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

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

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.

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

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

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

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

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

Key enablers under existing scenario 4.1. Internet and broadband subscribers 2. Infrastructure 2.1 4.6. Connected India: telecom vision 2020 4.4. Regulatory framework 2. Achievements and setbacks of NTP 1999 3.2.2.Contents 1. Telecom equipment manufacturing in India 2.8.1.3.9.3.2 Licensing Spectrum 45 46 47 48 48 50 1 Enabling the next wave of telecom growth in India .2. National long distance and international long distance 2. Evolution of the telecom sector in India 2. Wireless 2. History of the Indian telecom industry 2.7. Indian telecom sector 1. Outlook 9 10 12 14 15 16 17 19 21 22 27 28 3.1. Overview of the Indian telecom industry 2.10. Key challenges of NTP 1999 31 34 41 4 Key enablers 4.3. Connected Indian: telecom mission 2020 4. Value-added services 2. Importance of telecom 3 3 5 2.5. Wireline 2. Key achievements of NTP 1999 3.11.3.1. Overview 1.2.

4.4 4.4.5 4.4.3.8 4.3.4.2 4.12 Enterprise data 4. Global practices Conclusion Glossary 75 87 89 Enabling the next wave of telecom growth in India 2 .1 4.3.14 Security 4.3 4.3. Key enablers for potential opportunities 4.3.4.4.7 m-commerce M2M communication Mobile money M-health M-education Financial inclusion MNREGA and UID 5.11 Telecom infrastructure 4.7 4.4.3.6 4.4.3.3 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 4.3.13 Convergence 4.4 4.3.5 4.3.3.4.3.10 Equipment manufacturing 4.6 4.

5%2 annually from 1950 to 1980. respectively.eximbankindia. In less than a decade. 26 August 2010. 1 2 3 4 India: Rising growth potential.com/ind-eco. India has grown rapidly from a “command and control” economy to a market-based economy. intense competition among multiple operators.6%. while the industrial sector and agriculture sector contributed 28. low-priced handsets. http://www. India’s service sector was estimated to account for 56. The easy access to mobile services is the outcome of positive regulatory changes. The process of liberalization started in the mid-1980s and gathered momentum in the 1990s.financialexpress. “Redefining The Hindu Rate Of Growth. the telecom sector has been the major contributor to India’s growth. Overview Over the past two decades. India’s GDP has been rising by more than 7%1 annually in the past decade. India 2012: telecom growth continues. November 2008. http://www.9%3 of GDP. page 8. 13 October 2010. accounting for nearly 3. 3 Enabling the next wave of telecom growth in India .” The Financial Express. low tariffs and significant investments in telecom infrastructure and networks.pdf. As a result of liberalization. DBS Group Research.12 April 2004.” Export-Import Bank of India website. accessed 10 October 2010. the mobile phone has been transformed from being a luxury that few could own into one of the essentials of an average Indian’s existence. India is now closely integrated with the global economy and is considered one of the pillars of global economic growth. The Indian economy maintained a growth rate of more than 5% even during the global recession. Within the services sector. In FY10 (financial year ended 31 March 2010).1. “India’s Macroeconomic Indicators.6%4 of total GDP in FY10. accessed 19 October 2010. compared with 3.1 Indian telecom sector 1.com/news/redefining-the-hindu-rate-ofgrowth/104268/0.5% and 14. to GDP. Ernst & Young report. with the further opening of the economy and the creation of regulatory institutions to march toward fully competitive markets.

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

Mobile telephony had a profound impact on the fishing community in the southern state of Kerala. and have helped those who catch the fish communicate with merchants and transporters in an efficient and effective manner. registering a consistent overall growth rate of more than 35% over the past decade in terms of subscribers. a 10%5 increase in teledensity is known to boost GDP growth by 0.2% faster.2. mobile telephony has made the rural and underdeveloped markets much more efficient.1 Economic growth Indian telecom has emerged as one of the greatest economic success stories. a government organization. It has helped to reduce the time spent by agents and owners waiting for boats. World Bank. States with 10%6 higher teledensity have grown 1. The usage of mobile phones has enabled fishermen to respond quickly to market demand and prevent wastage. says study.6% points. 5 6 Unfinished Business: Mobilizing new efforts to achieve the 2015 millennium development goals.” through which fishermen are provided free mobile handsets. page 17. Mobiles have helped to co–ordinate demand and supply.1. It is one of the main architects of the accelerated growth and progress of different segments of the economy. accessed 10 October 2010.livemint.com/2009/01/19224316/ Highteledensity-states-grew-f. By virtue of being a carrier and disseminator of information. Narrowing access gaps and removing barriers to information dissemination are prerequisites for promoting equitable and sustainable development as well as political and social cohesion. Importance of telecom Telecommunication is pivotal to a country’s socioeconomic growth. 5 Enabling the next wave of telecom growth in India . “High-teledensity states grew faster. creates efficient information flows. shared on a rotating basis. The advantages of the advent of telecommunications are manifold and explicitly verifiable from the phenomenal success of the sector. has partnered with a leading telecom equipment and service provider to provide “Fisher friend. According to a World Bank study.” LiveMint.http://www. lowers transaction costs and is an effective substitute for infeasible physical transport. The MS Swaminathan Research Foundation (MSSRF). business communication. reduced business risk and made those involved with fishing feel much safer at sea. for instance.2. There is a substantial relationship between increase in teledensity and the economic development of a region. security. along with free access to information service. 1. In other words. Samar Srivastava. September 2010. Bihar could have witnessed 4% faster growth if it had enjoyed the same teledensity as Punjab. Increasing connectivity is highly instrumental in improving governance. a 1% increase in mobile subscribers is estimated to increase per capita GDP by about US$200. states with a higher teledensity have grown faster than those with lower teledensity. response to emergencies and in the overall strengthening of the sociocultural ethos of the country. The well-distributed network of telecommunication services results in widening markets. 19 January 2009.html. According to a study by the Indian Council for Research on International Economic Relations (ICRIER).

As a result. 1. RuralShores: bringing jobs to rural India Over the years. However. • • • 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.2. RuralShores is an initiative that aims to reverse the trend. Further. With more untapped territories being connected through telecom. Enabling the next wave of telecom growth in India 6 . The telecom sector has led to the growth of a range of communication technology-enabled activities and services. generating awareness. low employee attrition and the potential for scalability. Indian villages account for 70%7 of the country’s total population. revenue accounting.Rural Divide. leading to the inclusion of rural India in the global economic milieu and reducing the rural-urban divide. customer support centers. page 13. the hitherto dormant economic potential is being increasingly tapped. thus reducing the pressure of urban migration 1. guaranteed service levels. creating an atmosphere of economic diversification. including improved education. It helps combat epidemics such as HIV/AIDS and malaria by supplying information on treatment and control. August 2010. The current synergy between health reform initiatives and advantages in technologies has resulted in the proliferation of e-medicine projects.2. technology transfer and entrepreneurship Facilitating national and regional integration. Communication facilities in rural areas are critical for the development of rural India. the lack of employment opportunities in rural India has forced people belonging to villages to move to the cities. 56% of the country’s income.3 Social development Connectivity fosters social development. Participation in the initiative is an act of corporate social responsibility. it ensures complete information protection.2 Job creation Besides being one of the largest revenue generators. human resource services. employment and a strong socio-cultural ethos Open rural areas to foreign investment. call center operations. improving access to and connectivity with health centers. health and increased citizen participation in civil society. This represents an innovative approach in providing quality health care whenever and wherever needed.1. Moreover. resulting in the organized aggregation of supply and demand Providing enhancement of microfinancing. The provision of telecom services in rural areas and the obscure hinterland has made previously abandoned areas highly accessible. software development. Telecommunication helps provide access to health care and allied services. telecom is also a major creator of jobs. the quality of life in rural area improves. 64% of consumption expenditure and 33% of national savings. a committed workforce and business continuity. Operations such as data entry. It aims to introduce rural youth to BPO and to provide employment in their village. corporations benefit through cost-effectiveness due to the lower costs associated with a rural ecosystem. providing the following advantages: • • • 7 Challenges Before An Integrated India: Bridging The Urban . In return. systems engineering and systems design and integration are popular examples.4 Rural development According to FICCI and Nielsen study.2. Nielsen. and establishing the mobile testing of diseases. the spread of telecom and information services to rural areas is enabling the setup of rural business process outsourcing (BPO). processing of insurance claims.

memos. G2G services are transactions between the central/national and local governments. renewing licenses. and can be used as an instrument of international relations and diplomacy.2. Delivering literacy and education to women wherever they live or work: this opens up new avenues and allows for flexible learning times. Government to employee (G2E): this includes G2C services as well as specialized services that cover only government employees.7 Gender equality The advent of communications technology has helped overcome institutional and social barriers of mobility.1. http://dipp. as well as citizen assistance for basic services such as education. accessed 10 October 2010. and creating new economic opportunities for women through digital empowerment. specifically the development of small and medium enterprises (SMEs). ordering of birth/death/marriage certificates and filing of income taxes. rules and regulations. obtaining permits and the payment of taxes.9 billion). among others. registering businesses. the inflow of FDI into India’s telecom sector was approximately INR407. conduct of public examination and customs clearance. Achieving gender equality and empowering women is crucial because of its cross-cutting influence. On a global footing. including the dissemination of policies. 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. Most relevant information about these entities is now available on their websites. health care. allocation of the Permanent Account Number (PAN) to income tax payers. • Government to citizen (G2C): this comprises information dissemination to the public. Business services offered include obtaining current business information. Since the advent of IT and communication technology.5 E-governance E-governance that helps exploit the power of information and communication technology to transform accessibility. downloading application forms.nic. 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.2. Between FY00 and FY10.” Department of Industrial Policy & Promotion. It is facilitating women’s participation in the political and economic processes of the country. Indian ministries and government departments are working to computerize their operations to make them simpler and increasingly accessible for Indian citizens. It is an irreplaceable component for achieving most developmental goals. Government to business (G2B): this entails services between government and the business community. 7 Enabling the next wave of telecom growth in India .1 billion (US$8. making it easily accessible and increasing transparency. 1.” 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. G2G services are transactions between governments. processing of passport application. 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. Significant progress has been made in the computerization of railway bookings. high illiteracy and negative social norms. 1.2. The services offered through G2B transactions also assist in business development. Simplifying the application and approval procedures process for SME requests would encourage business development. as well as basic citizen services such as license renewals.in/.6 Strengthening investments Attractive trade and investment policies have transformed the Indian telecom sector into one of the most investorfriendly markets. including the “Millennium Development Goals.8 accounting for more than 8% of approved FDI. quality and the cost-effectiveness of public services has been made possible by the telecom revolution. hospital information and libraries. and between the departments and their agencies and bureaus.

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

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

In January 2000.1. The formulation of NTP 1994 was followed by the launch of mobile telephony in India in 1995. 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. which is now known as Tata Communications. universal licensing regime. The introduction of the New Industrial Policy 1991 initiated the liberalization process in India. 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. Chennai. However. primarily due to initiatives taken by the regulator and service providers. Its history begins with the laying down of the first experimental electric telegraph line in Kolkata. Telecom equipment manufacturing was also de–licensed in 1991. the sector underwent its first wave of change. Following independence. and the TRAI was established in 1997. telephone services were introduced. In 1881. Mumbai. the Telecommunications Dispute Settlement and Appellate Tribunal (TDSAT) was established to take over the adjudicatory and disputes functions from TRAI. growth in the initial years was very slow due to high mobile handset prices as well as the high tariff structure of service providers. and were under government control. The liberalization of the sector resulted in the need for a regulator. with exchanges being opened in Kolkata. and the NTP was announced in 1994. and Mahanagar Telephone Nigam Limited (MTNL) were formed. The introduction of NTP 1999 heralded pro-consumer policies.2. DoT was established in 1985 to provide domestic and long-distance services in India. Interconnect Usage Charges (IUC). in 1986. two wholly government-owned companies — Videsh Sanchar Nigam Limited (VSNL). 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). and calling party pays (CPP) • 2004: Broadband policy. 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 . NTP 1999 enabled the telecom sector to reach an average subscriber growth rate of more than 35%. Further. Telephone and Telegraph (PTT). VSNL and MTNL aimed at providing services to international and metropolitan areas. respectively. all foreign telecommunication companies in India were nationalized to constitute the Posts. In the early 1980s.

mobile services had outpaced fixed-line services with nearly 45 million mobile subscribers. in case UASL was not allocated spectrum due to non-availability. which permitted an access service provider to offer both fixed and/or mobile services under the same license. 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. In May 2003.In 2002. In 2004.3GHz range in each of the country’s 22 circles. and INR300 million for the rural C circles. entertainment. which recognized the ubiquitous potential of broadband services and their contribution toward the GDP growth and improved quality of life through e–governance. telecom towers were accorded “Infrastructure Status” by the Reserve Bank of India (RBI).2 billion (US$14. e–commerce. Allocation of spectrum and grant of wireless license was subject to availability and. Operators were allowed to share infrastructure in their tower installations. In November 2005. The Broadband Policy 2004 specified targets in terms of subscribers. Further. The GoI also introduced the Broadband Policy 2004. January 2004. among others. new UASL guidelines were issued. the Universal Service Support Policy came into effect. using any technology. the amount payable by BSNL and MTNL for 3G services pushed the total auction revenue to INR677. 11 Enabling the next wave of telecom growth in India .2 billion for the B circles.2 billion) in auction revenues. The auction aimed at allotting three to four 3G licenses for each of the 22 regional circles. The reserve price for 3G services was categorized on the basis of circles — INR3. which covered the levy paid by mobile operators to the state–run operator. The fund was introduced to provide access to telegraph services to people in rural and remote areas at affordable prices. the GoI introduced the Unified Access Service (UAS) licensing regime. providing statutory status to the USOF in December 2003. ADC was the fee paid by private mobile operators to the state-owned BSNL. which witnessed fierce bidding for spectrum. In February 2008. In July 2010. The seven winners were required to pay INR509. Following the auction of 3G mobile services. through which all local incoming calls were made free. The bidding process continued for 34 days. the Government concluded the auction of BWA services across India. INR1. During the same year. in February 2004. In March 2008.6 billion). the GoI raised in excess of INR1 trillion from the auction of 3G and BWA services. the TRAI abolished the access deficit charge (ADC). FDI limit in the telecom sector was increased from 49% to 74%. The bidding process continued for a period of 16 days. which mainly used the proceeds of ADC to develop rural telephony services. The GoI commenced the auction for 2x5MHz in the 2100MHz band for 3G services in April 2010. Additionally.7 billion to the GoI. education and medicine. the calling party pays (CPP) regime was introduced. The GoI subsequently issued licenses in November 2003. raising INR385. as these constitute an essential and possibly the most expensive component in the entire telecom service delivery infrastructure. the licensee was required to endeavor to rollout services using wireline technology.2 billion for the more populated A and Metro circles. the DoT approved the sharing of infrastructure among mobile operators. reaching the final stage in May 2010. Thus. March 2007 and January 2008. The GoI offered two 20MHz blocks in the 2. BSNL. the DoT issued guidelines for the intra-circle merger of cellular mobile telephone service (CMTS)/UAS licenses. December 2006.4 billion (US$8.

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

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

urban subscribers account for more than 65% of the overall subscriber base. The wireless segment has been registering monthly mobile additions of about 15 to 2011 million subscribers. infrastructure sharing and the introduction of positive and enabling regulatory reforms.7% 37.2.0% 26.3 million subscribers. 11 Shauvik Ghosh. However.com/ pdf/ppp_position_paper_telecom_122k9.0 FY02 5. 12 Ernst & Young analysis. wireless subscribers constitute the majority of the total subscriber base. http://pppinindia.1% to reach 621.gov. Such phenomenal growth can be attributed primarily to the country’s large population. hypercompetition in the sector.2% 12.5 FY00 61. high economic growth.7 FY08 FY09 FY10 Sep-10 0% Total subscribers Source: TRAI Teledensity According to TRAI. leading toward a huge urban–rural digital divide.3 621.” Department of Economic Affairs – Ministry of Finance. The telecom revolution in the country has impacted both the urban and rural population. Enabling the next wave of telecom growth in India 14 .9% 28. accounting for 95.3. As of September 2010.pdf.html. September 2010 100%= 723.” LiveMint. In the past decade.9 FY07 3.12 whereas wireline subscribers account for 4. accessed 10 October 2010. page 4.livemint.3% 45. with the mobile segment leading this growth.1% 54. reduced tariffs.”TRAI website. 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.3% Urban 67.7% Source: TRAI 10 “TRAI Press Release No.3 million10 in September 2010.13 in comparison with US$200–US$350 per subscriber for wireline.5 429.6 FY03 7.3 million Teledensity (%) 50% Rural 32.1%. 63 /2010.9%.2% 205. http://www.9% 140.asp. Overview of the Indian telecom industry India is the world’s second-largest telecom market.4 FY05 300.3 40% 30% 20% 10% 18. Subscriber base and teledensity (wireless and wireline) 800 Total subscribers (million) 700 600 500 400 300 200 100 0 2. accessed 10 December 2010. Lower costs and the additional benefit of mobility that is associated with wireless subscribers have led to the stagnation of the wireline subscriber base.3% FY01 4.in/Default. http://www. 30 May 2010. The total subscriber base (including wireline and wireless) reached 723.5 FY04 9.0% 52. affordable handsets. accessed 12 October 2010.6% 36.0% 98. Urban and rural subscriber base. December 2009. 13 “Position paper on the Telecom sector in India. com/2010/05/30230743/Telcos-to-recoup-3G-bid-money.trai.3 FY06 70% 60% 723.0% 76. The capital cost to provide mobile service varies in the range of US$50–US$90 per subscriber. the total teledensity has risen above 50%.

zinnov. with average monthly subscriber additions in the range of 0.05–0.7% 687. accessed 15 October 2010.3 million15 subscribers in Wireless subscribers in India 800 700 Wireless subscribers (millions) 600 500 400 300 200 100 0 1. The advent of NTP 1999 paved the way for aggressive growth in the wireless subscriber base.4% 3. 15 “TRAI: The Indian Telecom Services Performance Indicators (January .8% 52. FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 Sep-10 Wireless subscribers Teledensity Source: TRAI Wireless subscribers: GSM vs.4.March 2010).8 33. 84. http://www. VAS.6 0. The wireless subscriber base in India grew from FY00 through FY10 at a compound annual growth rate (CAGR) of 77.” Zinnov Research and Consulting.7 million CDMA 15. Over an extended period.2. Mobile services were commercially launched in India in 1995.1 million16 subscribers. primarily due to the advent of new services such as 3G.gov. mobile number portability (MNP) and the growth of manufacturing. India’s mobile market is the second largest in terms of subscribers in the world after China.5%14 to reach 584.7 584. the growth in the number of subscribers was very low.0% 98. July 2010.in/Default.9% GSM GSM subscribers constitute about 84.2% 6. Wireless India has emerged as one of the world’s fastest-growing telecom markets. In the initial years of mobile telephony.” TRAI website. accessed 10 October 2010.1% of the total wireless subscriber base. page 2. and this growth is primarily attributed to the growth in wireless services. the gap between GSM and CDMA has widened as the GSM subscriber base has grown more rapidly.1 261. 15 Enabling the next wave of telecom growth in India .1 22.5 13.3 49. September 2010 100% = 687. http://www.asp. October 2006.pdf.2% 3. The road ahead for the Indian telecom sector is expected to be more eventful.2 14.7 4. CDMA.9 0.8 165.6% 1.1% Source: TRAI 14 Ernst & Young analysis.6% 58. 16 “Penetration of Mobile Telephony in India & Value added services in Indian Mobile Telephony market.8% 391.0 33.6% 9.com/presentation/Mobile_VAS.trai.0% 70% 60% 50% Teledensity (%) 40% 30% 20% 10% 0% FY10.

gov.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. in FY10.0 25% 20% 35. there were 3. accessed 10 October 2010.3%17 during the period between FY00 and FY10.9%. video on demand and videoconferencing.9% -3. besides other new technologies. accessed 15 January 2011.6% FY00 Wireless FY10 Wireline 93.5.8 39.5 40. Furthermore.5 million19 public call offices (PCOs) and 0.September 2010). Although wireline infrastructure in India is not as extensive as wireless infrastructure. the emergence of new technologies such as fiber to the home is expected to drive the growth of the wireline market in India. The wireline market is dominated by the governmentcontrolled incumbent players. As of September 2010. In the future.7% 38. the major wireline operators in India also operate mobile networks.1%. the urban market has dominated the wireline subscriber base.0% 26.3% 41.0 37.9% 94. http://www. January 2010.1 41.9% 32. driven by the immense potential for data growth. 18 “TRAI: The Indian Telecom Services Performance Indicators (January .3% 0.4% 5. the wireline subscriber base has declined due to lower mobile tariffs. 17 Ernst & Young analysis. DoT In FY00.7% -2. In FY10.18 with a teledensity of 3. the wireline market accounted for 93. Although fixed-line operators are trying to offer VAS such as high-speed internet access.2. Enabling the next wave of telecom growth in India 16 . accounting for 73. In the recent past.March 2010).3% -1. improved mobile coverage. Over the years. 19 “TRAI: The Indian Telecom Services Performance Indicators (July .4 41.3 7. http://www.7 17. additional private players have also ventured into the fixed-line market. wireline service continues to face stiff competition from wireless services.” TRAI website. the advantage of mobility among wireless networks and inadequate infrastructure of the wireline network. Wireline The Indian wireline market grew at a CAGR of 3.9% 3.7 18.” TRAI website. cheaper handsets. 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 -3.1% 22.gov.1% of the subscribers in FY10.trai.asp.4 38. there is a significant opportunity for future growth. the wireline subscriber base was 37 million. where they see higher revenue growth and continue to invest extensively.in/Default.trai. July 2010. it accounted for 5.1% Source: TRAI.3% -3.6% 40.in/Default.asp. Apart from these two players.4% of the subscribers.6 million village public telephones (VPTs) in India.

entrepreneurship and services. According to Booz & Company.” International Telecommunications Users Group website. a 10%22 increase in broadband penetration leads to a 1. employment and the delivery of services. digital subscriber lines (DSL) on copper loop.5% to reach 16. Booz & Company.9 16.3 3.9 11.5 10. http://intug. Broadband brings a number of benefits. cable television networks. Also.3 13.2 million and 8.2.3 17. whereas traditional internet connections have a speed of less than 256 kbps. it has made significant inroads in the urban market.6. the evolution of technology and increase in bandwidth has given rise to internet connections at speeds faster than traditional dial–up connections. knowledge sharing. 17 Enabling the next wave of telecom growth in India . the number of internet and Internet and broadband subscribers (million) 20 15 10 5. From FY05 through FY10.8 million. such as opportunities for education. FY06 FY07 Internet subscribers FY08 FY09 Broadband subscribers FY10 Sep 10 Source: TRAI 20 Ernst &Young analysis.1 8. Broadband infrastructure plays a vital role in a country’s achievement across domains such as social progress and economic development.9%20 and 117. governance.8 6. it is estimated that a 10%21 increase in broadband penetration translates to a 1.2 broadband subscribers has increased at a CAGR of 23. which envisions the creation of a framework through various access technologies such as optical fiber. accessed 25 October 2010.9 1.4 2. The minimum threshold speed for a broadband connection is 256 kilobits per second (kbps) or more. satellite media.6 5 0 0. June 2010. 22 “Broadband Commission Presents Report to United Nations. governance. Although the internet is a function of various factors such as literacy. org/2010/10/09/international-insights-%E2%80%93-september/. The opportunities hold a much larger promise for India’s large low-income population and a growing economy. The DoT formulated the Broadband Policy 2004.5% increase in labor productivity in a country. 21 Bringing Mass Broadband to India: Roles for Government and Industry. Further. September 2010. terrestrial wireless and future technologies.2 FY05 9. respectively in FY10.3 6.3% increase in GDP. access to personal computers and electricity. Internet and broadband The internet has revolutionized the lifestyle of many Indians by creating a new means of communication. This falls short of a Broadband Policy’s goals of 40 million internet subscribers and 20 million broadband subscribers by the end of 2010.

and 86. As of September 2010. especially in the case of broadband services. Currently.9% of the market share in broadband access.5% of the market share in internet access.5% 31.0% Market share by subscribers of technologies in broadband. September 2010 3. DSL constituted 50. primarily in business districts or high–end residential areas of the larger cities.5% DSL Dial-up Wireless Cable modem Ethernet Others 50.6% 4. despite a structured framework that included ambitious goals to be met in 2010. September 2010 1.8% 4.5% DSL Cable modem Ethernet Wireless Others 86.5% 6. Broadband penetration continues to be very low in India.6% Source: TRAI Source: TRAI Digital subscriber line (DSL) is the preferred technology among service providers for both internet access and broadband services.Market share by subscribers of technologies in internet access. The key factors responsible for the widespread adoption of broadband include affordability and availability.3% 0.6% 0. The share of wireless technology continues to be negligible and remains to be fully exploited. broadband users are concentrated in urban areas. .0% 10.

network integration. Most large global players have set up operations in India to cater to the connectivity needs of their customers. network management. managed services and network security services are provided by global operators in partnership with Indian IT companies. and national and international data connectivity.200 510 130 150 80 350 600 180 52 72 2. 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. The other services relevant to this segment are international private leased circuits. Voice over Internet Protocol (VoIP) is considered a key enterprise application for lowering operating costs. 19 Enabling the next wave of telecom growth in India .064 495 92 125 75 260 370 150 45 61 2.2.900 31 4.800 45 6.251 39 5.169 23 Industry estimates. the financial services sector and the government.556 FY09 930 480 70 110 65 210 250 130 30 56 1. multiprotocol label switching (MPLS) based IP-VPN services. The growing demand for connectivity is coming primarily from the IT and IT-enabled services sectors (ITeS). With telecom and IT converging.027 FY11E 1. network storage and enterprise voice solutions. internet connectivity. It has spurred the demand for IP-based virtual private network (IP-VPN) services in India.7. 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.262 FY10 1. A majority of global operators in this space are also offering VAS such as network security.600 20 3.

Market size of NLD 180 160 140 120 100 80 60 40 20 0 60% 50% 164.” Voice & Data.6% in FY 2009-10.ciol.2% 150.0% 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.asp.Department of Telecommunications.0% 115. with the sale of the strategic stake in VSNL to the Tata Group. accessed 18 October 2010.Department of Telecommunications.3 13.7% to reach total revenues of INR164 billion.25 However.0 144. FY10.NTP 1999 opened up the NLD service for private operators. the GoI had issued 29 NLD24 service licenses. ILD has witnessed steady growth.0 30.0% 40% 30% 20% 10% 0% 71.” Voice & Data.asp. 25 “India’s NLD market has grown by 13. Enabling the next wave of telecom growth in India 20 . Market size of ILD 200 Market size (INR billion) 150 100 50 0 115.1 1.7% FY08 FY09 FY10 Growth (%) Growth (%) Market size (INR billion) 48. http://voicendata. without any restriction on the number of operators.0 17.ciol.3 97.3 0. the GoI had issued 24 ILD27 service licenses. FY10. the Indian market for NLD grew by 13. with its revenues reaching INR176 billion26 in FY10.3% 25. India’s ILD services were opened up for private players. the market slowed in FY10. http://voicendata. In FY10. 27 DoT Annual Report 2009–10.com/content/vnd100_2010vol-II/110070519.9 FY07 Market size (INR billion) Source: Voice and Data Growth (%) In 2002.3% 35. As of December 2009. accessed 18 October 2010. 26 “India among the Top Few Fastest Growing Telecom Markets. primarily due to a decline in ARPU across all operators. with the annual license fee being reduced to 6% of the AGR.3% 176.com/content/vnd100_2010vol-II/110070520. As of December 2009.

7 1.” 19.” LiveMint.9% 4. only 40% of the requirement for equipment is met through local sourcing. http://www.” “Telecom Equipment & Services Export Promotion Council (TEPC). the market for wireless infrastructure equipment is estimated to be US$8–10 billion. accessed 12 October 2010.html.ciol. From 2005-09.9 Source: International Trade Centre Share of imports by country of origin.2. “Policy recommendations to increase domestic telecom growth and exports of telecom equipment and service. with the exception of telecom towers and cables. the manufacturing and exports of telecom equipment grew at a CAGR of 33.0 140 Exports (INR billion) 110.3 200 140.30 and equipment worth INR190 billion was imported in 2009.0 120 100 80 60 40 20 FY08 FY09 Exports 0 Value of telecom equipment imports to India 10 Imports (US$ billion) 8 6 4 2 0 1. Ministry of Communications and IT. Despite the growth of a localized manufacturing environment in India. the demand for telecom equipment is expected to be worth US$70–100 billion28 in 2015.4% 3. 2009 100%=US$8. 30 “Time to go local in telecom equipment purchase. according to a leading telecom equipment manufacturer.3 518. The majority of telecom segments are highly dependent on imports. 02 September 2010. companies in the manufacturing segment are yet to feature in the global telecom landscape. inadequate tax benefits and competition from low-cost Chinese equipment.0 160.8.climatechallengeindia. http://www.5% 6. Furthermore.0 412. Source: International Trade Centre Although a few Indian mobile operators have a significant presence globally.” CyberMedia India Online.com/News/News/News-Reports/ Time-to-go-local-in-telecom-equipment-purchase/140758/0/. 28 “Telecom equipment manufacturing in India needs help urgently. accessed 02 August 2010. an unreliable power supply.” India Climate Portal. accessed 10 October 2020. 29 Ernst & Young analysis.1% Sweden US Singapore Hong Kong Others According to industry estimates. chipsets.3 2005 1.29 respectively.5 0 FY04 FY05 FY06 Production 236.4% 3.3% 3.livemint. Telecom equipment manufacturing The telecom equipment industry comprises products such as cell phones. India is a strong market for global telecom equipment vendors. GOI.6 19.0 2.9 billion FY07 Note: Includes both indigenous and offshore production Source: DoT.1%.2 2008 2009 8.7 81. Telecom equipment manufacturing and exports Production (INR billion) 600 500 400 300 178. DSL and cable modems and networking devices.com/2010/04/01215017/Indian-telecomfirms-may-get-D.9 15. including routers and switches.7 2006 2007 3. “Indian telecom firms may get DoT boost. http://www.0 100 4.4% China South Korea 59. 21 Enabling the next wave of telecom growth in India .9% and 112. with the remainder coming from global companies manufacturing in India. Manufacturers in India face challenges such as high logistics costs.org/telecomequipment-manufacturing-in-india-needs-help-urgently-21-july-2010-t. wireless and landline infrastructure equipment. 21 July 2010.

node B. Infrastructure Provider-I (IP-I) can provide assets such as dark fiber. frequency band of operation and spectrum 31 32 33 34 35 2. there were 425.34 Electronic infrastructure consists of the electronics needed to run a wireless network such as a BTS or cell site. hurdles to the erection of cellular towers and value added tax (VAT) levies on broadband services delivered through fiber media. However. http://loksabha. The rollout of services by operators takes place only on the back of robust telecom infrastructure. the rollout of infrastructure will become easier.” Lok Sabha. a mobile network in a circle consists of mobile switching centers (MSCs). The BTSs are installed in a contiguous manner.in/. so as to facilitate the handing over of signals from one BTS to another like a chain.2. Enabling the next wave of telecom growth in India 22 . Competition will give further impetus to the development of infrastructure. page 9. and safety and aesthetic concerns. “Growth of Telecom Sector. with each BSC being connected to a base transceiver station (BTS). air conditioner. ROW. topography.45532 telecom towers in the country.9. Crisil Research. The National Telecom Critical Infrastructure Policy is expected to address these concerns as well as the issues affecting telecom providers on the state level. cables. radio antennas. the civil infrastructure and backhaul. radio access network. GBTs involve a capital expenditure in the range of INR2. Typically. each of which is connected to base station controllers (BSCs). The development of the telecom infrastructure depends on four key factors: rollout. steel tower. availability.4 to 2. battery backup. Rooftop towers (RTTs) are placed on the roofs of high-rise buildings.9. Civil infrastructure includes components such as tower site. Backhaul consists of the intermediate links between the core of the network and the various sub-networks. 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. it does not play any role in carrying wireless signals. 3G or BWA. However. power regulation equipment. fire extinguisher. Telecom towers and allied infrastructure. The components of mobile networks include the electronic infrastructure. It connects the electronic infrastructure at the tower site with the BSC and MSC. as the safety and aesthetic issues related to the setup of towers are addressed. including ROW related issues. feeders. Telecom infrastructure industry in India. competition. December 2008. while electronic infrastructure forms the remaining 40%. March 2009. the number of operators providing their services from a particular site influences the extent of civil infrastructure installed at the site. Civil infrastructure includes the complementary elements of a cellular network that ensure that the electronic components are operational. As of March 2010. The policy should clearly define the role of the Central Government and the states to help catalyze telecom sector growth. on behalf of the licensee. The wireless sector has charted an impressive growth trajectory. accessed 28 October 2010. page 5. Falling prices of telecom services will help to increase their affordability. whether it is GSM. 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.9. ICRA Rating Feature. depending on the height of the tower. ICRA Rating Feature. It can also create active infrastructure. and the demand for more services will translate into the development of more telecom infrastructure. Infrastructure development plays a crucial role in the development of the wireless sector.1 Mobile network Typically.2 Towers and in-building solutions Telecom towers are broadly classified as ground-based and rooftop towers.8 million. price. Finally. Infrastructure The Indian telecom success story is built around the wireless segment. diesel generator set  and security cabin. The radius of each BTS varies from 500 meters to as much as 8-10 km. It is not influenced by the type of the communication technology being used. shelter room. Telecom infrastructure industry in India. duct space and tower through simple registration without paying any license fee. core network and other transmission equipment. Ernst & Young analysis. March 2009. CDMA. GBTs can accommodate up to six tenants.nic. page 6. 2. growing at a CAGR of more than 75%31 in the past decade in terms of the number of subscribers. civil infrastructure forms about 60% of the cost of setting up a network.33 depending upon subscriber usage.

350 28. Meghalaya.428 4. State-wise number of towers States Rajasthan Gujarat.3 Telecom infrastructure in India Initially. Mizoram and Tripura Kerala and Lakshadweep Total Public sector 2.396 18. accessed 20 September 2010. mass transit systems.” Lok Sabha. stadiums and office buildings an essential requirement.678 425.392 45. Haryana and Chandigarh Uttar Pradesh and Uttarakhand Andhra Pradesh Punjab and Himachal Pradesh Jammu and Kashmir Tamil Nadu and Pondicherry Bihar and Jharkhand Nagaland. 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. RTTs can accommodate two to three tenants. telecom towers were accorded Infrastructure Status37 by the RBI. However.752 1.323 38.920 23.in/. over the past few years.aspx. In recent years.899 6.121 41.008 4. Typically.102 38.5-2 million.Exposure norms.794 369 1. telecom operators have hived off their telecom towers into separate entities. these involve a capital expenditure of INR1. Coverage is required to meet the needs of both the general public.271 3. Daman and Diu Maharashtra and Goa Karnataka Madhya Pradesh and Chhattisgarh West Bengal.494 24. Sikkim.392 22.995 25. http://www.090 52.trai.577 2. which need reliable communications for efficient incident management and personal safety. the leading operators have opted to share their infrastructure.766 21.207 34.in/Default. there are an estimated 425. In-building solutions are designed to improve the reception of radio frequency signals indoors to meet the increasing demand for high-quality mobile services.9. 23 Enabling the next wave of telecom growth in India . Currently. operators used their tower infrastructure for competitive advantage. Manipur.337 720 2.455 telecom towers in India.322 26.614 35.494 34. The GoI provides certain benefits specifically to infrastructure companies. http://www. http://loksabha.611 18.028 2.36 In July 2010. implying a subscriber-per-tower ratio of 1. 2.” Reserve Bank of India. Over the past couple of years.037 Private sector 23. where there is paucity of real-estate space. As a result. shopping malls. This constitutes an essential and possibly the most expensive component in the entire telecom service delivery infrastructure.rbi.55.512 488 3.242 17.387 5. which expects its mobile phones to work at all times. accessed 01 February 2011.275 23.460.154 1.455 Source: “Growth of Telecom Sector. 36 “TRAI: Consultaion paper on issues related to telecommunication infrastructure policy.098 57.418 Towers 25. tenancy level for the industry stands at 1.” TRAI website January 2011. the growth of mobile communications has made the provision of radio coverage within airports.708 8. asp.630 31. there are three types of tower companies — pure-play tower companies. and emergency services. Orissa.gov.177 41.371 8.in/scripts/BS_ViewMasterCirculardetails.071 1.634 4. 37 “Master Circular .102 26.854 3. operators with towers and operator-owned tower companies.644 17. Today. Andaman and Nicobar Assam and Arunachal Pradesh Delhi.org. accessed 28 October 2010. The tax benefit encourages the participation of private sector through investment.are shorter than GBTs and are common in urban and highly populated areas.184 391.608 2.nic.321 20.

Due to higher costs of land development. while the tower company earns revenues.6 Goals of infrastructure sharing The key beneficiary of infrastructure sharing is the subscriber. as the tenant paying a higher rent to the tower company accelerates the time-to-market process. The dependence on diesel could be reduced if the Government utilized that subsidy to support a move toward renewable energy options such as solar. additional security. Capital expenditure (capex) and operating expenditure (opex) savings: the setting up of a countrywide cellular network requires substantial capex.6 557. 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. where mobile teledensity is barely in the double digits. Tower sharing could help operators maintain quality network coverage throughout the city. insurance costs. investments required and emerging trends The industry faces low profitability. a higher proportion of ground-based towers. superior network quality is a sustainable differentiating factor that helps to reduce customer churn and command premium prices.9. service providers have strong incentives to share infrastructure. It is estimated that tenancy levels will rise to between 2–2. 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.5 liters. massive amounts of funds can be saved. With sharing. Spectrum constraints and network quality: for operators in urban areas. Such an arrangement works well for both partners. A significant part of the network rollout is likely to come in the untapped rural areas. significant investments will be required.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) 71.6 billion resulting from savings in infrastructure provisioning fee (IPF).2. and has a pre-tax margin of 7%–8%. power shortages. Average diesel consumption per site per hour is about 2. which is subsidized by GoI.9. translating to 6 million liters of diesel per day. 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. the industry has pumped in INR1 trillion and another INR400–500 billion is expected to be invested in the next two years. such as land and energy. 2. 27 million units of electricity are consumed per day. This translates to consumption of more than 2 billion liters of diesel per year for cell sites. capital and interest costs. it will allow a better use of spectrum. more groundbased towers will be needed.0 2. Rollouts in rural and semi-urban areas: as wireless service providers penetrate rural and semi-urban areas.5 Future growth potential. state electricity boards. 39 Industry estimates. further increasing capex requirements.9. and newer operators can build an assetlight model. the concept of infrastructure sharing assumes special importance.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). 38 Industry estimates. 10.4 Savings (INR billion) 476.4 Energy requirements Currently. and infrastructure sharing will act as an important tool to achieve faster rollouts and save operating and capital expenditure in these areas. Overall.2 81. unclear land ownership and expensive backhaul connectivity costs in the rural areas.5x in the course of this decade. energy. On average. In its more complex forms. Against this background. Since many rural areas are far-flung. It is estimated that infrastructure sharing in its current form has helped achieve savings of INR557. Enabling the next wave of telecom growth in India 24 . land owners and so on before the tower and electronic infrastructure can be completed.

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

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

with India being one of the leading mobile markets for the young. growing at a CAGR of more than 50% during 2006–10. Mobile VAS in India: 2010. handset manufacturers and content converters. IAMAI. IAMAI. games and services such as m–commerce and m–radio. as well as aggressive marketing efforts by telecom operators to spread awareness about their services such as updates and alerts. followed by music. approximately 60%–80%43 is captured by mobile operators. The rollout of 3G services in the near future is expected to provide consumers with new and improved services such as highspeed data transfer. Content owners end up getting approximately 5%–10% of the overall revenues.0 145.asp. The demand for mobile VAS is driven by the increase in the mobile subscriber base. The mobile VAS revenues in the country are driven by the P2P SMS service. The key participants in the mobile VAS market include content owners. the mobile VAS in India was estimated to be worth INR145. application-to-person (A2P) SMS.1 93. The rollout of 3G services is expected to drive the mobile VAS market in the future.42 The key mobile VAS include person-to-person (P2P) SMS. followed by technology enablers (10%–20%) and content aggregators (10%–15%).” TRAI website.0 billion41 in 2010. Market size of VAS 160 Market size (INR billion) 140 120 Growth (%) 100 80 60 40 20 0 28. content aggregators or developers.5 45. media companies. is also expected to drive the market for mobile VAS. July 2010 41 42 43 44 Mobile VAS in India: 2010. which has exceeded the 700 million44 mark. technology enablers. Entertainment mobile VAS constitutes 57% of the overall revenues followed by information mobile VAS (39%) and m-commerce (4%).in/Default. accessed 10 October 2010. Value-added services (VAS) According to the Internet and Mobile Association of India (IAMAI).2. The growth of m–commerce. 27 Enabling the next wave of telecom growth in India . July 2010. 63 /2010.trai.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. In terms of revenue distribution among various market participants. The demand for mobile VAS is mostly driven by the youth. short-code providers. July 2010 Source: Mobile VAS in India: 2010. IAMAI. mobile payments and money transfer.gov. polytones and truetones as well as caller ring-back tones (CRBT).10. Moreover. monotones. creating opportunities for both telecom operators and companies engaged in VAS. which provides services such as mobile banking. July 2010. person-to-application (P2A) SMS.6 75. IAMAI. “TRAI Press Release No. the decline in ARPU has compelled mobile operators to focus on mobile VAS to generate additional revenues. July 2010. Mobile VAS in India: 2010. out of the total amount paid by end users (excluding P2P SMS). http://www. IAMAI.

ovumkc.1 2009 2010 2011F 2012F 2013F 2014F 2015F 2020F Wireless subscribers Source: TRAI. respectively.8 60% 40% 20% 0% 1. there were 752. Further.2% 44. Teledensity (%) 87.185.217.1%. 3G services will drive the expansion of wireless services in future. 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. Ernst & Young analysis 45 “TRAI: The Indian Telecom Services Performance Indicators (January . leading to falling profit margins of mobile operators.” TRAI website.11.1 525. Ovum. video on demand. July 2010.1 1.217.0 6.2 923.in/Default.9% 97.7% 752.March 2010). According to Ovum. the country’s wireless teledensity is expected reach 97. accounting for 12% of the total wireless subscriber base. Further.1% 92.11.0% 11.9% 8.1 Wireless At the end of December 2010.9% 95.134. DoT. with a significant number of multiple and inactive Subscriber Identity Module (SIM) owners.000 800 600 400 200 0 77.516.asp.7% 25% 20% 15% 303. 47 Ovum: Mobile regional and country forecast pack: 2010–15. the ARPU continues to shrink.0 118.8% 35.gov.11.0 5% 0% 20.1 million47 subscribers in 2015. location based services and remote access/ VPN applications. http://www.46 to reach 1.7% 63.9% 10.200 1. during the period 2010–15. 3G subscribers are expected to reach 142 million by 2015.400 1.2% and 110% in 2015 and 2020. Ovum website. the number of wireless subscribers in India is expected to increase at a CAGR of 10.2 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.0 2011F 2012F 2013F 2014F 2015F 2020F 3G subscribers 3G subscribers as a % of wireless subscribers Source: Ovum. Wireless subscribers in India Wireless subscribers (million) 1.600 1.5 1.trai. accounting for 20% of the total wireless subscriber base. accessed 16 October 2010.9% 120% 100% Enabling the next wave of telecom growth in India 28 . including a host of rich multimedia services such as video calling. http://www. Although the telecom sector is witnessing strong customer additions every month.049.2.com/.2% 109.4 10% 142.2 million45 mobile subscribers. 46 Ernst & Young analysis.0 72. Outlook 2. accessed 10 October 2010. 3G subscribers forecast 350 300 250 200 150 100 50 0 3. Ernst & Young analysis Teledensity 2. Future subscriber growth is likely to hinge upon rural and low-income users.8 80% 1. 3G subscribers are expected to be more than 300 million by 2020.0% 101.3 1.

DoT.11. Ernst & Young analysis 37. a trend that is expected to continue. the number of wireline subscribers in India is expected to decrease at a CAGR of nearly 4%. Ovum. Ernst & Young analysis 48 “TRAI: The Indian Telecom Services Performance Indicators (January .ovumkc.” TRAI website. According to Ovum. 49 Ernst & Young analysis.in/Default. the wireline subscribers are forecasted to reach 26.5 32.3 2. July 2010. The growth in the mobile market is seen as the cause of the decline. http://www. http://www.3 million in 2020.” TRAI website.trai.com/. 29 Enabling the next wave of telecom growth in India .March 2010). during the period 2010–15.1 30.3 million broadband subscribers in India.in/Default. Ovum website.5 48 100 150 Source: “TRAI: Consultation Paper on National Broadband Plan. June 2010.49 to reach 29.1 34.2.asp. The wireline market is in decline. http://www. Considering increasing broadband demand.11.1 26.3 Wireline There were 35. 50 Ovum: Fixed voice connections forecast pack: 2008–15.9 33.4 Broadband As of September 2010. page 16. The growth of broadband is expected to increase with uptake of 3G and BWA services.gov.trai. there were 10. Wireline subscribers in India Wire line subscribers (million) 40 35 30 25 20 15 10 5 0 2009 2010 2011F 2012F 2013F 2014F 2015F 2020F Source: TRAI. Broadband subscribers forecastc Year 2010 2012 2014 2020 Number of households 236 241 250 275 % of households to be covered for broadband 5% 20% 40% 55% Number of broadband connections (million) 11. the broadband connections are estimated to reach 150 million by 2020.1 million48 wireline subscribers at the end of December 2010.gov.1 million50 by 2015. accessed 10 October 2010.1 35. Further.asp. accessed 16 October 2010.5 29. accessed 10 October 2010.

1 13. NLD and VAS are also expected to drive revenue growth. to reach US$51.2 15.1 48.5 7. 52 Ovum: Forecast of service provider revenue and capex.1%51and 7.7 11. lower tariffs. accessed 16 October 2010.9 billion.4 14. Enabling the next wave of telecom growth in India 30 . The future revenue growth and increase in capex is expected to be driven by the rollout of 3G services and the increase in broadband penetration across the country. with the introduction of 3G and BWA services.0 34.2.0%.97 billion by 2015.11.9 15.0 57.9 2009 2010F 2011F Revenues 2012F 2013F 2014F Capex 2015F 2020F Source: Ovum. 2009-2014. The growth in revenues is driven by cheaper mobile handsets. Other services such as ILD.2 billion and US$ 13. Ernst & Young analysis 51 Ernst & Young analysis. respectively.3 38.8 45. the Indian telecom sector has witnessed an increase in revenues and contribution toward GDP.8 43. Ovum website.5 Revenue and capex Over the years.0 13. 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. http://www. the increase in mobile penetration in both urban and rural areas. Further. industry revenues and capital expenditure are expected to increase at CAGR of 8.0 10. According to Ovum. Revenue and capex forecast Revenue and capex (US$ billion) 70 60 50 40 30 20 10 0 32. the contribution of non-voice services towards the industry revenues is expected to reach 38% by 2020. during the period 2009–15. including BWA penetration. industry revenues and capex are expected to increase to US$57.0452 billion and US$14. Ernst & Young analysis Over the years.8 51. and the adoption of VAS.ovumkc.com/. respectively by 2020.

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

using technologies including international services digital network (ISDN).4% to 4% by 2010. 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. 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. global standards in the quality of service. and protection of the country’s security interests. for all cities with a population greater than 200. the emergence of India as a major manufacturing base and a major exporter of telecom equipment. FDI and domestic investment. achieving universal service across all villages.The NTP 1999 aims at making India competitive in the global telecom market through growth in exports. making it more affordable by fixing a suitable tariff structure and making rural communication mandatory for all fixed service providers Increase rural teledensity from 0.000 by 2002 • • • • Enabling the next wave of telecom growth in India 32 .

resulting in huge operating expenditure • Effective utilization of USOF to increase rural penetration • Increasing broadband penetration and rural connectivity • Overcoming security concerns over the use of mobile handsets and telecom equipment • Limited availability of talent.3 million) and in teledensity (61. R&D and customer care. among others • Among the lowest tariffs in the world.5% in 2000 • Creation of jobs across sales and marketing.0%) • Contribution of telecom to overall GDP of almost 3%. e. 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. especially telecom specialists • Fixed mobile convergence (FMC) 33 Enabling the next wave of telecom growth in India .NTP 1999 has been a catalyst for the telecom sector: • Growth in the subscriber base (723. providers. mobile value-added services (MVAS) encompass mobile operators. 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. technology. up from 1. especially reliability.. content creators.g.

2007.4% 2.3%55 and 28.3% poses a critical challenge due to low population density.2% 5. 55 “TRAI: The Indian Telecom Services Performance Indicators (July – September 2010). Although India has witnessed a steep rise in teledensity over the past few years.9% 0.” TRAI website.0% 24.3% 3.7% 137.54 Urban teledensity and rural teledensity at the end of September 2010 were 137.9% 4.8% 5. The improvement in rural teledensity Urban and rural teledensity 140% 120% 100% Teledensity (%) 80% 60% 40% 20% 0% 8.4% 61.gov. Enabling the next wave of telecom growth in India 34 . http://www.0% 119..0%. FY09 FY10 Sept 10 Urban teledensity Source: TRAI Rural teledensity Total teledensity 53 “Rural Telecom and IT.trai. accessed 15 January 2011.2% 1.9% 52.2% FY08 14. R.4%.” The Quarterly Journal of Economics.3% 4. The impact of mobile telephony on rural areas has been profound. which was set at 4% by 2010. As a result.02%53.1% 1.7% 37. Furthermore. respectively.9% 47. NTP 1999 has been instrumental in the growth of telecom in both urban and rural areas.2% 9.asp.5% 12.1% 1.4% 65. accessed 10 December 2010. and its targets have been achieved well in advance.56 decreased fish prices by 4% and consumption of fish increased by 6%.2% 9.8% FY05 12. January 2010.iitk.3% 26. http://www.” Indian Institute of Kanpur website.ac.2% FY02 FY03 20. the introduction of mobile telephony in Kerala increased the fishing community’s profits by 8%.3% 0.pdf.3. http://www.9% FY01 14. the overall teledensity as of September 2010 stood at 61. a Harvard University economist. Key achievements of NTP 1999 3. by 1998. “The Digital Provide: Information (Technology).4% in rural India.0% FY06 18.” TRAI website. the teledensity level in the country was 0. the disparity between urban and rural areas in terms of mobile penetration has increased significantly.1 Teledensity Reforms in the telecom sector have been encouraged by the active participation of the public and private sector. 56 Jensen. the level had increased to only 1.in/3inetwork/html/reports/IIR2007/04-Rural Telecom.6% 1.in/Default. There is a significant opportunity for service providers to increase penetration in rural areas and generate revenues.8% FY07 89. and mobile penetration stands at a meager 28.trai.1. about 70% of the population in India lives in rural areas. geographical spread. with rural teledensity being far ahead of the NTP 1999 target. there is an uneven distribution of teledensity among Indian states resulting in slow economic development of the states and their surrounding regions.0% 26.7% FY00 10.2% 2. According to a study by Robert Jensen.1. Following independence. Currently. Market Performance and Welfare in the South Indian Fisheries Sector.9%. page 76. 63 /2010. 54 “TRAI Press Release No. It has helped reduce the cost and time of transactions and has visibly compensated for the poor infrastructure.gov.asp.3% 28.6% FY04 38. low per capita income and the cost of maintaining phones in rural areas.in/Default. The overall teledensity target of 15% by 2010 was achieved in FY07.

and information-based economy.5% 429. R&D and customer care. technology.9 34. technology. as well as indirect employment.00057 direct employees.5% 79.0% FY06 432.0% 89. The expansion of the Indian BPO industry is a classic example of indirect employment.3% FY07 PSU operators Private operators Subscribers per employee ratio in India FY05 PSU operators Private operators 132 1. media.8% 52. Employees of private and PSU operators 100%= 436.771 14.400 11.1. R&D and financial services.5% 65.7 20.3% FY05 429. which has resulted in an increase in employment opportunities in the telecom sector.3 43. 57 Overview of Telecom Industry. 35 Enabling the next wave of telecom growth in India .Total teledensity by state in India.9% 47.678 FY07 193 2. December 2009. education.5 26. which augurs well for sectors such as IT/ITES. Mix of private and PSU operators.4 140.5% 205. The sector has created direct employment across various business areas such as sales and marketing.3% 73.089 FY06 158 1.7% 300. FY10 The Indian telecom industry employs more than 430. Dun & Bradstreet website.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. Dun & Bradstreet 3.110 The development of telephony in India has played an important role in altering the structure of the economy. The ratio of the number of subscribers per employee is very high in the case of private operators in India.2 Teledensity and employment Over the past decade. with the majority of these employees being a part of the public sector undertakings (PSU).7% 90. It has paved the way for a knowledge.891 9. by subscriber base 100%= million 98.7% 85. private telecom players have considerably expanded their operations.1% 56.

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

39 Enabling the next wave of telecom growth in India . access to niche technologies. the average selling price (ASP) of both feature phones and smartphones has been on the decline. the ASP of feature phones is expected to be US$50. http://dipp.7 Global outreach of Indian telecom companies In the early 1990s. and foreign affiliations were formed through joint ventures. M&A provide benefits such as expansion of global footprint. greenfield investments were a popular mode of overseas investment among Indian firms. India’s FDI outflows (debit) have grown at a CAGR of 47.nic. monotone ringtones to MP3 ringtones. Over the next few years. Over the period. The share of manufacturing in the investment activity has Source: Voice & Data 69 “NCAER: FDI in India and its growth linkages. Globally. In line with the change in the pattern of investments. Over the past decade.4 FY06 FY07 FY08 FY09 FY10 3. and the majority of this capital value has been used to acquire companies. However.6 billion69 in FY09.5% to reach a projected US$18.2 95. accessed 10 October 2010. from US$0.6 6 5 4 3 2 1 0 Value (US$ billion) 3.8 billion in FY01. the price of feature phones is declining at a faster rate than smartphones.6 71. page 13. 3G and an improved user interface.7 80 60 40 20 0 33. India has witnessed prominent diversification in the industry composition of overseas activities of Indian firms.1.4 7 5.” Department of Industrial Policy & Promotion. the structure of ownership has also shifted toward majority and full ownership. August 2009.in/. The market has witnessed investment in the form of greenfield projects. new product mix. mobile handsets have evolved rapidly. and the ASP of smartphones is expected to drop below US$200. Video Graphics Array (VGA) to 8-to-12-megapixel cameras.5 108 6. According to the National Council of Applied Economic Research (NCAER).8 101. enhanced memory. usually with a minority ownership. FDI by firms belonging to developing countries has gained momentum and has become an integral part of globalization.0 5. adding numerous features ranging from monochrome screens to touch screens. Global Positioning System (GPS).Average selling price (ASP) of mobile handsets 200 Average selling price (US$) 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. email. Indian mobile handset market 120 100 Volume (million units) 4. a wider customer base and growth momentum. Macquarie Capital In the past decade. Indian companies have reached overseas destinations to tap new markets and have acquired technologies.

0 30. 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.700.declined considerably. 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) 10.0 194. The Indian telecom sector has actively been a part of the global M&A activity.8 177.0 300.0 62.0 Source: Thomson ONE Banker Enabling the next wave of telecom growth in India 40 . leading to the emergence of telecom giants from India. Bangladesh FLAG Telecom Group Ltd Teleglobe International Holdings Ltd.

asp.htm. Despite India’s status as an IT superpower.gov. cheaper handsets. page 7. The Broadband Policy 2004 has failed to keep pace with advances in technology and failed to boost the telecom sector.5 million in FY06 to 37 million in FY10. 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. India has an internet penetration of 7%. page 339. accessed 15 January 2011.9 million70 internet subscribers and 10. http://www.3 million broadband subscribers in India. http://www. inadequate content and applications in regional languages.” TRAI website.in/ntp/broadbandpolicy2004.2.September 2010).trai.asp. However. 3.dot. Although wireline infrastructure in India has been in place for an extended period. therefore requiring lesser BTSs density and lower capital and operating expenditure.2. accessed 10 October 2010.3. India lags behind in terms of availability of spectrum for commercial use.” TRAI website. the Broadband Policy 2004 had anticipated 40 million71 internet subscribers and 20 million broadband subscribers by 2010. along with the benefit of VAS such as internet for the urban and rural population and the abolition of the digital divide. Despite being the second-largest market in terms of the subscriber base. January 2010. 41 Enabling the next wave of telecom growth in India . In line with the growth of subscribers. with a CAGR of 77. according to TRAI.5% during the period FY00–10. the Indian telecom industry is expected to reach 1 billion73 wireless subscribers by March 2014. the advantage of mobility among wireless networks and the inadequate infrastructure of the wireline network. the affordability and availability of broadband services and inadequate infrastructure. and the number of wireline subscribers has fallen from 41. 72 The Internet’s New Billion.asp. May 2010.gov. May 2010.in/Default. the need for spectrum to service these subscribers has also increased.trai.1 Growth of wireline The wireline segment has added just 10 million users since the introduction of the NTP 1999.gov. The decline has been due to lower mobile tariffs.” DoT website. Furthermore.3 Spectrum challenges The Indian telecom industry has witnessed phenomenal growth in the number of subscribers. wireline and wireless complement each other. 74 “TRAI: Spectrum Management and Licensing Framework.74 Spectrum bands such as the 900MHz band are of great value to mobile operators due to the longer ranges these can support. broadband penetration is accepted as a measure of a country’s ability to compete as an economic power. However. Russia and China. 70 “TRAI: The Indian Telecom Services Performance Indicators (July . accessed 10 October 2010. http://www. The sluggish growth in broadband services is attributable to the absence of low-cost devices.2 Growth of broadband As of September 2010. Currently. the growth of wireline phones is not in sync with the rise in the number of wireless subscribers. 73 “TRAI: Spectrum Management and Licensing Framework.” TRAI website. the advent of new technologies is expected to create conflicts for spectrum. According to TRAI. 71 “Broadband Policy 2004. Key challenges of NTP 1999 NTP 1999 envisaged the affordability and availability of telecommunication services for the common populace.trai. page 18. 3. The availability of spectrum for commercial services in India is below the required levels.72 in comparison with 33% in Brazil. Globally.in/Default. 31% in Russia and 28% in China. in the absence of a long-term plan to meet future requirements. September 2010. broadband penetration levels in India are far below other emerging countries such as Brazil. According to Boston Consulting Group.2.2.in/Default. there were 17. the bandwidth required by 2014 may be as high as 800MHz. improved mobile coverage. the telecom sector continues to face various issues that act as impediments to its growth. http://www. Boston Consulting Group. 3.gov. accessed 10 October 2010.

Subsequently. All operators were expected to pay higher spectrum usage charges. The GoI raised INR385. 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. along with 2x4. to the government operator on a pro bono basis In 2001. the bandwidth for broadband services (WiMAX) was auctioned by the GoI.nic. Including the amount paid by state-owned BSNL and MTNL. in line with TRAI’s recommendations. The GoI allocated spectrum to new telecom players in service areas across India The defense services agreed to vacate 2x20MHz in the 1. Start-up spectrum of 2x4. and incumbents were kept out of fresh allocations.2MHz per circle in case of GSM players and above 5MHz for CDMA In August 2008. 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 INR509.7 billion to the GoI within 10 days of the closing of the auction.4MHz of start-up spectrum in the 900MHz band.1GHz band with reserve prices for different categories of LSAs In May 2010. it totalled to INR677. 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. licensees were required to pay a percentage of annual revenue as spectrum charges In 2002. in 2001.2 billion Following the completion of the 3G auctions. the fourth operator license was issued using a three-stage auction procedure. This differed from the earlier strategy of increasing spectrum charges only for those operators who held more than 6.3GHz range in each of the country’s 22 service areas.” Integrated Defense Staff http://ids.1GHz UMTS band The DoT proposed new 2G spectrum usage charges for all operators. the GoI announced the policy for 3G mobile services. in addition to 25MHz in the 2. It auctioned two 20MHz blocks in the 2.Spectrum and license allocation timeline in India First stage: 1995–2003 Auctioning scarce spectrum • • • In 1995. the e–auction of 3G mobile services was concluded after 183 rounds of bidding across all service areas.800MHz band.5MHz of spectrum per operator in each LSA Second stage: 2003–06 Unified Access Service (UAS) licenses • • In November 2003. Although firms were awarded licenses after paying the required entry fee.in/tnl_jces_Sep_2009/Spectrum%20allocation%20 procedure.800MHz was given to the winning bidder: • • In addition to the entry fees. the third operator license was awarded. the GoI auctioned 2x4.pdf accessed 02 August 2010 Enabling the next wave of telecom growth in India 42 .4MHz in 1.4MHz of start–up spectrum for GSM-based services Two operators were selected for each License Service Area (LSA). It laid down a roadmap for the allotment of 2x12.4 billion from the broadband wireless auction Source: “A peep into RF spectrum allocation process in India. 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. irrespective of the quantity they held. and TRAI continued to maintain that there was a shortage of 2G spectrum A new SBN policy was defined. subscriber based norms (SBN) was introduced.

data services and PCOs. page 59. licensees were required to use GSM technology. 3. Prior to this. in India. Since the introduction of the UAS licensing regime. However. in their service area of operations. 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. especially away from cities and towns. using any type of network equipment that met the International Telecommunication Union (ITU) or Telecommunication Engineering Center (TEC) standards. 43 Enabling the next wave of telecom growth in India . and some look at infrastructure companies as a means to finance deficits.2. The policy made the cellular license technology neutral.” is far from ubiquitous. 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. preferential treatment for sharing and incentives in a timely manner.asp. and the biggest barrier to setting up telecom towers and other infrastructure is the wide variation in the approval process adopted by local bodies. accessed 10 October 2010. Several demand prohibitive fees. However. 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. Telecom infrastructure service providers face several challenges. despite being a “key infrastructure. Currently. telecom manufacturing in India has not been able to keep pace. including voice and non-voice messages. single window clearance.6 Infrastructure Telecommunications infrastructure.75 Globally.trai. where telecom companies see poor returns on the expensive investment required in setting up the infrastructure.” TRAI website.2. There are huge gaps in low-income or sparsely populated areas. Tower companies. the GoI introduced the UAS licensing regime. permitting an access service provider to offer either fixed or mobile services or both. the total number of licenses in a circle ranges from 12 to 14.in/Default. therefore. 75 “TRAI: Spectrum Management and Licensing Framework. the country lags behind in terms of telecom R&D and continues to be reliant on imports. some treat infrastructure business in the same way they treat petty commercial undertakings. others require dealing with multiple agencies.2. 3. the allocation of spectrum is separate from the grant of license to provide service. and also allowed licensees to migrate from a fixed license regime to a revenue-sharing arrangement starting in August 1999.3. which are highlighted below: Role played by multiple state agencies: there is no uniform approval process across the states. Moreover. In November 2003. Civic issues: there is a need to address civic issues such as zoning regulation.5 Equipment manufacturing The Indian telecom sector has witnessed rapid growth.gov. page 59. http://www.4 Licensing challenges NTP 1999 permitted Cellular Mobile Service Providers (CMSPs) to provide all types of mobile services. licenses are bundled with the allotment of a certain amount of spectrum. incur huge costs and delays because several state agencies are involved in granting approval for setting up towers. May 2010.

Safety: the construction of telecom towers is still a self-regulated activity throughout India. Enabling the next wave of telecom growth in India 44 . there is a need to accelerate the pace of setting up the tower infrastructure in these areas. The cumulative carbon footprint of telecom towers due to diesel consumption in a year is more than 5. namely IS:800. Energy consumption: cell sites account for most of the energy consumed by mobile networks. while others charge “commercial” rates. citing concerns over alleged health hazards relating to BTS.Taxation on towers: multiple levies and high taxes are imposed for setting up mobile towers. for the design of towers. This adds avoidable uncertainity in an already tough business.000 per tower and the New Delhi Municipal Council (NDMC) charges INR200. and it is estimated that India as a country consumes more than 2 billion liters of diesel per year for cell sites. Environmental issues: diesel consumed by towers results in about 17. Secondly. Further. Misplaced apprehensions on health hazards of electromagnetic radiation from mobile antennas: many state governments and municipalities have barred towers in residential areas. The above IS codes are primarily meant for electric/power transmission line tower design.000 tonnes of CO2 and 24.76 The thrust in increasing rural telephony will further aggravate the diesel dependence by telecom towers. Without it. For instance. the power connection to telecom towers is treated as one to a “commercial establishment. as these are dependent on diesel generators to keep running. Diesel fuel is subsidized.000 per tower as a one-off registration fee in Delhi. Some agencies charge them “industry” rates. The site clearance basically requires examination from the point of safety for flight navigation and interference with existing wireless systems. the power is either unavailable or erratic. Grievance redressal: there is no clear grievance escalation/ redressal mechanism that infrastructure companies can seek when a conflict arises.000 tonnes of carbon equivalent.” and thus. In large parts of India. the highest tariff is applied to the telecom site. Power consumption: one of the major problems faced is the lack of reliable grid power. service providers are forced to use diesel generator sets at tower sites most of the time. there is no clarity on the rates to be paid by infrastructure companies. Utilization of USOF and incentives: since the next level of growth is expected to come from rural areas. and the load criteria for telecom towers and transmission line towers are different. Although the USOF was created with the sole aim of promoting rural telephony. Delays and cumbersome processes for the SACFA clearances: the SACFA gives siting clearance of all wireless installations in the country. This increases the dependence on diesel. which is not only more expensive but also polluting. IS:802 and IS:875. and there are other options as well.5 million tonnes. Currently all the telecom operators are following IS codes. the fund rules are too cumbersome and lack focus. the Municipal Corporation of Delhi (MCD) charges INR100. They do not reflect the fact that USOF subsidies are perhaps most urgently required to defray the cost of infrastructure creation in rural areas. 76 Industry estimates.

It needs to identify and address barriers to growth The functioning of the regulator in an unbiased manner. technological advancements and business dynamics of telecommunications.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. transparent. 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 time is ripe for a comprehensive review to build a forward-looking. The NTP 1999 has served the sector well for more than a decade. India’s telecom industry is at a crossroad.4 • • • • Key enablers As we enter the second decade of the 21st century. independent and competitively neutral policy that will accelerate the pace of growth in telecom services and manufacturing. efficient. Therefore. India needs a principle and objective-based. A principle. strong and transparent policy framework that will be the backbone to achieving the India Telecom Vision 2020. This is the appropriate time to look again at the NTP 1999 and customize it to meet current and future needs. and the formulation of a competitively neutral policy that is not discriminatory toward any of the stakeholders 45 Enabling the next wave of telecom growth in India . which witnessed significant changes in the socioeconomic environment.

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

spectrum. achieve rural penetration of 100% and reach overall wireless penetration of 110% To strengthen broadband penetration to reduce the digital divide. among other things.2. 47 Enabling the next wave of telecom growth in India . Second. 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. equipment manufacturing and infrastructure development. broadband penetration. This will. This involves key enablers such as licensing framework. financial inclusion and m-commerce. First. M&As. the policy should be able to meet future opportunities. achieve total broadband connections of 150 million To earn revenues of around US$60 billion • • • A two-pronged strategy is needed to achieve connected India Telecom Mission 2020. include the unique identification number (UID) scheme. the existing challenges faced by various stakeholders need to be addressed. USOF.4.

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

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

6-21. http://www.in/Default.6-21.4. 80 “TRAI: Spectrum Management and Licensing Framework.785-1.880-1.300-3.300-2.8 18.980 2.” TRAI website. May 2010.8 35-75 35-75 0-20 (after coordination) 0-60 60 40 40 100 (ISPs) 287. http://www. page 22.3.805-1. An increasing availability of smart-phones with significant processing capacity and a wide array of applications are resulting in higher requirements of spectrum.900-1.010-2.920-1.” TRAI website.710-1. plays a critical role in the provision of mobile telecom services. a minimum of 287MHz and a maximum of 454MHz is currently available.6 78 See 5.785 1.025 2.gov.gov.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. the National Frequency Allocation Plan (NFAP) is the basis for spectrum utilization and development and the manufacturing of wireless equipment.805 1. being a scarce natural resource.400 2.2 Spectrum78 Spectrum. Enabling the next wave of telecom growth in India 50 . May 2010.690 3. In India.170 2. data and other application services.161 Spectrum available for telecom sector 20 20 18. page 22. The next five years are going to see the spread of telecom services enabling subscribers to benefit from voice. accessed 10 October 2010.asp. In line with estimated demand of approximately 500-800MHz spectrum across various bands out of a total 1.500-2. accessed 10 October 2010.2. 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 1.400 3.in/Default.110-2. 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.400-3.161MHz79 of identified spectrum by TRAI.910 1.asp.900 1.880 1. 79 “TRAI: Spectrum Management and Licensing Framework. A mechanism to ensure transparent and non-discriminatory spectrum management is needed. for global practices.2-453.trai.trai.

9 52.3gamericas.6 72.4 67 61.09 0.31 0.4 69. ITU .1 24 17.08 Subscriber (million) Subscriber/MHz (million) 81 “TRAI: Spectrum Management and Licensing Framework. January 2010.53 0.8 75.5 0.3 19.8 61.4 69.2 63.26 0.accessed 10 October 2010. http://www.” TRAI website.org/documents/MWC%202009%20Digital%20Dividend%20Pavilion-3G%20Americas%20 Erasmo%20Rojas. 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 33.3 74.in/Default.5 31.52 0.63 0.75 11.95 76.15 84.” TRAI website.78 0.4 69.25 10 10 10 Total 68.92 Argentina Brazil Canada Chile Colombia Mexico Spain UK US Source: “Digital Dividend Pavilion .7 0.75 0.55 0.2 6.asp.4 60. “TRAI: The Indian Telecom Services Performance Indicators (July-September 2010).75 15 12.6 10.2 4.25 67.57 0.75 13.15 79.6 150.16 0.4 55 53. page 22.5 64.27 0.2 50.1 0. 51 Enabling the next wave of telecom growth in India .2 76. May 2010.8 41. Ernst & Young analysis.5 13.75 15 12.5 15 15 12.1 44.65 65 63.pdf.4 74.49 0.2 62.7 43.22 0.6 0.55 70.2 53.4 75.48 0.Latin America Wireless Roadmap.35 0.in/Default. accessed 15 January 2011.gov.4 63. 2008 (million) 46.7 0. 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 53.7 18.8 59.4 CDMA 15 15 13.2 63.6 77. http://www.2 37.3 31 6.5 13. http://www.trai.48 0.trai.22 0. accessed 14 January 2011.26 0.asp.5 11.15 83.ICT Statistics 2008.2 59. gov.” 3g Americas website.37 0.6 87.63 0.4 270.2 49.14 0.8 63 53 57.2 78. February 2009.9 83.3 37.6 14.5 150.4 72.7 38.75 12.3 49. MHz (2008) 170 200 265 140 120 120 358 353 294 Wireless subscribers.4 60. Ernst & Young analysis.6 37.4 No.49 0.75 13.1 62.2 28.36 0.Country-wise spectrum availability Country Total licensed spectrum for mobile services.6 66.3 Subscriber/MHz (million/MHz) 0.6 80.5 76.11 0.25 10 13.15 78.

6 138. It should be based on market price and not administered pricing. The contacted limit of spectrum will be 6. Re-farming Spectrum allocation Spectrum allocation should be based on technology neutrality. MHz 28-37 118. accessed 14 January 2011. based on a transparent auction mechanism to determine the price. February 2009. 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.pdf.2 75-96 Source: “Digital Dividend Pavilion . Spectrum allocation to new players Spectrum usage charges Spectrum sharing and trading Enabling the next wave of telecom growth in India 52 .Latin America Wireless Roadmap.7 100.in/images/1-pdotfinal. service flexibility.pdf. Spectrum should be provided to the highest bidder. timely allocation. The criteria for levying spectrum usage charges should be identified upfront at the time of allocation of spectrum. 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.communicationstoday. Regular spectrum audits should be carried to oversee the efficient utilization of spectrum. http://www.” Communications Today.6 92 82. Identify and vacate new spectrum bands for future use. timely spectrum reconciliation and enhanced transparency. accessed 14 January 2011.3gamericas.4 92. and to draw up a suitable schedule.2MHz for GSM operators and 5MHz for CDMA operators. 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. National frequency allocation plan should be reviewed every two years. “Presentation to the DoT committee on spectrum allocation criteria.  Spectrum allocation to existing players 2G spectrum up to the contracted limit should be ensured as initial spectrum.5 65 72.co. http://www. Allocation of spectrum beyond the contacted limit should be based on market mechanisms. This roadmap should be made available publicly to ensure transparency.Operator spectrum holdings Country/Region/Operator India Denmark EU average France Germany Italy Spain Sweden UK US Spectrum holding per operator.” 3g Americas website. Parameters Availability Recommendations Align spectrum bands with globally harmonized bands to achieve interference-free coexistence and economies of scale.org/documents/MWC%202009%20Digital%20Dividend%20Pavilion-3G%20Americas%20 Erasmo%20Rojas. Allocation of spectrum should be based on auctions. Need to bring in additional spectrum for commercial telecom services.

3.9 16. 40. via Dow Jones Factive.4.2 17.83 at the end of FY10. © 2010 HT Media Limited. BSNL has provided VPTs to 61. Tower infrastructure: provide infrastructure support to set up and manage 7. whereas urban teledensity is about 137.694 have been provided as of December 2009. rural teledensity is at 28. 83 “Minister Sachin wants to ‘Pilot’ IT revolution in northeast.000 VPTs are currently eligible for financial support for operation and maintenance. However.1 39.011 broadband connections out of the proposed 888.186 out of 62. 53 Enabling the next wave of telecom growth in India . In 2002. 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.4 32.1 15.705 rural community phones (RCPs).3%.5 55.0 N/A FY05 Funds collected FY06 Funds disbursed FY07 FY08 FY09 Dec-09 Source: DoT 82 See 5. As of 31 December 2009. for global practices.7 18.436 infrastructure sites spread over 500 districts in 27 states.500 have been replaced as of 31 December 2009. Out of the target of 40. about 6. about 184.302 uncovered villages. As of 31 December 2009. 7 March 2010.832 wireline broadband connections have been provided as of 31 December 2009.6 13. especially those in rural and remote areas. voice mail and email. (INR billion) 40 30 20 10 0 34.121 MARR-based VPTs installed before April 2002.0 12. Multi access radio relay (MARR)-based VPT: out of 185.4%.2 VPT and RCP: around 570. the Universal Service Support Policy came into effect.” Indo-Asian News Service.950 towers have been set up under this scheme. The USOF is estimated to hold around INR180 billion. 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. at affordable prices.3. Rural broadband: 95. 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. The USOF covers rural and remote areas with public access telephones and individual rural household telephones in net high cost rural and remote areas.3 Universal Service Obligation Fund (USOF)82 NTP 1999 envisaged access to basic telecom services for all. resulting in a huge digital divide.

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

To kick-start the broadband penetration in rural and far-flung areas. socioeconomic growth is dependent on the spread of broadband services across the country.in/Default.85 There were just 8. 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. connecting 40% of the households in the country.trai. June 2010. social. 106. 84 See 5. there should be balanced competition to ensure the quality and affordability of services. 85 “TRAI: Consultation Paper on National Broadband Plan. deployment of wireless access should be given preference and fiber media should be utilized from the already available fiber capacity across nation. in order to encourage broadband. http://www. use. India has set a target of 100 million broadband connections by 2014.” TRAI website. 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. lack of vernacular content. This calls for a critical review of the Broadband Policy 2004 and the creation of appropriate infrastructure to support broadband growth. 2004. The 3C’s — customer. connectivity.1 to 0. page 28.4 Broadband84 India trails all developing Asian countries. and skills.gov. Further. page 3.86 with a ranking of 129. accessed 10 October 2010. Broadband should be redefined and clauses such as ‘’always on’’ and minimum speed should be removed from National Broadband Policy.” TRAI website.3.asp. Today. http://www. 86 “TRAI: Consultation Paper on National Broadband Plan. respectively.4. India lags behind in terms of ITU’s ICT Development Index (IDI).2 million. The drivers for broadband services are broadly classified as technological. The growth of broadband is restricted by several factors such as its perceived utility. cost of device and affordability.asp.4. with a broadband penetration of just 0. accessed 10 October 2010.8 million broadband connections at the end of FY10. The net broadband addition per month is just 0.in/Default. cost and competition — are essential for improving broadband penetration.trai. as well as its BRIC counterparts. application. behavioral and government initiatives. against the target of 20 million by 2010 set in the Broadband Policy of 2004. and 118 out of 154 countries in terms of ICT access. 55 Enabling the next wave of telecom growth in India . The last mile access issue can be addressed through the deployment of wireless technology. economic.74%.gov. June 2010. for global practices.

The development of the customer premises equipment (CPE) model should be supported for the interoperability of broadband. driving licenses. vehicle registration. Right of way (ROW) ROW procedures should be uniform. Wireless broadband More spectrum should be made available. Discounts should be provided for online payments. Fiscal incentives Tariffs need to come down. The support for local access and content delivery to towns should extend beyond the 150 commercially viable towns. The GoI should consider a differential tax to encourage the private sector to set up common access points. all national and state highway projects should include the laying of an optic fiber backbone. the government and private sector should collectively work toward developing low-cost mobile applications. BSCs and BTS from the nearest block headquarters. Online fee payments should be encouraged for land records. Regional content Content and applications in regional languages should be created to promote rural broadband. high-capacity microwave and satellite connectivity should be extended to rural. which is a part of the National e-Governance Plan (NeGP). The Government should foster competition to improve the pace of penetration. The tax status for expenditure on connectivity/usage should be similar to policies on other public welfare services such as education and medical allowance. PC penetration Workshops by local entrepreneurs should be promoted under the common services centers (CSC) scheme. Computer usage by government employees should be encouraged. Broadband connectivity should be made mandatory for all buildings requiring a completion certificate. operate and transfer route. This can happen only if there are incentives to build infrastructure and provide broadband services. building and cooperative society bylaws can be effectively modified to make it mandatory for such entities to invite broadband service providers to broadband-enable buildings by at least 10 Mbps per household. remote and inaccessible areas.Parameters Infrastructure Recommendations Optic fiber communication (OFC). Since growth will be through wireless broadband. There is a case for private-public partnership (PPP) in broadband along the lines of highway construction in India through the build. Enabling the next wave of telecom growth in India 56 . Investments should be made in key content development and services such as e-health and e-education. on the lines of water and power connectivity. Backhaul connectivity and OFC should be provided to all telecom towers. In addition. and charges for broadband services should be rationalized across all states. Similarly. More than two service providers with a rollout obligation should be funded. payment of electric and water bills.

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 12.5. Parameters Number of operators Service area and license stipulations Recommendations Mergers should not result in less than six operators in the circle. Merged licenses in all the categories above shall be in UASL category only. CMTS license with UASL.5 Mergers and acquisitions87 At present. Merger of licenses shall be restricted to the same circle. The share of a merged entity should not be greater than 30% in terms of sub-base or AGR. for global practices. Market share of merged entity Lock-in period 87 See 5. and UASL with UASL.3. 57 Enabling the next wave of telecom growth in India .4MHz for B circle and C circle No one entity can hold equity stake of 10% or more in more than one licensee company in the same circle • • The Government should continue to follow the policy to permit mergers but at the same time retain enough competition in the market so as to protect the consumer interest. The TRAI recommendations dated 11 May 2010 should be followed to maintain the balance between the interests of consumers and service providers. The stipulation regarding the minimum period of three years from the effective date of license for merger or acquisition should be done away with.4. unified access services license (UASL) with UASL. Merger of license(s) shall be permitted in the following category of licenses: cellular mobile telephone service (CMTS) license with CMTS license.

January 2010. Denial of credit on such goods would lead to an increase in the financial burden on telecom operators. It is important to note that currently industry players are paying service tax on RCVs.e. http://www. RCV is one of the most popular ways to pay for telecommunication services. As of September 2010.1% of the CDMA subscribers were prepaid subscribers.4. 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. channels and beams. thereby leading to greater financial burden on the telecom sector. This includes the uniform license fee. custom duty and other taxes. 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. the sector contributes significantly to GDP.cms.” The Economic Times. It is important to note that currently the industry players are paying service tax on such broadband services. the revenue share license fee (including the USOF) is prescribed as follows: • • • • 6% to 10% of AGR for access services. This position has been adopted by industry players. 5% levy for USOF. Currently. The issue was first taken up in the case of a leading telecom player by the state of Karnataka. which are used for building transmission towers.indiatimes.trai. BTS etc.) 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.4% of the GSM subscribers and 94. VAT. Various states across India have issued show cause notices.6 Taxation Over the years. as the RCVs are witnessing liberalization in the flexibility of their usage.. The levy of VAT on the activity of providing broadband connectivity services would lead to double taxation of such services.com/news/news-by-industry/telecom/telecom-firms-wantlower-tax-burden/articleshow/2753840. with the matter going up to the Supreme Court. which is 23%–25% higher than their counterparts in other Asian countries. or other services. Enabling the next wave of telecom growth in India 58 .asp. 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.” TRAI website.3. The classification of tower. 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 issue whether the sale of RCVs should attract service tax or VAT has been a subject of constant debate and discussion. 89 “TRAI: The Indian Telecom Services Performance Indicators (July – September 2010). Towers and shelters fall under Chapter 73 and 94 respectively of the Central Excise Tariff Act 1985. accessed 15 January 2011. However. • • Sale of light energy: broadband services also continue to face taxation-related concerns. Over the years. the significance of the telecom sector to the Indian economy has grown immensely. which account for 80%–85% of the operator revenues.89 96. while the dominant purpose for selling these RCVs is provision of telecom services to subscribers. 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. According to TRAI. The levy of VAT on the sale of RCVs to subscribers would result in double taxation. Currently. The Supreme Court without going into the merits of the case has ordered a relook at the matter by the state VAT authorities. 88 “Telecom firms want lower tax burden.in/Default. The Indian telecom sector is subject to numerous taxes and levies. as well as tax.gov. these goods could be treated as “component/ spare/accessories” of “capital goods” (i. the bouquet of services has changed. http://economictimes. accessed 10 January 2011. thereby leading to greater financial burden on the telecom sector. the operators pay up to 30%88 of their total revenues toward different levies.

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

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

Furthermore. with a large majority of people using low-cost mobile handsets.4.05 Thailand 0. This was followed up by incumbent operators introducing cheaper tariffs.1 0. India Telecom 2010 brochure In February 2006.” It was considered affordable.19 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. giving India some of the lowest tariffs in the world.11 0. Mobile tariffs per minute in US$ 0.09 Malaysia 0. a leading operator launched the “One India Plan.3 0.8 Consumer affordability and rural penetration The Indian telecom market has some of the lowest tariffs in the world. It also removed the distinction between fixed-line and cellular tariffs. 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. the increase in subscriber base and teledensity has enabled telecom companies to achieve economies of scale and.03 China 0.23 0. provide leading class services.1 0.17 0.04 Pakistan 0. customer friendly and innovative for both local and long distance calls.2 0.01 India Phillipines Source: DoT.0 Belgium UK France Brazil 0.16 0. at the same time. 61 Enabling the next wave of telecom growth in India .2 0.3.

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

while the GoI provides basic and research infrastructure.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. including 243 state universities. However. India possesses a developed higher education system that offers training in many fields. which is characterized by a dynamic young population base– more than half of which is under 25 years old. Government of India — Annual Report 2009–10. 91 Unleashing India’s Innovation. organizations such as the Telecom Centers of Excellence (TCOE). For instance. The main funding for a TCOE comes from the sponsoring telecom operators. As of December 2009. only 17%91 of those in their mid–20s or older have completed their secondary education.9 10.4 30 25 20 15 10 21.213 20.000 Number of higher education institutions 21. 130 deemed universities and 33 institutions of national importance. 53 state private universities. Ministry of Human Resource Development. and AUSPI submitted a report that suggested ways to form seven TCOEs across India in a PPP mode. India has the largest number of higher education institutions.92 there were 504 universities and university-level institutions. the Center of Excellence in Wireless Technology (CEWIT) and the Broadband Wireless Consortium of India (BWCI) have been established.000 12. COAI.000 6. FY10.9 Human resource India has the benefit of a huge population. 2010 In keeping with the NTP 1999’s R&D objective.8 25. World Bank website. Ernst & Young. Ernst & Young. 92 Ministry of Human Resource Development.706 17. followed by the US and China. October 2007.3. 63 Enabling the next wave of telecom growth in India . page xv. In terms of size and diversity. 40 central universities. Number of higher education institutions and student enrollment 30. in May 2007. Each TCOE is sponsored by a telecom operating company and is hosted by a premier technical or management institute.4. Such organizations promote R&D and help in creating a talented workforce. India lags behind China and the US in terms of student enrollment. However. 2010 0 India US China Source: Making the Indian higher education system future ready. a committee comprised of the DoT.

Fiscal incentives Domestic telecom equipment manufacturers may be allowed to have access to external commercial borrowing for capital expenditure and working capital requirements.” LiveMint. Enabling the next wave of telecom growth in India 64 . and policy initiatives should be focused on encouraging localized manufacturing. According to DoT estimates. localized players can expect to compete globally with established manufacturers and make their own mark in foreign markets in the long run. 93 See 5. In order to encourage technology transfer. There is a need to align product certification with international standards and to facilitate global accreditation for the testing facility. Increased competitiveness in the global market: a technologically advanced manufacturing ecosystem in India prospectively offers an international platform to telecom manufacturers. 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. http://www. html. India needs to position itself as a telecom manufacturing hub in the long term. 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). accessed 02 August 2010. accessed 20 October 2010.10 Equipment manufacturing93 The production of telecom equipment in India has increased at a CAGR of 29% from FY04 to FY09. growth in the segment holds the potential to triple the country’s current employment base by FY14. supported by the banking system. customs clearance for imports and exports should be done on a self-declaration basis.4. 95 “Indian telecom firms may get DoT boost. However. the segment holds an export potential of INR450-500 billion96 by FY14. royalty payments of up to 5% on domestic sales and 8% on exports should be exempted from income tax.6. In addition. Other significant incentives would encompass the removal of withheld tax on the fee for transfer of technology and software import. http://theviewspaper. • • Employment generation: given the right impetus. page 4. In order to reduce transaction costs.livemint.” The Viewspaper. 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. the requirement for telecom equipment in India is expected to be about INR5 trillion95 by 2015. resulting in the significant growth of exports to developing nations. for global practices.Telecom Equipment and Services Export Promotion Council (TEPC). It is necessary to ensure the free movement of the equipment/raw materials. the share of locally manufactured equipment has declined to 30% in FY09 from 74% in FY04.net/indian-telecom-a-tale-of-stupendousgrowth/. 28 February 2010. the provision of a single window clearance for all state-level approvals would be a vital fiscal measure. 01 April 2010. Export promotion The Government could create a sizable export promotion fund for the Telecom Equipment and Services Export Promotion Council (TESEPC). 94 “Indian Telecom: A Tale of Stupendous Growth. There should be provision for round-the-clock customs clearance. 96 Policy Recommendations to Increase Domestic Telecom Growth and Exports of Telecom Equipment & Services . The tax on the payment of royalty should be as low as possible.com/2010/04/01215017/Indian-telecom-firms-may-get-D. The value of telecom equipment exports was INR81 billion in FY09 during the last five years.3. Thus. In addition. 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. further strengthening the case for a robust telecom manufacturing industry. reaching a value of INR518 billion94 in FY09 during the last five years.

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

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. But the lack of guidelines or standard procedures results in enormous delays and huge cost implications. There is a need for national ROW policy for rollout of backhaul network. These are not matters of local self-government or municipal departments. Moreover. Full utilization of towers— optimum sharing There should be laws governing the rollout of towers. The march of technology-IP/converged platforms is leading to integrated technology-neutral host platforms. creating a uniform taxation regime. Also. If an existing tower is not operating at 100% capacity. for global practices. Every tower should be fully utilized. A 70-meter tower could service an area of 2-3 square kilometers. low working capital requirements and high incremental profitability. stable and predictable cash flow. Technological approaches that can potentially reduce the direct and indirect costs of creating telecom infrastructure should be encouraged. in-building solutions and DAS make it possible to conserve spectrum and reduce the visual impact of towers. the tower business is characterized by high initial capital investments. which are directly connected with the growth of tower infrastructure. the scale and spread of the tower portfolio and the ability to raise capital. but are matters liable to be governed by the GoI or regulatory authority constituted by it in accordance with the NTP. 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. For India to achieve 85% teledensity. The profitability is dependent on the ability to increase tenancy on the tower. There is also a need for an empowered committee or similar structure to engage with roads and power ministries. Such practice is being followed in developed countries such as the US. The biggest barrier to setting up telecom towers and other infrastructure is the wide variation in the approval process adopted by local bodies. they should be adopted in a timely manner. single window clearance and preferential treatment for sharing and incentives need to be addressed in a timely manner.7. 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. Tower infrastructure needs to come under the Indian Telegraph Act.” Tower infrastructure should be erected in accordance with the NTP and licenses granted by the GoI under the Indian Telegraph Act.3. Given the challenges that the industry faces. then no new tower should be allowed in that zone. and extending subsidies and other packages to create a conducive environment to boost national telecom infrastructure building and thereby ensure the increased participation of all the stakeholders. the rents charged. If legislative amendments are needed. and GoI should declare mobile and tower infrastructure as “Critical Infrastructure Services. there is no uniform approval process across states for setting up telecom infrastructure. Civic issues Civic issues such as zoning regulation. The rollout subsidy could be fixed at a flat amount based on the approved tower design for a period of five years. it needs 95% coverage. and there could be distance guidelines for the same. Telecom/broadband connectivity should be considered a necessity such as water and power in every housing facility. GoI should announce a National Telecom Critical Infrastructure Policy (NTCIP). which avoids duplication of capex. a new tower could be awarded through a bidding process.4. The telecom infrastructure service provider needs to apply to the local municipality or panchayats for permission to build a tower. Once the existing tower is at capacity. 97 See 5. At present. Enabling the next wave of telecom growth in India 66 .

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

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

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

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

manufacturers.3. Firstly. The IMIE number helps intelligence agencies track mobile phone users and curb anti–national activities. The key players that have been impacted by the security concerns include one of the world’s leading mobile handset manufacturers. virtual private networks (VPNs). Secondly. along software and facilities at the time of procurement and with a trained workforce. Thirdly. with penalties for non-compliance. Although the GoI has initiated these steps to enhance security and curb terrorism with the help of mobile telephony. modern data mining and network mobile operator. the GoI has taken steps regarding telecom infrastructure equipment. 71 Enabling the next wave of telecom growth in India . with Chinese mobile phones being the major category. Indian intelligence agencies. telecom equipment manufacturers and telecom operators. Know Your Customer (KYC) verification process for a mobile connection faces issues The guidelines mandate the sharing and monitoring of such as forged documents. In 2009. which is a unique number allotted to every mobile phone for the identification purposes. any suspicious equipment periodic review thereafter.4. issuing guidelines related to the import of network equipment from foreign telecommunications vendors. As a result. internet service providers and one of the world’s leading internet search engines.14 Security In the recent past. 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. The management infrastructure that is able to monitor DoT has also mandated thorough inspection of hardware. with terrorism being primarily attributable to religious communities and radical movements. highly vulnerable. The key stakeholders associated with security concerns surrounding telecom equipment include the DoT. the DoT blocked calls to mobile devices without a 15-digit International Mobile Equipment Identity (IMEI) number. India has witnessed a series of terrorist attacks. This move is expected to have impacted approximately 25 million users. terabytes and exabytes of data need to be set up. the guidelines put the onus for compliance on the voice and data traffic. as the requested information is considered sensitive and proprietary. other issues remain that continue to raise concerns over security. the Ministry of Home Affairs. leaving the telecom system source code and design along with Indian security agencies. with the rapid growth in Further.

9. 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. booking tickets for transportation services such as trains and taxis and online shopping. cinema) • Shopping (i. train. mobile banking and multimedia messaging service (MMS). for global practices. paying bills for utilities such as power and gas. including current affairs. Enabling the next wave of telecom growth in India 72 . web-enabled phones and smartphones by mobile subscribers is expected to play an important role in the growth of m-commerce.1 m-commerce100 The next revolution that is expected through the use of mobile phones is the emergence of m-commerce. with each broad category providing an array of services. It is forecasted to overtake e-commerce in terms of the number of transactions.. in India is expected to boost market growth. Going forward. Mobile phones provide the consumer an opportunity to transact anytime and anywhere. 4. especially in the case of banking and internet-based purchases. The rollout of 3G services m-commerce Mobile banking • Inter–account fund transfer • Account inquiry • Stock trading • Bill payment Mobile payments • Information services.. m–commerce finds its applications across various end markets such as banking and financial institutions. driven by the uptake of services such as mobile web browsing. tourism and search engines • Ticketing (e.e. purchase of goods and services) Mobile transfer • Prepaid card top-up • Person-to-person transfers • International remittances 100 See 5.4. the UID scheme and financial inclusion. the rollout of 3G services and increasing usage of WAP. with synergy existing between e–commerce and m–commerce.g. The m-commerce service umbrella in India has been limited primarily to payment and transfer systems.4.

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

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. MNREGA achieves twin objectives of rural development and employment. 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.4. It aims to bridge the supplydemand gap of high-quality teachers in the country.4. In India. The integration of such programs with mobile telephony will benefit the nation. this data could be transmitted to MNREGA.7 MNREGA and UID MNREGA and UID strive for providing inclusive growth. and help them earn their daily wages. 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. 4.6 Financial inclusion Financial inclusion is central to the overall task of inclusive growth.4.4. Enabling the next wave of telecom growth in India 74 . It enables a virtual community to facilitate the learning activities of teachers. 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. The UID program is critical to improving the delivery of social services.5 M-education M-education offers innovative use of mobile and wireless technologies for education. about 80% of households do not have bank accounts. For instance. students and peers through collaboration in a distributed environment. 4. subsidies and other government programs while also strengthening national security. Once workers have logged in.

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

Licensing Hong Kong In February 2001. Further. • The selection of applicants was based on the “beauty contest” criteria (i. • Successful bidders were required to provide a five-year rolling guarantee of the minimum royalty payment for the entire license period. with the number of applicants matching the number of licenses. In March 2000. network rollout.. 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. From the sixth year on. Japan • In 1998. which is to the advantage of operators and consumers. with a guaranteed minimum payment.5. Sweden issued an invitation to provide network capacity for UMTS mobile telecommunications services. • Successful bidders were expected to pay a minimum royalty fixed by the Government for the first five years of the license. the Government decided to issue four licenses through auctions. the Hong Kong Government released its 3G licensing framework. The Government decided to issue four licenses for up to 31 December 2015. allotting licenses to operators who best meet stated pre-set criteria). with the regulator having a total of 60MHz of spectrum for 3G services. with the same royalty percentage applying to all licensees. 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.e. quality of service and financial capability. Enabling the next wave of telecom growth in India 76 . Following the pre–qualification exercise. Sweden • In May 2000. The pre–qualification criteria included investment. • The number of 3G operators was fixed at three per region. the MPT established the technical regulations and publicized the licensing policies. the Swedish law states that licenses are allocated based on specific criteria. with new as well as incumbent opeartors — but not fixed regional operators — being eligible. the policy for comparative selection was not invoked. • The Government focused on rapid rollout and nationwide coverage.1. • Since the 3G license allocation in Japan was straightforward. the successful bidders were required to pay royalties according to the royalty percentage determined at the time of auction. as operators do not pay expensive fees to the state for the issue of licenses. • The three-license limit was driven by a shortage of spectrum. the Japanese Ministry of Posts and Telecommunications (MPT) published the draft for the introduction of 3G services and solicited public comment.

It is essential to provide details about license renewal or reissue. 5.pdf. http://www. Spectrum Re-farming of spectrum • The US Government created the Spectrum Relocation Fund (SRF) in December 2004. The 102 “3G Mobile Licensing Policy.8 360. accessed 22 October 2010. In September 2006. gov/reports/2008/SpectrumRelocation2008.755MHz band paired with the 2.520. Public consultation procedures and the right to appeal also increase the prospects for a successful renewal process.710–1.0 Nominal 4.0 Note: The “beauty contest” approach purports to allocate licenses to operators who best meet stated pre-set criteria. transparent and participatory renewal process.870. This is done through the principle of renewal expectancy.390.508. including the use of the SRF to facilitate relocation of federal communications systems.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.” National Telecommunications and Information Administration website.080. The 1.0 120. http://www.710–1.” ITU website.0 35.doc. which provides a funding mechanism through which federal agencies can recover the costs associated with relocating their radio communications systems from certain spectrum bands.pdf.0 each 44.0 45.755MHz band used by federal agencies was reallocated to AWS under the provisions of Commercial Spectrum Enhancement Act (CSEA).2.0 10. and through promoting regulatory certainty through a fair.070.103 the Federal Communications Commission (FCC) concluded the auction of Advanced Wireless Services (AWS) in the 1.4 44.ntia. 77 Enabling the next wave of telecom growth in India .110– 2.itu.0 351.int/osg/spu/ni/3G/casestudies/GSM-FINAL.08 116. accessed 12 October 2010.155MHz band. page 50. which were authorized to be auctioned for commercial purposes. 103 “1710–1755MHz spectrum band relocation.482.0 3. and ensure sufficient lead times and transitional arrangements in the event of non-renewal or changes in licensing conditions.7 1. page 1. Policy-makers and regulators should focus on creating interest among providers and providing incentives for long-term investment.0 51.0 2.

AWS auction raised US$13. and innovation in the supply and demand for radio-based technologies. promotion of innovation and flexibility. the Ministry of Communications and the Ministry of Defense have agreed to make 2x75MHz spectrum available for WiMAX in the 3. and it has begun a program to identify which spectrum can be released and time frame for releasing it. Enabling the next wave of telecom growth in India 78 .6GHz band to support the nationwide deployment of nextgeneration mobile broadband services. • In March 2007. the Australian Communications and Media  Authority (ACMA) reviewed government spectrum holdings. assignment of the license to another party.6GHz band had previously been allocated to multichannel multipoint distribution service (MMDS) operators to support pay-per-view TV services. and facilitates the provision of innovative new wireless services in the commercial market.4–3. as a part of spectrum re–farming. and de facto control. In 2006. The MoD has management rights to 35%104 of the spectrum bands listed in the UK Frequency Allocation Table (UKFAT). accessed 12 October 2010.7 billion in net winning bids. an inefficient primary mechanism of spectrum allocation that makes it necessary to move to a market-based method of secondary allocation. Spectrum trading • Spectrum trading gives public and private sector entities the opportunity to decide which spectrum to release or share. giving them the option to deploy LTE immediately. the Brazilian telecommunications regulator. spectrum is needed only in certain geographical areas.. One of the key recommendations of the Independent Review of Government Spectrum Holdings (IRGSH) was a regular review of all defense band allocations. the possibility exists to use the spectrum for other applications the primary user does not need. Further. emergency and public safety services (E&PSS) and science services. While it is important to ensure that access to spectrum 104 “A Strategy for Management of major Public Sector Public Holdings. the FCC formulated rules for spectrum trading. transferee retains the license and legal responsibilities. • Geographical sharing: in certain situations. simplifying them in mid-2004. the FCC proposed the concept of developing smart devices that adjust to the spectrum they use and take advantage of underused spectrum. but transfers management control of the spectrum. 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. • • • • • Sharing of spectrum • Time sharing: defense needs to use part of the spectrum only in crisis situations during exercises. Spectrum assigned to the maritime sector may need to be used for maritime radio services only near the coastline. in consultation with the Office of Communications (Ofcom).e. uk/files/file38572. In Italy. in 2004. is guaranteed the moment it is needed. Innovation and Skills website.6GHz band. inland waterways and rivers. sharing or reallocation opportunities for spectrum. The re–allocation benefits the country’s mobile operators.” UK Department for Business. Such spectrum could be made available for other applications inland. agreed to re-allocate spectrum in the 2. The FCC distinguished between de jure rights. The committee formulated the strategic plan for the Ministry of Defense (MoD). and spectrum regulation. bis. civil aeronautical. 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. page 28. i. The critical success factors for spectrum trading include a large number of buyers and sellers. In 2010. In 2003. the UK Department of Trade  and Industry’s spectrum strategy committee.gov..e. civil maritime. The secondary trading of spectrum provided benefits such as economic efficiency. i. In 1989. New Zealand was the first country to introduce open market trading of spectrum.pdf. ANATEL. 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 2. http://www.

However. after liberalization of the telecom sector. governments should consider whether they should create a USOF for broadband services. a competitive tender mechanism was used. subsidies are granted according to formulas for compensating operators already serving high-cost rural areas within their operating territory. or proposing to expand into high-costs areas. with the aim of increasing overall teledensity. The Brazilian legal framework uses a variety of tools to achieve universal service. In Mexico. Universal service levies by country105 Country Malaysia India Colombia US Russia Canada Peru Uganda Nigeria Contribution by operators 6% 5% of license fee 5% Less than 4% (plus state levies) 2% 1. have not considered the creation of a universal fund.1% in France to 6% in Malaysia. page 19. ANATEL has imposed a coverage obligation rather than a funding mechanism.5% (plus federal contributions) 1% 1% 1% Considering USOF for rural wireless broadband services With the rising importance of broadband. Brazil has developed a mechanism that achieves universal objectives through obligations imposed on its licensees. accessed 20 October 2010. The contribution rate ranges from 0. In most countries. On the other hand. 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.3.pdf. the telecom regulator. the incumbent operator was required as part of its privatization to install payphones in 20.org/dataoecd/59/48/36503873. countries with large geographic areas and consequently much higher costs to serve rural areas have funds that aim to cater for the rural population. Most European countries.oecd.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. In the UK. Communication service providers are obliged to contribute to this fund in many countries. BT is the designated USO provider. As a result. Universal Service Obligation Fund In many countries. USO services were provided by incumbent operators. with a relatively small geographical area and high population density. a separate universal service fund has been set up. In Greece.5. 79 Enabling the next wave of telecom growth in India . http:// www.

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

8 million107 broadband subscriptions across the world.. invest in infrastructure and latest technology.5% 26. during 2005–08. which covers the overall .1% 33. 2010. Indian organizations.com/Assets/PDF/Article/WA-323857001. Broadband services have economic benefits both in developed and developing nations. However. However. urban–rural divide and other factors that impact broadband penetration are very different in developing nations. identity and access management computing. Point Topic Ltd. Furthermore. The Information Security Management System (ISMS). page 2. For instance. increased risks: 3.intel.4 million fixed broadband subscribers. and release spectrum for the sustainable deployment of broadband services. page 4. if China is excluded from the developing world. content and applications.7% 26. 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.3% 7. 23% of 107 World Broadband Statistics: Short report. Of all participants. Investment in information world in terms of broadband penetration. the growth rate is much higher in the developed world.7% 0.5. Increased security aware1.” Intel website.pdf. Emerging markets such as India need to adopt leading practices that facilitate rapid and cost-effective deployment of broadband technologies.” ITU.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. as against only 8% by systems. 61% (46% globally) agreed that their organization will spend more this year in information security than it did last year. Intel 37. whereas African countries were able to add 2. Broadband penetration by country 2009 Netherlands Korea UK Finland US Australia China India 0% Source: OECD. Although the world is witnessing a rise in broadband penetration. The firm combination of national objectives toward broadband services with leading practices is expected to enable developing nations to achieve benefits of broadband growth. form PPPs.5% 29. Other top trends next 12 months. that emerged were increases in the global respondents stated that 108 “Intel: Realizing the benefits of broadband. as they provide businesses and consumers with fast and continuous access to internet–based services. Booz & Company analysis There are more than 497.4. it declined to just 2%. The number of organizations currently evaluating the use of virtualization techniques is growing: 81 4. encourage competitive ecosystems. infrastructure.4% 23. regulatory environment. a large digital divide exists between the developed and the developing 2. accessed 12 auditing capability and stronger they have embraced cloud October 2010.108 in comparison with 4% in developing economies. Broadband Broadband networks are an essential infrastructure for the global economy. However. The trend of actions that organizations have taken to control the leakage of Enabling the next wave of telecom growth in India 5. http://www. 23%. 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. The essential leading practices that enable countries to increase broadband penetration include: adoption of regulations that embraces innovation and competition. TRAI. Eastern Europe added 19.5 million fixed broadband subscribers.

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. subsidies for purchase of personal computers by low-income citizens • Promote digital literacy • Support e–governance.South Korea Policy element Objectives Action • The South Korean Government created an action plan for the emergence of a knowledge-based  society. 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 . 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. where all have the confidence to access the new and innovative services delivered by computer. e–commerce. 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. technology demonstration projects. mobile phone. formulated the action plans. The Korean Digital Divide Act created the five–year master plan to close the digital divide. with each citizen having access to a personal 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. 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. 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.

Ofcom has proposed a cap on the amount of spectrum held by any operator in the spectrum range under 1GHz. After the auction in 700MHz band. allowing other competitors to rollout services. the cap was raised to 55MHz. Mexico and Guatemala. After the elimination of the spectrum cap. a spectrum cap has been implemented in Canada. In 2001. In March 2010. especially in emerging markets.5. Similarly. there is a lack of regulatory consistency at the international level. a spectrum cap was in place from 1994 to 2003. A spectrum cap refers to the amount of spectrum any operator or group of operators can hold in a geographic area. and it was abolished in 2003.5. It placed a limit of 45MHz on the commercial mobile radio spectrum (CMRS) that a single entity could acquire in any geographical area across the US. 83 Enabling the next wave of telecom growth in India . the telecom regulator. The emergence of new technologies and applications worldwide has forced mobile operators to expand their global footprint through mergers and acquisitions. the key to the telecom sector is radio spectrum management. The combined amount of spectrum held by the two parties — at 1. the FCC used a cap of 70MHz in deciding mergers. such as Australia. the spectrum cap in the US stands at 95MHz. 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.800MHz — was larger than that of their competitors. In the US. have abstained from the implementation of a spectrum cap. with different views on each regulatory issue. has proposed a cap on the award of spectrum to a mobile operator. However. As a result. other countries. which would help overcome the challenges posed by globalization. In the UK. However. In any country. Ofcom. the merger of the UK operations of two mobile operators was cleared by the European Commission. the parties offered to surrender 15MHz of spectrum. The US and the UK have gradually eased their respective spectrum caps. Mergers and acquisitions The telecom sector has evolved at different rates around the world.

particularly in the ICT sector. Finland’s state-owned post. and in 1991. 29 July 2008.000 people in over 4.5. • Development of clusters: the development of the Finnish telecom industry is also attributed to the emergence of an ICT cluster. including mobile application developers. content owners and content providers for mobile applications. with Nordic countries benefitting from the first-mover advantage in the mobile telecom industry worldwide. and Denmark based PTTs. liberalization and innovation drive the telecom equipment industry109 Background • Prior to the 1990s. secondary and tertiary education is free of charge. consulting firms. networks were opened to free competition.” OECD Publishing. Enabling the next wave of telecom growth in India 84 . equipment manufacturers. academic and research institutions. • Skilled workforce: Finland has a strong skilled workforce. The mobile telecom cluster. primarily driven by a robust educational system in which basic. which has facilitated the emergence of Finland in the telecom sector by providing a large pool of engineers. • Deregulation and increased competition: in the late 1980s and early 1990s. These changes were primarily driven by higher education and the emergence of knowledge-based industries. Norway-. includes a wide range of stakeholders. Finland removed the restriction on foreign ownership in Finnish firms and restrictions on capital inflows. the economy shifted to ICT and consumer electronics. which is also known as Finland’s Wireless Valley. However.000 firms in 2000. telegraph and telephone (PTT) operator developed the Nordic mobile telephony standard in collaboration with Sweden-. Trade Liberalisation and Innovation Capacity in the Finnish Telecom Equipment Industry. Equipment manufacturing Finland: Market openness. In 1991. The country witnessed more than fivefold growth in FDI from 1990 to 2000. Further. Finland deregulated the telecom sector by the adoption of the Telecommunications Act and a new Radio Act. Strategic initiatives 109 Caroline Lesser. which encourages cooperation among a wide range of manufacturers and suppliers.6. which more than doubled between 1985 and 2005. After the collapse of the Soviet Union in 1991. mobile network operators. in the late 1990s. Finland lowered the entry barriers through the introduction of reforms. • First-mover advantage: in the 1970s. component manufacturers and electronics contract manufacturers. An increase in FDI has resulted in technology transfer and cooperation that has helped to fuel the telecom sector. with telecom equipment manufacturing accounting for 90% of the ICT manufacturing in 2003. public certification and standardization authorities and financial service providers. It employed more than 80. the Finnish economy was dominated by forest-related industries. • Foreign direct investment: in 1993. The country has invested in a number of technical universities. • Specialization in telecom: Finland’s ICT sector has developed specialization in the manufacturing and export of telecom equipment. “Market Openness. and joined the European Union in 1993. the country redirected its trade to the West. the country’s ICT sector has benefitted from investment in R&D. the first GSM network was launched in Finland. with electronics and electrotechnics accounting for about 25% of the country’s exports. From 1987 to 1997.

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

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

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

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

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 .

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. Telephone and Telegraph Rural Community Phones Recharge Coupon Voucher Reference Interconnect Offer 91 Enabling the next wave of telecom growth in India .

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 .

500 corporates and over 500 chambers of commerce. FICCI espouses Indian businesses and speaks directly and indirectly for over 250. seminars and meets for promoting business. is the largest and oldest apex organization of Indian business. conferences.000 business units. interactions at the highest political level and global networking.About Federation of Indian Chambers of Commerce and Industry (FICCI) FICCI. 97 Enabling the next wave of telecom growth in India . With a nationwide membership of over 1. FICCI organizes a large number of exhibitions. set up in 1927. FICCI maintains the lead as the proactive business solutions provider through research.

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

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

Enabling the next wave of telecom growth in India 100 .

Ernst & Young Global Limited. About Federation of Indian Chambers of Commerce and Industry (FICCI) FICCI. Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited.000 business units. a UK company limited by guarantee. does not provide services to clients.500 corporates and over 500 chambers of commerce. each of which is a separate legal entity. EYG no. set up in 1927. .com © 2011 EYGM Limited. Worldwide. For more information about our organization. FICCI espouses Indian businesses and speaks directly and indirectly for over 250. We make a difference by helping our people. our clients and our wider communities achieve their potential.000 people are united by our shared values and an unwavering commitment to quality. our 141. FICCI maintains the lead as the proactive business solutions provider through research. All Rights Reserved.Ernst & Young Assurance | Tax | Transactions | Advisory About Ernst & Young Ernst & Young is a global leader in assurance. The opinions of third parties set out in this publication are not necessarily the opinions of the global Ernst & Young organization or its member firms.ey. this document has been printed on paper with a high recycled content. please visit www. Neither EYGM Limited nor any other member of the global Ernst & Young organization can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. It is not intended to be a substitute for detailed research or the exercise of professional judgment. On any specific matter. conferences. EH0091 In line with Ernst & Young’s commitment to minimize its impact on the environment. is the largest and oldest apex organization of Indian business. This publication contains information in summary form and is therefore intended for general guidance only. tax. seminars and meets for promoting business. reference should be made to the appropriate advisor. With a nationwide membership of over 1. FICCI organizes a large number of exhibitions. interactions at the highest political level and global networking. transaction and advisory services.

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