Enabling the next wave of telecom growth in India

Industry inputs for National Telecom Policy 2011

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Enabling the next wave of telecom growth in India

Foreword
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

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with the market evolving into the world’s second largest in terms of subscribers. The announcement of the National Telecom Policy (NTP) in 1994 marked the first steps toward the new model. promoting India’s emergence as a major manufacturing and export base of telecom equipment and universal availability of basic telecom services to all villages. especially in the 1990s. issued the NTP 1999. Liberalization initiatives. In 1999. Government.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.” the provision of leading class services at reasonable prices. resulted in an improved business climate and in an increase in investment across the country. centralized economic model for four decades. 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. Presently. recognizing the need to overhaul its policy framework. It aimed at making available “telephone on demand. With plenty of strong potential value remaining. After embracing a closed. Indian telecom is an economic miracle in the making. India shifted to a market-oriented model. there are more than 700 million subscribers in India. India has reached the goals set in NTP 1999 far ahead of time. 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. iv Enabling the next wave of telecom growth in India . 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. which had played a key role in shaping the sector. and the overall teledensity has reached more than 60%.

reasons for refusal to renew and appeals to regulatory decisions Enabling the next wave of telecom growth in India v . infrastructure segment. taxation and aspects of foreign direct investment (FDI). The opportunities around which the policy initiatives need to be designed include financial inclusion. renewal procedures. mergers and acquisitions scenario. equipment manufacturing. Universal Service Obligation Fund (USOF) structure. broadband. 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.The present challenges include the spectrum and licensing framework. m-commerce and convergence.

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 .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.

m-commerce. 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. 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.Focus areas Taxation Recommendations The upcoming goods and service tax (GST) regime should aim to simplify the tax structure for the industry. However. convergence. the state where GST will be paid for different kind of telecom services. 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. there is no unique.e. Enabling the next wave of telecom growth in India vii . security concerns and consumer affordability. 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.. which imposes double taxation on ILD and NLD license holders FDI Given the importance of foreign investment. 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.

infrastructure. The research program studies in detail all the key segments of the telecom landscape — wireless. viii . which is used by the Government of India (GoI) as a decisionmaking guide for the Indian telecom sector. As a part of the research program. ILD. security. It examines the NTP 1999.Methodology In 2010. outlining the phenomenal growth witnessed by the sector and recommendations for the existing policy framework that will enable the next level of growth. value-added services (VAS). It identifies and evaluates the critical success factors that are applicable across all telecom segments such as spectrum. equipment manufacturing. wireline. The study gives a detailed perspective on the telecom sector in India. infrastructure and convergence. NLD. These interviews provided a firsthand perspective on the opportunities and challenges faced by various stakeholders in the sector. FDI. Ernst & Young conducted a research study on the Indian telecom sector in collaboration with one of the leading business organizations in India — FICCI. consumer affordability and the role of the regulator. analysis and insights provided by Ernst & Young. USOF. broadband. licensing framework. This report reflects the key conclusions of that wider study. Ernst & Young conducted comprehensive interviews with senior executives in the Indian telecom sector. These findings have been combined with secondary research.

HS Bedi. Lt. Anil Sardana Managing Director Tata Teleservices Ltd. South Asia AT&T Communication Services India Pvt. Col. Rajiv Mehrotra Chief Executive Officer Vihaan Networks Ltd. Mathews Director General Cellular Operators Association of India Rajat Mukarji Chief Corporate Affairs Officer Idea Cellular Ltd. Brijendra K Syngal Senior Principal Dua Consulting Pvt. Ltd. India Ericsson India Vsevolod Rozanov President and Chief Executive Officer Sistema Shyam TeleServices Ltd. Corporate Affairs & Business Development. Sanjay Kapoor Chief Executive Officer Bharti Airtel (India & South Asia) Mahesh Uppal Director Com First (India) Pvt. Ltd. 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. Ashok Sharma National Head — Regulatory Aircel Ltd. Ltd. B S Shantharaju Chief Executive Officer Indus Towers Ltd. Ltd. Ltd. P Balaji Head of Communications. TV Ramachandran Resident Director Vodafone Essar Rajan S. VSM Chairman and Managing Director Tulip Telecom Ltd. ix . Parag Kar Senior Director — Government Affairs Qualcomm India Pvt. Mahendra Nahata Managing Director Himachal Futuristic Communication Shamik Das Chief Executive Officer S Tel Pvt.Syed Safawi President Reliance Communications Ltd. List of participants Virat Bhatia President. External Affairs.

The organizations’ publications are widely read for their in-depth research and policy prescriptions. It provides a forum for discussion and exchange of the ideas between these bodies and service providers. fixed–line services and VAS across the country. governments and academia. Over the years. who share a common interest in the development of cellular mobile telephony. it has joint business councils with 79 countries across the world. Association of Unified Telecom Service Providers of India (AUSPI): constituted in 1997. Home to 400 professionals. . regulators. COAI has emerged as the official voice for the Indian GSM industry and interacts directly with ministries. policy-makers.Industry associations Federation of Indian Chambers of Commerce and Industry (FICCI): established in 1927. nonprofit. FICCI is one of the largest and oldest apex business organizations in India. financial institutions and technical bodies. COAI is a registered. AUSPI is the representative industry body of unified access service licensees providing CDMA and GSM mobile services. AUSPI is a registered society that works as a non-profit organization with the aim of delivering improved access. and its stand on policy issues is sought after by think tanks. Cellular Operators Association of India (COAI): established in 1995. economic and political change. It plays a leading role in policy debates that are at the forefront of Indian social. non-governmental society dedicated to the advancement of modern communication through the establishment of a world-class cellular infrastructure. FICCI is active in 39 sectors of the economy. coverage and teledensity in India.

evaluating and recommending industry standards and practices. embassies. Telecom Equipment Manufacturers Association (TEMA): established in 1990. conducting research. TEMA is an industry association for telecom equipment manufacturers as well as component and cable manufacturers. Other Service Providers Association of India (OSPAI): established in 2008. medical transcription. trade missions. business process outsourcing. communicating on behalf of the industry and helping to create a favorable business environment for the industry. information technology (IT). knowledge process outsourcing. It acts as an interface with government bodies for the growth of all services covered under the registration of other service providers. tele-medicine. . billing services and network operating centers. Internet Service Providers Association of India (ISPAI): founded in 1998. IAMAI is an industry body representing the interests of online and mobile VAS industry. The association was formed by several leading non-integrated long-distance carriers that provide service to the enterprise market segment. which includes IT-enabled services. It has helped in shaping telecom policies for ISPs and internet entrepreneurs to grow their services in a supportive and enabling environment.Association of Competitive Telecom Operators (ACTO): established in 2008. ISPAI acts as a collective voice of the ISP community. creating platforms for its members. with the mission of promoting internet for the benefit of all. functioning as an association of companies operating in areas such as domestic and international call centers. tele-trading. Indian missions abroad and leading national and international trade associations. It plays an active role in the dissemination and exchange of information among the GoI. OSPAI is the representative industry body. business process outsourcing and multinational company segments. The association’s activities include promoting the digital economy. foreign agencies. Internet & Mobile Association of India (IAMAI): founded in January 2004. financial services. tele-education. ACTO is an industry body that focuses on policies that enhance enterprise telecommunications in India.

10.2 Licensing Spectrum 45 46 47 48 48 50 1 Enabling the next wave of telecom growth in India .1.3. Internet and broadband subscribers 2.2. Regulatory framework 2. Key challenges of NTP 1999 31 34 41 4 Key enablers 4. Evolution of the telecom sector in India 2.3.4.7.1.1 4.3. History of the Indian telecom industry 2. Telecom equipment manufacturing in India 2.8.6.2.11. Wireless 2. National long distance and international long distance 2. Overview 1. Importance of telecom 3 3 5 2.2. Infrastructure 2. Key enablers under existing scenario 4. Connected India: telecom vision 2020 4. Value-added services 2. Achievements and setbacks of NTP 1999 3.1. Connected Indian: telecom mission 2020 4. Overview of the Indian telecom industry 2. Outlook 9 10 12 14 15 16 17 19 21 22 27 28 3. Key achievements of NTP 1999 3.1.Contents 1. Indian telecom sector 1.5.2.9.3. Wireline 2.

12 Enterprise data 4.4.4.3.3.4.3.3 4.3 4.13 Convergence 4.2 4.4 4.4.7 m-commerce M2M communication Mobile money M-health M-education Financial inclusion MNREGA and UID 5.4.5 4. Key enablers for potential opportunities 4.7 4.3.3.3.11 Telecom infrastructure 4.3.6 4.5 4.4.3.6 4.4.14 Security 4.4.3. Global practices Conclusion Glossary 75 87 89 Enabling the next wave of telecom growth in India 2 .4 4.10 Equipment manufacturing 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 4.8 4.3.1 4.4.3.3.

http://www.eximbankindia. As a result of liberalization.” Export-Import Bank of India website. accessed 19 October 2010. 26 August 2010. In less than a decade. In FY10 (financial year ended 31 March 2010). Within the services sector. accessed 10 October 2010. Overview Over the past two decades. India has grown rapidly from a “command and control” economy to a market-based economy. Ernst & Young report. compared with 3. low tariffs and significant investments in telecom infrastructure and networks.5% and 14. DBS Group Research. The easy access to mobile services is the outcome of positive regulatory changes. “India’s Macroeconomic Indicators.com/news/redefining-the-hindu-rate-ofgrowth/104268/0.com/ind-eco. low-priced handsets. November 2008. “Redefining The Hindu Rate Of Growth. India is now closely integrated with the global economy and is considered one of the pillars of global economic growth.9%3 of GDP.pdf.financialexpress. 3 Enabling the next wave of telecom growth in India .1.6%4 of total GDP in FY10. the telecom sector has been the major contributor to India’s growth.6%. http://www. 1 2 3 4 India: Rising growth potential. India 2012: telecom growth continues.” The Financial Express. India’s GDP has been rising by more than 7%1 annually in the past decade.5%2 annually from 1950 to 1980. with the further opening of the economy and the creation of regulatory institutions to march toward fully competitive markets. India’s service sector was estimated to account for 56. The Indian economy maintained a growth rate of more than 5% even during the global recession. while the industrial sector and agriculture sector contributed 28. respectively. page 8. intense competition among multiple operators. 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.1 Indian telecom sector 1. accounting for nearly 3.12 April 2004. to GDP. The process of liberalization started in the mid-1980s and gathered momentum in the 1990s. 13 October 2010.

telecomcircle. Enabling the next wave of telecom growth in India 4 . accessed 25 October 2010. e-Charge Economies of scale Low acquisition cost (no handset subsidy) Source: “How can carriers make 40% EBIDTA margin at 2 cents/min tariff?.” http://www.com/2009/02/carriers-ebidta/. network Infrastructure sharing Paradigm shift from average revenue per user (ARPU) to revenue per min Focus on prepaid Low cost distribution.Indian telecom model Outsourcing non-core activities like IT.

2. 5 Enabling the next wave of telecom growth in India .http://www.1. The advantages of the advent of telecommunications are manifold and explicitly verifiable from the phenomenal success of the sector.” through which fishermen are provided free mobile handsets. Mobile telephony had a profound impact on the fishing community in the southern state of Kerala. shared on a rotating basis. Narrowing access gaps and removing barriers to information dissemination are prerequisites for promoting equitable and sustainable development as well as political and social cohesion.html. According to a study by the Indian Council for Research on International Economic Relations (ICRIER). World Bank. Increasing connectivity is highly instrumental in improving governance. Mobiles have helped to co–ordinate demand and supply. reduced business risk and made those involved with fishing feel much safer at sea. mobile telephony has made the rural and underdeveloped markets much more efficient. Samar Srivastava. a government organization. The MS Swaminathan Research Foundation (MSSRF). for instance. 1. States with 10%6 higher teledensity have grown 1.2% faster. a 1% increase in mobile subscribers is estimated to increase per capita GDP by about US$200. and have helped those who catch the fish communicate with merchants and transporters in an efficient and effective manner. says study. 5 6 Unfinished Business: Mobilizing new efforts to achieve the 2015 millennium development goals.livemint. security.6% points. Importance of telecom Telecommunication is pivotal to a country’s socioeconomic growth. “High-teledensity states grew faster. According to a World Bank study. has partnered with a leading telecom equipment and service provider to provide “Fisher friend. a 10%5 increase in teledensity is known to boost GDP growth by 0. It is one of the main architects of the accelerated growth and progress of different segments of the economy. September 2010. Bihar could have witnessed 4% faster growth if it had enjoyed the same teledensity as Punjab. By virtue of being a carrier and disseminator of information. There is a substantial relationship between increase in teledensity and the economic development of a region. 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. business communication.com/2009/01/19224316/ Highteledensity-states-grew-f. states with a higher teledensity have grown faster than those with lower teledensity. along with free access to information service. lowers transaction costs and is an effective substitute for infeasible physical transport.2. page 17. response to emergencies and in the overall strengthening of the sociocultural ethos of the country. The usage of mobile phones has enabled fishermen to respond quickly to market demand and prevent wastage. 19 January 2009. registering a consistent overall growth rate of more than 35% over the past decade in terms of subscribers.1 Economic growth Indian telecom has emerged as one of the greatest economic success stories. creates efficient information flows. In other words.” LiveMint. accessed 10 October 2010.

As a result.3 Social development Connectivity fosters social development. Operations such as data entry. 64% of consumption expenditure and 33% of national savings. systems engineering and systems design and integration are popular examples. a committed workforce and business continuity. the spread of telecom and information services to rural areas is enabling the setup of rural business process outsourcing (BPO).2. Communication facilities in rural areas are critical for the development of rural India. The provision of telecom services in rural areas and the obscure hinterland has made previously abandoned areas highly accessible. Participation in the initiative is an act of corporate social responsibility. technology transfer and entrepreneurship Facilitating national and regional integration. leading to the inclusion of rural India in the global economic milieu and reducing the rural-urban divide. 1. 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. page 13. • • • 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.Rural Divide. creating an atmosphere of economic diversification.2 Job creation Besides being one of the largest revenue generators. Indian villages account for 70%7 of the country’s total population. The telecom sector has led to the growth of a range of communication technology-enabled activities and services.4 Rural development According to FICCI and Nielsen study. health and increased citizen participation in civil society. customer support centers.1. Nielsen. the hitherto dormant economic potential is being increasingly tapped. guaranteed service levels. In return. It aims to introduce rural youth to BPO and to provide employment in their village. However. This represents an innovative approach in providing quality health care whenever and wherever needed. call center operations. 56% of the country’s income. software development. Further.2. the quality of life in rural area improves. including improved education. It helps combat epidemics such as HIV/AIDS and malaria by supplying information on treatment and control. and establishing the mobile testing of diseases. Enabling the next wave of telecom growth in India 6 . August 2010.2. RuralShores is an initiative that aims to reverse the trend. RuralShores: bringing jobs to rural India Over the years. Moreover. the lack of employment opportunities in rural India has forced people belonging to villages to move to the cities. thus reducing the pressure of urban migration 1. corporations benefit through cost-effectiveness due to the lower costs associated with a rural ecosystem. it ensures complete information protection. telecom is also a major creator of jobs. low employee attrition and the potential for scalability. providing the following advantages: • • • 7 Challenges Before An Integrated India: Bridging The Urban . employment and a strong socio-cultural ethos Open rural areas to foreign investment. resulting in the organized aggregation of supply and demand Providing enhancement of microfinancing. human resource services. With more untapped territories being connected through telecom. revenue accounting. generating awareness. processing of insurance claims. improving access to and connectivity with health centers.

1. health care. downloading application forms. and can be used as an instrument of international relations and diplomacy. Delivering literacy and education to women wherever they live or work: this opens up new avenues and allows for flexible learning times. hospital information and libraries. ordering of birth/death/marriage certificates and filing of income taxes.” 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. Significant progress has been made in the computerization of railway bookings.1 billion (US$8. and between the departments and their agencies and bureaus. 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 inflow of FDI into India’s telecom sector was approximately INR407. Most relevant information about these entities is now available on their websites. renewing licenses. registering businesses. Simplifying the application and approval procedures process for SME requests would encourage business development.nic. high illiteracy and negative social norms. Government to business (G2B): this entails services between government and the business community. as well as citizen assistance for basic services such as education. allocation of the Permanent Account Number (PAN) to income tax payers. G2G services are transactions between the central/national and local governments. including the “Millennium Development Goals.5 E-governance E-governance that helps exploit the power of information and communication technology to transform accessibility. Since the advent of IT and communication technology. Business services offered include obtaining current business information. quality and the cost-effectiveness of public services has been made possible by the telecom revolution.9 billion). 1. It is an irreplaceable component for achieving most developmental goals. processing of passport application. including the dissemination of policies.2.2. conduct of public examination and customs clearance. The services offered through G2B transactions also assist in business development. G2G services are transactions between governments.” Department of Industrial Policy & Promotion.7 Gender equality The advent of communications technology has helped overcome institutional and social barriers of mobility. rules and regulations. making it easily accessible and increasing transparency. It is facilitating women’s participation in the political and economic processes of the country. On a global footing. as well as basic citizen services such as license renewals. memos. obtaining permits and the payment of taxes. and creating new economic opportunities for women through digital empowerment. Between FY00 and FY10. 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. 1. Government to employee (G2E): this includes G2C services as well as specialized services that cover only government employees.2.in/. http://dipp. 7 Enabling the next wave of telecom growth in India . Indian ministries and government departments are working to computerize their operations to make them simpler and increasingly accessible for Indian citizens. 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.8 accounting for more than 8% of approved FDI.6 Strengthening investments Attractive trade and investment policies have transformed the Indian telecom sector into one of the most investorfriendly markets. specifically the development of small and medium enterprises (SMEs). among others. accessed 10 October 2010. • Government to citizen (G2C): this comprises information dissemination to the public. Achieving gender equality and empowering women is crucial because of its cross-cutting influence.

m-commerce finds its applications across various end markets such as banking and financial institutions. Efforts are constantly being made to devise more affordable technology for the masses.2.8 m–commerce This is the next revolution that is expected to emerge through the use of mobile phones. transfer funds. places great emphasis on research and development 9 “Nokia to rollout mobile banking in India. strengthening health networks. there is a significant focus on technology with the potential to improve rural connectivity.ciol. focus on global telecom standardization activities and the promotion of entrepreneurship. booking tickets for transportation services such as trains and taxis and online shopping. For instance. leading class services and a global presence. trade stocks and purchase financial products such as insurance. In India.. 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.9 1. paying bills for utilities such as power and gas. The challenges surrounding these programs include job cards for those demanding work. Mobile banking enables customers of banks and other financial institutions to access their account information. the elimination of ghost workers.3 billion by 2013. 14 April 2010. taking relevant education that is well aligned to the needs of the communities to their doorstep. which aim to provide inclusive growth. the introduction of GPS-enabled biometric systems at the grass-roots level continues to remain a challenge. These organizations have helped to create synergy among academia.2. the development of manufacturing capability.and the Indira Gandhi National Open University. accessed 12 October 2010. This is one of the most befitting instances of the telecom and internet revolution. the telecom industry and the Government for the creation of new services and applications. Furthermore. thus overcoming cultural and language barriers.2. The integration of such programs with mobile telephony is expected to benefit such programs of national importance. wage payments and the authorization of wages electronically. formulated by the GoI. the value of mobile payment transactions in India is expected to reach approximately US$1.com/News/News/News-Reports/Nokia-to-rollout-mobile-banking-in-India/134910/0/. as these become a tool for commerce.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). Enabling the next wave of telecom growth in India 8 . 1.” CyberMedia India Online Ltd. Once a worker has logged in.9 Facilitating research and development The growth in high-speed communication and advances in internet technology are making India a major R&D hub. http://www. the TCOEs have focused on the technological and management challenges that Indian operators face in reaching all sections of society while offering affordable solutions. monitoring health trends and provisioning primary health care. the introduction of electronic muster rolls. 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. making sure the worker is paid for the day. According to Cybermedia India Online Limited. • Helping lower child mortality and improve maternal health: this is done by providing information on nutrition. this data could be transmitted to MNREGA. In pursuance of the NTP 1999’s objective toward R&D. 1. (R&D). Mobile phones provide consumers an opportunity to transact anytime and anywhere. organizations such as Telecom Centers of Excellence (TCOE). NTP 1999. the Center of Excellence in Wireless Technology (CEWIT) and the Broadband Wireless Consortium of India (BWCI) have been established. For instance. the generation of intellectual property right (IPR).

2 9 Evolution of the telecom sector in India Enabling the next wave of telecom growth in India .

and the TRAI was established in 1997. and Mahanagar Telephone Nigam Limited (MTNL) were formed. Telephone and Telegraph (PTT). However. Its history begins with the laying down of the first experimental electric telegraph line in Kolkata. which is now known as Tata Communications. Karachi and Ahmedabad. 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. Further. 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). The formulation of NTP 1994 was followed by the launch of mobile telephony in India in 1995. In 1881. respectively. the Telecommunications Dispute Settlement and Appellate Tribunal (TDSAT) was established to take over the adjudicatory and disputes functions from TRAI. telephone services were introduced. The introduction of the New Industrial Policy 1991 initiated the liberalization process in India. universal licensing regime. Following independence. with exchanges being opened in Kolkata. In January 2000. two wholly government-owned companies — Videsh Sanchar Nigam Limited (VSNL). Chennai. Telecom equipment manufacturing was also de–licensed in 1991. in 1986. and were under government control. 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. Mumbai. primarily due to initiatives taken by the regulator and service providers. VSNL and MTNL aimed at providing services to international and metropolitan areas. all foreign telecommunication companies in India were nationalized to constitute the Posts. In the early 1980s. NTP 1999 enabled the telecom sector to reach an average subscriber growth rate of more than 35%. The liberalization of the sector resulted in the need for a regulator. and calling party pays (CPP) • 2004: Broadband policy. Interconnect Usage Charges (IUC). and the NTP was announced in 1994. 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 . DoT was established in 1985 to provide domestic and long-distance services in India. growth in the initial years was very slow due to high mobile handset prices as well as the high tariff structure of service providers.1.2. the sector underwent its first wave of change. The introduction of NTP 1999 heralded pro-consumer policies.

The reserve price for 3G services was categorized on the basis of circles — INR3. Allocation of spectrum and grant of wireless license was subject to availability and. which mainly used the proceeds of ADC to develop rural telephony services.3GHz range in each of the country’s 22 circles. December 2006. the TRAI abolished the access deficit charge (ADC).In 2002. January 2004.6 billion). as these constitute an essential and possibly the most expensive component in the entire telecom service delivery infrastructure. During the same year. the amount payable by BSNL and MTNL for 3G services pushed the total auction revenue to INR677.2 billion) in auction revenues. The fund was introduced to provide access to telegraph services to people in rural and remote areas at affordable prices. Thus. the licensee was required to endeavor to rollout services using wireline technology. telecom towers were accorded “Infrastructure Status” by the Reserve Bank of India (RBI).2 billion (US$14. In 2004. among others. education and medicine. in case UASL was not allocated spectrum due to non-availability. The bidding process continued for 34 days. The Broadband Policy 2004 specified targets in terms of subscribers. 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 for the more populated A and Metro circles. March 2007 and January 2008. in February 2004. the GoI introduced the Unified Access Service (UAS) licensing regime. Following the auction of 3G mobile services. new UASL guidelines were issued. reaching the final stage in May 2010. Additionally. the Government concluded the auction of BWA services across India. ADC was the fee paid by private mobile operators to the state-owned BSNL. which covered the levy paid by mobile operators to the state–run operator. entertainment. the Universal Service Support Policy came into effect. which witnessed fierce bidding for spectrum. The GoI also introduced the Broadband Policy 2004. the calling party pays (CPP) regime was introduced. 11 Enabling the next wave of telecom growth in India . using any technology.2 billion for the B circles. Operators were allowed to share infrastructure in their tower installations. The GoI subsequently issued licenses in November 2003. The auction aimed at allotting three to four 3G licenses for each of the 22 regional circles.7 billion to the GoI. BSNL. In February 2008. FDI limit in the telecom sector was increased from 49% to 74%. In July 2010. The seven winners were required to pay INR509. The GoI offered two 20MHz blocks in the 2. Further. the DoT approved the sharing of infrastructure among mobile operators. mobile services had outpaced fixed-line services with nearly 45 million mobile subscribers. In March 2008. through which all local incoming calls were made free. INR1.4 billion (US$8. providing statutory status to the USOF in December 2003. and INR300 million for the rural C circles. which recognized the ubiquitous potential of broadband services and their contribution toward the GDP growth and improved quality of life through e–governance. In November 2005. raising INR385. e–commerce. the GoI raised in excess of INR1 trillion from the auction of 3G and BWA services. which permitted an access service provider to offer both fixed and/or mobile services under the same license. the DoT issued guidelines for the intra-circle merger of cellular mobile telephone service (CMTS)/UAS licenses. The bidding process continued for a period of 16 days. The GoI commenced the auction for 2x5MHz in the 2100MHz band for 3G services in April 2010. In May 2003.

an open approach and encouragement of consultation with stakeholders. The key feature of India’s regulatory regime is transparency in industry information. administrative monitoring of public sector undertakings (PSUs). telephones. and four part-time members that are secretaries to the GoI of the concerned departments The Telecom Commission is responsible for policy formulation. wireless spectrum management. Department of Telecommunications (DoT). licensing. telegraph and other means of communication The laws governing the telecom sector include the Indian Telegraph Act. licensing and coordination matters relating to telegraphs. Its key responsibilities include: • • • • Policy. the Indian Wireless Telegraphy Act. 1997 DoT • The DoT is a part of the MICT.2. post. the Telecom Commission. among other matters Enabling the next wave of telecom growth in India 12 .2. Regulatory framework A number of positive regulatory changes have driven growth in the sector. The key stakeholders as a part of the regulatory environment in the telecom ecosystem include the Ministry of Communications & Information Technology (MICT). 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. 1885. wireless. 1933. The key departments of the ministry include the Department of Telecommunications. the Telecom Regulatory Authority of India (TRAI) and the Telecom Dispute Settlement & Appellate Tribunal (TDSAT). the Department of Information Technology. R&D and standardization and validation of equipment. and the Department of Posts The MICT formulates policies with respect to telecom. MICT • • • The MICT is part of the Indian Government. data. and the Telecom Regulatory Authority of India Act.

between two or more service providers. and between a service provider and a group of consumers. the GoI established the Telecom Dispute Settlement & Appellate Tribunal (TDSAT). The key powers and functions of the authority include: • • • • • • • • • • • • • • • Recommending the need for a new service provider. such as administrative and financial functions.TRAI • TRAI was established as an independent statutory regulatory authority under the TRAI Act in 1997. that may be entrusted to TRAI by the central government. 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. or as may be necessary to carry out the provisions of the TRAI act TDSAT • • • In April 2000. 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. 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 .

hypercompetition in the sector. December 2009. accessed 10 December 2010.9%. Lower costs and the additional benefit of mobility that is associated with wireless subscribers have led to the stagnation of the wireline subscriber base. http://www. high economic growth. accounting for 95.9% 140. urban subscribers account for more than 65% of the overall subscriber base.7% 37. Overview of the Indian telecom industry India is the world’s second-largest telecom market.2% 12. However. with the mobile segment leading this growth.html. page 4.13 in comparison with US$200–US$350 per subscriber for wireline. http://www.” LiveMint.3 million10 in September 2010.3 40% 30% 20% 10% 18. affordable handsets.0% 26. Urban and rural subscriber base.1%.0 FY02 5. In the past decade.9% 28.6% 36.2% 205.2. 12 Ernst & Young analysis.trai.9 FY07 3.0% 76. reduced tariffs. 63 /2010. The telecom revolution in the country has impacted both the urban and rural population.3 621.livemint.gov.3 million Teledensity (%) 50% Rural 32. wireless subscribers constitute the majority of the total subscriber base. The total subscriber base (including wireline and wireless) reached 723.pdf.1% 54.3 million subscribers. The capital cost to provide mobile service varies in the range of US$50–US$90 per subscriber.3 FY06 70% 60% 723. The wireless segment has been registering monthly mobile additions of about 15 to 2011 million subscribers.5 FY00 61.” Department of Economic Affairs – Ministry of Finance. September 2010 100%= 723. leading toward a huge urban–rural digital divide. Enabling the next wave of telecom growth in India 14 . the total subscriber base grew from FY00 through FY10 at a compound annual growth rate (CAGR) of 36. “Telcos to recoup 3G bid money in 5-6 years: Analysys Mason.12 whereas wireline subscribers account for 4.in/Default.com/ pdf/ppp_position_paper_telecom_122k9.0% 98.0% 52.5 FY04 9.3% 45. 30 May 2010. Such phenomenal growth can be attributed primarily to the country’s large population. Subscriber base and teledensity (wireless and wireline) 800 Total subscribers (million) 700 600 500 400 300 200 100 0 2.7% Source: TRAI 10 “TRAI Press Release No.3% FY01 4.asp. accessed 10 October 2010. accessed 12 October 2010. infrastructure sharing and the introduction of positive and enabling regulatory reforms. As of September 2010. http://pppinindia.3% Urban 67.4 FY05 300.3. 11 Shauvik Ghosh.7 FY08 FY09 FY10 Sep-10 0% Total subscribers Source: TRAI Teledensity According to TRAI. 13 “Position paper on the Telecom sector in India.1% to reach 621.”TRAI website.6 FY03 7. com/2010/05/30230743/Telcos-to-recoup-3G-bid-money.5 429. the total teledensity has risen above 50%.

Wireless India has emerged as one of the world’s fastest-growing telecom markets.4.4% 3. accessed 15 October 2010.gov. July 2010.trai. September 2010 100% = 687. VAS.1 22.1% of the total wireless subscriber base.6 0.1 261.com/presentation/Mobile_VAS.1 million16 subscribers. FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 Sep-10 Wireless subscribers Teledensity Source: TRAI Wireless subscribers: GSM vs.05–0. the growth in the number of subscribers was very low.8 165. 15 Enabling the next wave of telecom growth in India . In the initial years of mobile telephony.5 13.6% 9. page 2.2 14. 15 “TRAI: The Indian Telecom Services Performance Indicators (January . with average monthly subscriber additions in the range of 0. October 2006.6% 58. 16 “Penetration of Mobile Telephony in India & Value added services in Indian Mobile Telephony market. CDMA. The road ahead for the Indian telecom sector is expected to be more eventful. 84.8 33.pdf. the gap between GSM and CDMA has widened as the GSM subscriber base has grown more rapidly.8% 52.3 49.7 4.6% 1.2% 6.zinnov.March 2010).2. The wireless subscriber base in India grew from FY00 through FY10 at a compound annual growth rate (CAGR) of 77.2% 3.8% 391.0% 70% 60% 50% Teledensity (%) 40% 30% 20% 10% 0% FY10.9% GSM GSM subscribers constitute about 84.asp. primarily due to the advent of new services such as 3G. Mobile services were commercially launched in India in 1995. and this growth is primarily attributed to the growth in wireless services. http://www. Over an extended period. The advent of NTP 1999 paved the way for aggressive growth in the wireless subscriber base. mobile number portability (MNP) and the growth of manufacturing.3 million15 subscribers in Wireless subscribers in India 800 700 Wireless subscribers (millions) 600 500 400 300 200 100 0 1.0% 98.7% 687.9 0.7 584.5%14 to reach 584. http://www. accessed 10 October 2010.” Zinnov Research and Consulting.” TRAI website.1% Source: TRAI 14 Ernst & Young analysis.0 33.in/Default. India’s mobile market is the second largest in terms of subscribers in the world after China.7 million CDMA 15.

gov. Enabling the next wave of telecom growth in India 16 . besides other new technologies.” TRAI website.7% -2.asp.7 18. accessed 10 October 2010. http://www.1% Source: TRAI. where they see higher revenue growth and continue to invest extensively.3%17 during the period between FY00 and FY10.0 37. In the future.gov. the major wireline operators in India also operate mobile networks. July 2010.6 million village public telephones (VPTs) in India.3% -3. the advantage of mobility among wireless networks and inadequate infrastructure of the wireline network.in/Default. cheaper handsets.3% -1. DoT In FY00.September 2010). 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. 19 “TRAI: The Indian Telecom Services Performance Indicators (July .8 39. the wireline subscriber base was 37 million.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. Wireline The Indian wireline market grew at a CAGR of 3.4 41. The wireline market is dominated by the governmentcontrolled incumbent players. wireline service continues to face stiff competition from wireless services. the emergence of new technologies such as fiber to the home is expected to drive the growth of the wireline market in India.4 38.1% of the subscribers in FY10. improved mobile coverage. there were 3.asp. In the recent past.March 2010).3% 41. As of September 2010. Although fixed-line operators are trying to offer VAS such as high-speed internet access. Furthermore. 18 “TRAI: The Indian Telecom Services Performance Indicators (January . driven by the immense potential for data growth. Apart from these two players.0 25% 20% 35. 17 Ernst & Young analysis.7% 38.in/Default. Although wireline infrastructure in India is not as extensive as wireless infrastructure. accessed 15 January 2011.3% 0.5 million19 public call offices (PCOs) and 0. video on demand and videoconferencing.” TRAI website.9%. Over the years.9% 94.trai. it accounted for 5.6% FY00 Wireless FY10 Wireline 93.4% 5. http://www. the wireline market accounted for 93. the wireline subscriber base has declined due to lower mobile tariffs. the urban market has dominated the wireline subscriber base.9% -3.trai.0% 26. there is a significant opportunity for future growth. in FY10.9% 32.2.1%.1 41.18 with a teledensity of 3.7 17.6% 40.5. In FY10.4% of the subscribers. accounting for 73.1% 22.3 7.5 40.9% 3. additional private players have also ventured into the fixed-line market. January 2010.

21 Bringing Mass Broadband to India: Roles for Government and Industry. From FY05 through FY10.2 FY05 9.2 million and 8. satellite media. digital subscriber lines (DSL) on copper loop. a 10%22 increase in broadband penetration leads to a 1. org/2010/10/09/international-insights-%E2%80%93-september/. accessed 25 October 2010. The minimum threshold speed for a broadband connection is 256 kilobits per second (kbps) or more. June 2010.3% increase in GDP. whereas traditional internet connections have a speed of less than 256 kbps.9 1. access to personal computers and electricity. September 2010. Internet and broadband The internet has revolutionized the lifestyle of many Indians by creating a new means of communication.6 5 0 0.5% to reach 16. 17 Enabling the next wave of telecom growth in India .6.3 13.3 6.8 million.8 6. respectively in FY10. Booz & Company. terrestrial wireless and future technologies.” International Telecommunications Users Group website. entrepreneurship and services. This falls short of a Broadband Policy’s goals of 40 million internet subscribers and 20 million broadband subscribers by the end of 2010. knowledge sharing. Further.3 17.5% increase in labor productivity in a country. 22 “Broadband Commission Presents Report to United Nations. According to Booz & Company. Broadband infrastructure plays a vital role in a country’s achievement across domains such as social progress and economic development. cable television networks.2.4 2. such as opportunities for education. The opportunities hold a much larger promise for India’s large low-income population and a growing economy. employment and the delivery of services. Although the internet is a function of various factors such as literacy. governance. FY06 FY07 Internet subscribers FY08 FY09 Broadband subscribers FY10 Sep 10 Source: TRAI 20 Ernst &Young analysis. Also. it has made significant inroads in the urban market. which envisions the creation of a framework through various access technologies such as optical fiber.9 16. it is estimated that a 10%21 increase in broadband penetration translates to a 1.3 3.1 8. The DoT formulated the Broadband Policy 2004. the number of internet and Internet and broadband subscribers (million) 20 15 10 5. the evolution of technology and increase in bandwidth has given rise to internet connections at speeds faster than traditional dial–up connections.5 10.2 broadband subscribers has increased at a CAGR of 23. http://intug. Broadband brings a number of benefits. governance.9%20 and 117.9 11.

6% Source: TRAI Source: TRAI Digital subscriber line (DSL) is the preferred technology among service providers for both internet access and broadband services.9% of the market share in broadband access. DSL constituted 50.5% 31. primarily in business districts or high–end residential areas of the larger cities.8% 4.6% 4. broadband users are concentrated in urban areas. Broadband penetration continues to be very low in India. The share of wireless technology continues to be negligible and remains to be fully exploited.Market share by subscribers of technologies in internet access. September 2010 1. September 2010 3.0% Market share by subscribers of technologies in broadband.5% DSL Cable modem Ethernet Wireless Others 86. despite a structured framework that included ambitious goals to be met in 2010. .3% 0. and 86. The key factors responsible for the widespread adoption of broadband include affordability and availability.0% 10. As of September 2010. especially in the case of broadband services.5% 6.5% DSL Dial-up Wireless Cable modem Ethernet Others 50. Currently.5% of the market share in internet access.6% 0.

251 39 5. Most large global players have set up operations in India to cater to the connectivity needs of their customers.064 495 92 125 75 260 370 150 45 61 2.600 20 3. 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. It has spurred the demand for IP-based virtual private network (IP-VPN) services in India. and national and international data connectivity. network integration.169 23 Industry estimates. multiprotocol label switching (MPLS) based IP-VPN services. the financial services sector and the government. The other services relevant to this segment are international private leased circuits. network management.900 31 4. A majority of global operators in this space are also offering VAS such as network security. The growing demand for connectivity is coming primarily from the IT and IT-enabled services sectors (ITeS).262 FY10 1.556 FY09 930 480 70 110 65 210 250 130 30 56 1. internet connectivity. Voice over Internet Protocol (VoIP) is considered a key enterprise application for lowering operating costs.2. 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.027 FY11E 1. 19 Enabling the next wave of telecom growth in India .800 45 6. With telecom and IT converging.200 510 130 150 80 350 600 180 52 72 2.7. managed services and network security services are provided by global operators in partnership with Indian IT companies. network storage and enterprise voice solutions.

ciol. Enabling the next wave of telecom growth in India 20 . FY10. the GoI had issued 29 NLD24 service licenses.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. with the sale of the strategic stake in VSNL to the Tata Group. http://voicendata. FY10.9 FY07 Market size (INR billion) Source: Voice and Data Growth (%) In 2002. 25 “India’s NLD market has grown by 13.3% 35. accessed 18 October 2010.” Voice & Data.0 144. with the annual license fee being reduced to 6% of the AGR.0% 40% 30% 20% 10% 0% 71.0 30. the market slowed in FY10. without any restriction on the number of operators. As of December 2009.3 97.NTP 1999 opened up the NLD service for private operators.7% to reach total revenues of INR164 billion. accessed 18 October 2010.6% in FY 2009-10. Market size of NLD 180 160 140 120 100 80 60 40 20 0 60% 50% 164. 26 “India among the Top Few Fastest Growing Telecom Markets. India’s ILD services were opened up for private players. primarily due to a decline in ARPU across all operators.1 1.com/content/vnd100_2010vol-II/110070519.25 However.asp.3 13.3% 176.2% 150.asp. Market size of ILD 200 Market size (INR billion) 150 100 50 0 115.0% 115.” Voice & Data.7% FY08 FY09 FY10 Growth (%) Growth (%) Market size (INR billion) 48. the Indian market for NLD grew by 13.com/content/vnd100_2010vol-II/110070520. with its revenues reaching INR176 billion26 in FY10. 27 DoT Annual Report 2009–10. ILD has witnessed steady growth.Department of Telecommunications. As of December 2009. the GoI had issued 24 ILD27 service licenses. In FY10.Department of Telecommunications.0 17.ciol.3% 25.3 0. http://voicendata.

com/2010/04/01215017/Indian-telecomfirms-may-get-D. including routers and switches. accessed 12 October 2010.4% 3.8.1%. with the exception of telecom towers and cables. chipsets. Telecom equipment manufacturing and exports Production (INR billion) 600 500 400 300 178.0 160. the demand for telecom equipment is expected to be worth US$70–100 billion28 in 2015. DSL and cable modems and networking devices.com/News/News/News-Reports/ Time-to-go-local-in-telecom-equipment-purchase/140758/0/.4% China South Korea 59.9 Source: International Trade Centre Share of imports by country of origin.” CyberMedia India Online. Source: International Trade Centre Although a few Indian mobile operators have a significant presence globally. according to a leading telecom equipment manufacturer. an unreliable power supply. only 40% of the requirement for equipment is met through local sourcing.7 1.2.9% 4. GOI.0 140 Exports (INR billion) 110. India is a strong market for global telecom equipment vendors.2 2008 2009 8.0 100 4.7 2006 2007 3. Manufacturers in India face challenges such as high logistics costs. 21 Enabling the next wave of telecom growth in India . with the remainder coming from global companies manufacturing in India.” “Telecom Equipment & Services Export Promotion Council (TEPC).html.9 15.0 2. 21 July 2010. Despite the growth of a localized manufacturing environment in India. accessed 10 October 2020.3 200 140.climatechallengeindia. 2009 100%=US$8.” LiveMint. wireless and landline infrastructure equipment. “Policy recommendations to increase domestic telecom growth and exports of telecom equipment and service. 02 September 2010. 30 “Time to go local in telecom equipment purchase. 29 Ernst & Young analysis.6 19.” India Climate Portal.3% 3. Telecom equipment manufacturing The telecom equipment industry comprises products such as cell phones. http://www.29 respectively.4% 3. 28 “Telecom equipment manufacturing in India needs help urgently. Furthermore.org/telecomequipment-manufacturing-in-india-needs-help-urgently-21-july-2010-t. The majority of telecom segments are highly dependent on imports. the market for wireless infrastructure equipment is estimated to be US$8–10 billion. From 2005-09.0 412.3 518. http://www.7 81.9 billion FY07 Note: Includes both indigenous and offshore production Source: DoT.” 19.0 120 100 80 60 40 20 FY08 FY09 Exports 0 Value of telecom equipment imports to India 10 Imports (US$ billion) 8 6 4 2 0 1.9% and 112.ciol. companies in the manufacturing segment are yet to feature in the global telecom landscape.30 and equipment worth INR190 billion was imported in 2009. accessed 02 August 2010. Ministry of Communications and IT.5 0 FY04 FY05 FY06 Production 236. inadequate tax benefits and competition from low-cost Chinese equipment.1% Sweden US Singapore Hong Kong Others According to industry estimates.5% 6. the manufacturing and exports of telecom equipment grew at a CAGR of 33.3 2005 1.livemint. “Indian telecom firms may get DoT boost. http://www.

Enabling the next wave of telecom growth in India 22 . it does not play any role in carrying wireless signals. GBTs involve a capital expenditure in the range of INR2. and the demand for more services will translate into the development of more telecom infrastructure. Telecom infrastructure industry in India. It can also create active infrastructure. radio antennas. there were 425. node B. availability.2 Towers and in-building solutions Telecom towers are broadly classified as ground-based and rooftop towers.nic. page 5. feeders. ROW. The wireless sector has charted an impressive growth trajectory. page 9. hurdles to the erection of cellular towers and value added tax (VAT) levies on broadband services delivered through fiber media. Backhaul consists of the intermediate links between the core of the network and the various sub-networks. “Growth of Telecom Sector. radio access network. depending on the height of the tower. CDMA.9. Infrastructure The Indian telecom success story is built around the wireless segment. Rooftop towers (RTTs) are placed on the roofs of high-rise buildings. Civil infrastructure includes components such as tower site. power regulation equipment. the civil infrastructure and backhaul. Infrastructure development plays a crucial role in the development of the wireless sector.8 million.45532 telecom towers in the country.1 Mobile network Typically. battery backup. accessed 28 October 2010. The development of the telecom infrastructure depends on four key factors: rollout. diesel generator set  and security cabin. Infrastructure Provider-I (IP-I) can provide assets such as dark fiber. civil infrastructure forms about 60% of the cost of setting up a network. core network and other transmission equipment. the rollout of infrastructure will become easier. March 2009. and safety and aesthetic concerns. as the safety and aesthetic issues related to the setup of towers are addressed. http://loksabha. As of March 2010. whether it is GSM. Competition will give further impetus to the development of infrastructure. a mobile network in a circle consists of mobile switching centers (MSCs). cables.34 Electronic infrastructure consists of the electronics needed to run a wireless network such as a BTS or cell site.” Lok Sabha. It connects the electronic infrastructure at the tower site with the BSC and MSC. Civil infrastructure includes the complementary elements of a cellular network that ensure that the electronic components are operational. December 2008. ICRA Rating Feature. 2. The BTSs are installed in a contiguous manner. while electronic infrastructure forms the remaining 40%. duct space and tower through simple registration without paying any license fee. 3G or BWA. However. The National Telecom Critical Infrastructure Policy is expected to address these concerns as well as the issues affecting telecom providers on the state level. 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. Crisil Research. growing at a CAGR of more than 75%31 in the past decade in terms of the number of subscribers. However. March 2009.in/. so as to facilitate the handing over of signals from one BTS to another like a chain. on behalf of the licensee.9. the number of operators providing their services from a particular site influences the extent of civil infrastructure installed at the site. each of which is connected to base station controllers (BSCs).33 depending upon subscriber usage. The policy should clearly define the role of the Central Government and the states to help catalyze telecom sector growth. air conditioner. Falling prices of telecom services will help to increase their affordability. including ROW related issues. page 6. Finally. shelter room. Typically.9. 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. price. steel tower.2. with each BSC being connected to a base transceiver station (BTS). competition. topography. ICRA Rating Feature.4 to 2. It is not influenced by the type of the communication technology being used. Telecom infrastructure industry in India. The rollout of services by operators takes place only on the back of robust telecom infrastructure. Ernst & Young analysis. fire extinguisher. GBTs can accommodate up to six tenants. frequency band of operation and spectrum 31 32 33 34 35 2. The components of mobile networks include the electronic infrastructure. Telecom towers and allied infrastructure. The radius of each BTS varies from 500 meters to as much as 8-10 km.

http://www.9.428 4.102 26. Manipur. In-building solutions are designed to improve the reception of radio frequency signals indoors to meet the increasing demand for high-quality mobile services. accessed 20 September 2010. Sikkim. the leading operators have opted to share their infrastructure.008 4. Meghalaya. 37 “Master Circular .271 3. stadiums and office buildings an essential requirement. implying a subscriber-per-tower ratio of 1. Orissa.418 Towers 25.” Lok Sabha.708 8.634 4.321 20. asp.644 17. accessed 01 February 2011. 2. The GoI provides certain benefits specifically to infrastructure companies.678 425.207 34. Daman and Diu Maharashtra and Goa Karnataka Madhya Pradesh and Chhattisgarh West Bengal.371 8.102 38. Currently.090 52.322 26. these involve a capital expenditure of INR1.494 34.512 488 3. shopping malls. there are three types of tower companies — pure-play tower companies. which expects its mobile phones to work at all times. telecom operators have hived off their telecom towers into separate entities.455 telecom towers in India.611 18. State-wise number of towers States Rajasthan Gujarat.387 5. 36 “TRAI: Consultaion paper on issues related to telecommunication infrastructure policy.55.” Reserve Bank of India.org.242 17.337 720 2.184 391. accessed 28 October 2010.920 23. mass transit systems.028 2. tenancy level for the industry stands at 1.794 369 1.995 25.nic.608 2.121 41.5-2 million.899 6.455 Source: “Growth of Telecom Sector.766 21.rbi. Typically.071 1. operators with towers and operator-owned tower companies.3 Telecom infrastructure in India Initially.36 In July 2010. operators used their tower infrastructure for competitive advantage. where there is paucity of real-estate space.392 22. and emergency services.in/scripts/BS_ViewMasterCirculardetails.in/. Andaman and Nicobar Assam and Arunachal Pradesh Delhi.Exposure norms.614 35.494 24. Today.630 31. telecom towers were accorded Infrastructure Status37 by the RBI. which need reliable communications for efficient incident management and personal safety. there are an estimated 425.752 1.are shorter than GBTs and are common in urban and highly populated areas. Mizoram and Tripura Kerala and Lakshadweep Total Public sector 2.275 23.350 28.in/Default.396 18. Haryana and Chandigarh Uttar Pradesh and Uttarakhand Andhra Pradesh Punjab and Himachal Pradesh Jammu and Kashmir Tamil Nadu and Pondicherry Bihar and Jharkhand Nagaland.323 38.” TRAI website January 2011. This constitutes an essential and possibly the most expensive component in the entire telecom service delivery infrastructure.460. The tax benefit encourages the participation of private sector through investment.aspx.154 1. Coverage is required to meet the needs of both the general public.577 2.gov. 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.trai. http://loksabha. 23 Enabling the next wave of telecom growth in India .392 45. over the past few years. the growth of mobile communications has made the provision of radio coverage within airports. RTTs can accommodate two to three tenants.854 3. As a result.098 57. http://www.037 Private sector 23. In recent years. However.177 41. Over the past couple of years.

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) 71.9. 2. Tower sharing could help operators maintain quality network coverage throughout the city. This translates to consumption of more than 2 billion liters of diesel per year for cell sites. it will allow a better use of spectrum. capital and interest costs. Enabling the next wave of telecom growth in India 24 . insurance costs.2.5x in the course of this decade. investments required and emerging trends The industry faces low profitability. while the tower company earns revenues. Average diesel consumption per site per hour is about 2. and has a pre-tax margin of 7%–8%. A significant part of the network rollout is likely to come in the untapped rural areas. power shortages. The dependence on diesel could be reduced if the Government utilized that subsidy to support a move toward renewable energy options such as solar. as the tenant paying a higher rent to the tower company accelerates the time-to-market process.4 Energy requirements Currently. In its more complex forms. Overall. On average. and newer operators can build an assetlight model. a higher proportion of ground-based towers.4 Savings (INR billion) 476. 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.9. energy. land owners and so on before the tower and electronic infrastructure can be completed. and infrastructure sharing will act as an important tool to achieve faster rollouts and save operating and capital expenditure in these areas. where mobile teledensity is barely in the double digits. 38 Industry estimates. which is subsidized by GoI.6 557. further increasing capex requirements. 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.2 81.6 Goals of infrastructure sharing The key beneficiary of infrastructure sharing is the subscriber. With sharing. 27 million units of electricity are consumed per day. state electricity boards. translating to 6 million liters of diesel per day. the concept of infrastructure sharing assumes special importance. service providers have strong incentives to share infrastructure. 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. Since many rural areas are far-flung. It is estimated that tenancy levels will rise to between 2–2. It is estimated that infrastructure sharing in its current form has helped achieve savings of INR557. Such an arrangement works well for both partners. unclear land ownership and expensive backhaul connectivity costs in the rural areas. the industry has pumped in INR1 trillion and another INR400–500 billion is expected to be invested in the next two years.6 billion resulting from savings in infrastructure provisioning fee (IPF).5 liters.0 2.5 Future growth potential. massive amounts of funds can be saved. more groundbased towers will be needed. Against this background. Capital expenditure (capex) and operating expenditure (opex) savings: the setting up of a countrywide cellular network requires substantial capex. Spectrum constraints and network quality: for operators in urban areas. such as land and energy. superior network quality is a sustainable differentiating factor that helps to reduce customer churn and command premium prices. 39 Industry estimates.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). Due to higher costs of land development. additional security.9. 10. significant investments will be required. Rollouts in rural and semi-urban areas: as wireless service providers penetrate rural and semi-urban areas.

An extended version of RAN can be in the form of intra-circle roaming. The separation of the core network also allows each service provider to offer differentiated services to its subscribers. Government initiatives on infrastructure sharing: regulators favor faster deployment and investment optimization in the telecom sector. It helps to expand coverage into previously unserved geographic areas. Usually. 2. radio access network (RAN). cables. node B and transmission equipment. Operators have realized that the industry needs significant capital expenditure. masts. Electronic infrastructure sharing: this refers to the sharing of electronic elements such as antennas.7 Models of infrastructure sharing As India’s mobile networks have expanded over the past few years. Node B sharing: in the Node B sharing model. 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. freeing up significant resources and management time to focus on their core business. Thus. one physical unit is shared by two distinct nodes B. RAN sharing: this is the simplest type of electronic infrastructure sharing. Less negative environmental impact: although environmentalists show limited support for telecom network deployment. These provide incentives for companies to participate in infrastructure sharing. apart from improving capex and opex efficiencies. which can be reduced by sharing their networks.9. infrastructure sharing reduces operating costs and provides additional capacity in congested areas where space for sites and towers is limited. Expeditious time-to-market for new players: sharing significantly speeds up the time-to-market. mast and site. This can increase the coverage area and improve the quality of service. It also provides an additional source of revenue but may be limited by differing strategic objectives. This is by far the most common form of infrastructure sharing in India now. infrastructure sharing typically receives the backing of many conservation groups because less network buildup means fewer negative environmental impacts. including radio equipment. 25 Enabling the next wave of telecom growth in India . Infrastructure sharing limits duplication and gears investment toward underserved areas. buildings. feeders. it provides an opportunity to reduce capital and operational expenditure by sharing infrastructure from the start of the build-out. There are many government initiatives that support infrastructure sharing. operators either establish a joint venture company to operate the shared network or establish an agreement on the use of each other’s networks. so that each service provider can maintain control of its equipment and spectrum use. coverage is no longer a source of competitive advantage. The level of sharing among wireless service providers varies depending on the complexity of the arrangements and the interdependence of the wireless service providers. 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. shelters. It involves all the access network elements to the point of connection with the core network. 40 “Mobile infrastructure sharing. thus contributing to the growth of the industry as a whole. For operators who have been awarded 3G licenses and will be launching 3G operations. Commercial considerations appear to be driving the increasing trend to adopt a variety of infrastructure models. Infrastructure sharing can take the following forms40: Civil infrastructure sharing: this refers to the sharing of physical sites. The tower business can become a profit center by itself. product innovation and improved customer service. What started off as arrangements between two telecom operators has evolved into the creation of tower companies.Revenue stream for incumbents: sharing enables incumbents to earn revenues from a new source. rather than just leading to cost savings.” GSMA. power supply and battery backup. zoning regulations may start to play an important role in driving service providers to share civil infrastructure. page 12. The radio network controller (RNC) and core network are not shared in this model. 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. towers.

who have yet to complete their network deployment to provide national service coverage through sharing incumbents’ networks in specific areas. The benefits of DAS are twofold — the technology allows carriers to fill in coverage gaps and dead spots in their macro network and. to provide wireless service within a geographic area or structure. especially with the advent of smartphones and 3G. radio links. In Sweden. Radio and core sharing: all electronic components in the access and core network as well as civil infrastructure are shared. DAS has emerged as a powerful tool for wireless carriers to bolster their coverage and boost their capacity. but required each operator to maintain 30% of its network separately. network elements. Distributed antennae sharing (DAS): over the past few years. permitting one or more partner service providers to access some or all of the mobile network. antenna and transmission equipment. National roaming accelerates competition by allowing new players to launch their services within a shorter time frame. A common RF or optical fiber medium can be utilized. it helps add much-needed capacity to operators’ networks. National roaming: mandatory national roaming is a form of infrastructure sharing that allows new operators. reducing cost and maintenance efforts. backhaul. DAS technology can be used to boost signal coverage in large buildings. Mobile virtual network operators (MVNOs): these typically do not have their own network and have no rights to spectrum. Each consortium has built out a joint network. Backhaul sharing: common backhaul sharing will be very useful in rural environments where traffic from BTS to BSC is very low. 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. Enabling the next wave of telecom growth in India 26 . They typically rely on operator network sharing to get access to subscribers and offer services. Exits from such sharing arrangements can easily be provided if warranted due to an increase of traffic or other reasons. The regulator permitted this level of sharing. stadiums and shopping malls as well as for outdoor purposes. Essentially. by breaking down the macro cell site into smaller pieces. usually a base station.Core network: the most complex form of network sharing involves both radio and core network elements. This can be implemented to various levels depending on which platforms operators wish to share. including electronic components such as optic and feeder fiber cables.

as well as aggressive marketing efforts by telecom operators to spread awareness about their services such as updates and alerts. The rollout of 3G services is expected to drive the mobile VAS market in the future. Moreover. followed by technology enablers (10%–20%) and content aggregators (10%–15%).in/Default.10. 63 /2010. IAMAI. short-code providers. 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 driven by the increase in the mobile subscriber base. http://www. followed by music. the mobile VAS in India was estimated to be worth INR145. IAMAI. Content owners end up getting approximately 5%–10% of the overall revenues. The rollout of 3G services in the near future is expected to provide consumers with new and improved services such as highspeed data transfer. out of the total amount paid by end users (excluding P2P SMS). growing at a CAGR of more than 50% during 2006–10. polytones and truetones as well as caller ring-back tones (CRBT). July 2010 Source: Mobile VAS in India: 2010. technology enablers. person-to-application (P2A) SMS.0 145. accessed 10 October 2010. Mobile VAS in India: 2010.2. Entertainment mobile VAS constitutes 57% of the overall revenues followed by information mobile VAS (39%) and m-commerce (4%). approximately 60%–80%43 is captured by mobile operators. July 2010. media companies. content aggregators or developers.42 The key mobile VAS include person-to-person (P2P) SMS. The demand for mobile VAS is mostly driven by the youth. IAMAI. July 2010. IAMAI.1 93. The key participants in the mobile VAS market include content owners.” TRAI website. mobile payments and money transfer. creating opportunities for both telecom operators and companies engaged in VAS.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. the decline in ARPU has compelled mobile operators to focus on mobile VAS to generate additional revenues. “TRAI Press Release No. which provides services such as mobile banking. Mobile VAS in India: 2010. The mobile VAS revenues in the country are driven by the P2P SMS service.gov. application-to-person (A2P) SMS. 27 Enabling the next wave of telecom growth in India . July 2010 41 42 43 44 Mobile VAS in India: 2010. The growth of m–commerce. Value-added services (VAS) According to the Internet and Mobile Association of India (IAMAI).5 45.trai. handset manufacturers and content converters. In terms of revenue distribution among various market participants. July 2010.0 billion41 in 2010. which has exceeded the 700 million44 mark. with India being one of the leading mobile markets for the young. is also expected to drive the market for mobile VAS. games and services such as m–commerce and m–radio. monotones. IAMAI.asp.6 75.

Further.March 2010). leading to falling profit margins of mobile operators.9% 97. the ARPU continues to shrink. accessed 10 October 2010. video on demand.9% 8.5 1. Teledensity (%) 87. Ernst & Young analysis Teledensity 2. Outlook 2. accounting for 12% of the total wireless subscriber base.1 2009 2010 2011F 2012F 2013F 2014F 2015F 2020F Wireless subscribers Source: TRAI. 3G subscribers are expected to be more than 300 million by 2020.049. during the period 2010–15.2 923. According to Ovum.0 72. accessed 16 October 2010.217. including a host of rich multimedia services such as video calling.0 2011F 2012F 2013F 2014F 2015F 2020F 3G subscribers 3G subscribers as a % of wireless subscribers Source: Ovum.134. there were 752.0 118. the number of wireless subscribers in India is expected to increase at a CAGR of 10. Wireless subscribers in India Wireless subscribers (million) 1.2% and 110% in 2015 and 2020. Ovum.200 1. 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.7% 752.11.1 1.0 6.2.400 1. Ovum website.1 million47 subscribers in 2015. 46 Ernst & Young analysis.4 10% 142.8 60% 40% 20% 0% 1.600 1.7% 25% 20% 15% 303.8 80% 1.gov. Ernst & Young analysis 45 “TRAI: The Indian Telecom Services Performance Indicators (January . http://www. http://www.0 5% 0% 20. accounting for 20% of the total wireless subscriber base.7% 63.9% 95.” TRAI website.1 525. 47 Ovum: Mobile regional and country forecast pack: 2010–15.asp.3 1.2 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.trai.9% 120% 100% Enabling the next wave of telecom growth in India 28 . 3G subscribers forecast 350 300 250 200 150 100 50 0 3. Although the telecom sector is witnessing strong customer additions every month.in/Default.0% 11. location based services and remote access/ VPN applications.8% 35.2 million45 mobile subscribers. Future subscriber growth is likely to hinge upon rural and low-income users.000 800 600 400 200 0 77. DoT.2% 109. Further.185. 3G services will drive the expansion of wireless services in future. 3G subscribers are expected to reach 142 million by 2015. July 2010.11.com/.0% 101. the country’s wireless teledensity is expected reach 97.2% 44.46 to reach 1.217.1%.1% 92. with a significant number of multiple and inactive Subscriber Identity Module (SIM) owners.516.9% 10.ovumkc.11. respectively.1 Wireless At the end of December 2010.

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. The growth in the mobile market is seen as the cause of the decline. The growth of broadband is expected to increase with uptake of 3G and BWA services.9 33.trai. there were 10.1 26.March 2010). Ernst & Young analysis 48 “TRAI: The Indian Telecom Services Performance Indicators (January .5 29.3 million in 2020.1 million48 wireline subscribers at the end of December 2010.5 48 100 150 Source: “TRAI: Consultation Paper on National Broadband Plan. the number of wireline subscribers in India is expected to decrease at a CAGR of nearly 4%. 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. accessed 10 October 2010.3 2. the broadband connections are estimated to reach 150 million by 2020. July 2010. Ovum.” TRAI website. accessed 10 October 2010. According to Ovum. 49 Ernst & Young analysis.” TRAI website. Ernst & Young analysis 37.1 34. http://www. the wireline subscribers are forecasted to reach 26.3 million broadband subscribers in India. page 16.in/Default. http://www. during the period 2010–15.4 Broadband As of September 2010.asp.1 30.asp.in/Default.11.gov. 50 Ovum: Fixed voice connections forecast pack: 2008–15.com/.1 million50 by 2015. accessed 16 October 2010. http://www. June 2010.1 35. Further.trai. DoT. a trend that is expected to continue. The wireline market is in decline.3 Wireline There were 35.ovumkc.11. Considering increasing broadband demand.gov.49 to reach 29.2.5 32. 29 Enabling the next wave of telecom growth in India . Ovum website.

8 45.0%.2. http://www. the increase in mobile penetration in both urban and rural areas. lower tariffs. 52 Ovum: Forecast of service provider revenue and capex.9 2009 2010F 2011F Revenues 2012F 2013F 2014F Capex 2015F 2020F Source: Ovum. Revenue and capex forecast Revenue and capex (US$ billion) 70 60 50 40 30 20 10 0 32. Further. 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.3 38.8 43.2 billion and US$ 13. with the introduction of 3G and BWA services.97 billion by 2015. NLD and VAS are also expected to drive revenue growth.8 51.1 13. the Indian telecom sector has witnessed an increase in revenues and contribution toward GDP.com/.0 57. According to Ovum. industry revenues and capex are expected to increase to US$57.0 34. Ernst & Young analysis Over the years. Ernst & Young analysis 51 Ernst & Young analysis. during the period 2009–15.7 11.2 15.5 7. including BWA penetration. respectively by 2020. Ovum website.0452 billion and US$14. 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. 2009-2014. accessed 16 October 2010.0 13. industry revenues and capital expenditure are expected to increase at CAGR of 8. Enabling the next wave of telecom growth in India 30 .11.9 15. the contribution of non-voice services towards the industry revenues is expected to reach 38% by 2020. and the adoption of VAS. to reach US$51.9 billion.1%51and 7. respectively. The growth in revenues is driven by cheaper mobile handsets.5 Revenue and capex Over the years.ovumkc.4 14.0 10.1 48. Other services such as ILD.

3 31 Achievements and setbacks of NTP 1999 Enabling the next wave of telecom growth in India .

for all cities with a population greater than 200.000 by 2002 • • • • Enabling the next wave of telecom growth in India 32 . FDI and domestic investment.The NTP 1999 aims at making India competitive in the global telecom market through growth in exports.4% to 4% by 2010. the emergence of India as a major manufacturing base and a major exporter of telecom equipment. and protection of the country’s security interests. using technologies including international services digital network (ISDN). 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. achieving universal service across all villages. The key objectives of the policy include telecommunication for all and within the reach of all. 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. global standards in the quality of service. 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.

g. technology. mobile value-added services (MVAS) encompass mobile operators. up from 1. e. providers. among others • Among the lowest tariffs in the world. especially reliability. especially telecom specialists • Fixed mobile convergence (FMC) 33 Enabling the next wave of telecom growth in India .. 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.NTP 1999 has been a catalyst for the telecom sector: • Growth in the subscriber base (723.5% in 2000 • Creation of jobs across sales and marketing. content creators. 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.0%) • Contribution of telecom to overall GDP of almost 3%. 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.3 million) and in teledensity (61. R&D and customer care.

8% FY07 89. January 2010. with rural teledensity being far ahead of the NTP 1999 target. and its targets have been achieved well in advance. Currently. there is an uneven distribution of teledensity among Indian states resulting in slow economic development of the states and their surrounding regions. R. There is a significant opportunity for service providers to increase penetration in rural areas and generate revenues.3% 28.” Indian Institute of Kanpur website. the level had increased to only 1.3.in/Default. Furthermore.4% 2.7% 137. As a result.1 Teledensity Reforms in the telecom sector have been encouraged by the active participation of the public and private sector. the teledensity level in the country was 0. “The Digital Provide: Information (Technology). The improvement in rural teledensity Urban and rural teledensity 140% 120% 100% Teledensity (%) 80% 60% 40% 20% 0% 8. 54 “TRAI Press Release No. http://www.1.2% 1.4% 65.iitk.9%. http://www.7% FY00 10.8% FY05 12. respectively. accessed 15 January 2011. the overall teledensity as of September 2010 stood at 61.gov.4% 61.gov.pdf.3% poses a critical challenge due to low population density.5% 12. Enabling the next wave of telecom growth in India 34 . 55 “TRAI: The Indian Telecom Services Performance Indicators (July – September 2010). by 1998.9% 47. the disparity between urban and rural areas in terms of mobile penetration has increased significantly. http://www. The overall teledensity target of 15% by 2010 was achieved in FY07.8% 5.0% 26.2% 5.1. 56 Jensen. According to a study by Robert Jensen. FY09 FY10 Sept 10 Urban teledensity Source: TRAI Rural teledensity Total teledensity 53 “Rural Telecom and IT.1% 1.02%53.1% 1. page 76.56 decreased fish prices by 4% and consumption of fish increased by 6%.trai. the introduction of mobile telephony in Kerala increased the fishing community’s profits by 8%.in/Default.0% FY06 18.3% 4. NTP 1999 has been instrumental in the growth of telecom in both urban and rural areas.3%55 and 28.3% 0. a Harvard University economist..6% FY04 38. Key achievements of NTP 1999 3.2% FY08 14. Following independence.0%.6% 1.9% 52.0% 24. about 70% of the population in India lives in rural areas.2% FY02 FY03 20.trai.asp. accessed 10 December 2010.9% FY01 14.0% 119. Although India has witnessed a steep rise in teledensity over the past few years.asp.2% 2.2% 9.54 Urban teledensity and rural teledensity at the end of September 2010 were 137.” The Quarterly Journal of Economics. which was set at 4% by 2010.4%.3% 3. 2007.9% 4.3% 26.in/3inetwork/html/reports/IIR2007/04-Rural Telecom. Market Performance and Welfare in the South Indian Fisheries Sector.4% in rural India. It has helped reduce the cost and time of transactions and has visibly compensated for the poor infrastructure.9% 0. 63 /2010.7% 37.2% 9.” TRAI website. geographical spread. and mobile penetration stands at a meager 28. low per capita income and the cost of maintaining phones in rural areas.ac.” TRAI website. The impact of mobile telephony on rural areas has been profound.

Mix of private and PSU operators.5% 429.7% 85. private telecom players have considerably expanded their operations.2 Teledensity and employment Over the past decade. Dun & Bradstreet 3.1% 56. The expansion of the Indian BPO industry is a classic example of indirect employment. R&D and financial services. December 2009.1.7% 90.3% FY05 429. with the majority of these employees being a part of the public sector undertakings (PSU).9% 47.3 43.3% FY07 PSU operators Private operators Subscribers per employee ratio in India FY05 PSU operators Private operators 132 1. as well as indirect employment. education. The sector has created direct employment across various business areas such as sales and marketing.7 20. Employees of private and PSU operators 100%= 436. Dun & Bradstreet website.0% 89.4 140.00057 direct employees.3% 73.5% 65. 35 Enabling the next wave of telecom growth in India .5% 79. The ratio of the number of subscribers per employee is very high in the case of private operators in India. FY10 The Indian telecom industry employs more than 430.5 26.and information-based economy. R&D and customer care. which has resulted in an increase in employment opportunities in the telecom sector.891 9.400 11.0% FY06 432.7% 300.771 14. media.089 FY06 158 1. It has paved the way for a knowledge.8% 52.678 FY07 193 2.9 34. technology.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.Total teledensity by state in India. 57 Overview of Telecom Industry. which augurs well for sectors such as IT/ITES. technology. by subscriber base 100%= million 98.5% 205.110 The development of telephony in India has played an important role in altering the structure of the economy.

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

0

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

FY10

35

33

0.0%

36

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

21.4%

Services sector Computer hardware and software Telecommunications
9.0%

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

2.6

2.6

FY09

FY10

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.

37

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)
MoU (minutes)

ARPU
Source: TRAI

MOU

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

307

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.

FY10

Sep10

ARPU
Source: TRAI

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
Source: TRAI

0.9

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

CDMA

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

38

adding numerous features ranging from monochrome screens to touch screens. the price of feature phones is declining at a faster rate than smartphones. access to niche technologies. M&A provide benefits such as expansion of global footprint.4 FY06 FY07 FY08 FY09 FY10 3.6 71. new product mix. August 2009. accessed 10 October 2010. from US$0. India’s FDI outflows (debit) have grown at a CAGR of 47. 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. FDI by firms belonging to developing countries has gained momentum and has become an integral part of globalization. monotone ringtones to MP3 ringtones.6 billion69 in FY09. Video Graphics Array (VGA) to 8-to-12-megapixel cameras. Over the past decade. and the majority of this capital value has been used to acquire companies. In line with the change in the pattern of investments. a wider customer base and growth momentum. the average selling price (ASP) of both feature phones and smartphones has been on the decline.8 billion in FY01.” Department of Industrial Policy & Promotion. usually with a minority ownership. and foreign affiliations were formed through joint ventures. However.5 108 6.2 95. Global Positioning System (GPS).in/.8 101. mobile handsets have evolved rapidly. Globally. enhanced memory. 3G and an improved user interface.4 7 5. Indian companies have reached overseas destinations to tap new markets and have acquired technologies. The market has witnessed investment in the form of greenfield projects. email. Over the next few years. the ASP of feature phones is expected to be US$50. India has witnessed prominent diversification in the industry composition of overseas activities of Indian firms.5% to reach a projected US$18. http://dipp. Macquarie Capital In the past decade. the structure of ownership has also shifted toward majority and full ownership. According to the National Council of Applied Economic Research (NCAER).6 6 5 4 3 2 1 0 Value (US$ billion) 3. Over the period.0 5. 39 Enabling the next wave of telecom growth in India .7 80 60 40 20 0 33. page 13. and the ASP of smartphones is expected to drop below US$200.1. greenfield investments were a popular mode of overseas investment among Indian firms.Average selling price (ASP) of mobile handsets 200 Average selling price (US$) 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.nic. Indian mobile handset market 120 100 Volume (million units) 4.

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.declined considerably.0 300. leading to the emergence of telecom giants from India.0 Source: Thomson ONE Banker Enabling the next wave of telecom growth in India 40 .0 62. The Indian telecom sector has actively been a part of the global M&A activity. Key overseas M&A by Indian firms Year 2010 2010 2003 2005 2010 2000 Target company Zain Africa BV Warid Telecom. whereas the share of services has increased.8 177.0 194.700. Bangladesh FLAG Telecom Group Ltd Teleglobe International Holdings Ltd.

Boston Consulting Group. accessed 10 October 2010.74 Spectrum bands such as the 900MHz band are of great value to mobile operators due to the longer ranges these can support. Despite being the second-largest market in terms of the subscriber base. 70 “TRAI: The Indian Telecom Services Performance Indicators (July . http://www.3. 73 “TRAI: Spectrum Management and Licensing Framework. September 2010. and the number of wireline subscribers has fallen from 41.” TRAI website.in/Default. page 339. the telecom sector continues to face various issues that act as impediments to its growth.gov. 3. The Broadband Policy 2004 has failed to keep pace with advances in technology and failed to boost the telecom sector. 3.” TRAI website. http://www. http://www. along with the benefit of VAS such as internet for the urban and rural population and the abolition of the digital divide. According to TRAI.gov. according to TRAI. 41 Enabling the next wave of telecom growth in India . with a CAGR of 77.gov. 72 The Internet’s New Billion. the bandwidth required by 2014 may be as high as 800MHz. May 2010.9 million70 internet subscribers and 10. http://www. Russia and China. accessed 15 January 2011. India has an internet penetration of 7%.5 million in FY06 to 37 million in FY10. 74 “TRAI: Spectrum Management and Licensing Framework.2.2 Growth of broadband As of September 2010. India lags behind in terms of availability of spectrum for commercial use.in/Default. The sluggish growth in broadband services is attributable to the absence of low-cost devices.dot.72 in comparison with 33% in Brazil. According to Boston Consulting Group. January 2010.” DoT website. In line with the growth of subscribers.asp.trai. 3. broadband penetration levels in India are far below other emerging countries such as Brazil. wireline and wireless complement each other. page 18. improved mobile coverage. the advent of new technologies is expected to create conflicts for spectrum. the advantage of mobility among wireless networks and the inadequate infrastructure of the wireline network.asp. Currently. Key challenges of NTP 1999 NTP 1999 envisaged the affordability and availability of telecommunication services for the common populace.trai. in the absence of a long-term plan to meet future requirements.2.in/Default.September 2010).” TRAI website.2.1 Growth of wireline The wireline segment has added just 10 million users since the introduction of the NTP 1999. the affordability and availability of broadband services and inadequate infrastructure. there were 17.2. the growth of wireline phones is not in sync with the rise in the number of wireless subscribers. Globally.htm. accessed 10 October 2010. May 2010. the need for spectrum to service these subscribers has also increased. 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. 71 “Broadband Policy 2004. The availability of spectrum for commercial services in India is below the required levels. the Indian telecom industry is expected to reach 1 billion73 wireless subscribers by March 2014. Despite India’s status as an IT superpower. page 7. cheaper handsets.trai.5% during the period FY00–10. The decline has been due to lower mobile tariffs. broadband penetration is accepted as a measure of a country’s ability to compete as an economic power.in/ntp/broadbandpolicy2004. accessed 10 October 2010. Furthermore.3 Spectrum challenges The Indian telecom industry has witnessed phenomenal growth in the number of subscribers.3 million broadband subscribers in India. Although wireline infrastructure in India has been in place for an extended period. inadequate content and applications in regional languages.gov. However.asp. However. therefore requiring lesser BTSs density and lower capital and operating expenditure. 31% in Russia and 28% in China. the Broadband Policy 2004 had anticipated 40 million71 internet subscribers and 20 million broadband subscribers by 2010.

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. to the government operator on a pro bono basis In 2001. in addition to 25MHz in the 2. Including the amount paid by state-owned BSNL and MTNL. 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.Spectrum and license allocation timeline in India First stage: 1995–2003 Auctioning scarce spectrum • • • In 1995.1GHz UMTS band The DoT proposed new 2G spectrum usage charges for all operators. It auctioned two 20MHz blocks in the 2.4MHz in 1. irrespective of the quantity they held. This differed from the earlier strategy of increasing spectrum charges only for those operators who held more than 6.2MHz per circle in case of GSM players and above 5MHz for CDMA In August 2008.in/tnl_jces_Sep_2009/Spectrum%20allocation%20 procedure.800MHz band. subscriber based norms (SBN) was introduced. 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.3GHz range in each of the country’s 22 service areas.4MHz of start–up spectrum for GSM-based services Two operators were selected for each License Service Area (LSA). The GoI raised INR385. the fourth operator license was issued using a three-stage auction procedure. the GoI auctioned 2x4. The GoI allocated spectrum to new telecom players in service areas across India The defense services agreed to vacate 2x20MHz in the 1. It laid down a roadmap for the allotment of 2x12. Start-up spectrum of 2x4.1GHz band with reserve prices for different categories of LSAs In May 2010. the third operator license was awarded.2 billion Following the completion of the 3G auctions. licensees were required to pay a percentage of annual revenue as spectrum charges In 2002.4MHz of start-up spectrum in the 900MHz band. in line with TRAI’s recommendations.800MHz was given to the winning bidder: • • In addition to the entry fees. along with 2x4. in 2001. and incumbents were kept out of fresh allocations. the e–auction of 3G mobile services was concluded after 183 rounds of bidding across all service areas. and TRAI continued to maintain that there was a shortage of 2G spectrum A new SBN policy was defined.4 billion from the broadband wireless auction Source: “A peep into RF spectrum allocation process in India. Subsequently.nic.7 billion to the GoI within 10 days of the closing of the auction.5MHz of spectrum per operator in each LSA Second stage: 2003–06 Unified Access Service (UAS) licenses • • In November 2003. the bandwidth for broadband services (WiMAX) was auctioned by the GoI. the GoI announced the policy for 3G mobile services. and opted for the auction of a start–up spectrum of 2x5MHz in the 2. 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.” Integrated Defense Staff http://ids. Although firms were awarded licenses after paying the required entry fee. All operators were expected to pay higher spectrum usage charges.pdf accessed 02 August 2010 Enabling the next wave of telecom growth in India 42 . it totalled to INR677.

75 Globally.2. 3. Telecom infrastructure service providers face several challenges.6 Infrastructure Telecommunications infrastructure. Civic issues: there is a need to address civic issues such as zoning regulation. the total number of licenses in a circle ranges from 12 to 14.” is far from ubiquitous. page 59. especially away from cities and towns. data services and PCOs. May 2010. and the biggest barrier to setting up telecom towers and other infrastructure is the wide variation in the approval process adopted by local bodies. Moreover. telecom manufacturing in India has not been able to keep pace. the allocation of spectrum is separate from the grant of license to provide service. single window clearance. 75 “TRAI: Spectrum Management and Licensing Framework. However.gov. others require dealing with multiple agencies.5 Equipment manufacturing The Indian telecom sector has witnessed rapid growth. licenses are bundled with the allotment of a certain amount of spectrum. In November 2003. Several demand prohibitive fees. therefore. the GoI introduced the UAS licensing regime. Tower companies. where telecom companies see poor returns on the expensive investment required in setting up the infrastructure.2. preferential treatment for sharing and incentives in a timely manner. Since the introduction of the UAS licensing regime. http://www. 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. Prior to this.trai. and some look at infrastructure companies as a means to finance deficits. permitting an access service provider to offer either fixed or mobile services or both.3. page 59.in/Default. 43 Enabling the next wave of telecom growth in India . despite being a “key infrastructure. the country lags behind in terms of telecom R&D and continues to be reliant on imports. which are highlighted below: Role played by multiple state agencies: there is no uniform approval process across the states.asp. including voice and non-voice messages. incur huge costs and delays because several state agencies are involved in granting approval for setting up towers. 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. in their service area of operations. However. licensees were required to use GSM technology. and also allowed licensees to migrate from a fixed license regime to a revenue-sharing arrangement starting in August 1999. The policy made the cellular license technology neutral.4 Licensing challenges NTP 1999 permitted Cellular Mobile Service Providers (CMSPs) to provide all types of mobile services. There are huge gaps in low-income or sparsely populated areas. 3. Currently. accessed 10 October 2010. in India. using any type of network equipment that met the International Telecommunication Union (ITU) or Telecommunication Engineering Center (TEC) standards. some treat infrastructure business in the same way they treat petty commercial undertakings.” TRAI website. 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.2.

Environmental issues: diesel consumed by towers results in about 17. Secondly. the power is either unavailable or erratic. there is no clarity on the rates to be paid by infrastructure companies. and the load criteria for telecom towers and transmission line towers are different. citing concerns over alleged health hazards relating to BTS. while others charge “commercial” rates. The cumulative carbon footprint of telecom towers due to diesel consumption in a year is more than 5.000 tonnes of CO2 and 24. and it is estimated that India as a country consumes more than 2 billion liters of diesel per year for cell sites. This increases the dependence on diesel. 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. Without it. Safety: the construction of telecom towers is still a self-regulated activity throughout India. service providers are forced to use diesel generator sets at tower sites most of the time. Some agencies charge them “industry” rates.76 The thrust in increasing rural telephony will further aggravate the diesel dependence by telecom towers. The site clearance basically requires examination from the point of safety for flight navigation and interference with existing wireless systems. for the design of towers. Power consumption: one of the major problems faced is the lack of reliable grid power.” and thus. 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.000 tonnes of carbon equivalent. there is a need to accelerate the pace of setting up the tower infrastructure in these areas. Utilization of USOF and incentives: since the next level of growth is expected to come from rural areas. Enabling the next wave of telecom growth in India 44 .000 per tower and the New Delhi Municipal Council (NDMC) charges INR200. Grievance redressal: there is no clear grievance escalation/ redressal mechanism that infrastructure companies can seek when a conflict arises. They do not reflect the fact that USOF subsidies are perhaps most urgently required to defray the cost of infrastructure creation in rural areas. namely IS:800.Taxation on towers: multiple levies and high taxes are imposed for setting up mobile towers. Delays and cumbersome processes for the SACFA clearances: the SACFA gives siting clearance of all wireless installations in the country. Currently all the telecom operators are following IS codes.5 million tonnes. Diesel fuel is subsidized. Energy consumption: cell sites account for most of the energy consumed by mobile networks. as these are dependent on diesel generators to keep running. IS:802 and IS:875. The above IS codes are primarily meant for electric/power transmission line tower design. For instance. Further. and there are other options as well. the Municipal Corporation of Delhi (MCD) charges INR100. which is not only more expensive but also polluting. the fund rules are too cumbersome and lack focus. This adds avoidable uncertainity in an already tough business.000 per tower as a one-off registration fee in Delhi. 76 Industry estimates. In large parts of India.

strong and transparent policy framework that will be the backbone to achieving the India Telecom Vision 2020. Therefore. providing interested parties with concrete opportunities to navigate the growth of the telecom sector The creation of an efficient mechanism to implement regulatory decisions. The NTP 1999 has served the sector well for more than a decade. 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 . transparent. India’s telecom industry is at a crossroad. technological advancements and business dynamics of telecommunications. efficient. independent and competitively neutral policy that will accelerate the pace of growth in telecom services and manufacturing. India needs a principle and objective-based. the time is ripe for a comprehensive review to build a forward-looking.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. A principle. This is the appropriate time to look again at the NTP 1999 and customize it to meet current and future needs. which witnessed significant changes in the socioeconomic environment.4 • • • • Key enablers As we enter the second decade of the 21st century. It needs to identify and address barriers to growth The functioning of the regulator in an unbiased manner.

1. video. with inclusive participation from rural India to ensure telecom coverage for all. media. broadband and internet services delivery to subscribers with high quality of experience.4. Enabling the next wave of telecom growth in India 46 . It should be supported by different metrics of quality of services at affordable tariffs meeting the needs of different segments of society. data. 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.

equipment manufacturing and infrastructure development. USOF.2.4. This will. achieve rural penetration of 100% and reach overall wireless penetration of 110% To strengthen broadband penetration to reduce the digital divide. 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. broadband penetration. spectrum. include the unique identification number (UID) scheme. 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. the policy should be able to meet future opportunities. M&As. among other things. Second. financial inclusion and m-commerce. First. the existing challenges faced by various stakeholders need to be addressed. 47 Enabling the next wave of telecom growth in India . This involves key enablers such as licensing framework.

which let the provider offer fixed. using any technology.3. excluding the USOF. entry tax and levies on towers. with the allocation of spectrum separate from the allocation of a license. The policy must preserve competition and ensure that no service is given a price arbitrage over others. a licensee is entitled to obtain a certain amount of spectrum. the number of incumbent telecom service providers varies from four to six.4. VAT. Pure internet service providers should continue to be free of any license fees. Since there is a significant cash reserve lying unutilized in the USOF. Enabling the next wave of telecom growth in India 48 . including service tax and license fees (such as universal service obligation fees and spectrum charges). should be fixed. The GoI has issued many new UAS licenses since the introduction of the UAS regime. Fee There should be a uniform license fee across all telecom circles. mobile or both services under the same license. Multiple levies. A uniform revenue share license fee of 1%. DoT should consider lowering the contribution from 5% of AGR to 1% of AGR. Parameters Spectrum and license Recommendations Need to have a single universal license for all telecom services. are currently imposed on the industry. which aggregate to 30% of the revenues earned by telecom companies. in India. under the UAS regime. However. states levy additional taxes such as octroi. stamp duty. Key enablers under existing scenario 4. 77 See 5. In November 2003. subject to its availability and efficient usage.3.1. Moreover. the GoI introduced the UAS licensing regime. for global practices.1 Licensing77 The telecom sector has evolved from a monopolistic regime in the early 1990s to 12–14 licensees in a circle now. Globally.

amendments to license agreements are carried out unilaterally. 49 Enabling the next wave of telecom growth in India . 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. Service providers should be consulted before provisions in license agreements are amended. renewal procedures. if the burden is not kept at a manageable level Amendments Currently.License renewal Ensure regulatory certainty and ease investor concerns: • Provide a clear license renewal regime that includes legislation. reasons for refusal to renew and appeals to regulatory decisions • Provide details along with the license.

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 National Frequency Allocation Plan (NFAP) is the basis for spectrum utilization and development and the manufacturing of wireless equipment.880 1. accessed 10 October 2010.trai. May 2010. plays a critical role in the provision of mobile telecom services.690 3.gov. 79 “TRAI: Spectrum Management and Licensing Framework.910 1.in/Default.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 1.010-2.900-1.6 78 See 5.asp.6-21.4.400 2.980 2.8 35-75 35-75 0-20 (after coordination) 0-60 60 40 40 100 (ISPs) 287. http://www. A mechanism to ensure transparent and non-discriminatory spectrum management is needed.170 2.710-1. 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. Enabling the next wave of telecom growth in India 50 .6-21.3. The next five years are going to see the spread of telecom services enabling subscribers to benefit from voice. being a scarce natural resource. page 22.” TRAI website.785 1. data and other application services. page 22.920-1.2-453. In line with estimated demand of approximately 500-800MHz spectrum across various bands out of a total 1. for global practices.500-2.880-1. May 2010.785-1.300-3.161 Spectrum available for telecom sector 20 20 18.asp.400-3. accessed 10 October 2010.2 Spectrum78 Spectrum.110-2.025 2.in/Default.805-1. 80 “TRAI: Spectrum Management and Licensing Framework.gov.805 1. a minimum of 287MHz and a maximum of 454MHz is currently available.8 18. In India.900 1.2.161MHz79 of identified spectrum by TRAI. http://www.400 3.” TRAI website. An increasing availability of smart-phones with significant processing capacity and a wide array of applications are resulting in higher requirements of spectrum.trai.300-2.

accessed 14 January 2011.8 61. http://www.5 13.8 59.5 64.95 76.2 59.75 11.7 0.ICT Statistics 2008.2 4.2 78.48 0.asp.2 53.2 63.5 0.63 0.3 37.2 28.75 15 12.22 0.65 65 63.7 0.78 0.26 0.in/Default.27 0.57 0.pdf. 2008 (million) 46. 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 53.4 CDMA 15 15 13.53 0.15 83.6 10.” 3g Americas website. MHz (2008) 170 200 265 140 120 120 358 353 294 Wireless subscribers.8 63 53 57.6 14.3gamericas. http://www.37 0.22 0.35 0.8 41.4 67 61.4 72.31 0.5 15 15 12. page 22.5 31.2 49.accessed 10 October 2010.4 69.4 270.2 62.3 49.3 Subscriber/MHz (million/MHz) 0.6 87. Ernst & Young analysis. http://www.75 15 12.4 No.7 43.6 0.trai.48 0.3 31 6.2 76.25 10 13. 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 33.15 84.2 37.1 24 17.49 0.2 6.2 50.6 37.6 72.92 Argentina Brazil Canada Chile Colombia Mexico Spain UK US Source: “Digital Dividend Pavilion .5 13.75 0. ITU .6 77.7 38.4 69.Country-wise spectrum availability Country Total licensed spectrum for mobile services. May 2010.Latin America Wireless Roadmap.1 44.55 70.36 0.2 63.26 0.4 69.trai. February 2009.11 0.25 10 10 10 Total 68. accessed 15 January 2011.3 19.4 63.” TRAI website.asp.09 0.75 13.6 150.75 13.org/documents/MWC%202009%20Digital%20Dividend%20Pavilion-3G%20Americas%20 Erasmo%20Rojas.25 67.4 55 53.6 80.4 75. “TRAI: The Indian Telecom Services Performance Indicators (July-September 2010).55 0.” TRAI website.7 18.in/Default. gov.4 60.16 0.9 83.gov. January 2010.15 78.1 62.4 60.1 0.9 52.5 11.08 Subscriber (million) Subscriber/MHz (million) 81 “TRAI: Spectrum Management and Licensing Framework.6 66. Ernst & Young analysis.4 74.3 74.75 12.52 0. 51 Enabling the next wave of telecom growth in India .63 0.49 0.5 150.5 76.14 0.15 79.8 75.

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. “Presentation to the DoT committee on spectrum allocation criteria.co.7 100. 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. It should be based on market price and not administered pricing. based on a transparent auction mechanism to determine the price. Allocation of spectrum should be based on auctions.” 3g Americas website. accessed 14 January 2011. The criteria for levying spectrum usage charges should be identified upfront at the time of allocation of spectrum.2MHz for GSM operators and 5MHz for CDMA operators.pdf. accessed 14 January 2011.in/images/1-pdotfinal. Need to bring in additional spectrum for commercial telecom services.” Communications Today.Latin America Wireless Roadmap. Identify and vacate new spectrum bands for future use. Parameters Availability Recommendations Align spectrum bands with globally harmonized bands to achieve interference-free coexistence and economies of scale. Spectrum should be provided to the highest bidder. timely spectrum reconciliation and enhanced transparency. http://www. February 2009. This roadmap should be made available publicly to ensure transparency.pdf. and to draw up a suitable schedule.communicationstoday. http://www.6 92 82. timely allocation.4 92. Allocation of spectrum beyond the contacted limit should be based on market mechanisms. service flexibility.2 75-96 Source: “Digital Dividend Pavilion .5 65 72.  Spectrum allocation to existing players 2G spectrum up to the contracted limit should be ensured as initial spectrum.6 138. 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. Re-farming Spectrum allocation Spectrum allocation should be based on technology neutrality.org/documents/MWC%202009%20Digital%20Dividend%20Pavilion-3G%20Americas%20 Erasmo%20Rojas. MHz 28-37 118. The contacted limit of spectrum will be 6. Regular spectrum audits should be carried to oversee the efficient utilization of spectrum. National frequency allocation plan should be reviewed every two years.3gamericas.Operator spectrum holdings Country/Region/Operator India Denmark EU average France Germany Italy Spain Sweden UK US Spectrum holding per operator. Spectrum allocation to new players Spectrum usage charges Spectrum sharing and trading Enabling the next wave of telecom growth in India 52 .

for global practices. The USOF has enabled telecom development in rural areas through the following key developments: Disbursement of the USO levy to the operators 60 50 54.9 16. © 2010 HT Media Limited. BSNL has provided VPTs to 61.6 13. 7 March 2010.694 have been provided as of December 2009. As of 31 December 2009.705 rural community phones (RCPs). resulting in a huge digital divide. Multi access radio relay (MARR)-based VPT: out of 185.186 out of 62.3. the Universal Service Support Policy came into effect.302 uncovered villages. at affordable prices.436 infrastructure sites spread over 500 districts in 27 states.7 18. about 6. The USOF is estimated to hold around INR180 billion. In 2002. Rural broadband: 95. Tower infrastructure: provide infrastructure support to set up and manage 7.3 Universal Service Obligation Fund (USOF)82 NTP 1999 envisaged access to basic telecom services for all.950 towers have been set up under this scheme.121 MARR-based VPTs installed before April 2002. especially those in rural and remote areas. (INR billion) 40 30 20 10 0 34.000 VPTs are currently eligible for financial support for operation and maintenance. 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. The USOF covers rural and remote areas with public access telephones and individual rural household telephones in net high cost rural and remote areas.83 at the end of FY10.3%.0 N/A FY05 Funds collected FY06 Funds disbursed FY07 FY08 FY09 Dec-09 Source: DoT 82 See 5.4.4 32.2 17.3.1 15.011 broadband connections out of the proposed 888. 83 “Minister Sachin wants to ‘Pilot’ IT revolution in northeast. about 184. rural teledensity is at 28. Out of the target of 40.2 VPT and RCP: around 570.4%. voice mail and email.0 12. whereas urban teledensity is about 137. As of 31 December 2009. 40. via Dow Jones Factive. 53 Enabling the next wave of telecom growth in India .5 55.1 39. 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. However.832 wireline broadband connections have been provided as of 31 December 2009.500 have been replaced as of 31 December 2009.” Indo-Asian News Service.

There is a significant cash reserve lying unutilized in the USOF.Parameters Objectives Recommendations The USOF framework needs to be reviewed regularly to effectively utilize the funds to achieve universal service. 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. so DoT should lower the contribution from 5% to 1% of AGR.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. Enabling the next wave of telecom growth in India 54 .

Further.in/Default. 86 “TRAI: Consultation Paper on National Broadband Plan. page 28. connectivity. The growth of broadband is restricted by several factors such as its perceived utility.4 Broadband84 India trails all developing Asian countries.gov.85 There were just 8. 84 See 5.” TRAI website. The net broadband addition per month is just 0.asp. 55 Enabling the next wave of telecom growth in India . 106.2 million. Today. deployment of wireless access should be given preference and fiber media should be utilized from the already available fiber capacity across nation. The 3C’s — customer. cost and competition — are essential for improving broadband penetration.gov. use. and 118 out of 154 countries in terms of ICT access. accessed 10 October 2010.4. Broadband should be redefined and clauses such as ‘’always on’’ and minimum speed should be removed from National Broadband Policy. The drivers for broadband services are broadly classified as technological.” TRAI website. 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.asp.3.74%.in/Default. with a broadband penetration of just 0. socioeconomic growth is dependent on the spread of broadband services across the country. for global practices. lack of vernacular content. connecting 40% of the households in the country.86 with a ranking of 129. there should be balanced competition to ensure the quality and affordability of services. behavioral and government initiatives.trai. against the target of 20 million by 2010 set in the Broadband Policy of 2004. and skills. http://www. economic. This calls for a critical review of the Broadband Policy 2004 and the creation of appropriate infrastructure to support broadband growth. respectively. cost of device and affordability. social. application.4. as well as its BRIC counterparts.8 million broadband connections at the end of FY10. 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.trai. June 2010. 85 “TRAI: Consultation Paper on National Broadband Plan. India has set a target of 100 million broadband connections by 2014. To kick-start the broadband penetration in rural and far-flung areas. http://www. 2004. page 3.1 to 0. in order to encourage broadband. India lags behind in terms of ITU’s ICT Development Index (IDI). The last mile access issue can be addressed through the deployment of wireless technology. accessed 10 October 2010. June 2010.

The GoI should consider a differential tax to encourage the private sector to set up common access points. which is a part of the National e-Governance Plan (NeGP). driving licenses. Discounts should be provided for online payments. Investments should be made in key content development and services such as e-health and e-education. 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. high-capacity microwave and satellite connectivity should be extended to rural. More than two service providers with a rollout obligation should be funded. Enabling the next wave of telecom growth in India 56 . Wireless broadband More spectrum should be made available. Similarly. There is a case for private-public partnership (PPP) in broadband along the lines of highway construction in India through the build. remote and inaccessible areas. Regional content Content and applications in regional languages should be created to promote rural broadband. In addition. PC penetration Workshops by local entrepreneurs should be promoted under the common services centers (CSC) scheme. Fiscal incentives Tariffs need to come down. The development of the customer premises equipment (CPE) model should be supported for the interoperability of broadband. Online fee payments should be encouraged for land records. Right of way (ROW) ROW procedures should be uniform. on the lines of water and power connectivity. vehicle registration. operate and transfer route. The tax status for expenditure on connectivity/usage should be similar to policies on other public welfare services such as education and medical allowance. Computer usage by government employees should be encouraged. the government and private sector should collectively work toward developing low-cost mobile applications. BSCs and BTS from the nearest block headquarters. all national and state highway projects should include the laying of an optic fiber backbone. This can happen only if there are incentives to build infrastructure and provide broadband services. The Government should foster competition to improve the pace of penetration. Backhaul connectivity and OFC should be provided to all telecom towers. Since growth will be through wireless broadband. and charges for broadband services should be rationalized across all states. Broadband connectivity should be made mandatory for all buildings requiring a completion certificate. The support for local access and content delivery to towns should extend beyond the 150 commercially viable towns. payment of electric and water bills.Parameters Infrastructure Recommendations Optic fiber communication (OFC).

4. Merger of license(s) shall be permitted in the following category of licenses: cellular mobile telephone service (CMTS) license with CMTS license. The TRAI recommendations dated 11 May 2010 should be followed to maintain the balance between the interests of consumers and service providers. The share of a merged entity should not be greater than 30% in terms of sub-base or AGR. CMTS license with UASL. Merger of licenses shall be restricted to the same circle. Merged licenses in all the categories above shall be in UASL category only. The stipulation regarding the minimum period of three years from the effective date of license for merger or acquisition should be done away with.3. 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 12.4MHz 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. Parameters Number of operators Service area and license stipulations Recommendations Mergers should not result in less than six operators in the circle. and UASL with UASL. 57 Enabling the next wave of telecom growth in India .5 Mergers and acquisitions87 At present. for global practices.5. Market share of merged entity Lock-in period 87 See 5.

The issue whether the sale of RCVs should attract service tax or VAT has been a subject of constant debate and discussion.” TRAI website. the operators pay up to 30%88 of their total revenues toward different levies. 88 “Telecom firms want lower tax burden. which account for 80%–85% of the operator revenues.trai. The Indian telecom sector is subject to numerous taxes and levies. • • Sale of light energy: broadband services also continue to face taxation-related concerns.4% of the GSM subscribers and 94. 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..) 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.1% of the CDMA subscribers were prepaid subscribers. The classification of tower. 5% levy for USOF. Denial of credit on such goods would lead to an increase in the financial burden on telecom operators. http://www. which is 23%–25% higher than their counterparts in other Asian countries. The levy of VAT on the sale of RCVs to subscribers would result in double taxation. According to TRAI. The issue was first taken up in the case of a leading telecom player by the state of Karnataka. 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. as the RCVs are witnessing liberalization in the flexibility of their usage. January 2010. 89 “TRAI: The Indian Telecom Services Performance Indicators (July – September 2010). RCV is one of the most popular ways to pay for telecommunication services. Over the years. the significance of the telecom sector to the Indian economy has grown immensely. the revenue share license fee (including the USOF) is prescribed as follows: • • • • 6% to 10% of AGR for access services. as well as tax.4. channels and beams. accessed 15 January 2011.indiatimes. or other services. Towers and shelters fall under Chapter 73 and 94 respectively of the Central Excise Tariff Act 1985.89 96. VAT. 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 sector contributes significantly to GDP. http://economictimes.6 Taxation Over the years.com/news/news-by-industry/telecom/telecom-firms-wantlower-tax-burden/articleshow/2753840. BTS etc. As of September 2010. Currently. accessed 10 January 2011. It is important to note that currently industry players are paying service tax on RCVs. custom duty and other taxes. 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. these goods could be treated as “component/ spare/accessories” of “capital goods” (i. However.” The Economic Times. It is important to note that currently the industry players are paying service tax on such broadband services. Currently. This position has been adopted by industry players.in/Default. The Supreme Court without going into the merits of the case has ordered a relook at the matter by the state VAT authorities.3. thereby leading to greater financial burden on the telecom sector. thereby leading to greater financial burden on the telecom sector. with the matter going up to the Supreme Court.gov. The levy of VAT on the activity of providing broadband connectivity services would lead to double taxation of such services. This includes the uniform license fee. which are used for building transmission towers.cms.asp. while the dominant purpose for selling these RCVs is provision of telecom services to subscribers. such as to procure merchandise. Central value-added tax (CENVAT) position on tower materials and shelters: telecom operators are availing CENVAT credit on goods such as angles. the bouquet of services has changed. Various states across India have issued show cause notices. Enabling the next wave of telecom growth in India 58 .e.

In case entertainment tax is levied on VAS products. Further.. It is important to note that as per the current proposal. in view of the exponential growth witnessed by the telecom sector. aim to rationalize the tax structure in the Indian telecom industry. ease in statewise compliances. The upcoming GST regime should aim to simplify the tax structure for the industry. • 90 Place of supply rules define the place (state) which has the right to tax a service transaction. GST should not translate into an ambitious target to generate higher service tax revenues from the telecom sector. entertainment tax is not proposed to be subsumed in goods and services tax (GST). thus. 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.e. Upcoming GST regime: according to industry experts. 59 Enabling the next wave of telecom growth in India . 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. the non-subsumation of entertainment tax in GST could impose a significant financial impact on the telecom industry.• 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. The upcoming GST regime should. with all services and goods being taxed at a standard rate. the state where GST will be paid for different kind of telecom services. along with the creation of a roadmap for a single unified levy.

and enhances market competition. However. the balance between economic gains from foreign investment and national telecommunications sovereignty presents a challenging task. Globally. 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. Together. FDI in telecom brings advanced technological skills and large amounts of funds.3. The telecom sector has been among the sectors that have witnessed substantial growth in FDI. As a result. social stability and national security. telecommunication industries are often state-operated and monopolized in many countries. Hence. The WTO aims to promote foreign and domestic investment. major FDI in the telecom sector is facilitated by two international organizations — the World Trade Organization (WTO) and the International Telecommunication Union (ITU). FDI in developing countries enables the development of a local telecommunication infrastructure and universal access. with countries such as the Philippines. It results in substantial progress in meeting such countries’ basic telecommunication requirements.4. The telecom sector has a substantial impact on a nation’s economic development. Taiwan and Thailand opening their markets to foreign investment. and due to its influence on national security. In the Asia–Pacific region. In Latin America. the telecommunications market reform has continued. prosper together. many countries control FDI in telecom according to their economic and developmental needs.7 Foreign direct investment (FDI) In the past decade. the policy should consider raising the upper limit on foreign investment to encourage more foreign players to invest in the capexintensive telecom sector. 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. globalization has led to a rapid increase in FDI. the WTO and the ITU encourage the development of a global telecommunication infrastructure and the formation of an integrated global telecommunication market. thereby enhancing economic growth in developing countries. Given the importance of foreign investment. several countries that first privatized their domestic operators in the early 2000s are now preparing for a second round of market openings. including the development of new forms of electronic commerce. Enabling the next wave of telecom growth in India 60 .

1 0.23 0.01 India Phillipines Source: DoT.” It was considered affordable. Mobile tariffs per minute in US$ 0.2 0. a leading operator launched the “One India Plan. with a large majority of people using low-cost mobile handsets. This was followed up by incumbent operators introducing cheaper tariffs.04 Pakistan 0. provide leading class services. 61 Enabling the next wave of telecom growth in India . Furthermore.09 Malaysia 0. at the same time.17 0. the increase in subscriber base and teledensity has enabled telecom companies to achieve economies of scale and. 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.4.8 Consumer affordability and rural penetration The Indian telecom market has some of the lowest tariffs in the world.19 0.05 Thailand 0. 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.0 Belgium UK France Brazil 0.2 0.3 0. customer friendly and innovative for both local and long distance calls.16 0.1 0.03 China 0. It also removed the distinction between fixed-line and cellular tariffs.11 0. giving India some of the lowest tariffs in the world.3. India Telecom 2010 brochure In February 2006.

home offices and other organized/ unorganized groups in rural and remote areas to serve the needs of the population in a holistic way. it is important that alternative models such as mobile resale be introduced. The entity will sell the connections to their end customer and contract and bill them in their own capacity for the services provided. increased usage and highly utilized networks also help lower tariffs. The services will be provided only by the underlying access provider who will continue to address the related compliance requirements. There is a need to create a regulatory framework that enables greater sharing. easy market entry. The entity will not replicate the efforts of service provider.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. operators in Bangladesh have designed products and services such as micro prepaid topups. On the other hand. and low risk enable the creation of policy and a regulatory approach that helps to drive down tariffs. Resale of mobile services will allow an entity to resell mobile services after buying connections in wholesale from the underlying service provider. Factors such as transparent regulation. Enabling the next wave of telecom growth in India 62 . reduction in capital expenditure and operational expenditure. lower tax burden. 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 buying connections in wholesale will be the customer. which are available in very small increments. For the service provider. This arrangement will allow SMEs. operator strategies such as innovative business models. In order to drive penetration in rural and remote areas. small office. Similarly. and also allow consumers to transfer airtime between each other and use it as currency.

130 deemed universities and 33 institutions of national importance. India has the largest number of higher education institutions. Number of higher education institutions and student enrollment 30. in May 2007. 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. In terms of size and diversity. For instance. 92 Ministry of Human Resource Development. However. the Center of Excellence in Wireless Technology (CEWIT) and the Broadband Wireless Consortium of India (BWCI) have been established.4.213 20. followed by the US and China. COAI. including 243 state universities.9 Human resource India has the benefit of a huge population. 2010 In keeping with the NTP 1999’s R&D objective. which is characterized by a dynamic young population base– more than half of which is under 25 years old. and AUSPI submitted a report that suggested ways to form seven TCOEs across India in a PPP mode.3. Such organizations promote R&D and help in creating a talented workforce. 91 Unleashing India’s Innovation. India possesses a developed higher education system that offers training in many fields. As of December 2009.9 10.000 12. while the GoI provides basic and research infrastructure.706 17. World Bank website. a committee comprised of the DoT. Ernst & Young. only 17%91 of those in their mid–20s or older have completed their secondary education. However. 53 state private universities. October 2007.000 6.000 Number of higher education institutions 21. organizations such as the Telecom Centers of Excellence (TCOE).92 there were 504 universities and university-level institutions. Ernst & Young.8 25. India lags behind China and the US in terms of student enrollment. page xv.4 30 25 20 15 10 21. Government of India — Annual Report 2009–10.213 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. Each TCOE is sponsored by a telecom operating company and is hosted by a premier technical or management institute. Ministry of Human Resource Development. 63 Enabling the next wave of telecom growth in India . 40 central universities. FY10.

However. customs clearance for imports and exports should be done on a self-declaration basis. growth in the segment holds the potential to triple the country’s current employment base by FY14.livemint. 93 See 5. In order to encourage technology transfer. Export promotion The Government could create a sizable export promotion fund for the Telecom Equipment and Services Export Promotion Council (TESEPC). The value of telecom equipment exports was INR81 billion in FY09 during the last five years.4. 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.com/2010/04/01215017/Indian-telecom-firms-may-get-D. There should be provision for round-the-clock customs clearance. 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. Enabling the next wave of telecom growth in India 64 . Thus. for global practices. 96 Policy Recommendations to Increase Domestic Telecom Growth and Exports of Telecom Equipment & Services . supported by the banking system. In addition. India needs to position itself as a telecom manufacturing hub in the long term. and policy initiatives should be focused on encouraging localized manufacturing. accessed 02 August 2010. It is necessary to ensure the free movement of the equipment/raw materials. The tax on the payment of royalty should be as low as possible. In order to reduce transaction costs. http://theviewspaper. accessed 20 October 2010. the provision of a single window clearance for all state-level approvals would be a vital fiscal measure.Telecom Equipment and Services Export Promotion Council (TEPC). Increased competitiveness in the global market: a technologically advanced manufacturing ecosystem in India prospectively offers an international platform to telecom manufacturers.” LiveMint. http://www. localized players can expect to compete globally with established manufacturers and make their own mark in foreign markets in the long run. the requirement for telecom equipment in India is expected to be about INR5 trillion95 by 2015. 94 “Indian Telecom: A Tale of Stupendous Growth. html.net/indian-telecom-a-tale-of-stupendousgrowth/. 95 “Indian telecom firms may get DoT boost.” The Viewspaper. There is a need to align product certification with international standards and to facilitate global accreditation for the testing facility. resulting in the significant growth of exports to developing nations. further strengthening the case for a robust telecom manufacturing industry. 01 April 2010. royalty payments of up to 5% on domestic sales and 8% on exports should be exempted from income tax. According to DoT estimates.10 Equipment manufacturing93 The production of telecom equipment in India has increased at a CAGR of 29% from FY04 to FY09. In addition. • • Employment generation: given the right impetus. the segment holds an export potential of INR450-500 billion96 by FY14.6. Fiscal incentives Domestic telecom equipment manufacturers may be allowed to have access to external commercial borrowing for capital expenditure and working capital requirements. 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. reaching a value of INR518 billion94 in FY09 during the last five years. Other significant incentives would encompass the removal of withheld tax on the fee for transfer of technology and software import. 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 share of locally manufactured equipment has declined to 30% in FY09 from 74% in FY04. 28 February 2010.3. page 4.

Latin America. 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. to assist and provide guidance to those who want to set up a manufacturing facility.Bilateral trade programs Telecom exports from India may be included in bilateral trade agreements with emerging markets in regions such as South Asia. Taxation Financial support Investments for accessories R&D The current taxation structure for mobile handsets must be maintained for long-term growth. Leading class R&D centers in the PPP mode should be promoted. A fund for R&D and product development for the segment should be created. 65 Enabling the next wave of telecom growth in India . A detailed program should be created to attract investment in the manufacturing of accessories such as batteries and chargers for mobile handsets. R&D should be the key focus. similar to the Telecom Finance Corporation. Africa. Set up an autonomous body. Russia and Eastern Europe. Indian trade missions in these regions should proactively seek opportunities in the telecom electronics and equipment domain and facilitate business interactions. Service hubs Telecom equipment manufacturers should be encouraged to create service hubs to develop a global network and strengthen their presence across India.

Every tower should be fully utilized. in-building solutions and DAS make it possible to conserve spectrum and reduce the visual impact of towers. GoI should announce a National Telecom Critical Infrastructure Policy (NTCIP). the tower business is characterized by high initial capital investments. Technological approaches that can potentially reduce the direct and indirect costs of creating telecom infrastructure should be encouraged. Enabling the next wave of telecom growth in India 66 . If an existing tower is not operating at 100% capacity. The telecom infrastructure service provider needs to apply to the local municipality or panchayats for permission to build a tower. there is no uniform approval process across states for setting up telecom infrastructure. stable and predictable cash flow. There is also a need for an empowered committee or similar structure to engage with roads and power ministries. Civic issues Civic issues such as zoning regulation. single window clearance and preferential treatment for sharing and incentives need to be addressed in a timely manner. creating a uniform taxation regime. Full utilization of towers— optimum sharing There should be laws governing the rollout of towers. 97 See 5.” Tower infrastructure should be erected in accordance with the NTP and licenses granted by the GoI under the Indian Telegraph Act. 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. This mandate should be included in bylaws of the local and state governments.11 Telecom infrastructure97 Infrastructure growth is critical to the rollout of services. the rents charged. 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. 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. A 70-meter tower could service an area of 2-3 square kilometers. The march of technology-IP/converged platforms is leading to integrated technology-neutral host platforms.3. which are directly connected with the growth of tower infrastructure. for global practices. At present. But the lack of guidelines or standard procedures results in enormous delays and huge cost implications. If legislative amendments are needed. Moreover.7.4. Such practice is being followed in developed countries such as the US. Given the challenges that the industry faces. low working capital requirements and high incremental profitability. The profitability is dependent on the ability to increase tenancy on the tower. but are matters liable to be governed by the GoI or regulatory authority constituted by it in accordance with the NTP. they should be adopted in a timely manner. Also. There is a need for national ROW policy for rollout of backhaul network. 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. and GoI should declare mobile and tower infrastructure as “Critical Infrastructure Services. The rollout subsidy could be fixed at a flat amount based on the approved tower design for a period of five years. Once the existing tower is at capacity. Telecom/broadband connectivity should be considered a necessity such as water and power in every housing facility. then no new tower should be allowed in that zone. a new tower could be awarded through a bidding process. which avoids duplication of capex. and there could be distance guidelines for the same. These are not matters of local self-government or municipal departments. Tower infrastructure needs to come under the Indian Telegraph Act. For India to achieve 85% teledensity. it needs 95% coverage.

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.” The development of specific IS code of telecom towers will help the industry to follow optimized design parameters. and treating these efforts as part of the overall effort to reduce greenhouse gases and the country’s carbon footprint. USOF subsidies are required to defray the cost of infrastructure creation in rural areas. There is little justification for imposing costs such as lincense fees on these players. There should be a method to cash in carbon credits. Each tower should have a structural certificate. which account for 60% of infrastructure companies’ outgo. The fee levied on tower companies should not be viewed as a source of income to fund the development of a municipality. which would be approved by a “design approving authority. The USOF contribution toward the setup of telecom infrastructure and its role for rural rollouts should be specified. Tower specification and standardization requirements should be clearly spelled out. Power tariffs and consumption Telecom services should be treated as a public utility service. Currently. There could be 6-10 standard designs for a tower.Taxation on towers Rationalize the tax structure across states in the form of tax cuts. The Central Government should not impose a cess on tower operators. because they do not interface directly with end users. 67 Enabling the next wave of telecom growth in India . which will make towers safer. Infrastructure companies are akin to players such as equipment vendors and network management companies. call centers (with about 40. The state electricity boards should be advised to place a priority on applications for utility connections from telecom infrastructure service providers. SACFA clearances Telecom service providers coordinate with a variety of departments for site clearances which is a time-consuming process. Operators should reduce their existing diesel generator run times by deploying the latest fastcharging batteries and improving their partial-state-of-charge capabilities. a cess should not be levied on them. Grid power supply should be made available.000 employees) and BTS manufacturers. The immediate cost of infrastructure creation can be brought down significantly by reducing  government duties and taxes. Time-related incentives ought to be provided to tower infrastructure providers to speed up deployment. fiscal incentives and subsidies. 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. The SACFA Committee should be revamped as part of a faster and simpler site clearance process. fuel cells or wind power. Since tower operators do not  directly serve the end consumer. The energy used by tower companies should fall under a uniform classification in all states. Standardized design across operators and geography would further help optimize sharing and potentially reduce cost. there is no cess on handset manufacturers. 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. and the industrial rate structure should be made applicable to towers across all states. which should be approved by a competent authority.

Local authorities and consumer groups should be made more aware of this.000 renewable energy base stations could reduce annual carbon emissions by up to 6. annual carbon emissions could be reduced. due to their lower frequency. While the operators are making their best efforts to educate the general public. there should be a joint endeavor between civic agencies and other related departments. Operators are also experimenting with the use of non-conventional sources of energy wherever feasible for meeting energy requirements. at similar radio frequency exposure levels. and not for all generic urban areas. depending on a variety of factors such as the proximity to the antenna and the surrounding environment. Alternative sources of energy need to be developed and deployed wherever found feasible. There should be incentives for tower companies to optimize fuel and power costs. 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. The feasibility of using biofuels is also being studied. Misplaced apprehensions on health hazards of electromagnetic radiation from mobile antennae-BTS International institutions like the World Health Organization. In fact. there is a need to fix the feed strength to control radiation emissions. 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. Service providers are using green shelters or deploying outdoor BTS wherever found feasible to reduce power consumption. These measures have the potential to reduce the carbon footprint significantly. Further.800MHz) and because a person’s height makes the body an efficient receiving antenna. Environmental issues If these BTSs can be run on renewable energy resources. increase the energy efficiency of new network equipment and optimize network technology to increase energy efficiency. Operators should be encouraged to use green technologies. Recent surveys have shown that the radio frequency exposure from base stations ranges from 0. the body absorbs up to five times more of the signal from FM radio and television than from base stations. Even for limited camouflaging. radio and television broadcast stations have been in operation for the past 50 or more years without any adverse health consequence being established. 118. Enabling the next wave of telecom growth in India 68 .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. a positive public stand by the regulator would be extremely helpful. the British Medical Association.3 million tonnes. Furthermore.002% to 2% of the levels of international exposure guidelines.

Ranking of subscribers. It should be retail minus and avoid vertical price squeeze by the incumbent. with attention given to MPLS and IP-VPN services. The security/lawful monitoring and interception requirements applicable to enterprise data services should be specified. which do not connect to a public network. Interconnection regime and cable landing station (CLS) access Access charges under existing Reference Interconnect Offers (RIOs) should be fair. and are largely premised on the provision of mass market consumer voice services. specifically LIRC. which imposes double taxation on ILD and NLD license holders. these licenses do not allow the use of adequate encryption in accordance with current commercial standards to protect confidential information.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%. To promote competition in the IPLC segment. should be clarified. Despite the large number of players entering the enterprise data segment. 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. 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. data revenue. including lawful interception  and monitoring conditions.4. 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. BPO customers need variable per minute usage-based pricing model both for inbound and outbound calls. In the interest of national security. Association of Competitive Telecom Operators. 69 Enabling the next wave of telecom growth in India . Therefore. non-discriminatory and cost-based. the customer should undertake to make its encryption key available to the licensed entity on demand. Need to eliminate the cumulative assessment of licensing fees on the purchase of inputs. 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. most regulations are voice-centric and do not cover issues related to enterprise service providers. Regulatory restrictions related to interconnection of data and public switched voice networks interfere with the realization of these services’ full potential. a wholesale pricing regime should be introduced. In line with international practice. Therefore.3. November 2010. Costing should be in place for RIO charges to ensure proper cost-oriented charges. Taxation 98 Enterprise Sector. Access charges under new RIOs for accessing new cables should represent only the actual incremental network costs of providing the access services. However. India does not rank in the top 10 data revenue earning countries. telecom licenses are voice-centric. Lawful interception The proper treatment of data services under the ILD and NLD licenses. current ILD and NLD licenses were drafted before the development of current GTS services and technologies.

Convergence has evolved due to the processes of digitalization and computerization. Convergence has led to increased competition in the marketplace. Market-related convergence arises due to consumer expectations of one-stop service availability and bundling of services. which refers to the combination of three services — internet. Enabling the next wave of telecom growth in India 70 . Technological convergence has made way for business convergence. In the near future. whereas another telco provides triple play through a single channel. 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. At the same time. data and telephone through separate channels. most of the telecom operators provide broadband services in addition to voice communication services. Hence. Convergence creates opportunities such as the combination of either equipment or businesses to provide multiple telecommunications. for global practices. broadcasting and internet-based services by a single operator. 99 See 5. Triple play is also used to define the end result of convergence. telecom and telephone. it poses challenges that need to be addressed from a regulatory perspective.8. television and personal computer.3. Today. a telco provides video. As a result. In the US and Hong Kong.13 Convergence99 The ITU defines convergence as the integration of customer end terminal equipment. commercial power lines have been used to provide telecommunication and internet services. impacting both the telecommunications and broadcasting sector as a whole. with a service provider offering a bundle of services. taking convergence to a new level. it is expected that these lines will become an alternate medium for providing information services.4. or access devices such as the telephone. It is essential to create a regulatory framework that addresses the issues arising from both technological and business convergence.

This move is expected to have impacted approximately 25 million users. the Ministry of Home Affairs. with Chinese mobile phones being the major category. Secondly. the guidelines put the onus for compliance on the voice and data traffic. Firstly. which is a unique number allotted to every mobile phone for the identification purposes. virtual private networks (VPNs). 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 players that have been impacted by the security concerns include one of the world’s leading mobile handset manufacturers. Although the GoI has initiated these steps to enhance security and curb terrorism with the help of mobile telephony. as the requested information is considered sensitive and proprietary. The management infrastructure that is able to monitor DoT has also mandated thorough inspection of hardware. the DoT blocked calls to mobile devices without a 15-digit International Mobile Equipment Identity (IMEI) number. telecom equipment manufacturers and telecom operators. internet service providers and one of the world’s leading internet search engines. highly vulnerable. In 2009. with penalties for non-compliance. with the rapid growth in Further. terabytes and exabytes of data need to be set up. with terrorism being primarily attributable to religious communities and radical movements. India has witnessed a series of terrorist attacks. along software and facilities at the time of procurement and with a trained workforce. The key stakeholders associated with security concerns surrounding telecom equipment include the DoT. Thirdly.14 Security In the recent past.4. manufacturers. As a result. The IMIE number helps intelligence agencies track mobile phone users and curb anti–national activities. any suspicious equipment periodic review thereafter. 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. leaving the telecom system source code and design along with Indian security agencies. issuing guidelines related to the import of network equipment from foreign telecommunications vendors.3. Indian intelligence agencies. the GoI has taken steps regarding telecom infrastructure equipment. other issues remain that continue to raise concerns over security. modern data mining and network mobile operator.

Enabling the next wave of telecom growth in India 72 . The m-commerce service umbrella in India has been limited primarily to payment and transfer systems. mobile banking and multimedia messaging service (MMS). train. booking tickets for transportation services such as trains and taxis and online shopping. the UID scheme and financial inclusion. Going forward..1 m-commerce100 The next revolution that is expected through the use of mobile phones is the emergence of m-commerce. the rollout of 3G services and increasing usage of WAP. tourism and search engines • Ticketing (e. m–commerce finds its applications across various end markets such as banking and financial institutions. with each broad category providing an array of services.. It is forecasted to overtake e-commerce in terms of the number of transactions.4. Mobile phones provide the consumer an opportunity to transact anytime and anywhere.g. 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.4. in India is expected to boost market growth. paying bills for utilities such as power and gas. for global practices.4.9. especially in the case of banking and internet-based purchases. cinema) • Shopping (i. driven by the uptake of services such as mobile web browsing. web-enabled phones and smartphones by mobile subscribers is expected to play an important role in the growth of m-commerce.e. including current affairs. The rollout of 3G services m-commerce Mobile banking • Inter–account fund transfer • Account inquiry • Stock trading • Bill payment Mobile payments • Information services. purchase of goods and services) Mobile transfer • Prepaid card top-up • Person-to-person transfers • International remittances 100 See 5. with synergy existing between e–commerce and m–commerce. 4.

health care. page 2. to extend affordable health care to all in the country. December 2010. monetary settlements. owing to increased volume. to look at account information and transfer small amounts of money between various accounts. There are a number of government schemes and other initiatives from medical service providers offering tele-medicine services. Mobile payment technology will transform the nature of physical interaction between consumers. 4. 4. finance. education. bill payment related to utility and others will become a major application. 73 Enabling the next wave of telecom growth in India . This will cause a reduction in the cost of transactions. It will significantly impact the banking industry. 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. M2M is characterized by small amounts of data between the device and network. merchants and banks. coupons and advertising would pick up. adoption of other services such as ticketing. researchers and patients. delivery of health care information to practitioners. thereafter.4. mobilized and generated in future. the world is expected to witness 50 billion101 connected devices in 2020. Ericsson.4. The initial application will focus on mobile banking.3 Mobile money Mobile communication and secure mobile transaction opportunities will bring a transformation in the manner in which money is managed.4. service quality and security. government. redundancy and coverage. and will enable networks to support automated machine communications. over a period of time. disruptive business models and reduced legal and professional fees. It offers a huge potential for health care delivery in India. Utilities.4 M-health M-health applications include the use of mobile devices in collecting community and clinical health data. with mobile money becoming a truly rich and integrated application for consumer convenience.2 M2M communication According to Ericsson. transportation and other emerging industries are expected to be at the forefront in adopting M2M communication.4. The key advantages provided by M2M include cost and spectrum efficiency. real-time monitoring of patient vital signs and direct provision of care via mobile tele-medicine. with machine– to–machine (M2M) communication being the key driver behind this exponential increase in connected devices.

and help them earn their daily wages. Once workers have logged in.4.4. The integration of such programs with mobile telephony will benefit the nation.4. 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. 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.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. It enables a virtual community to facilitate the learning activities of teachers.5 M-education M-education offers innovative use of mobile and wireless technologies for education.6 Financial inclusion Financial inclusion is central to the overall task of inclusive growth. Enabling the next wave of telecom growth in India 74 . For instance. students and peers through collaboration in a distributed environment. this data could be transmitted to MNREGA. 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. about 80% of households do not have bank accounts. MNREGA achieves twin objectives of rural development and employment. It aims to bridge the supplydemand gap of high-quality teachers in the country.7 MNREGA and UID MNREGA and UID strive for providing inclusive growth. subsidies and other government programs while also strengthening national security. 4. In India. The UID program is critical to improving the delivery of social services. 4.

Global practices 75 Enabling the next wave of telecom growth in India .5.

. The pre–qualification criteria included investment. • The selection of applicants was based on the “beauty contest” criteria (i. the successful bidders were required to pay royalties according to the royalty percentage determined at the time of auction. 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. Sweden issued an invitation to provide network capacity for UMTS mobile telecommunications services. Licensing Hong Kong In February 2001. with the regulator having a total of 60MHz of spectrum for 3G services.e. the Hong Kong Government released its 3G licensing framework. as operators do not pay expensive fees to the state for the issue of licenses. quality of service and financial capability. the policy for comparative selection was not invoked. the Japanese Ministry of Posts and Telecommunications (MPT) published the draft for the introduction of 3G services and solicited public comment. • Successful bidders were required to provide a five-year rolling guarantee of the minimum royalty payment for the entire license period. the Swedish law states that licenses are allocated based on specific criteria. with the same royalty percentage applying to all licensees. • Successful bidders were expected to pay a minimum royalty fixed by the Government for the first five years of the license. allotting licenses to operators who best meet stated pre-set criteria). Japan • In 1998. • Since the 3G license allocation in Japan was straightforward. with the number of applicants matching the number of licenses. with new as well as incumbent opeartors — but not fixed regional operators — being eligible. Enabling the next wave of telecom growth in India 76 . the MPT established the technical regulations and publicized the licensing policies. Further. 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 three-license limit was driven by a shortage of spectrum. • The number of 3G operators was fixed at three per region. • The Government focused on rapid rollout and nationwide coverage. From the sixth year on.5. the Government decided to issue four licenses through auctions. with a guaranteed minimum payment. which is to the advantage of operators and consumers. Following the pre–qualification exercise. Sweden • In May 2000.1. The Government decided to issue four licenses for up to 31 December 2015.

transparent and participatory renewal process.710–1.0 351.0 Note: The “beauty contest” approach purports to allocate licenses to operators who best meet stated pre-set criteria.103 the Federal Communications Commission (FCC) concluded the auction of Advanced Wireless Services (AWS) in the 1.” National Telecommunications and Information Administration website. and ensure sufficient lead times and transitional arrangements in the event of non-renewal or changes in licensing conditions.390.pdf.itu. accessed 22 October 2010.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. The 1.7 1.110– 2.pdf. and through promoting regulatory certainty through a fair.155MHz band. gov/reports/2008/SpectrumRelocation2008.0 Nominal 4. 103 “1710–1755MHz spectrum band relocation. including the use of the SRF to facilitate relocation of federal communications systems.482. Spectrum Re-farming of spectrum • The US Government created the Spectrum Relocation Fund (SRF) in December 2004.508. Policy-makers and regulators should focus on creating interest among providers and providing incentives for long-term investment. http://www.int/osg/spu/ni/3G/casestudies/GSM-FINAL.2.0 10.4 44.0 120. 5.0 45.0 35. which were authorized to be auctioned for commercial purposes. 77 Enabling the next wave of telecom growth in India .520. page 50.755MHz band used by federal agencies was reallocated to AWS under the provisions of Commercial Spectrum Enhancement Act (CSEA). accessed 12 October 2010.080.08 116. It is essential to provide details about license renewal or reissue.0 51. This is done through the principle of renewal expectancy. The 102 “3G Mobile Licensing Policy. Public consultation procedures and the right to appeal also increase the prospects for a successful renewal process.755MHz band paired with the 2. In September 2006.8 360. http://www.0 2.ntia.870.710–1. page 1.070.” ITU website.0 3.doc.0 each 44. which provides a funding mechanism through which federal agencies can recover the costs associated with relocating their radio communications systems from certain spectrum bands.

7 billion in net winning bids. page 28. assignment of the license to another party. • Geographical sharing: in certain situations. Spectrum assigned to the maritime sector may need to be used for maritime radio services only near the coastline. The re–allocation benefits the country’s mobile operators. but transfers management control of the spectrum. sharing or reallocation opportunities for spectrum. is guaranteed the moment it is needed.gov. 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. transferee retains the license and legal responsibilities. i. the FCC formulated rules for spectrum trading. the Australian Communications and Media  Authority (ACMA) reviewed government spectrum holdings. an inefficient primary mechanism of spectrum allocation that makes it necessary to move to a market-based method of secondary allocation.6GHz band. In 2010. in consultation with the Office of Communications (Ofcom). • • • • • Sharing of spectrum • Time sharing: defense needs to use part of the spectrum only in crisis situations during exercises. ANATEL.e. The MoD has management rights to 35%104 of the spectrum bands listed in the UK Frequency Allocation Table (UKFAT). giving them the option to deploy LTE immediately. the possibility exists to use the spectrum for other applications the primary user does not need. spectrum is needed only in certain geographical areas. bis. uk/files/file38572. emergency and public safety services (E&PSS) and science services. In 2006. The 2. and de facto control. The committee formulated the strategic plan for the Ministry of Defense (MoD). as a part of spectrum re–farming. the Ministry of Communications and the Ministry of Defense have agreed to make 2x75MHz spectrum available for WiMAX in the 3.6GHz band to support the nationwide deployment of nextgeneration mobile broadband services. In Italy. and facilitates the provision of innovative new wireless services in the commercial market. in 2004. Such spectrum could be made available for other applications inland. i.pdf. the UK Department of Trade  and Industry’s spectrum strategy committee. accessed 12 October 2010. civil maritime. civil aeronautical. In 1989.AWS auction raised US$13. and it has begun a program to identify which spectrum can be released and time frame for releasing it.. • In March 2007. New Zealand was the first country to introduce open market trading of spectrum.. One of the key recommendations of the Independent Review of Government Spectrum Holdings (IRGSH) was a regular review of all defense band allocations. http://www. While it is important to ensure that access to spectrum 104 “A Strategy for Management of major Public Sector Public Holdings. promotion of innovation and flexibility. the FCC proposed the concept of developing smart devices that adjust to the spectrum they use and take advantage of underused spectrum.” UK Department for Business. The secondary trading of spectrum provided benefits such as economic efficiency. agreed to re-allocate spectrum in the 2. The critical success factors for spectrum trading include a large number of buyers and sellers. and spectrum regulation. Innovation and Skills website. In 2003. Further. Enabling the next wave of telecom growth in India 78 . and innovation in the supply and demand for radio-based technologies. Spectrum trading • Spectrum trading gives public and private sector entities the opportunity to decide which spectrum to release or share. simplifying them in mid-2004.e. 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. The FCC distinguished between de jure rights. inland waterways and rivers. the Brazilian telecommunications regulator. 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.6GHz band had previously been allocated to multichannel multipoint distribution service (MMDS) operators to support pay-per-view TV services.4–3.

governments should consider whether they should create a USOF for broadband services.5. the incumbent operator was required as part of its privatization to install payphones in 20.5% (plus federal contributions) 1% 1% 1% Considering USOF for rural wireless broadband services With the rising importance of broadband. subsidies are granted according to formulas for compensating operators already serving high-cost rural areas within their operating territory.oecd. accessed 20 October 2010. the telecom regulator.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. a separate universal service fund has been set up.pdf. with a relatively small geographical area and high population density. Universal Service Obligation Fund In many countries.org/dataoecd/59/48/36503873.1% in France to 6% in Malaysia. have not considered the creation of a universal fund. ANATEL has imposed a coverage obligation rather than a funding mechanism. http:// www. USO services were provided by incumbent operators. In the UK. However. page 19. a competitive tender mechanism was used. 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. Communication service providers are obliged to contribute to this fund in many countries. or proposing to expand into high-costs areas.3. As a result. On the other hand. with the aim of increasing overall teledensity. In Greece. countries with large geographic areas and consequently much higher costs to serve rural areas have funds that aim to cater for the rural population. The contribution rate ranges from 0. 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. Brazil has developed a mechanism that achieves universal objectives through obligations imposed on its licensees. 79 Enabling the next wave of telecom growth in India . Most European countries. In Mexico. after liberalization of the telecom sector. BT is the designated USO provider. The Brazilian legal framework uses a variety of tools to achieve universal service. In most countries.

Subsidies distributed through competitive bidding. 5% of national and long distance operators’ revenues. with the lowest bidder being the winner. The telecommunication carriers are eligible to receive universal service funds. Starting in 2002. France Italy Operators contribute a percentage of revenue i. Compensation for costs incurred by USO provider. with the lowest bidder being the winner. Subsidies distributed through competitive bidding. April 2006. plus funds from license fees. couriers and ISPs. ISPs and mobile operators. The USO provider makes an offer to provide services at specified cost. Subsidies distributed through competitive bidding. with the lowest bidder being the winner. including telecom operators. page 19. Subsidies distributed through competitive bidding. Method of allocating funds Government to determine based on its goal to increase wireless and wireline teledensity. operators invited to submit proposals for universal service provider and to be compensated from the fund through a competitive process. 5% levy on the revenue of telecommunication operators. 0. with the lowest bidder being the winner. Subsidies mainly awarded to tele–center projects and areas of greatest need. Method of allocating funds The Government determines the level of subsidy paid to the USO provider.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. Both fixed and mobile operators pay a fixed percentage of eligible telecom revenue. and the regulator decides what part to accept. Universal service fund supports ICT projects consistent with the Government’s development objectives. with the lowest bidder being the winner.16% of all operators’ revenues. Japan Developing countries Country Argentina Brazil Telecommunications carriers contribute to the USOF. 1% of all operators’ gross revenues. Government budget. Universal service fund compensates costs estimated on the basis of long run marginal costs.. Fixed and mobile network operators contribute 6% of their weighted revenue from designated services to the fund. and additionally 15% for joint and common costs. Enabling the next wave of telecom growth in India 80 . 1% levy on all sector participants. with the lowest bidder being the winner.e.1%. Subsidies distributed through competitive bidding. 2% levy on the revenues of the incumbent operators. 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. Subsidies distributed through competitive bidding. Major operators contribute 1% of revenue. 0. the postal service. 1% of service providers’ gross operational revenues earned from telecom services. Source of revenue 1% of all operators’ gross revenues.

as they provide businesses and consumers with fast and continuous access to internet–based services. increased risks: 3.pdf. and release spectrum for the sustainable deployment of broadband services. Eastern Europe added 19. form PPPs. The firm combination of national objectives toward broadband services with leading practices is expected to enable developing nations to achieve benefits of broadband growth. 2010. Broadband Broadband networks are an essential infrastructure for the global economy. as against only 8% by systems. Increased security aware1. 23% of 107 World Broadband Statistics: Short report.” Intel website. Furthermore. Of all participants.108 in comparison with 4% in developing economies. infrastructure. For instance. However. 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. Investment in information world in terms of broadband penetration.1% 33. Although the world is witnessing a rise in broadband penetration. if China is excluded from the developing world. 61% (46% globally) agreed that their organization will spend more this year in information security than it did last year. However. during 2005–08. content and applications. Point Topic Ltd. it declined to just 2%. whereas African countries were able to add 2.7% 26. Broadband services have economic benefits both in developed and developing nations. Broadband penetration by country 2009 Netherlands Korea UK Finland US Australia China India 0% Source: OECD. Other top trends next 12 months.3% 7.5 million fixed broadband subscribers.5..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. encourage competitive ecosystems. invest in infrastructure and latest technology.intel. identity and access management computing. The number of organizations currently evaluating the use of virtualization techniques is growing: 81 4. The Information Security Management System (ISMS). regulatory environment.8 million107 broadband subscriptions across the world. a large digital divide exists between the developed and the developing 2.4. which covers the overall . TRAI. http://www. the growth rate is much higher in the developed world. accessed 12 auditing capability and stronger they have embraced cloud October 2010. page 2.” ITU. Booz & Company analysis There are more than 497. page 4. Indian organizations. 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.5% 29. The trend of actions that organizations have taken to control the leakage of Enabling the next wave of telecom growth in India 5.5% 26. 23%. The essential leading practices that enable countries to increase broadband penetration include: adoption of regulations that embraces innovation and competition.com/Assets/PDF/Article/WA-323857001. Intel 37.7% 0. However. Emerging markets such as India need to adopt leading practices that facilitate rapid and cost-effective deployment of broadband technologies. that emerged were increases in the global respondents stated that 108 “Intel: Realizing the benefits of broadband. urban–rural divide and other factors that impact broadband penetration are very different in developing nations.4 million fixed broadband subscribers.4% 23.

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 . 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. subsidies for purchase of personal computers by low-income citizens • Promote digital literacy • Support e–governance. 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. 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. 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. The Korean Digital Divide Act created the five–year master plan to close the digital divide. through funding • Financial support for R&D. 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.South Korea Policy element Objectives Action • The South Korean Government created an action plan for the emergence of a knowledge-based  society. with each citizen having access to a personal computer. mobile phone. 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. e–commerce. formulated the action plans.

the FCC used a cap of 70MHz in deciding mergers. especially in emerging markets.5. Ofcom. such as Australia. with different views on each regulatory issue. have abstained from the implementation of a spectrum cap. As a result. 83 Enabling the next wave of telecom growth in India . Ofcom has proposed a cap on the amount of spectrum held by any operator in the spectrum range under 1GHz. has proposed a cap on the award of spectrum to a mobile operator. other countries. In 2001. a spectrum cap was in place from 1994 to 2003. After the auction in 700MHz band. the key to the telecom sector is radio spectrum management. A spectrum cap refers to the amount of spectrum any operator or group of operators can hold in a geographic area. The emergence of new technologies and applications worldwide has forced mobile operators to expand their global footprint through mergers and acquisitions. the cap was raised to 55MHz. In the UK. which would help overcome the challenges posed by globalization. and it was abolished in 2003. In any country. In March 2010. the telecom regulator. After the elimination of the spectrum cap. there is a lack of regulatory consistency at the international level. However. Mergers and acquisitions The telecom sector has evolved at different rates around the world. a spectrum cap has been implemented in Canada. allowing other competitors to rollout services. Mexico and Guatemala. 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. Similarly.5. In the US. The US and the UK have gradually eased their respective spectrum caps.800MHz — was larger than that of their competitors. the parties offered to surrender 15MHz of spectrum. the merger of the UK operations of two mobile operators was cleared by the European Commission. 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. the spectrum cap in the US stands at 95MHz. However. The combined amount of spectrum held by the two parties — at 1.

6. including mobile application developers. public certification and standardization authorities and financial service providers. Finland lowered the entry barriers through the introduction of reforms.” OECD Publishing. An increase in FDI has resulted in technology transfer and cooperation that has helped to fuel the telecom sector. which encourages cooperation among a wide range of manufacturers and suppliers. equipment manufacturers. Norway-. the Finnish economy was dominated by forest-related industries. However. with Nordic countries benefitting from the first-mover advantage in the mobile telecom industry worldwide.5. Finland deregulated the telecom sector by the adoption of the Telecommunications Act and a new Radio Act. the country’s ICT sector has benefitted from investment in R&D. From 1987 to 1997. primarily driven by a robust educational system in which basic. in the late 1990s. component manufacturers and electronics contract manufacturers. the country redirected its trade to the West. In 1991. After the collapse of the Soviet Union in 1991. telegraph and telephone (PTT) operator developed the Nordic mobile telephony standard in collaboration with Sweden-. • Development of clusters: the development of the Finnish telecom industry is also attributed to the emergence of an ICT cluster. “Market Openness. These changes were primarily driven by higher education and the emergence of knowledge-based industries. includes a wide range of stakeholders.000 people in over 4. networks were opened to free competition. with telecom equipment manufacturing accounting for 90% of the ICT manufacturing in 2003. with electronics and electrotechnics accounting for about 25% of the country’s exports. and joined the European Union in 1993. • Foreign direct investment: in 1993. the first GSM network was launched in Finland. Equipment manufacturing Finland: Market openness. and Denmark based PTTs. secondary and tertiary education is free of charge. 29 July 2008. It employed more than 80. consulting firms. Enabling the next wave of telecom growth in India 84 . content owners and content providers for mobile applications.000 firms in 2000. Finland removed the restriction on foreign ownership in Finnish firms and restrictions on capital inflows. The country witnessed more than fivefold growth in FDI from 1990 to 2000. particularly in the ICT sector. The country has invested in a number of technical universities. Further. liberalization and innovation drive the telecom equipment industry109 Background • Prior to the 1990s. • First-mover advantage: in the 1970s. • Skilled workforce: Finland has a strong skilled workforce. and in 1991. which is also known as Finland’s Wireless Valley. • Deregulation and increased competition: in the late 1980s and early 1990s. Trade Liberalisation and Innovation Capacity in the Finnish Telecom Equipment Industry. Strategic initiatives 109 Caroline Lesser. mobile network operators. which more than doubled between 1985 and 2005. Finland’s state-owned post. which has facilitated the emergence of Finland in the telecom sector by providing a large pool of engineers. • Specialization in telecom: Finland’s ICT sector has developed specialization in the manufacturing and export of telecom equipment. The mobile telecom cluster. the economy shifted to ICT and consumer electronics. academic and research institutions.

and the country joined the WTO in 2001. The key reforms undertaken by the country include development of a trade policy. In the EU. In 2001. the US granted China the most favored nation status in 1980. Strategic initiatives Since 1978. These operators are encouraged to share both civil and electronic infrastructure. An administrative group has been established to own and operate existing RAN and fund future network rollout plans as agreed with operators. Initially. “China’s Emergence as a Manufacturing Juggernaut: Is It Overstated?” Federal Reserve Bank of Philadelphia. 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. with the emergence of Chinese firms that have successfully competed in the global marketplace. raw materials such as parts and components and other intermediate imported goods do not have any duty imposed. This enabled the country’s domestic and foreign-owned firms to compete. National roaming was permitted in rural areas for a longer period than for urban areas. • 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. four of whom have formed two separate consortiums of two operators each. Additionally. The regulator permitted this level of sharing. The implementation of the export processing regime facilitated the reduction of tariff rates. individual national regulatory authorities are required to notify the EU Commission of decisions regarding infrastructure sharing. 85 Enabling the next wave of telecom growth in India . despite the presence of multinationals. operators have commercially negotiated for 3G site and RAN sharing. • Research and development: during the late 1990s. • Export processing: in the late 1970s and 1980s. although national roaming was permitted for new entrants. China implemented policies that favored the inflow of FDI. the tariffs reached less than 15%.7. Telecom infrastructure • • Brazil is split into 11 licensing areas with 4 operators in each licensing area. there are five operators. The operators challenged the Commission’s decision. In the 1980s. government support to domestic telecom enterprises and the presence of a well–qualified technical workforce. Under the policy. • • • 110 Behzad Kianian and Kei-Mu Yi. Chinese manufacturers have evolved from producing cheap and low-quality imitations to products that use high-end advanced technology. In Sweden. R&D led to the emergence of Chinese manufacturers that spend a significant portion of their revenues on R&D. The European Court of First Instance ruled in favor of the operators and stated that the EU had overplayed the competition concerns. • Tariff barriers: during the 1980s and early 1990s. leading global telecom manufacturers launched their R&D centers in China. particularly in rural areas that may be costly to serve otherwise. This has led to greater opportunities for operators to engage in infrastructure sharing. worldwide. • Over the years. These centers have helped global players to understand the local market and helped in the overall development of the telecom sector. This helped the country to produce products rapidly. 2009. some of its tariff rates were above 50%. China established an export processing policy. reduction in tariff barriers and development of an enabling environment to attract FDI. Other European NRAs followed the Commission’s approach and as such active infrastructure sharing was limited. it was often time limited. 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. • Foreign direct investment: in 1979.China: Emergence of a global manufacturer and innovator110 Background • China’s telecom sector has witnessed rapid growth in the last two decades. along with technological expertise. the country reduced its tariff barriers drastically. Infrastructure sharing has been well accepted globally. China has implemented numerous reforms that have boosted the country’s  manufacturing and trade. Each consortium has built a joint network. As a result. as long as they are used to produce export goods. In Australia. Furthermore. 5.

In India. satellite and cable and content. the regulatory functions of the Broadcasting Standards Commission. Brazil. 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. the Australian Broadcasting Authority and the Australian Communications Authority merged to form the Australian Communications and Media Authority. radio. accessed 16 October 2010. There are commercial agreements between the main operators. and took over the functions of two previous regulators – the South African Telecommunications Regulatory Authority and the Independent Broadcasting Authority. publish tariffs and reference offers. Countries such as Sudan. After smartphones were released. Convergence • In the US. http://www. subject to an individual consideration. Enabling the next wave of telecom growth in India 86 . allow fulfillment of the coverage requirements through roaming in networks based on other technologies than Universal Mobile Telecommunications System (UMTS).ovumkc. the rollout of 3G has provided the required impetus to drive widespread adoption of m-commerce services. It is also the regulator of the UK communications industries. In Canada. the mobile switching center (MSC) may not be shared. The main operator is obliged to provide national roaming and MVNO access.5 billion111 in 2015. provided such networks can offer sufficient capacity and that the arrangement is without substantial disadvantage to subscribers. telecommunications and wireless communications services. • • In Norway. However. Recently.9. Argentina. a number of commercially negotiated and regulated agreements exist between the two main operators and the MVNOs. The Ministry of Transport and Communications may. the Philippines and South Africa have been the largest adopters of this service. as well as to regulate telecom common carriers and service providers. Latin American countries such as Uruguay. Independent Television Commission. the state of Texas passed a bill deregulating the telecom markets. cable TV services require approvals at the municipal level. Ghana. optic fiber. networks’ packet data grew nine times larger than voice services. All operators may share sites and masts. Radio Authority and Radio Communications Authority were combined to form Ofcom. m-commerce is very popular in countries where most of the population is unbanked.com/. Office of Telecommunications. cables. the Federal Communications Commission (FCC) is an independent agency that regulates interstate and international communications by radio. but operators must retain logical control over their networks and spectrum. television. with responsibilities across television. as the cable industry underwent the time-consuming and expensive process to secure city-by-city franchises over the last three decades. • • • 5. Ovum website. implement accounting separation and is subject to price and accounting controls for national roaming. For core networks. In July 2005. All transmission routes (i.7% during the same period.8. the Canadian Radio-television and Telecommunications Commission (CRTC) is an independent public authority to regulate and supervise all aspects of the Canadian broadcasting system. 5. m-commerce Globally. 111 Ovum: Mobile regional and country forecast pack: 2010–15. This has made it possible for telephone companies to receive a statewide franchise to provide video services that compete with cable. In Canada in 2002. In July 2000. Mobile networks in North America witnessed growth in data services that were also driven by the introduction of smartphones. wire. and Mexico have also implemented m-commerce successfully. voice revenues are expected to decline at a CAGR (2008–15) of 1. The cable industry has opposed this demand. Paraguay. the Independent Communications Authority  of South Africa was established. Venezuela.. but data revenues are expected to increase at a CAGR of 16.e.but required each operator to maintain 30% of its network separately. P-P radio lines) may be shared.1% to reach US$19. Radio network controllers (RNC) may be shared physically. It is the regulator of the telecommunications and the broadcasting sectors.

87 Enabling the next wave of telecom growth in India . progressive policies will become increasingly important to guide unparalleled growth and transformation in the sector. Looking ahead.Multiple reforms in the Indian telecom sector have coalesced to produce a remarkable decade of continued success.

m-commerce. The distribution of funds should be through transparent market-oriented allocation methodology. high-capacity microwave and satellite connectivity — must be extended to rural. spectrum. Content and applications in regional languages should be created to promote rural broadband. The key recommendations for improving the existing scenario focus on licensing framework. This approach has helped the sector grow by leaps and bounds. A National Telecom Critical Infrastructure Policy on the lines of NTP 1999 should establish uniform procedures for land acquisition. 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. 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. It should be used for creating infrastructure for the provision of mobile services and development of telecommunication facilities. HMCP should be set up across the country.Conclusion The telecom sector in India has witnessed a series of fundamental structural and institutional reforms over the past decade. a uniform taxation regime. information services. Operators must be allowed to merge intra-circle while being allowed to combine spectrum. • The USOF should be utilized for the provision of public telecom. R&D initiatives should be encouraged. USOF. • • • The key recommendations for advancing the sector to the next level of growth focus on financial inclusion. Broadband infrastructure — OFC. M&A. timely spectrum reconciliation and enhanced transparency. remote and inaccessible areas. DoT should also consider lowering the contribution to 1% of AGR toward the fund. timely allotment. The share of a merged entity should not be greater than 30% in terms of subscriber base or AGR. service flexibility. Spectrum sharing and trading should be allowed. Spectrum allocation should be based on technology neutrality. security concerns and consumer affordability. broadband. • • • A single license should cover all telecom services. household telephones and broadband connectivity in rural and remote areas. Future policy should encourage identifying and vacating spectrum bands for future use. convergence. Enabling the next wave of telecom growth in India 88 . with which the regulatory authorities make industry information public and accessible. and inducting new technological developments in rural and remote areas. and fiscal incentives should be provided to promote local manufacturing. equipment manufacturing and infrastructure sharing. There should be uniform fee structure across all telecom circles. and encourage a healthy level of consultation with stakeholders. The best feature of India’s regulatory regime has been its open and transparent approach.

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 .

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Enabling the next wave of telecom growth in India 96 .

is the largest and oldest apex organization of Indian business. conferences. seminars and meets for promoting business. FICCI organizes a large number of exhibitions.000 business units. FICCI maintains the lead as the proactive business solutions provider through research.About Federation of Indian Chambers of Commerce and Industry (FICCI) FICCI. interactions at the highest political level and global networking. FICCI espouses Indian businesses and speaks directly and indirectly for over 250. set up in 1927.500 corporates and over 500 chambers of commerce. With a nationwide membership of over 1. 97 Enabling the next wave of telecom growth in India .

business transformation. Delhi. They know that they have much to gain from our clear understanding of the opportunities. Beijing and San Antonio. Operating from Paris. tax. Cologne. technological change and regulatory pressures in increasingly difficult economic conditions. complexities and commercial realities of the telecommunications industry — wherever in the world they’re operating.ey. the Center brings together people and ideas from across the world.com/telecommunications Enabling the next wave of telecom growth in India 98 . What gives us this understanding is our Global Telecommunications Center. transaction and advisory needs. These may relate to the economic downturn. Our clients benefit from our insights on key trends and emerging issues. future growth markets or mergers and acquisitions. next-generation services. to help our clients address the challenges of today — and tomorrow. Learn more about our approaches and services by visiting our website: www. outsourcing. infrastructure sharing. convergence. We help our clients react to trends in a way that improves the financial performance of their business.Ernst & Young’s Global Telecommunications Center Telecommunications operators are facing the challenges of growth. operational efficiency. Johannesburg. Riyadh. regulations. Operators choose Ernst & Young because they value our industry-based approach to addressing their assurance. revenue assurance.

de.ey.ey.ey.ey.stoltz@ey.ey.la.com 99 Enabling the next wave of telecom growth in India .thiemele@ci.com Marc Chaya Global Telecommunications Markets Leader marc.ey.com Serge Thiemele Global Telecommunications Center — Johannesburg serge.ey.com Mike Stoltz Global Telecommunications Center — San Antonio michael.com Holger Forst Global Telecommunications Center — Cologne holger.com Prashant Singhal Global Telecommunications Center — Delhi prashant.com Steve Lo Global Telecommunications Center — Beijing steve.forst@de.ey.dharmapalan@ey.com Jonathan Dharmapalan Global Deputy Telecommunications Leader jonathan.bachelerie@fr.khan@sa.chaya@fr.com Adrian Baschnonga Global Telecommunications Senior Analyst abaschnonga@uk.com Wasim Khan Global Telecommunications Center — Riyadh wasim.Contacts Vincent de La Bachelerie Global Telecommunications Center Global Telecommunications Leader vincent.singhal@in.lo@cn.

Enabling the next wave of telecom growth in India 100 .

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