increase the prospects for a successful renewal process.7 1.” ITU website.390.755MHz band used by federal agencies was reallocated to AWS under the provisions of Commercial Spectrum Enhancement Act (CSEA).itu.508.” National Telecommunications and Information Administration website.110– 2. page 1.710–1.8 360.08 116.Allocation of 3G mobile licenses102 Country Austria Australia Canada Finland France Germany Italy South Korea Netherlands New Zealand Norway Portugal Spain Sweden Switzerland UK Number of licenses 6 6 5 4 4 6 5 3 5 4 4 4 4 4 4 5 Mobile incumbents 4 4 4 3 3 4 4 2 5 2 2 3 3 3 2 4 Method Auction Auction Auction Beauty contest + nominal fee Beauty contest + nominal fee Auction Auction Beauty contest + fee Auction Auction Beauty contest + fee Beauty contest + fee Beauty contest + fee Beauty contest Auction Auction Date November 2000 March 2001 January 2001 March 1999 July 2001 July 2000 October 2000 End 2000 July 2000 January 2001 November 2000 December 2000 March 2000 December 2000 December 2000 April 2000 Sum paid (US$ million) 610.0 10. and ensure sufficient lead times and transitional arrangements in the event of non-renewal or changes in licensing conditions.080.2. http://www.520.pdf. It is essential to provide details about license renewal or reissue. page 50.
and it has begun a program to identify which spectrum can be released and time frame for releasing it.6GHz band had previously been allocated to multichannel multipoint distribution service (MMDS) operators to support pay-per-view TV services. The secondary trading of spectrum provided benefits such as economic efficiency. the UK Department of Trade and Industry’s spectrum strategy committee. Further. as a part of spectrum re–farming.7 billion in net winning bids. and innovation in the supply and demand for radio-based technologies. and facilitates the provision of innovative new wireless services in the commercial market. the Australian Communications and Media Authority (ACMA) reviewed government spectrum holdings.gov. • • • • • Sharing of spectrum • Time sharing: defense needs to use part of the spectrum only in crisis situations during exercises.4–3. Spectrum could be shared on a short-term or long-term basis under the condition that the use is vacated immediately when the need arises.6GHz band to support the nationwide deployment of nextgeneration mobile broadband services. agreed to re-allocate spectrum in the 2. Spectrum trading • Spectrum trading gives public and private sector entities the opportunity to decide which spectrum to release or share.AWS auction raised US$13. the FCC formulated rules for spectrum trading. • In March 2007. Such spectrum could be made available for other applications inland. The MoD has management rights to 35%104 of the spectrum bands listed in the UK Frequency Allocation Table (UKFAT). and spectrum regulation. but transfers management control of the spectrum. the possibility exists to use the spectrum for other applications the primary user does not need. Enabling the next wave of telecom growth in India 78 . assignment of the license to another party. In 2003... New Zealand was the first country to introduce open market trading of spectrum. transferee retains the license and legal responsibilities. It also provides the terms and flexibility to enter into leasing arrangements for a limited time if the bodies do not wish to dispose of the spectrum permanently. bis. i. civil aeronautical. page 28. In Italy. and de facto control. simplifying them in mid-2004. Spectrum assigned to the maritime sector may need to be used for maritime radio services only near the coastline. In 2010. in 2004. In 2006.e. the Brazilian telecommunications regulator. giving them the option to deploy LTE immediately. spectrum is needed only in certain geographical areas. sharing or reallocation opportunities for spectrum. accessed 12 October 2010. is guaranteed the moment it is needed. The re–allocation benefits the country’s mobile operators. The FCC distinguished between de jure rights.” UK Department for Business. the FCC proposed the concept of developing smart devices that adjust to the spectrum they use and take advantage of underused spectrum. In 1989. While it is important to ensure that access to spectrum 104 “A Strategy for Management of major Public Sector Public Holdings. • Geographical sharing: in certain situations. http://www. inland waterways and rivers. civil maritime.e. ANATEL. The committee formulated the strategic plan for the Ministry of Defense (MoD). an inefficient primary mechanism of spectrum allocation that makes it necessary to move to a market-based method of secondary allocation. the Ministry of Communications and the Ministry of Defense have agreed to make 2x75MHz spectrum available for WiMAX in the 3.pdf. promotion of innovation and flexibility. The critical success factors for spectrum trading include a large number of buyers and sellers. emergency and public safety services (E&PSS) and science services. Innovation and Skills website. One of the key recommendations of the Independent Review of Government Spectrum Holdings (IRGSH) was a regular review of all defense band allocations.6GHz band. i. formulated policies and a strategic plan for the future allocation of spectrum to meet the needs of users in both the public and the private sector. uk/files/file38572. The 2. in consultation with the Office of Communications (Ofcom).
In the UK.oecd. ANATEL has imposed a coverage obligation rather than a funding mechanism. In Mexico. Universal service levies by country105 Country Malaysia India Colombia US Russia Canada Peru Uganda Nigeria Contribution by operators 6% 5% of license fee 5% Less than 4% (plus state levies) 2% 1. As a result. governments should consider whether they should create a USOF for broadband services. In Greece. page 19.5. In most countries. The contribution rate ranges from 0. BT is the designated USO provider.org/dataoecd/59/48/36503873. the incumbent operator was required as part of its privatization to install payphones in 20. 79 Enabling the next wave of telecom growth in India .1% in France to 6% in Malaysia. have not considered the creation of a universal fund. The Brazilian legal framework uses a variety of tools to achieve universal service. Brazil has developed a mechanism that achieves universal objectives through obligations imposed on its licensees. a separate universal service fund has been set up.3. subsidies are granted according to formulas for compensating operators already serving high-cost rural areas within their operating territory. On the other hand. accessed 20 October 2010. or proposing to expand into high-costs areas.pdf. USO services were provided by incumbent operators. a competitive tender mechanism was used.000 rural areas over a five-year period to meet the policy goal of ensuring some telephone access in all villages with at least 500 residents. Universal Service Obligation Fund In many countries. the telecom regulator. after liberalization of the telecom sector. Communication service providers are obliged to contribute to this fund in many countries. However. The key reasons include: • • • • • • • • Considering whether broadband is an essential service of significant “social importance” Estimating the degree of expected market penetration of broadband service Assessing the nature and extent to which broadband will not be made available by the market and the associated reasons Identifying and specifying the objectives and desired outcomes Assessing the extent to which market demand and delivery will meet the specified objectives Considering the social and economic disadvantages incurred by those without access to broadband if there is no government intervention Estimating the costs of intervention to widen broadband deployment through the use of the USO mechanism Estimating the costs of intervention through the use of the USO mechanism compared with the use of other approaches 105 Organization for Economic Co-operation and Development: Working Party on Telecommunication and Information Services Policies. with a relatively small geographical area and high population density. Most European countries. countries with large geographic areas and consequently much higher costs to serve rural areas have funds that aim to cater for the rural population. http:// www. with the aim of increasing overall teledensity.5% (plus federal contributions) 1% 1% 1% Considering USOF for rural wireless broadband services With the rising importance of broadband.
Subsidies distributed through competitive bidding. with the lowest bidder being the winner. page 19. Subsidies mainly awarded to tele–center projects and areas of greatest need. Universal service fund supports ICT projects consistent with the Government’s development objectives. 0. with the lowest bidder being the winner. Subsidies distributed through competitive bidding. including telecom operators. Both fixed and mobile operators pay a fixed percentage of eligible telecom revenue. the postal service.. Subsidies distributed through competitive bidding.Methods of utilizing USOF across various countries106 Developed countries Country Australia Canada Source of revenue Levy on licensed operators depending on market share of eligible revenue. Government budget. 2% levy on the revenues of the incumbent operators. Enabling the next wave of telecom growth in India 80 . with the lowest bidder being the winner. and the regulator decides what part to accept. 0. The telecommunication carriers are eligible to receive universal service funds. Source of revenue 1% of all operators’ gross revenues. operators invited to submit proposals for universal service provider and to be compensated from the fund through a competitive process. Subsidies distributed through competitive bidding. Japan Developing countries Country Argentina Brazil Telecommunications carriers contribute to the USOF. 1% of all operators’ gross revenues.16% of all operators’ revenues. Starting in 2002. Chile Colombia Malaysia Nepal India Peru South Africa Uganda 106 Organization for Economic Co-operation and Development: Working Party on Telecommunication and Information Services Policies. Compensation for costs incurred by USO provider.e. Method of allocating funds Government to determine based on its goal to increase wireless and wireline teledensity. 5% levy on the revenue of telecommunication operators. with the lowest bidder being the winner. Major operators contribute 1% of revenue. plus funds from license fees. April 2006. 1% of service providers’ gross operational revenues earned from telecom services. Universal service fund compensates costs estimated on the basis of long run marginal costs. Subsidies distributed through competitive bidding. Method of allocating funds The Government determines the level of subsidy paid to the USO provider. with the lowest bidder being the winner.1%. couriers and ISPs. Fixed and mobile network operators contribute 6% of their weighted revenue from designated services to the fund. France Italy Operators contribute a percentage of revenue i. 5% of national and long distance operators’ revenues. ISPs and mobile operators. and additionally 15% for joint and common costs. 1% levy on all sector participants. The USO provider makes an offer to provide services at specified cost. with the lowest bidder being the winner. Subsidies distributed through competitive bidding.
TRAI. The broadband ness controls will be implesecurity has increased: penetration rate ingrowth in theeconomies is nearly to mitigate new or The survey revealed developed mented organization’s annual investment in information security. Booz & Company analysis There are more than 497. 2010. which covers the overall . and release spectrum for the sustainable deployment of broadband services.4. Other top trends next 12 months. For instance.4% 23. it declined to just 2%. The survey revealed that more A total of 34 % of respondents than 60% of the respondents are revealed that they are either implementing security awareness evaluating or planning to evaluate controls to mitigate new or virtualization techniques in the increased risks. the growth rate is much higher in the developed world. increased risks: 3.. Eastern Europe added 19. content and applications. urban–rural divide and other factors that impact broadband penetration are very different in developing nations. Furthermore.3% 7. However.7% 10% 20% 30% 40% Monthly broadband charges on a purchasing power parity basis (US$) 60 50 40 30 20 10 0 56 35 UAE Germany 34 Saudi Arabia 32 China 29 Japan 23 UK 22 Canada 20 US 18 Hong Kong 16 India 7 Israel Source: “Measuring the Information Society. 23%. However.com/Assets/PDF/Article/WA-323857001. page 2. accessed 12 auditing capability and stronger they have embraced cloud October 2010. Although the world is witnessing a rise in broadband penetration.” ITU. The Information Security Management System (ISMS).7% 0. The essential leading practices that enable countries to increase broadband penetration include: adoption of regulations that embraces innovation and competition. However. Intel 37.” Intel website. The number of organizations currently evaluating the use of virtualization techniques is growing: 81 4. invest in infrastructure and latest technology. Investment in information world in terms of broadband penetration. that emerged were increases in the global respondents stated that 108 “Intel: Realizing the benefits of broadband. during 2005–08. as against only 8% by systems. Broadband penetration by country 2009 Netherlands Korea UK Finland US Australia China India 0% Source: OECD.intel. The trend of actions that organizations have taken to control the leakage of Enabling the next wave of telecom growth in India 5. Broadband services have economic benefits both in developed and developing nations.108 in comparison with 4% in developing economies. Indian organizations. if China is excluded from the developing world. infrastructure. a large digital divide exists between the developed and the developing 2.7% 26.5 million fixed broadband subscribers. Of all participants.5% 29. Increased security aware1. Emerging markets such as India need to adopt leading practices that facilitate rapid and cost-effective deployment of broadband technologies. form PPPs. encourage competitive ecosystems. 23% of 107 World Broadband Statistics: Short report.8 million107 broadband subscriptions across the world. regulatory environment. identity and access management computing.pdf. whereas African countries were able to add 2.1% 33. http://www. Broadband Broadband networks are an essential infrastructure for the global economy.5. as they provide businesses and consumers with fast and continuous access to internet–based services. page 4.5% 26. 61% (46% globally) agreed that their organization will spend more this year in information security than it did last year.4 million fixed broadband subscribers. The firm combination of national objectives toward broadband services with leading practices is expected to enable developing nations to achieve benefits of broadband growth. Point Topic Ltd.
with each citizen having access to a personal computer. re-engage those who have been disaffected and equip children with skills increasingly essential in the workplace • Have Ofcom research the prospects for home broadband adoption. personalized and efficient • Use ICT to reduce social exclusion Priorities • Transform learning with ICT • Set up a digital challenge for local authorities to achieve both excellence and equity in ICT • Make the UK a safe place to use the internet • Promote the creation of innovative broadband content • Create a strategy for the transformation of delivery of key public services • Have Ofcom (the independent regulator and competition authority for the UK telecom industry) set out regulatory strategy • Improve access to technology for the digitally excluded and ease technology use for the disabled Incentives and initiatives • Ensure that ICT is embedded in education to improve the quality of the learning experience for all. The Korean Digital Divide Act created the five–year master plan to close the digital divide.South Korea Policy element Objectives Action • The South Korean Government created an action plan for the emergence of a knowledge-based society. subsidies for purchase of personal computers by low-income citizens • Promote digital literacy • Support e–governance. e–commerce. through funding • Financial support for R&D. formulated the action plans. digital television or any other device • Bridge the digital divide arising due to access cost related to internet services • Establish the UK as a world leader in digital excellence with public services that are responsive. where all have the confidence to access the new and innovative services delivered by computer. as well as funding for information society–related R&D • Plan to implement number portability for both wireline and wireless services • Create fund for promotion of digital literacy • Develop content for disabled people and elderly people • Create and support ICT United Kingdom Policy element Objectives Action • Create a “digitally rich” UK. education and other information and communications technology (ICT) services Priorities Incentives and initiatives • Offer a 30%-50% discount on telecom service charges to low-income and disabled users • Provide low-interest loans for communications infrastructure development in less-advantaged regions. focusing on adoption among the more disadvantaged • Provide support to BBC and commercial market for experimentation in broadband content using commissions and partnerships Enabling the next wave of telecom growth in India 82 . mobile phone. and launched the Korean Agency for Digital Opportunity and Promotion (KADO) • Encourage infrastructure investment by incumbents and market entrants • Support construction of new high-capacity digital broadband backbone. technology demonstration projects.
In 2001. Similarly. Mergers and acquisitions The telecom sector has evolved at different rates around the world. the key to the telecom sector is radio spectrum management. especially in emerging markets. Ofcom. has proposed a cap on the award of spectrum to a mobile operator. there is a lack of regulatory consistency at the international level. After the auction in 700MHz band. In any country. Mexico and Guatemala. Ofcom has proposed a cap on the amount of spectrum held by any operator in the spectrum range under 1GHz. the parties offered to surrender 15MHz of spectrum. In March 2010. However.800MHz — was larger than that of their competitors. a spectrum cap was in place from 1994 to 2003. a spectrum cap has been implemented in Canada. have abstained from the implementation of a spectrum cap. As a result. 83 Enabling the next wave of telecom growth in India . the cap was raised to 55MHz. the telecom regulator. the FCC used a cap of 70MHz in deciding mergers. with different views on each regulatory issue. The combined amount of spectrum held by the two parties — at 1. the merger of the UK operations of two mobile operators was cleared by the European Commission. which would help overcome the challenges posed by globalization. allowing other competitors to rollout services. After the elimination of the spectrum cap. In the US. The emergence of new technologies and applications worldwide has forced mobile operators to expand their global footprint through mergers and acquisitions. A spectrum cap refers to the amount of spectrum any operator or group of operators can hold in a geographic area. other countries.5. It placed a limit of 45MHz on the commercial mobile radio spectrum (CMRS) that a single entity could acquire in any geographical area across the US. such as Australia. In the UK. The spectrum under 1GHz is the obvious choice for mobile broadband as the airwaves have higher propensity which is needed for high data rate services. The US and the UK have gradually eased their respective spectrum caps.5. the spectrum cap in the US stands at 95MHz. However. and it was abolished in 2003.
Equipment manufacturing Finland: Market openness. equipment manufacturers. includes a wide range of stakeholders. liberalization and innovation drive the telecom equipment industry109 Background • Prior to the 1990s. Finland’s state-owned post. Finland deregulated the telecom sector by the adoption of the Telecommunications Act and a new Radio Act. From 1987 to 1997. and joined the European Union in 1993.5. networks were opened to free competition. The country has invested in a number of technical universities. Finland removed the restriction on foreign ownership in Finnish firms and restrictions on capital inflows.6. • Deregulation and increased competition: in the late 1980s and early 1990s. in the late 1990s. academic and research institutions.000 people in over 4. Further. including mobile application developers. component manufacturers and electronics contract manufacturers. Norway-. “Market Openness. the Finnish economy was dominated by forest-related industries. Enabling the next wave of telecom growth in India 84 . It employed more than 80. Finland lowered the entry barriers through the introduction of reforms. with telecom equipment manufacturing accounting for 90% of the ICT manufacturing in 2003. secondary and tertiary education is free of charge. The country witnessed more than fivefold growth in FDI from 1990 to 2000. • Skilled workforce: Finland has a strong skilled workforce. particularly in the ICT sector. Trade Liberalisation and Innovation Capacity in the Finnish Telecom Equipment Industry. and Denmark based PTTs.000 firms in 2000. content owners and content providers for mobile applications. primarily driven by a robust educational system in which basic. • Foreign direct investment: in 1993. with Nordic countries benefitting from the first-mover advantage in the mobile telecom industry worldwide. and in 1991. public certification and standardization authorities and financial service providers. the country redirected its trade to the West. mobile network operators. 29 July 2008. telegraph and telephone (PTT) operator developed the Nordic mobile telephony standard in collaboration with Sweden-. which encourages cooperation among a wide range of manufacturers and suppliers. which has facilitated the emergence of Finland in the telecom sector by providing a large pool of engineers. the country’s ICT sector has benefitted from investment in R&D. An increase in FDI has resulted in technology transfer and cooperation that has helped to fuel the telecom sector. These changes were primarily driven by higher education and the emergence of knowledge-based industries. consulting firms. which more than doubled between 1985 and 2005. • Specialization in telecom: Finland’s ICT sector has developed specialization in the manufacturing and export of telecom equipment. the first GSM network was launched in Finland. Strategic initiatives 109 Caroline Lesser. In 1991. • Development of clusters: the development of the Finnish telecom industry is also attributed to the emergence of an ICT cluster. However. After the collapse of the Soviet Union in 1991. The mobile telecom cluster.” OECD Publishing. with electronics and electrotechnics accounting for about 25% of the country’s exports. the economy shifted to ICT and consumer electronics. which is also known as Finland’s Wireless Valley. • First-mover advantage: in the 1970s.
R&D led to the emergence of Chinese manufacturers that spend a significant portion of their revenues on R&D. individual national regulatory authorities are required to notify the EU Commission of decisions regarding infrastructure sharing. four of whom have formed two separate consortiums of two operators each. Other European NRAs followed the Commission’s approach and as such active infrastructure sharing was limited. China established an export processing policy. despite the presence of multinationals. • Export processing: in the late 1970s and 1980s. This enabled the country’s domestic and foreign-owned firms to compete. In Sweden. leading global telecom manufacturers launched their R&D centers in China. The regulator permitted this level of sharing. China implemented policies that favored the inflow of FDI. “China’s Emergence as a Manufacturing Juggernaut: Is It Overstated?” Federal Reserve Bank of Philadelphia. reduction in tariff barriers and development of an enabling environment to attract FDI. National roaming was permitted in rural areas for a longer period than for urban areas. the EU took a negative view of the benefits versus costs of infrastructure sharing and saw it as having a potential negative impact on competition. 5. • Research and development: during the late 1990s. along with technological expertise. • The emergence of a strong telecom sector in China has also been driven by a burgeoning domestic market with the highest number of mobile subscribers in the world. The awarding of 3G licenses led to an increase in applications to share infrastructure and in particular for new 3G operators to be permitted to use national roaming to provide full geographic coverage. the country reduced its tariff barriers drastically. it was often time limited. As a result. 2009. • Tariff barriers: during the 1980s and early 1990s. Each consortium has built a joint network. Chinese manufacturers have evolved from producing cheap and low-quality imitations to products that use high-end advanced technology. The key reforms undertaken by the country include development of a trade policy. government support to domestic telecom enterprises and the presence of a well–qualified technical workforce. Furthermore. Initially. and the country joined the WTO in 2001. • Over the years. The operators challenged the Commission’s decision. In Australia. with the emergence of Chinese firms that have successfully competed in the global marketplace. These centers have helped global players to understand the local market and helped in the overall development of the telecom sector. In 2001. the US granted China the most favored nation status in 1980. as long as they are used to produce export goods. although national roaming was permitted for new entrants.China: Emergence of a global manufacturer and innovator110 Background • China’s telecom sector has witnessed rapid growth in the last two decades. The implementation of the export processing regime facilitated the reduction of tariff rates. This helped the country to produce products rapidly.7. In the EU. operators have commercially negotiated for 3G site and RAN sharing. Under the policy. Strategic initiatives Since 1978. raw materials such as parts and components and other intermediate imported goods do not have any duty imposed. Infrastructure sharing has been well accepted globally. These operators are encouraged to share both civil and electronic infrastructure. the tariffs reached less than 15%. This has led to greater opportunities for operators to engage in infrastructure sharing. Telecom infrastructure • • Brazil is split into 11 licensing areas with 4 operators in each licensing area. • • • 110 Behzad Kianian and Kei-Mu Yi. An administrative group has been established to own and operate existing RAN and fund future network rollout plans as agreed with operators. particularly in rural areas that may be costly to serve otherwise. In the 1980s. China has implemented numerous reforms that have boosted the country’s manufacturing and trade. 85 Enabling the next wave of telecom growth in India . Additionally. • Foreign direct investment: in 1979. there are five operators. The European Court of First Instance ruled in favor of the operators and stated that the EU had overplayed the competition concerns. some of its tariff rates were above 50%. worldwide.
Mobile networks in North America witnessed growth in data services that were also driven by the introduction of smartphones. In Canada.e. subject to an individual consideration. wire. radio.1% to reach US$19. telecommunications and wireless communications services.9. It is also the regulator of the UK communications industries.8. Paraguay. In July 2005. • • • 5. the Independent Communications Authority of South Africa was established. and took over the functions of two previous regulators – the South African Telecommunications Regulatory Authority and the Independent Broadcasting Authority. • • In Norway. Latin American countries such as Uruguay. as well as to regulate telecom common carriers and service providers. All transmission routes (i. 111 Ovum: Mobile regional and country forecast pack: 2010–15. the Australian Broadcasting Authority and the Australian Communications Authority merged to form the Australian Communications and Media Authority. In July 2000. However. The main operator is obliged to provide national roaming and MVNO access. cables. Enabling the next wave of telecom growth in India 86 . the regulatory functions of the Broadcasting Standards Commission. the Philippines and South Africa have been the largest adopters of this service. networks’ packet data grew nine times larger than voice services.ovumkc. publish tariffs and reference offers. as the cable industry underwent the time-consuming and expensive process to secure city-by-city franchises over the last three decades. the Federal Communications Commission (FCC) is an independent agency that regulates interstate and international communications by radio. Office of Telecommunications. voice revenues are expected to decline at a CAGR (2008–15) of 1. http://www. Ovum website. In Canada in 2002. m-commerce Globally.5 billion111 in 2015. For core networks. Ghana. P-P radio lines) may be shared.7% during the same period. allow fulfillment of the coverage requirements through roaming in networks based on other technologies than Universal Mobile Telecommunications System (UMTS). All operators may share sites and masts. m-commerce is very popular in countries where most of the population is unbanked. Venezuela. satellite and cable and content. the rollout of 3G has provided the required impetus to drive widespread adoption of m-commerce services. implement accounting separation and is subject to price and accounting controls for national roaming. the state of Texas passed a bill deregulating the telecom markets. Brazil. Countries such as Sudan. After smartphones were released. with responsibilities across television. Argentina.com/. the mobile switching center (MSC) may not be shared. The cable industry has opposed this demand. Radio network controllers (RNC) may be shared physically. Convergence • In the US. provided such networks can offer sufficient capacity and that the arrangement is without substantial disadvantage to subscribers. a number of commercially negotiated and regulated agreements exist between the two main operators and the MVNOs. It is the regulator of the telecommunications and the broadcasting sectors. Telecom operators that provide IPTV services on their broadband networks have demanded amendments to the regulations to allow them to provide national franchise and rollout of services. 5. Recently. accessed 16 October 2010. In India. Radio Authority and Radio Communications Authority were combined to form Ofcom. but operators must retain logical control over their networks and spectrum.but required each operator to maintain 30% of its network separately. There are commercial agreements between the main operators. The Ministry of Transport and Communications may. cable TV services require approvals at the municipal level.. Independent Television Commission. but data revenues are expected to increase at a CAGR of 16. This has made it possible for telephone companies to receive a statewide franchise to provide video services that compete with cable. television. and Mexico have also implemented m-commerce successfully. the Canadian Radio-television and Telecommunications Commission (CRTC) is an independent public authority to regulate and supervise all aspects of the Canadian broadcasting system. optic fiber.
Multiple reforms in the Indian telecom sector have coalesced to produce a remarkable decade of continued success. progressive policies will become increasingly important to guide unparalleled growth and transformation in the sector. 87 Enabling the next wave of telecom growth in India . Looking ahead.
timely spectrum reconciliation and enhanced transparency.Conclusion The telecom sector in India has witnessed a series of fundamental structural and institutional reforms over the past decade. The share of a merged entity should not be greater than 30% in terms of subscriber base or AGR. m-commerce. remote and inaccessible areas. Operators must be allowed to merge intra-circle while being allowed to combine spectrum. This approach has helped the sector grow by leaps and bounds. and subsidies and other packages for creating an environment conducive to boosting the construction of national telecom infrastructure and ensuring the increased participation of all the stakeholders. Spectrum allocation should be based on technology neutrality. A National Telecom Critical Infrastructure Policy on the lines of NTP 1999 should establish uniform procedures for land acquisition. Broadband infrastructure — OFC. The distribution of funds should be through transparent market-oriented allocation methodology. USOF. Content and applications in regional languages should be created to promote rural broadband. information services. • The USOF should be utilized for the provision of public telecom. timely allotment. with which the regulatory authorities make industry information public and accessible. security concerns and consumer affordability. household telephones and broadband connectivity in rural and remote areas. Future policy should encourage identifying and vacating spectrum bands for future use. Enabling the next wave of telecom growth in India 88 . M&A. There should be uniform fee structure across all telecom circles. HMCP should be set up across the country. broadband. • • • The key recommendations for advancing the sector to the next level of growth focus on financial inclusion. and fiscal incentives should be provided to promote local manufacturing. The key recommendations for improving the existing scenario focus on licensing framework. Spectrum sharing and trading should be allowed. DoT should also consider lowering the contribution to 1% of AGR toward the fund. and inducting new technological developments in rural and remote areas. spectrum. equipment manufacturing and infrastructure sharing. and encourage a healthy level of consultation with stakeholders. The best feature of India’s regulatory regime has been its open and transparent approach. a uniform taxation regime. It should be used for creating infrastructure for the provision of mobile services and development of telecommunication facilities. • • • A single license should cover all telecom services. high-capacity microwave and satellite connectivity — must be extended to rural. convergence. service flexibility. The report is an attempt to help understand the viewpoints of various stakeholders and to arrive at reasonable and practical recommendations to help overcome the challenges that the sector faces and harness its opportunities. R&D initiatives should be encouraged.
Glossary AWS A2P ACMA ACTO ADC AGR ARPU AUSPI BSCs BTS BWA BWCI CAGR CDB CEWIT CLS CMRS CMSPs CMTS CMTS COAI CPE CPP CRBT CRTC CSC CSEA CVD DAS DoT DSL Advanced Wireless Services Application-to-person Australian Communications and Media Authority Association of Competitive Telecom Operators Access deficit charge Adjusted Gross Revenue Average Revenue Per User Association of Unified Telecom Service Providers of India Base Station Controllers Base Transceiver Stations Broadband Wireless Access Broadband Wireless Consortium of India Compound annual growth rate Cut-out Distance Band Center of Excellence in Wireless Technology Cable Landing Station Commercial Mobile Radio Spectrum Cellular Mobile Service Providers Cellular Mobile Telephone Service Cable Modem Termination System Cellular Operators Association of India Customer Premises Equipment Calling party pays Caller Ring Back Tones Canadian Radio-television and Telecommunications Commission Common Services Centers Commercial Spectrum Enhancement Act Countervailing Duty Distributed Antennae Sharing Department of Telecommunications Digital Subscriber Lines 89 Enabling the next wave of telecom growth in India .
E&PSS FCC FDI FICCI FY G2B G2C G2E G2G GBT GMPCS GoI GST HMCP IAMAI IBA ICASA ICNIRP ICRIER ICT IDI ILD IMEI IPF IP-I IPLC IP-VPN ISPAI IT ITeS ITU Emergency & Public Safety Services Federal Communications Commission Foreign direct investment Federation of Indian Chambers of Commerce and Industry Financial Year Government-to-business Government-to-citizen Government-to-employee Government-to-government Ground-Based Towers Global Mobile Personal Communications Services Government of India Goods and Services Tax Hardware Manufacturing Cluster Parks Internet & Mobile Association of India Independent Broadcasting Authority IBA Independent Communications Authority of South Africa International Commission on Non Ionizing Radiation Protection Indian Council for Research on International Economic Relations Information and Communications Technology ICT Development Index International long distance International Mobile Equipment Identity Infrastructure Provisioning Fee Infrastructure Provider-I International Private Leased Circuit IP-based Virtual Private Network Internet Service Providers Association of India Information Technology IT-enabled Services Sectors International Telecommunication Union 90 .
Telephone and Telegraph Rural Community Phones Recharge Coupon Voucher Reference Interconnect Offer 91 Enabling the next wave of telecom growth in India .KADO kbps KYC MARR MCD MMDS MMS MNP MNREGA MoD MoU MPLS MSCs MTNL NCAER NDMC NeGP NFAP NLD NRAs NTCIP NTP OFC P2A P2P PAN PCOs PMRTS POPs PPP PSU PTT RCP RCV RIOs Korean Agency for Digital Opportunity and Promotion kilobit per second Know Your Customer Multi Access Radio Relay Municipal Corporation of Delhi Multichannel Multipoint Distribution Service Multimedia Messaging Service Mobile number portability Mahatama Gandhi National Rural Employment Guarantee Act Ministry of Defense Minutes of usage Multiprotocol Label Switching Mobile Switching Centers Mahanagar Telephone Nigam Limited National Council of Applied Economic Research New Delhi Municipal Council National e-Governance Plan National Frequency Allocation Plan National long distance National Regulatory Authorities National Telecom Critical Infrastructure Policy National Telecom Policy Optic fiber communication Person-to-application Person-to-person Permanent Account Number Public Call Offices Public Mobile Radio Trunked Services Point of Presence Private-public Partnership Public Sector Undertakings Posts.
RKM RNC ROW RPM RTT SACFA SATRA SIM SRF TCOE TDSAT TEC TEMA TESEPC TRAI UAS UID UIDAI UKFAT UMTS USOF VAS VoIP VPNs VPTs VSNL WMO WPC WTO Route Kilometer Radio Network Controllers Right of way Rate per minute Roof-top tower Standing Advisory Committee on Radio Frequency Allocation South African Telecommunications Regulatory Authority Subscriber Identity Module Spectrum Relocation Fund Telecom Centers of Excellence Telecommunications Dispute Settlement and Appellate Tribunal Telecommunication Engineering Center Telecom Equipment Manufacturers Association Telecom Equipment and Services Export Promotion Council Telecom Regulatory Authority of India Unified Access Service Unique identification number Unique Identification Authority of India UK Frequency Allocation Table Universal Mobile Telecommunications System Universal Service Obligation Fund Value-added services Voice over Internet Protocol Virtual Private Network Village Public Telephones Videsh Sanchar Nigam Limited Wireless Monitoring Organization Wireless Planning & Coordination Wing World Trade Organization 92 .
Enabling the next wave of telecom growth in India
Enabling the next wave of telecom growth in India
Enabling the next wave of telecom growth in India
Enabling the next wave of telecom growth in India 96 .
FICCI maintains the lead as the proactive business solutions provider through research. 97 Enabling the next wave of telecom growth in India . seminars and meets for promoting business. is the largest and oldest apex organization of Indian business.000 business units. FICCI espouses Indian businesses and speaks directly and indirectly for over 250. FICCI organizes a large number of exhibitions. set up in 1927. conferences.About Federation of Indian Chambers of Commerce and Industry (FICCI) FICCI. With a nationwide membership of over 1. interactions at the highest political level and global networking.500 corporates and over 500 chambers of commerce.
Delhi. to help our clients address the challenges of today — and tomorrow. Learn more about our approaches and services by visiting our website: www. transaction and advisory needs. We help our clients react to trends in a way that improves the financial performance of their business. infrastructure sharing. Beijing and San Antonio. Riyadh. operational efficiency. business transformation. Operating from Paris. tax. Our clients benefit from our insights on key trends and emerging issues. convergence. They know that they have much to gain from our clear understanding of the opportunities. future growth markets or mergers and acquisitions. the Center brings together people and ideas from across the world.ey. Johannesburg.Ernst & Young’s Global Telecommunications Center Telecommunications operators are facing the challenges of growth.com/telecommunications Enabling the next wave of telecom growth in India 98 . regulations. outsourcing. next-generation services. Operators choose Ernst & Young because they value our industry-based approach to addressing their assurance. technological change and regulatory pressures in increasingly difficult economic conditions. What gives us this understanding is our Global Telecommunications Center. Cologne. These may relate to the economic downturn. revenue assurance. complexities and commercial realities of the telecommunications industry — wherever in the world they’re operating.
firstname.lastname@example.org@email@example.com.Contacts Vincent de La Bachelerie Global Telecommunications Center Global Telecommunications Leader vincent.com 99 Enabling the next wave of telecom growth in India .com Holger Forst Global Telecommunications Center — Cologne firstname.lastname@example.org@ey.ey.com Jonathan Dharmapalan Global Deputy Telecommunications Leader email@example.com Serge Thiemele Global Telecommunications Center — Johannesburg serge.com Wasim Khan Global Telecommunications Center — Riyadh wasim.de.com Adrian Baschnonga Global Telecommunications Senior Analyst firstname.lastname@example.org@email@example.com Steve Lo Global Telecommunications Center — Beijing steve.ey.ey.com Marc Chaya Global Telecommunications Markets Leader firstname.lastname@example.org Prashant Singhal Global Telecommunications Center — Delhi prashant.com Mike Stoltz Global Telecommunications Center — San Antonio michael.ey.
Enabling the next wave of telecom growth in India 100 .
a UK company limited by guarantee. does not provide services to clients. Ernst & Young Global Limited. It is not intended to be a substitute for detailed research or the exercise of professional judgment. FICCI organizes a large number of exhibitions. This publication contains information in summary form and is therefore intended for general guidance only. About Federation of Indian Chambers of Commerce and Industry (FICCI) FICCI.500 corporates and over 500 chambers of commerce. . FICCI maintains the lead as the proactive business solutions provider through research. reference should be made to the appropriate advisor.ey. seminars and meets for promoting business.000 business units. this document has been printed on paper with a high recycled content.com © 2011 EYGM Limited. For more information about our organization. please visit www. FICCI espouses Indian businesses and speaks directly and indirectly for over 250. our 141. All Rights Reserved. Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited. each of which is a separate legal entity. EYG no. With a nationwide membership of over 1. conferences. our clients and our wider communities achieve their potential.000 people are united by our shared values and an unwavering commitment to quality. set up in 1927.Ernst & Young Assurance | Tax | Transactions | Advisory About Ernst & Young Ernst & Young is a global leader in assurance. is the largest and oldest apex organization of Indian business. The opinions of third parties set out in this publication are not necessarily the opinions of the global Ernst & Young organization or its member firms. We make a difference by helping our people. EH0091 In line with Ernst & Young’s commitment to minimize its impact on the environment. interactions at the highest political level and global networking. transaction and advisory services. On any specific matter. tax. Worldwide. Neither EYGM Limited nor any other member of the global Ernst & Young organization can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication.
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