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

m-commerce and convergence. renewal procedures.The present challenges include the spectrum and licensing framework. infrastructure segment. Universal Service Obligation Fund (USOF) structure. mergers and acquisitions scenario. equipment manufacturing. broadband. The major recommendations for the policy framework for the Indian telecom industry are as follows: Focus areas Licensing Recommendations Need to have a single universal license for all telecom services There should be a uniform fee structure across all telecom circles Pure internet service providers should continue to be allowed without payment of any license fees Provide a clear license renewal regime that includes legislation. The opportunities around which the policy initiatives need to be designed include financial inclusion. 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).

Focus areas Spectrum Recommendations Need to re-farm available spectrum Spectrum up to contracted limit should be ensured as initial spectrum to the existing players Spectrum usage charge should be identified upfront at the time of spectrum allocation USOF The USOF should be utilized for the following in rural and remote areas: • Provision of public telecom and information services  • Provision of household telephones • Creation of infrastructure for provision of mobile services • Provision of broadband connectivity to villages in a phased manner • Creation of general infrastructure for development of telecommunication facilities • Induction of new technological developments in the telecom sector Subsidies should be distributed through transparent marketoriented allocation strategy Broadband Backhaul connectivity and optic fiber communication (OFC) should be provided to all telecom towers. base station controllers (BSCs) and base transceiver stations (BTS) from nearest block headquarters Make available more spectrum for wireless broadband Make broadband connectivity mandatory for all buildings to get completion certificate on the lines of water and power connectivity Create content and applications in regional languages to promote rural broadband Mergers and acquisition Merger should not result in less than six operators in a circle  The share of a merged entity should not be greater than 30% in terms of sub-base or adjusted gross revenue (AGR) vi Enabling the next wave of telecom growth in India .

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

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

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

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

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

National long distance and international long distance 2.1.1 4.2. Wireline 2. Evolution of the telecom sector in India 2.1. Internet and broadband subscribers 2. Key challenges of NTP 1999 31 34 41 4 Key enablers 4. Key enablers under existing scenario 4. Importance of telecom 3 3 5 2. Indian telecom sector 1.3.3.Contents 1.3. Infrastructure 2. Achievements and setbacks of NTP 1999 3.5.4.2 Licensing Spectrum 45 46 47 48 48 50 1 Enabling the next wave of telecom growth in India .9. Connected India: telecom vision 2020 4. Value-added services 2. Regulatory framework 2. Telecom equipment manufacturing in India 2.1. Wireless 2.3. Key achievements of NTP 1999 3. Connected Indian: telecom mission 2020 4.1. Overview of the Indian telecom industry 2. Overview 1.2. Outlook 9 10 12 14 15 16 17 19 21 22 27 28 3.2.8.6.11. History of the Indian telecom industry 2.10.2.7.

6 4.3.3.8 4.3.4.3 4.10 Equipment manufacturing 4.4.4.3.4 4.3.3 4.4.3.1 4.2 4.12 Enterprise data 4.5 4.4.3.4 4. Global practices Conclusion Glossary 75 87 89 Enabling the next wave of telecom growth in India 2 .3.3.4.14 Security 4.7 m-commerce M2M communication Mobile money M-health M-education Financial inclusion MNREGA and UID 5. Key enablers for potential opportunities 4.5 4.4.4.13 Convergence 4.6 4.3.7 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 4.11 Telecom infrastructure 4.3.4.3.

accounting for nearly 3. 13 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.” Export-Import Bank of India website.1 Indian telecom sector 1. low-priced handsets.eximbankindia.6%. The easy access to mobile services is the outcome of positive regulatory changes. 26 August 2010. “India’s Macroeconomic Indicators. compared with 3.6%4 of total GDP in FY10. 1 2 3 4 India: Rising growth potential.1. The Indian economy maintained a growth rate of more than 5% even during the global recession. accessed 10 October 2010. while the industrial sector and agriculture sector contributed 28. DBS Group Research.pdf. Ernst & Young report. respectively. Within the services sector. India’s service sector was estimated to account for 56.com/news/redefining-the-hindu-rate-ofgrowth/104268/0.financialexpress. http://www.9%3 of GDP. page 8. with the further opening of the economy and the creation of regulatory institutions to march toward fully competitive markets.12 April 2004. Overview Over the past two decades. low tariffs and significant investments in telecom infrastructure and networks. 3 Enabling the next wave of telecom growth in India .” The Financial Express. As a result of liberalization.com/ind-eco. India 2012: telecom growth continues. to GDP. India has grown rapidly from a “command and control” economy to a market-based economy. India is now closely integrated with the global economy and is considered one of the pillars of global economic growth. the telecom sector has been the major contributor to India’s growth. In less than a decade. India’s GDP has been rising by more than 7%1 annually in the past decade.5%2 annually from 1950 to 1980. intense competition among multiple operators. http://www. In FY10 (financial year ended 31 March 2010).5% and 14. The process of liberalization started in the mid-1980s and gathered momentum in the 1990s. accessed 19 October 2010. November 2008. “Redefining The Hindu Rate Of Growth.

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

Mobile telephony had a profound impact on the fishing community in the southern state of Kerala. Bihar could have witnessed 4% faster growth if it had enjoyed the same teledensity as Punjab. 5 Enabling the next wave of telecom growth in India . According to a study by the Indian Council for Research on International Economic Relations (ICRIER). World Bank. It is one of the main architects of the accelerated growth and progress of different segments of the economy.1.html. shared on a rotating basis. along with free access to information service. a government organization. response to emergencies and in the overall strengthening of the sociocultural ethos of the country. The advantages of the advent of telecommunications are manifold and explicitly verifiable from the phenomenal success of the sector. The MS Swaminathan Research Foundation (MSSRF). Importance of telecom Telecommunication is pivotal to a country’s socioeconomic growth. According to a World Bank study. There is a substantial relationship between increase in teledensity and the economic development of a region. It has helped to reduce the time spent by agents and owners waiting for boats. Increasing connectivity is highly instrumental in improving governance. business communication.” LiveMint. says study.com/2009/01/19224316/ Highteledensity-states-grew-f. By virtue of being a carrier and disseminator of information. has partnered with a leading telecom equipment and service provider to provide “Fisher friend. states with a higher teledensity have grown faster than those with lower teledensity. Samar Srivastava. page 17. 1. “High-teledensity states grew faster. for instance.1 Economic growth Indian telecom has emerged as one of the greatest economic success stories. Narrowing access gaps and removing barriers to information dissemination are prerequisites for promoting equitable and sustainable development as well as political and social cohesion. In other words. States with 10%6 higher teledensity have grown 1. September 2010. Mobiles have helped to co–ordinate demand and supply. and have helped those who catch the fish communicate with merchants and transporters in an efficient and effective manner. reduced business risk and made those involved with fishing feel much safer at sea. creates efficient information flows.2% faster. mobile telephony has made the rural and underdeveloped markets much more efficient. a 10%5 increase in teledensity is known to boost GDP growth by 0. accessed 10 October 2010. lowers transaction costs and is an effective substitute for infeasible physical transport.livemint. a 1% increase in mobile subscribers is estimated to increase per capita GDP by about US$200. 19 January 2009. The usage of mobile phones has enabled fishermen to respond quickly to market demand and prevent wastage.” through which fishermen are provided free mobile handsets.2.2. The well-distributed network of telecommunication services results in widening markets. 5 6 Unfinished Business: Mobilizing new efforts to achieve the 2015 millennium development goals.http://www. registering a consistent overall growth rate of more than 35% over the past decade in terms of subscribers. security.6% points.

the quality of life in rural area improves. Nielsen. processing of insurance claims. • • • 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. Participation in the initiative is an act of corporate social responsibility.2. The current synergy between health reform initiatives and advantages in technologies has resulted in the proliferation of e-medicine projects. The provision of telecom services in rural areas and the obscure hinterland has made previously abandoned areas highly accessible. Further. customer support centers. RuralShores is an initiative that aims to reverse the trend. However. Communication facilities in rural areas are critical for the development of rural India. employment and a strong socio-cultural ethos Open rural areas to foreign investment. This represents an innovative approach in providing quality health care whenever and wherever needed. Enabling the next wave of telecom growth in India 6 . Moreover. the spread of telecom and information services to rural areas is enabling the setup of rural business process outsourcing (BPO). With more untapped territories being connected through telecom. creating an atmosphere of economic diversification. 1. and establishing the mobile testing of diseases.1. systems engineering and systems design and integration are popular examples. including improved education.2. a committed workforce and business continuity. call center operations. guaranteed service levels. the lack of employment opportunities in rural India has forced people belonging to villages to move to the cities. low employee attrition and the potential for scalability. leading to the inclusion of rural India in the global economic milieu and reducing the rural-urban divide.4 Rural development According to FICCI and Nielsen study. it ensures complete information protection. telecom is also a major creator of jobs. page 13. August 2010. thus reducing the pressure of urban migration 1.3 Social development Connectivity fosters social development.Rural Divide. the hitherto dormant economic potential is being increasingly tapped. human resource services. It aims to introduce rural youth to BPO and to provide employment in their village. RuralShores: bringing jobs to rural India Over the years. resulting in the organized aggregation of supply and demand Providing enhancement of microfinancing. It helps combat epidemics such as HIV/AIDS and malaria by supplying information on treatment and control. software development. As a result. 64% of consumption expenditure and 33% of national savings. In return. 56% of the country’s income. improving access to and connectivity with health centers. health and increased citizen participation in civil society.2 Job creation Besides being one of the largest revenue generators. technology transfer and entrepreneurship Facilitating national and regional integration. revenue accounting. Operations such as data entry.2. corporations benefit through cost-effectiveness due to the lower costs associated with a rural ecosystem. The telecom sector has led to the growth of a range of communication technology-enabled activities and services. Telecommunication helps provide access to health care and allied services. providing the following advantages: • • • 7 Challenges Before An Integrated India: Bridging The Urban . Indian villages account for 70%7 of the country’s total population. generating awareness.

Delivering literacy and education to women wherever they live or work: this opens up new avenues and allows for flexible learning times. as well as basic citizen services such as license renewals. Simplifying the application and approval procedures process for SME requests would encourage business development. Government to business (G2B): this entails services between government and the business community. Achieving gender equality and empowering women is crucial because of its cross-cutting influence. G2G services are transactions between governments. Indian ministries and government departments are working to computerize their operations to make them simpler and increasingly accessible for Indian citizens. including the “Millennium Development Goals. On a global footing.2. high illiteracy and negative social norms.7 Gender equality The advent of communications technology has helped overcome institutional and social barriers of mobility. It is facilitating women’s participation in the political and economic processes of the country. health care.2. Between FY00 and FY10. conduct of public examination and customs clearance. quality and the cost-effectiveness of public services has been made possible by the telecom revolution. 1.8 accounting for more than 8% of approved FDI. and between the departments and their agencies and bureaus. Since the advent of IT and communication technology. 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. Government to employee (G2E): this includes G2C services as well as specialized services that cover only government employees.” 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. ordering of birth/death/marriage certificates and filing of income taxes.2. accessed 10 October 2010. 1. memos.” Department of Industrial Policy & Promotion. specifically the development of small and medium enterprises (SMEs). obtaining permits and the payment of taxes. registering businesses.1. 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.nic. G2G services are transactions between the central/national and local governments.5 E-governance E-governance that helps exploit the power of information and communication technology to transform accessibility. processing of passport application. rules and regulations. Significant progress has been made in the computerization of railway bookings. It is an irreplaceable component for achieving most developmental goals. Most relevant information about these entities is now available on their websites. 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. Business services offered include obtaining current business information. allocation of the Permanent Account Number (PAN) to income tax payers.6 Strengthening investments Attractive trade and investment policies have transformed the Indian telecom sector into one of the most investorfriendly markets. • Government to citizen (G2C): this comprises information dissemination to the public. among others. including the dissemination of policies.in/. The services offered through G2B transactions also assist in business development. downloading application forms. making it easily accessible and increasing transparency. and creating new economic opportunities for women through digital empowerment.1 billion (US$8. as well as citizen assistance for basic services such as education. hospital information and libraries. renewing licenses.9 billion). the inflow of FDI into India’s telecom sector was approximately INR407. http://dipp. 7 Enabling the next wave of telecom growth in India . and can be used as an instrument of international relations and diplomacy.

the introduction of electronic muster rolls.and the Indira Gandhi National Open University. organizations such as Telecom Centers of Excellence (TCOE). this data could be transmitted to MNREGA. the Center of Excellence in Wireless Technology (CEWIT) and the Broadband Wireless Consortium of India (BWCI) have been established. According to Cybermedia India Online Limited. the generation of intellectual property right (IPR). The challenges surrounding these programs include job cards for those demanding work. Efforts are constantly being made to devise more affordable technology for the masses. 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.ciol. the elimination of ghost workers. focus on global telecom standardization activities and the promotion of entrepreneurship.” CyberMedia India Online Ltd.2. leading class services and a global presence. trade stocks and purchase financial products such as insurance. Furthermore. 1. wage payments and the authorization of wages electronically.. as these become a tool for commerce. there is a significant focus on technology with the potential to improve rural connectivity. strengthening health networks. which aim to provide inclusive growth.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). the telecom industry and the Government for the creation of new services and applications. thus overcoming cultural and language barriers. NTP 1999. the introduction of GPS-enabled biometric systems at the grass-roots level continues to remain a challenge. 14 April 2010. taking relevant education that is well aligned to the needs of the communities to their doorstep.8 m–commerce This is the next revolution that is expected to emerge through the use of mobile phones. accessed 12 October 2010. m-commerce finds its applications across various end markets such as banking and financial institutions. 1. Mobile phones provide consumers an opportunity to transact anytime and anywhere. making sure the worker is paid for the day. paying bills for utilities such as power and gas. Enabling the next wave of telecom growth in India 8 . http://www. This is one of the most befitting instances of the telecom and internet revolution. the development of manufacturing capability. For instance. monitoring health trends and provisioning primary health care.com/News/News/News-Reports/Nokia-to-rollout-mobile-banking-in-India/134910/0/.3 billion by 2013.9 Facilitating research and development The growth in high-speed communication and advances in internet technology are making India a major R&D hub. transfer funds. Once a worker has logged in.9 1. In pursuance of the NTP 1999’s objective toward R&D. • Helping lower child mortality and improve maternal health: this is done by providing information on nutrition. These organizations have helped to create synergy among academia. the TCOEs have focused on the technological and management challenges that Indian operators face in reaching all sections of society while offering affordable solutions. (R&D). places great emphasis on research and development 9 “Nokia to rollout mobile banking in India.2. The integration of such programs with mobile telephony is expected to benefit such programs of national importance. Mobile banking enables customers of banks and other financial institutions to access their account information. For instance. In India.2. formulated by the GoI. 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. the value of mobile payment transactions in India is expected to reach approximately US$1. booking tickets for transportation services such as trains and taxis and online shopping.

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

and calling party pays (CPP) • 2004: Broadband policy. two wholly government-owned companies — Videsh Sanchar Nigam Limited (VSNL). in 1986. 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. and were under government control. 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. universal licensing regime. growth in the initial years was very slow due to high mobile handset prices as well as the high tariff structure of service providers. The formulation of NTP 1994 was followed by the launch of mobile telephony in India in 1995.2. telephone services were introduced. Karachi and Ahmedabad. the sector underwent its first wave of change. Telephone and Telegraph (PTT). the Telecommunications Dispute Settlement and Appellate Tribunal (TDSAT) was established to take over the adjudicatory and disputes functions from TRAI. Chennai.1. and Mahanagar Telephone Nigam Limited (MTNL) were formed. In the early 1980s. Mumbai. with exchanges being opened in Kolkata. The introduction of NTP 1999 heralded pro-consumer policies. respectively. DoT was established in 1985 to provide domestic and long-distance services in India. and the NTP was announced in 1994. and the TRAI was established in 1997. all foreign telecommunication companies in India were nationalized to constitute the Posts. 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 . VSNL and MTNL aimed at providing services to international and metropolitan areas. which is now known as Tata Communications. In 1881. Interconnect Usage Charges (IUC). 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). Following independence. The liberalization of the sector resulted in the need for a regulator. Further. NTP 1999 enabled the telecom sector to reach an average subscriber growth rate of more than 35%. The introduction of the New Industrial Policy 1991 initiated the liberalization process in India. 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. In January 2000. Telecom equipment manufacturing was also de–licensed in 1991. However.

new UASL guidelines were issued. The fund was introduced to provide access to telegraph services to people in rural and remote areas at affordable prices. raising INR385. the DoT issued guidelines for the intra-circle merger of cellular mobile telephone service (CMTS)/UAS licenses. the calling party pays (CPP) regime was introduced. e–commerce. The GoI also introduced the Broadband Policy 2004.2 billion for the B circles. In July 2010. as these constitute an essential and possibly the most expensive component in the entire telecom service delivery infrastructure. telecom towers were accorded “Infrastructure Status” by the Reserve Bank of India (RBI). entertainment. through which all local incoming calls were made free. December 2006. BSNL. ADC was the fee paid by private mobile operators to the state-owned BSNL. and INR300 million for the rural C circles.3GHz range in each of the country’s 22 circles. the GoI raised in excess of INR1 trillion from the auction of 3G and BWA services. Following the auction of 3G mobile services. which mainly used the proceeds of ADC to develop rural telephony services. January 2004. in February 2004. In 2004. The bidding process continued for a period of 16 days. During the same year. Allocation of spectrum and grant of wireless license was subject to availability and. the Government concluded the auction of BWA services across India. which covered the levy paid by mobile operators to the state–run operator. among others. The bidding process continued for 34 days. The seven winners were required to pay INR509. In November 2005. Further.6 billion). In May 2003. INR1. in case UASL was not allocated spectrum due to non-availability. the amount payable by BSNL and MTNL for 3G services pushed the total auction revenue to INR677. The Broadband Policy 2004 specified targets in terms of subscribers. the licensee was required to endeavor to rollout services using wireline technology. In February 2008. The GoI commenced the auction for 2x5MHz in the 2100MHz band for 3G services in April 2010. The GoI offered two 20MHz blocks in the 2.In 2002. education and medicine. The auction aimed at allotting three to four 3G licenses for each of the 22 regional circles.4 billion (US$8. The reserve price for 3G services was categorized on the basis of circles — INR3. Additionally. FDI limit in the telecom sector was increased from 49% to 74%. 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. Operators were allowed to share infrastructure in their tower installations. the TRAI abolished the access deficit charge (ADC). The GoI subsequently issued licenses in November 2003. using any technology.2 billion) in auction revenues. which witnessed fierce bidding for spectrum. Thus.7 billion to the GoI. which permitted an access service provider to offer both fixed and/or mobile services under the same license.2 billion (US$14. In March 2008. March 2007 and January 2008. which recognized the ubiquitous potential of broadband services and their contribution toward the GDP growth and improved quality of life through e–governance. reaching the final stage in May 2010. providing statutory status to the USOF in December 2003. the Universal Service Support Policy came into effect. the DoT approved the sharing of infrastructure among mobile operators. mobile services had outpaced fixed-line services with nearly 45 million mobile subscribers. 11 Enabling the next wave of telecom growth in India .2 billion for the more populated A and Metro circles. the GoI introduced the Unified Access Service (UAS) licensing regime.

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

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

gov. urban subscribers account for more than 65% of the overall subscriber base.5 FY04 9. Such phenomenal growth can be attributed primarily to the country’s large population.in/Default. However. leading toward a huge urban–rural digital divide.1% to reach 621. 11 Shauvik Ghosh. September 2010 100%= 723. In the past decade.3% Urban 67. December 2009. The total subscriber base (including wireline and wireless) reached 723.pdf.”TRAI website.3 million10 in September 2010.0 FY02 5.com/ pdf/ppp_position_paper_telecom_122k9. Enabling the next wave of telecom growth in India 14 .3% 45.7% Source: TRAI 10 “TRAI Press Release No.trai.2% 12. affordable handsets. hypercompetition in the sector. http://pppinindia.12 whereas wireline subscribers account for 4. 13 “Position paper on the Telecom sector in India.3 621.6% 36.7% 37.9% 28. page 4.0% 52. Overview of the Indian telecom industry India is the world’s second-largest telecom market.5 429.” Department of Economic Affairs – Ministry of Finance.asp.” LiveMint. 12 Ernst & Young analysis. high economic growth.13 in comparison with US$200–US$350 per subscriber for wireline. “Telcos to recoup 3G bid money in 5-6 years: Analysys Mason. wireless subscribers constitute the majority of the total subscriber base.0% 76.3. 63 /2010.3 million Teledensity (%) 50% Rural 32.3 40% 30% 20% 10% 18. http://www.html. infrastructure sharing and the introduction of positive and enabling regulatory reforms.0% 26.2. accessed 10 December 2010. accessed 12 October 2010. reduced tariffs. http://www.7 FY08 FY09 FY10 Sep-10 0% Total subscribers Source: TRAI Teledensity According to TRAI. Subscriber base and teledensity (wireless and wireline) 800 Total subscribers (million) 700 600 500 400 300 200 100 0 2. accessed 10 October 2010.0% 98.6 FY03 7. accounting for 95. com/2010/05/30230743/Telcos-to-recoup-3G-bid-money.3 FY06 70% 60% 723.9 FY07 3. the total subscriber base grew from FY00 through FY10 at a compound annual growth rate (CAGR) of 36. The capital cost to provide mobile service varies in the range of US$50–US$90 per subscriber. 30 May 2010. Urban and rural subscriber base.1% 54. Lower costs and the additional benefit of mobility that is associated with wireless subscribers have led to the stagnation of the wireline subscriber base.1%.livemint. As of September 2010.2% 205.3% FY01 4.9% 140.5 FY00 61. with the mobile segment leading this growth. the total teledensity has risen above 50%.9%.4 FY05 300. The wireless segment has been registering monthly mobile additions of about 15 to 2011 million subscribers.3 million subscribers. The telecom revolution in the country has impacted both the urban and rural population.

in/Default.6 0.5%14 to reach 584.com/presentation/Mobile_VAS.1% of the total wireless subscriber base. page 2.2% 3.pdf. http://www.6% 1. Mobile services were commercially launched in India in 1995.2% 6. July 2010. the gap between GSM and CDMA has widened as the GSM subscriber base has grown more rapidly.3 million15 subscribers in Wireless subscribers in India 800 700 Wireless subscribers (millions) 600 500 400 300 200 100 0 1.8 165. 84.05–0.March 2010).7 584.” Zinnov Research and Consulting.8 33.6% 58.2. 16 “Penetration of Mobile Telephony in India & Value added services in Indian Mobile Telephony market.9% GSM GSM subscribers constitute about 84.4.7 million CDMA 15.8% 391. and this growth is primarily attributed to the growth in wireless services.trai.0% 70% 60% 50% Teledensity (%) 40% 30% 20% 10% 0% FY10.zinnov. Over an extended period. VAS. October 2006. September 2010 100% = 687. primarily due to the advent of new services such as 3G.0% 98.3 49.0 33.2 14.” TRAI website.7% 687.1% Source: TRAI 14 Ernst & Young analysis. accessed 10 October 2010.4% 3.7 4.1 22.gov. In the initial years of mobile telephony.1 261.6% 9. Wireless India has emerged as one of the world’s fastest-growing telecom markets. The advent of NTP 1999 paved the way for aggressive growth in the wireless subscriber base. The road ahead for the Indian telecom sector is expected to be more eventful. mobile number portability (MNP) and the growth of manufacturing. the growth in the number of subscribers was very low.1 million16 subscribers.8% 52. India’s mobile market is the second largest in terms of subscribers in the world after China. 15 Enabling the next wave of telecom growth in India . http://www.5 13. The wireless subscriber base in India grew from FY00 through FY10 at a compound annual growth rate (CAGR) of 77. CDMA.asp. FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 Sep-10 Wireless subscribers Teledensity Source: TRAI Wireless subscribers: GSM vs. 15 “TRAI: The Indian Telecom Services Performance Indicators (January .9 0. with average monthly subscriber additions in the range of 0. accessed 15 October 2010.

the wireline market accounted for 93. Enabling the next wave of telecom growth in India 16 .4% 5.7 17.1% 22.6% 40.0 37.2.6 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. accounting for 73.gov.6 million village public telephones (VPTs) in India. Apart from these two players. January 2010.1% Source: TRAI. July 2010. besides other new technologies.” TRAI website.September 2010). http://www.7% -2.9% 94.5 million19 public call offices (PCOs) and 0. 18 “TRAI: The Indian Telecom Services Performance Indicators (January .gov.7 18.7% 38.” TRAI website. In the future.3% 41. where they see higher revenue growth and continue to invest extensively.4 38.0 25% 20% 35. 19 “TRAI: The Indian Telecom Services Performance Indicators (July .4 41. Wireline The Indian wireline market grew at a CAGR of 3. the wireline subscriber base has declined due to lower mobile tariffs.3% -3. improved mobile coverage.5 40. Over the years. the major wireline operators in India also operate mobile networks.0% 26.3 7. 17 Ernst & Young analysis. there were 3.in/Default. in FY10. http://www. DoT In FY00.9%. driven by the immense potential for data growth. the wireline subscriber base was 37 million.5.9% 3. there is a significant opportunity for future growth.6% FY00 Wireless FY10 Wireline 93. it accounted for 5.9% 32. Although wireline infrastructure in India is not as extensive as wireless infrastructure.in/Default.3% 0.trai.9% -3.4% of the subscribers.18 with a teledensity of 3.1% of the subscribers in FY10. additional private players have also ventured into the fixed-line market. the urban market has dominated the wireline subscriber base.asp.3% -1. Furthermore. the emergence of new technologies such as fiber to the home is expected to drive the growth of the wireline market in India.1 41.asp.trai. the advantage of mobility among wireless networks and inadequate infrastructure of the wireline network. Although fixed-line operators are trying to offer VAS such as high-speed internet access.3%17 during the period between FY00 and FY10. cheaper handsets. accessed 10 October 2010. In the recent past. 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. The wireline market is dominated by the governmentcontrolled incumbent players. accessed 15 January 2011. In FY10.8 39. As of September 2010.March 2010).1%. video on demand and videoconferencing. wireline service continues to face stiff competition from wireless services.

2. Broadband infrastructure plays a vital role in a country’s achievement across domains such as social progress and economic development.4 2.9%20 and 117. it is estimated that a 10%21 increase in broadband penetration translates to a 1. accessed 25 October 2010. org/2010/10/09/international-insights-%E2%80%93-september/.” International Telecommunications Users Group website. terrestrial wireless and future technologies.5 10. The opportunities hold a much larger promise for India’s large low-income population and a growing economy. the evolution of technology and increase in bandwidth has given rise to internet connections at speeds faster than traditional dial–up connections.9 1. which envisions the creation of a framework through various access technologies such as optical fiber. Booz & Company. satellite media. employment and the delivery of services. entrepreneurship and services. Broadband brings a number of benefits.9 16. a 10%22 increase in broadband penetration leads to a 1. such as opportunities for education.6.9 11. 21 Bringing Mass Broadband to India: Roles for Government and Industry. From FY05 through FY10. access to personal computers and electricity. FY06 FY07 Internet subscribers FY08 FY09 Broadband subscribers FY10 Sep 10 Source: TRAI 20 Ernst &Young analysis.3% increase in GDP. Also.8 million.5% increase in labor productivity in a country. September 2010. 17 Enabling the next wave of telecom growth in India . respectively in FY10. governance.3 6.6 5 0 0.3 13. knowledge sharing. This falls short of a Broadband Policy’s goals of 40 million internet subscribers and 20 million broadband subscribers by the end of 2010. governance. whereas traditional internet connections have a speed of less than 256 kbps.2 million and 8. Although the internet is a function of various factors such as literacy.2 broadband subscribers has increased at a CAGR of 23. it has made significant inroads in the urban market.1 8.3 3. Further. http://intug. June 2010. The DoT formulated the Broadband Policy 2004. According to Booz & Company.2 FY05 9. digital subscriber lines (DSL) on copper loop.5% to reach 16. 22 “Broadband Commission Presents Report to United Nations. The minimum threshold speed for a broadband connection is 256 kilobits per second (kbps) or more.8 6.3 17. cable television networks. Internet and broadband The internet has revolutionized the lifestyle of many Indians by creating a new means of communication. the number of internet and Internet and broadband subscribers (million) 20 15 10 5.

primarily in business districts or high–end residential areas of the larger cities.3% 0.5% of the market share in internet access.5% 31. especially in the case of broadband services.6% Source: TRAI Source: TRAI Digital subscriber line (DSL) is the preferred technology among service providers for both internet access and broadband services. September 2010 1. The key factors responsible for the widespread adoption of broadband include affordability and availability. As of September 2010. DSL constituted 50. and 86.5% 6.5% DSL Cable modem Ethernet Wireless Others 86.8% 4. The share of wireless technology continues to be negligible and remains to be fully exploited.0% Market share by subscribers of technologies in broadband. Currently.6% 0. Broadband penetration continues to be very low in India.9% of the market share in broadband access. .0% 10.5% DSL Dial-up Wireless Cable modem Ethernet Others 50. despite a structured framework that included ambitious goals to be met in 2010.6% 4. September 2010 3.Market share by subscribers of technologies in internet access. broadband users are concentrated in urban areas.

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. Most large global players have set up operations in India to cater to the connectivity needs of their customers. 19 Enabling the next wave of telecom growth in India .262 FY10 1.556 FY09 930 480 70 110 65 210 250 130 30 56 1. multiprotocol label switching (MPLS) based IP-VPN services. the financial services sector and the government. Voice over Internet Protocol (VoIP) is considered a key enterprise application for lowering operating costs.900 31 4.200 510 130 150 80 350 600 180 52 72 2.800 45 6. 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.064 495 92 125 75 260 370 150 45 61 2. and national and international data connectivity. The growing demand for connectivity is coming primarily from the IT and IT-enabled services sectors (ITeS).2.7.600 20 3. network management.027 FY11E 1. It has spurred the demand for IP-based virtual private network (IP-VPN) services in India. internet connectivity. A majority of global operators in this space are also offering VAS such as network security. network storage and enterprise voice solutions.251 39 5. With telecom and IT converging. network integration.169 23 Industry estimates. The other services relevant to this segment are international private leased circuits. managed services and network security services are provided by global operators in partnership with Indian IT companies.

http://voicendata. As of December 2009.” Voice & Data.ciol. the Indian market for NLD grew by 13.” Voice & Data.Department of Telecommunications. FY10.25 However. FY10.asp. In FY10.1 1.asp. 27 DoT Annual Report 2009–10. the market slowed in FY10.0% 40% 30% 20% 10% 0% 71.3 97. accessed 18 October 2010. India’s ILD services were opened up for private players.0 144.Department of Telecommunications. without any restriction on the number of operators.NTP 1999 opened up the NLD service for private operators.3 0.3% 176.com/content/vnd100_2010vol-II/110070520. 26 “India among the Top Few Fastest Growing Telecom Markets.ciol.3% 35.3 13. with the sale of the strategic stake in VSNL to the Tata Group. Enabling the next wave of telecom growth in India 20 .3% 25. ILD has witnessed steady growth. http://voicendata.0% 115.0 17.com/content/vnd100_2010vol-II/110070519. the GoI had issued 24 ILD27 service licenses.6% in FY 2009-10.2% 150. As of December 2009. primarily due to a decline in ARPU across all operators. Market size of ILD 200 Market size (INR billion) 150 100 50 0 115. 25 “India’s NLD market has grown by 13.7% FY08 FY09 FY10 Growth (%) Growth (%) Market size (INR billion) 48.0% 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 2009–10.7% to reach total revenues of INR164 billion. with the annual license fee being reduced to 6% of the AGR. with its revenues reaching INR176 billion26 in FY10. the GoI had issued 29 NLD24 service licenses.0 30. accessed 18 October 2010.9 FY07 Market size (INR billion) Source: Voice and Data Growth (%) In 2002. Market size of NLD 180 160 140 120 100 80 60 40 20 0 60% 50% 164.

” CyberMedia India Online. with the exception of telecom towers and cables. with the remainder coming from global companies manufacturing in India. the demand for telecom equipment is expected to be worth US$70–100 billion28 in 2015. 02 September 2010.9 Source: International Trade Centre Share of imports by country of origin.5 0 FY04 FY05 FY06 Production 236.4% 3.4% China South Korea 59.4% 3. http://www. companies in the manufacturing segment are yet to feature in the global telecom landscape.3 2005 1. inadequate tax benefits and competition from low-cost Chinese equipment. accessed 12 October 2010.climatechallengeindia. Furthermore. 30 “Time to go local in telecom equipment purchase.30 and equipment worth INR190 billion was imported in 2009.2 2008 2009 8. an unreliable power supply.0 100 4.com/2010/04/01215017/Indian-telecomfirms-may-get-D. the manufacturing and exports of telecom equipment grew at a CAGR of 33. “Policy recommendations to increase domestic telecom growth and exports of telecom equipment and service. accessed 02 August 2010.3 518. http://www.ciol. wireless and landline infrastructure equipment.9 billion FY07 Note: Includes both indigenous and offshore production Source: DoT. Ministry of Communications and IT.0 412.” “Telecom Equipment & Services Export Promotion Council (TEPC).9% 4.8. only 40% of the requirement for equipment is met through local sourcing.6 19. the market for wireless infrastructure equipment is estimated to be US$8–10 billion.9 15. Manufacturers in India face challenges such as high logistics costs. 28 “Telecom equipment manufacturing in India needs help urgently. DSL and cable modems and networking devices. 21 Enabling the next wave of telecom growth in India . Despite the growth of a localized manufacturing environment in India.” LiveMint.5% 6. Telecom equipment manufacturing The telecom equipment industry comprises products such as cell phones.29 respectively.2.0 160. Telecom equipment manufacturing and exports Production (INR billion) 600 500 400 300 178.3 200 140. 2009 100%=US$8. India is a strong market for global telecom equipment vendors.” 19.1%. Source: International Trade Centre Although a few Indian mobile operators have a significant presence globally.3% 3. The majority of telecom segments are highly dependent on imports.html. GOI.7 1. 21 July 2010. accessed 10 October 2020. 29 Ernst & Young analysis.com/News/News/News-Reports/ Time-to-go-local-in-telecom-equipment-purchase/140758/0/.7 81.1% Sweden US Singapore Hong Kong Others According to industry estimates.0 120 100 80 60 40 20 FY08 FY09 Exports 0 Value of telecom equipment imports to India 10 Imports (US$ billion) 8 6 4 2 0 1.9% and 112.7 2006 2007 3.0 2.” India Climate Portal. including routers and switches.0 140 Exports (INR billion) 110.livemint.org/telecomequipment-manufacturing-in-india-needs-help-urgently-21-july-2010-t. http://www. From 2005-09. according to a leading telecom equipment manufacturer. chipsets. “Indian telecom firms may get DoT boost.

accessed 28 October 2010.2. CDMA. the rollout of infrastructure will become easier. core network and other transmission equipment. The wireless sector has charted an impressive growth trajectory. The National Telecom Critical Infrastructure Policy is expected to address these concerns as well as the issues affecting telecom providers on the state level.9. The policy should clearly define the role of the Central Government and the states to help catalyze telecom sector growth. “Growth of Telecom Sector. cables. Falling prices of telecom services will help to increase their affordability. ROW. power regulation equipment. The radius of each BTS varies from 500 meters to as much as 8-10 km. page 9. radio access network.4 to 2. while electronic infrastructure forms the remaining 40%. 3G or BWA. there were 425. The BTSs are installed in a contiguous manner. Ernst & Young analysis. 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. However. a mobile network in a circle consists of mobile switching centers (MSCs). Competition will give further impetus to the development of infrastructure. GBTs involve a capital expenditure in the range of INR2. the number of operators providing their services from a particular site influences the extent of civil infrastructure installed at the site. GBTs can accommodate up to six tenants. topography. page 6. Enabling the next wave of telecom growth in India 22 . The rollout of services by operators takes place only on the back of robust telecom infrastructure. March 2009.33 depending upon subscriber usage.1 Mobile network Typically. Typically. ICRA Rating Feature. on behalf of the licensee. The development of the telecom infrastructure depends on four key factors: rollout. page 5. Telecom infrastructure industry in India. each of which is connected to base station controllers (BSCs). Civil infrastructure includes components such as tower site.2 Towers and in-building solutions Telecom towers are broadly classified as ground-based and rooftop towers. It is not influenced by the type of the communication technology being used.nic. the civil infrastructure and backhaul. It connects the electronic infrastructure at the tower site with the BSC and MSC. Civil infrastructure includes the complementary elements of a cellular network that ensure that the electronic components are operational. availability. Infrastructure The Indian telecom success story is built around the wireless segment. growing at a CAGR of more than 75%31 in the past decade in terms of the number of subscribers. ICRA Rating Feature. feeders. December 2008. Finally. Rooftop towers (RTTs) are placed on the roofs of high-rise buildings. Infrastructure development plays a crucial role in the development of the wireless sector. As of March 2010. fire extinguisher. It can also create active infrastructure. depending on the height of the tower. hurdles to the erection of cellular towers and value added tax (VAT) levies on broadband services delivered through fiber media. radio antennas.” Lok Sabha.9. competition. Telecom towers and allied infrastructure. steel tower. Infrastructure Provider-I (IP-I) can provide assets such as dark fiber. so as to facilitate the handing over of signals from one BTS to another like a chain. civil infrastructure forms about 60% of the cost of setting up a network.34 Electronic infrastructure consists of the electronics needed to run a wireless network such as a BTS or cell site. March 2009. diesel generator set  and security cabin. 2. including ROW related issues. duct space and tower through simple registration without paying any license fee. air conditioner. shelter room. with each BSC being connected to a base transceiver station (BTS).in/. as the safety and aesthetic issues related to the setup of towers are addressed. However. price. Telecom infrastructure industry in India.9. Crisil Research. whether it is GSM.45532 telecom towers in the country. The components of mobile networks include the electronic infrastructure. node B. Backhaul consists of the intermediate links between the core of the network and the various sub-networks.8 million. frequency band of operation and spectrum 31 32 33 34 35 2. it does not play any role in carrying wireless signals. 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. and safety and aesthetic concerns. http://loksabha. and the demand for more services will translate into the development of more telecom infrastructure. battery backup.

these involve a capital expenditure of INR1. accessed 20 September 2010.392 45. the leading operators have opted to share their infrastructure.154 1.396 18. mass transit systems.008 4. In recent years. Coverage is required to meet the needs of both the general public.271 3. the growth of mobile communications has made the provision of radio coverage within airports.455 Source: “Growth of Telecom Sector.” Lok Sabha. where there is paucity of real-estate space.071 1. Daman and Diu Maharashtra and Goa Karnataka Madhya Pradesh and Chhattisgarh West Bengal. Andaman and Nicobar Assam and Arunachal Pradesh Delhi.321 20. which need reliable communications for efficient incident management and personal safety. telecom towers were accorded Infrastructure Status37 by the RBI.752 1.387 5. 23 Enabling the next wave of telecom growth in India .634 4.184 391.in/scripts/BS_ViewMasterCirculardetails.gov. The GoI provides certain benefits specifically to infrastructure companies.org. In-building solutions are designed to improve the reception of radio frequency signals indoors to meet the increasing demand for high-quality mobile services.644 17. RTTs can accommodate two to three tenants.028 2.Exposure norms. Typically. Over the past couple of years. and emergency services. shopping malls.in/Default.494 34.037 Private sector 23.995 25.920 23. Haryana and Chandigarh Uttar Pradesh and Uttarakhand Andhra Pradesh Punjab and Himachal Pradesh Jammu and Kashmir Tamil Nadu and Pondicherry Bihar and Jharkhand Nagaland.in/. telecom operators have hived off their telecom towers into separate entities.371 8.460. http://loksabha.322 26. accessed 28 October 2010.350 28.494 24.678 425.428 4.098 57.611 18.614 35.” Reserve Bank of India. there are an estimated 425. over the past few years.177 41.36 In July 2010.512 488 3. tenancy level for the industry stands at 1. there are three types of tower companies — pure-play tower companies. Meghalaya.323 38. Orissa. 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. http://www.608 2. However. 36 “TRAI: Consultaion paper on issues related to telecommunication infrastructure policy. operators used their tower infrastructure for competitive advantage. implying a subscriber-per-tower ratio of 1.854 3. This constitutes an essential and possibly the most expensive component in the entire telecom service delivery infrastructure.275 23.3 Telecom infrastructure in India Initially.766 21. 2. Sikkim. stadiums and office buildings an essential requirement.899 6.090 52.are shorter than GBTs and are common in urban and highly populated areas. operators with towers and operator-owned tower companies.708 8.242 17.392 22.577 2. asp. State-wise number of towers States Rajasthan Gujarat. which expects its mobile phones to work at all times. Today.102 26.207 34.5-2 million. http://www.trai. The tax benefit encourages the participation of private sector through investment. 37 “Master Circular .418 Towers 25.337 720 2.121 41.aspx. Currently.455 telecom towers in India.102 38. Mizoram and Tripura Kerala and Lakshadweep Total Public sector 2.55.” TRAI website January 2011. As a result.794 369 1.630 31.rbi.9. accessed 01 February 2011. Manipur.nic.

9. while the tower company earns revenues. It is estimated that tenancy levels will rise to between 2–2.9.38 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. 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. as the tenant paying a higher rent to the tower company accelerates the time-to-market process. the concept of infrastructure sharing assumes special importance.2. Enabling the next wave of telecom growth in India 24 .6 billion resulting from savings in infrastructure provisioning fee (IPF). Due to higher costs of land development. 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. superior network quality is a sustainable differentiating factor that helps to reduce customer churn and command premium prices. the industry has pumped in INR1 trillion and another INR400–500 billion is expected to be invested in the next two years.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). insurance costs. additional security. a higher proportion of ground-based towers. state electricity boards. With sharing.9. Against this background.0 2. Tower sharing could help operators maintain quality network coverage throughout the city. 10.4 Energy requirements Currently. it will allow a better use of spectrum. massive amounts of funds can be saved.5 liters. It is estimated that infrastructure sharing in its current form has helped achieve savings of INR557. more groundbased towers will be needed. Rollouts in rural and semi-urban areas: as wireless service providers penetrate rural and semi-urban areas.4 Savings (INR billion) 476. This translates to consumption of more than 2 billion liters of diesel per year for cell sites. A significant part of the network rollout is likely to come in the untapped rural areas. Such an arrangement works well for both partners. In its more complex forms. which is subsidized by GoI. 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. and infrastructure sharing will act as an important tool to achieve faster rollouts and save operating and capital expenditure in these areas. and newer operators can build an assetlight model. land owners and so on before the tower and electronic infrastructure can be completed.2 81. Average diesel consumption per site per hour is about 2. and has a pre-tax margin of 7%–8%. 39 Industry estimates. further increasing capex requirements. significant investments will be required. such as land and energy.5x in the course of this decade. energy. Overall. 38 Industry estimates. Spectrum constraints and network quality: for operators in urban areas.5 Future growth potential. 27 million units of electricity are consumed per day. service providers have strong incentives to share infrastructure. Capital expenditure (capex) and operating expenditure (opex) savings: the setting up of a countrywide cellular network requires substantial capex. Since many rural areas are far-flung. On average. capital and interest costs. unclear land ownership and expensive backhaul connectivity costs in the rural areas.6 557. The dependence on diesel could be reduced if the Government utilized that subsidy to support a move toward renewable energy options such as solar. 2. where mobile teledensity is barely in the double digits. translating to 6 million liters of diesel per day.6 Goals of infrastructure sharing The key beneficiary of infrastructure sharing is the subscriber. power shortages. investments required and emerging trends The industry faces low profitability.

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

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

the mobile VAS in India was estimated to be worth INR145. IAMAI. application-to-person (A2P) SMS. person-to-application (P2A) SMS. short-code providers. Value-added services (VAS) According to the Internet and Mobile Association of India (IAMAI). The rollout of 3G services in the near future is expected to provide consumers with new and improved services such as highspeed data transfer. mobile payments and money transfer.asp.” TRAI website. IAMAI. which provides services such as mobile banking. the decline in ARPU has compelled mobile operators to focus on mobile VAS to generate additional revenues.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. July 2010 Source: Mobile VAS in India: 2010. The rollout of 3G services is expected to drive the mobile VAS market in the future. IAMAI. Market size of VAS 160 Market size (INR billion) 140 120 Growth (%) 100 80 60 40 20 0 28.10. July 2010. media companies. followed by music. is also expected to drive the market for mobile VAS. Mobile VAS in India: 2010.6 75.in/Default. 63 /2010. Moreover. IAMAI. handset manufacturers and content converters. The key participants in the mobile VAS market include content owners. out of the total amount paid by end users (excluding P2P SMS). technology enablers. followed by technology enablers (10%–20%) and content aggregators (10%–15%). Entertainment mobile VAS constitutes 57% of the overall revenues followed by information mobile VAS (39%) and m-commerce (4%). July 2010 41 42 43 44 Mobile VAS in India: 2010.2. http://www. monotones. content aggregators or developers. IAMAI. creating opportunities for both telecom operators and companies engaged in VAS. polytones and truetones as well as caller ring-back tones (CRBT). In terms of revenue distribution among various market participants. July 2010. The growth of m–commerce.0 billion41 in 2010.5 45.gov. The demand for mobile VAS is mostly driven by the youth. 27 Enabling the next wave of telecom growth in India .0 145. accessed 10 October 2010. “TRAI Press Release No. Mobile VAS in India: 2010.42 The key mobile VAS include person-to-person (P2P) SMS.trai. as well as aggressive marketing efforts by telecom operators to spread awareness about their services such as updates and alerts. with India being one of the leading mobile markets for the young. approximately 60%–80%43 is captured by mobile operators. July 2010. The demand for mobile VAS is driven by the increase in the mobile subscriber base.1 93. Content owners end up getting approximately 5%–10% of the overall revenues. which has exceeded the 700 million44 mark. The mobile VAS revenues in the country are driven by the P2P SMS service. growing at a CAGR of more than 50% during 2006–10. games and services such as m–commerce and m–radio.

134.11. DoT. with a significant number of multiple and inactive Subscriber Identity Module (SIM) owners.5 1.1%. the country’s wireless teledensity is expected reach 97.600 1. http://www.in/Default.2. Future subscriber growth is likely to hinge upon rural and low-income users.1 1.2% 109.185.asp.1 525. Outlook 2.7% 63.2 million45 mobile subscribers.8 80% 1. 46 Ernst & Young analysis. accessed 10 October 2010.11. including a host of rich multimedia services such as video calling.9% 8.9% 95.9% 10. location based services and remote access/ VPN applications. respectively. Although the telecom sector is witnessing strong customer additions every month. 3G subscribers are expected to reach 142 million by 2015.217. accessed 16 October 2010. leading to falling profit margins of mobile operators. video on demand.” TRAI website. 47 Ovum: Mobile regional and country forecast pack: 2010–15.1 million47 subscribers in 2015.com/. Wireless subscribers in India Wireless subscribers (million) 1. The presence of as many as 14 mobile operators in certain parts of the country and rising financial pressures are expected to drive consolidation in the sector.9% 120% 100% Enabling the next wave of telecom growth in India 28 .2% 44.11. July 2010. 3G services will drive the expansion of wireless services in future.1 Wireless At the end of December 2010.7% 752.46 to reach 1.2% and 110% in 2015 and 2020. Ernst & Young analysis 45 “TRAI: The Indian Telecom Services Performance Indicators (January .2 923.0 2011F 2012F 2013F 2014F 2015F 2020F 3G subscribers 3G subscribers as a % of wireless subscribers Source: Ovum.gov.0 118.7% 25% 20% 15% 303. accounting for 12% of the total wireless subscriber base.200 1.516.049.March 2010).1% 92.3 1.0 5% 0% 20. Further.0% 11. 3G subscribers forecast 350 300 250 200 150 100 50 0 3. the ARPU continues to shrink.000 800 600 400 200 0 77. during the period 2010–15.ovumkc.400 1. Teledensity (%) 87. Ovum website. accounting for 20% of the total wireless subscriber base. http://www. 3G subscribers are expected to be more than 300 million by 2020.trai. there were 752. According to Ovum.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% 101. Ernst & Young analysis Teledensity 2.8 60% 40% 20% 0% 1.4 10% 142. Further.0 72.8% 35.217.0 6.1 2009 2010 2011F 2012F 2013F 2014F 2015F 2020F Wireless subscribers Source: TRAI. Ovum.9% 97. the number of wireless subscribers in India is expected to increase at a CAGR of 10.

3 2. accessed 10 October 2010. Broadband subscribers forecastc Year 2010 2012 2014 2020 Number of households 236 241 250 275 % of households to be covered for broadband 5% 20% 40% 55% Number of broadband connections (million) 11.” TRAI website.1 34. 49 Ernst & Young analysis.in/Default.3 Wireline There were 35. http://www.3 million in 2020.gov. Further. The growth of broadband is expected to increase with uptake of 3G and BWA services. According to Ovum. http://www.ovumkc. Ernst & Young analysis 48 “TRAI: The Indian Telecom Services Performance Indicators (January . Considering increasing broadband demand.3 million broadband subscribers in India. during the period 2010–15.1 30.March 2010).” TRAI website.9 33. the wireline subscribers are forecasted to reach 26.1 35. 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.11.2. July 2010. 29 Enabling the next wave of telecom growth in India .5 32. June 2010.11.trai.trai.5 29. there were 10. The wireline market is in decline. the number of wireline subscribers in India is expected to decrease at a CAGR of nearly 4%. DoT.in/Default. a trend that is expected to continue. the broadband connections are estimated to reach 150 million by 2020. The growth in the mobile market is seen as the cause of the decline. 50 Ovum: Fixed voice connections forecast pack: 2008–15. Ovum website.asp.1 26. accessed 16 October 2010. Ovum.asp.1 million48 wireline subscribers at the end of December 2010.com/. http://www.4 Broadband As of September 2010.49 to reach 29.1 million50 by 2015.5 48 100 150 Source: “TRAI: Consultation Paper on National Broadband Plan. page 16. Ernst & Young analysis 37.gov. accessed 10 October 2010.

52 Ovum: Forecast of service provider revenue and capex. NLD and VAS are also expected to drive revenue growth.0 57.1 48. the contribution of non-voice services towards the industry revenues is expected to reach 38% by 2020.8 43. Revenue and capex forecast Revenue and capex (US$ billion) 70 60 50 40 30 20 10 0 32. Ovum website.0452 billion and US$14. Further. industry revenues and capital expenditure are expected to increase at CAGR of 8.2 15. and the adoption of VAS. According to Ovum.0 34.5 7.1%51and 7.7 11.3 38. to reach US$51.8 51. industry revenues and capex are expected to increase to US$57.0 10. lower tariffs. Enabling the next wave of telecom growth in India 30 . including BWA penetration.11. the increase in mobile penetration in both urban and rural areas. Ernst & Young analysis 51 Ernst & Young analysis.9 2009 2010F 2011F Revenues 2012F 2013F 2014F Capex 2015F 2020F Source: Ovum.9 billion.com/. Ernst & Young analysis Over the years.8 45. http://www. respectively by 2020. with the introduction of 3G and BWA services.ovumkc.5 Revenue and capex Over the years.4 14. respectively. The future revenue growth and increase in capex is expected to be driven by the rollout of 3G services and the increase in broadband penetration across the country. Other services such as ILD. during the period 2009–15.9 15.1 13. 2009-2014. The growth in revenues is driven by cheaper mobile handsets.0%. the Indian telecom sector has witnessed an increase in revenues and contribution toward GDP.0 13.97 billion by 2015. Revenue break-up: voice and non-voice 10% 17% 22% 27% 32% 38% 90% 83% 78% 73% 68% 62% 2011F 2012F 2013F Voice 2014F 2015F Non-voice 2020F Source: Pyramid Research.2. accessed 16 October 2010.2 billion and US$ 13.

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

The key objectives of the policy include telecommunication for all and within the reach of all. the emergence of India as a major manufacturing base and a major exporter of telecom equipment. and protection of the country’s security interests.The NTP 1999 aims at making India competitive in the global telecom market through growth in exports. for all cities with a population greater than 200. using technologies including international services digital network (ISDN). global standards in the quality of service.4% to 4% by 2010. achieving universal service across all villages. 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. 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. FDI and domestic investment. 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.000 by 2002 • • • • Enabling the next wave of telecom growth in India 32 .

up from 1.g. 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. providers. 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. technology..3 million) and in teledensity (61. 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. R&D and customer care.0%) • Contribution of telecom to overall GDP of almost 3%. e. content creators. especially reliability. especially telecom specialists • Fixed mobile convergence (FMC) 33 Enabling the next wave of telecom growth in India .5% in 2000 • Creation of jobs across sales and marketing. among others • Among the lowest tariffs in the world.NTP 1999 has been a catalyst for the telecom sector: • Growth in the subscriber base (723. mobile value-added services (MVAS) encompass mobile operators.

The improvement in rural teledensity Urban and rural teledensity 140% 120% 100% Teledensity (%) 80% 60% 40% 20% 0% 8. page 76.3.2% 5.2% FY08 14.1 Teledensity Reforms in the telecom sector have been encouraged by the active participation of the public and private sector.” Indian Institute of Kanpur website.2% 1.3%55 and 28. There is a significant opportunity for service providers to increase penetration in rural areas and generate revenues. R. with rural teledensity being far ahead of the NTP 1999 target.trai.in/Default.8% 5. accessed 10 December 2010.ac.gov. Following independence.3% 26.2% FY02 FY03 20. http://www.3% 3.54 Urban teledensity and rural teledensity at the end of September 2010 were 137.in/Default. respectively.4% 2. by 1998.3% poses a critical challenge due to low population density.9% 47.9% 4.9% 0.0%.asp.8% FY05 12.3% 4.1% 1. “The Digital Provide: Information (Technology).” The Quarterly Journal of Economics. 56 Jensen.0% 119.4% 65. geographical spread. the teledensity level in the country was 0. As a result.7% 37.02%53.” TRAI website.1. It has helped reduce the cost and time of transactions and has visibly compensated for the poor infrastructure.3% 28.0% 24.. Key achievements of NTP 1999 3.7% FY00 10. Market Performance and Welfare in the South Indian Fisheries Sector. the level had increased to only 1.0% FY06 18. NTP 1999 has been instrumental in the growth of telecom in both urban and rural areas. the disparity between urban and rural areas in terms of mobile penetration has increased significantly. and its targets have been achieved well in advance.1% 1.9% FY01 14.trai. According to a study by Robert Jensen. The overall teledensity target of 15% by 2010 was achieved in FY07. 54 “TRAI Press Release No. the overall teledensity as of September 2010 stood at 61. the introduction of mobile telephony in Kerala increased the fishing community’s profits by 8%. Although India has witnessed a steep rise in teledensity over the past few years.5% 12. 55 “TRAI: The Indian Telecom Services Performance Indicators (July – September 2010).3% 0.0% 26. http://www. 2007.8% FY07 89. Enabling the next wave of telecom growth in India 34 . accessed 15 January 2011.9% 52. Currently.4% 61. January 2010.” TRAI website.2% 9. Furthermore.9%.1.pdf.in/3inetwork/html/reports/IIR2007/04-Rural Telecom.gov. The impact of mobile telephony on rural areas has been profound. and mobile penetration stands at a meager 28. http://www. FY09 FY10 Sept 10 Urban teledensity Source: TRAI Rural teledensity Total teledensity 53 “Rural Telecom and IT.iitk.2% 9. low per capita income and the cost of maintaining phones in rural areas.2% 2. about 70% of the population in India lives in rural areas. which was set at 4% by 2010.7% 137. 63 /2010. a Harvard University economist.4% in rural India.asp.6% 1. there is an uneven distribution of teledensity among Indian states resulting in slow economic development of the states and their surrounding regions.4%.6% FY04 38.56 decreased fish prices by 4% and consumption of fish increased by 6%.

0% FY06 432.8% 52. Dun & Bradstreet 3. as well as indirect employment.00057 direct employees.110 The development of telephony in India has played an important role in altering the structure of the economy.400 11.771 14.089 FY06 158 1. 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. by subscriber base 100%= million 98. with the majority of these employees being a part of the public sector undertakings (PSU). December 2009.7% 85.4 140.1.3 43.and information-based economy.5% 79. R&D and financial services. education. technology.9 34.5% 65. private telecom players have considerably expanded their operations.678 FY07 193 2.1% 56. technology. The sector has created direct employment across various business areas such as sales and marketing.5% 429.7% 300.5% 205.2% 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.3% FY05 429. media.2 Teledensity and employment Over the past decade.0% 89. It has paved the way for a knowledge.7 20. R&D and customer care. The ratio of the number of subscribers per employee is very high in the case of private operators in India.3% 73. FY10 The Indian telecom industry employs more than 430. which augurs well for sectors such as IT/ITES. Employees of private and PSU operators 100%= 436. 57 Overview of Telecom Industry. Dun & Bradstreet website.Total teledensity by state in India.5 26. which has resulted in an increase in employment opportunities in the telecom sector.7% 90.891 9. 35 Enabling the next wave of telecom growth in India . Mix of private and PSU operators.9% 47.

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

4 FY06 FY07 FY08 FY09 FY10 3. page 13. August 2009. usually with a minority ownership. from US$0.” Department of Industrial Policy & Promotion. greenfield investments were a popular mode of overseas investment among Indian firms. http://dipp.4 7 5.7 Global outreach of Indian telecom companies In the early 1990s.8 billion in FY01. According to the National Council of Applied Economic Research (NCAER). FDI by firms belonging to developing countries has gained momentum and has become an integral part of globalization.2 95. the average selling price (ASP) of both feature phones and smartphones has been on the decline. and the majority of this capital value has been used to acquire companies. Global Positioning System (GPS). Video Graphics Array (VGA) to 8-to-12-megapixel cameras. However. the ASP of feature phones is expected to be US$50.6 6 5 4 3 2 1 0 Value (US$ billion) 3. Over the next few years. email. a wider customer base and growth momentum.nic.5 108 6. the price of feature phones is declining at a faster rate than smartphones. Over the past decade. Indian companies have reached overseas destinations to tap new markets and have acquired technologies. Globally.8 101.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. 39 Enabling the next wave of telecom growth in India . India’s FDI outflows (debit) have grown at a CAGR of 47.5% to reach a projected US$18. 3G and an improved user interface. accessed 10 October 2010. The share of manufacturing in the investment activity has Source: Voice & Data 69 “NCAER: FDI in India and its growth linkages. Indian mobile handset market 120 100 Volume (million units) 4. Macquarie Capital In the past decade.1.0 5. M&A provide benefits such as expansion of global footprint. and the ASP of smartphones is expected to drop below US$200. the structure of ownership has also shifted toward majority and full ownership. monotone ringtones to MP3 ringtones. adding numerous features ranging from monochrome screens to touch screens. new product mix. India has witnessed prominent diversification in the industry composition of overseas activities of Indian firms.7 80 60 40 20 0 33.6 billion69 in FY09. mobile handsets have evolved rapidly. and foreign affiliations were formed through joint ventures. enhanced memory. The market has witnessed investment in the form of greenfield projects.in/.6 71. Over the period. In line with the change in the pattern of investments. access to niche technologies.

declined considerably. Bangladesh FLAG Telecom Group Ltd Teleglobe International Holdings Ltd. The Indian telecom sector has actively been a part of the global M&A activity.0 300. whereas the share of services has increased.0 62. Key overseas M&A by Indian firms Year 2010 2010 2003 2005 2010 2000 Target company Zain Africa BV Warid Telecom.8 177. leading to the emergence of telecom giants from India.0 194.0 Source: Thomson ONE Banker Enabling the next wave of telecom growth in India 40 .700. 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 30.

Although wireline infrastructure in India has been in place for an extended period.gov. 70 “TRAI: The Indian Telecom Services Performance Indicators (July .” TRAI website.9 million70 internet subscribers and 10. 74 “TRAI: Spectrum Management and Licensing Framework. accessed 10 October 2010. with a CAGR of 77. page 7.72 in comparison with 33% in Brazil. http://www. However.3. the advantage of mobility among wireless networks and the inadequate infrastructure of the wireline network.3 Spectrum challenges The Indian telecom industry has witnessed phenomenal growth in the number of subscribers.in/ntp/broadbandpolicy2004. http://www. the affordability and availability of broadband services and inadequate infrastructure. Despite India’s status as an IT superpower. 3.dot. The decline has been due to lower mobile tariffs. the advent of new technologies is expected to create conflicts for spectrum. According to Boston Consulting Group.2.in/Default. the need for spectrum to service these subscribers has also increased. accessed 10 October 2010. Currently. India lags behind in terms of availability of spectrum for commercial use.in/Default.gov.3 million broadband subscribers in India. inadequate content and applications in regional languages. The Broadband Policy 2004 has failed to keep pace with advances in technology and failed to boost the telecom sector. Globally. 3.trai. May 2010.2 Growth of broadband As of September 2010. May 2010. improved mobile coverage. and the number of wireline subscribers has fallen from 41. September 2010. cheaper handsets. According to TRAI. The availability of spectrum for commercial services in India is below the required levels. 41 Enabling the next wave of telecom growth in India . wireline and wireless complement each other.5% during the period FY00–10.trai. http://www.gov.asp. page 339. 73 “TRAI: Spectrum Management and Licensing Framework. 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.5 million in FY06 to 37 million in FY10.2.” TRAI website. http://www. broadband penetration is accepted as a measure of a country’s ability to compete as an economic power.” TRAI website. according to TRAI. the Broadband Policy 2004 had anticipated 40 million71 internet subscribers and 20 million broadband subscribers by 2010.gov. along with the benefit of VAS such as internet for the urban and rural population and the abolition of the digital divide. the Indian telecom industry is expected to reach 1 billion73 wireless subscribers by March 2014. Furthermore.74 Spectrum bands such as the 900MHz band are of great value to mobile operators due to the longer ranges these can support.2. in the absence of a long-term plan to meet future requirements. Key challenges of NTP 1999 NTP 1999 envisaged the affordability and availability of telecommunication services for the common populace. the growth of wireline phones is not in sync with the rise in the number of wireless subscribers.” DoT website. However. there were 17. 31% in Russia and 28% in China.trai.1 Growth of wireline The wireline segment has added just 10 million users since the introduction of the NTP 1999. the telecom sector continues to face various issues that act as impediments to its growth.asp. therefore requiring lesser BTSs density and lower capital and operating expenditure. January 2010. In line with the growth of subscribers. The sluggish growth in broadband services is attributable to the absence of low-cost devices. page 18. 71 “Broadband Policy 2004. India has an internet penetration of 7%.September 2010). accessed 15 January 2011.asp. Despite being the second-largest market in terms of the subscriber base. the bandwidth required by 2014 may be as high as 800MHz.2. Russia and China. 72 The Internet’s New Billion. broadband penetration levels in India are far below other emerging countries such as Brazil. Boston Consulting Group. accessed 10 October 2010.htm. 3.in/Default.

Although firms were awarded licenses after paying the required entry fee. The GoI allocated spectrum to new telecom players in service areas across India The defense services agreed to vacate 2x20MHz in the 1. It laid down a roadmap for the allotment of 2x12. to the government operator on a pro bono basis In 2001. along with 2x4. Subsequently. they were given start-up spectrum only as and when available Following the entry of two or three CDMA-based mobile operators in each LSA.Spectrum and license allocation timeline in India First stage: 1995–2003 Auctioning scarce spectrum • • • In 1995. the GoI announced the policy for 3G mobile services.nic. and opted for the auction of a start–up spectrum of 2x5MHz in the 2. 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 INR509.4MHz of start–up spectrum for GSM-based services Two operators were selected for each License Service Area (LSA).5MHz of spectrum per operator in each LSA Second stage: 2003–06 Unified Access Service (UAS) licenses • • In November 2003.1GHz band with reserve prices for different categories of LSAs In May 2010.pdf accessed 02 August 2010 Enabling the next wave of telecom growth in India 42 . All operators were expected to pay higher spectrum usage charges. and TRAI continued to maintain that there was a shortage of 2G spectrum A new SBN policy was defined. the e–auction of 3G mobile services was concluded after 183 rounds of bidding across all service areas. in line with TRAI’s recommendations.1GHz UMTS band The DoT proposed new 2G spectrum usage charges for all operators. licensees were required to pay a percentage of annual revenue as spectrum charges In 2002. 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. This differed from the earlier strategy of increasing spectrum charges only for those operators who held more than 6. subscriber based norms (SBN) was introduced.4MHz in 1.” Integrated Defense Staff http://ids. 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.800MHz was given to the winning bidder: • • In addition to the entry fees. the fourth operator license was issued using a three-stage auction procedure. irrespective of the quantity they held.4 billion from the broadband wireless auction Source: “A peep into RF spectrum allocation process in India.2 billion Following the completion of the 3G auctions. Start-up spectrum of 2x4. Including the amount paid by state-owned BSNL and MTNL.4MHz of start-up spectrum in the 900MHz band. in addition to 25MHz in the 2.7 billion to the GoI within 10 days of the closing of the auction. the third operator license was awarded. it totalled to INR677. the bandwidth for broadband services (WiMAX) was auctioned by the GoI.3GHz range in each of the country’s 22 service areas. It auctioned two 20MHz blocks in the 2.2MHz per circle in case of GSM players and above 5MHz for CDMA In August 2008. and incumbents were kept out of fresh allocations. The GoI raised INR385.in/tnl_jces_Sep_2009/Spectrum%20allocation%20 procedure. the GoI auctioned 2x4.800MHz band. in 2001.

6 Infrastructure Telecommunications infrastructure. page 59. the allocation of spectrum is separate from the grant of license to provide service. and some look at infrastructure companies as a means to finance deficits. Civic issues: there is a need to address civic issues such as zoning regulation. the total number of licenses in a circle ranges from 12 to 14.2. The policy made the cellular license technology neutral. and the biggest barrier to setting up telecom towers and other infrastructure is the wide variation in the approval process adopted by local bodies. licenses are bundled with the allotment of a certain amount of spectrum. 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. Moreover. and also allowed licensees to migrate from a fixed license regime to a revenue-sharing arrangement starting in August 1999. 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. especially away from cities and towns. single window clearance. Prior to this. There are huge gaps in low-income or sparsely populated areas. some treat infrastructure business in the same way they treat petty commercial undertakings. Telecom infrastructure service providers face several challenges. However.2. licensees were required to use GSM technology. permitting an access service provider to offer either fixed or mobile services or both. Currently. others require dealing with multiple agencies. 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. preferential treatment for sharing and incentives in a timely manner.75 Globally. http://www. accessed 10 October 2010.” TRAI website.trai. despite being a “key infrastructure. Since the introduction of the UAS licensing regime.gov. incur huge costs and delays because several state agencies are involved in granting approval for setting up towers. telecom manufacturing in India has not been able to keep pace.2.5 Equipment manufacturing The Indian telecom sector has witnessed rapid growth. data services and PCOs.” is far from ubiquitous. May 2010. where telecom companies see poor returns on the expensive investment required in setting up the infrastructure. including voice and non-voice messages. the GoI introduced the UAS licensing regime. 3. However.in/Default. which are highlighted below: Role played by multiple state agencies: there is no uniform approval process across the states. 75 “TRAI: Spectrum Management and Licensing Framework. 3. the country lags behind in terms of telecom R&D and continues to be reliant on imports. 43 Enabling the next wave of telecom growth in India . Tower companies. Several demand prohibitive fees. therefore. In November 2003.asp. using any type of network equipment that met the International Telecommunication Union (ITU) or Telecommunication Engineering Center (TEC) standards.3.4 Licensing challenges NTP 1999 permitted Cellular Mobile Service Providers (CMSPs) to provide all types of mobile services. page 59. in India.

In large parts of India. Secondly. Grievance redressal: there is no clear grievance escalation/ redressal mechanism that infrastructure companies can seek when a conflict arises. Power consumption: one of the major problems faced is the lack of reliable grid power. the fund rules are too cumbersome and lack focus.Taxation on towers: multiple levies and high taxes are imposed for setting up mobile towers. while others charge “commercial” rates. Further. This increases the dependence on diesel.000 per tower as a one-off registration fee in Delhi. the Municipal Corporation of Delhi (MCD) charges INR100. citing concerns over alleged health hazards relating to BTS. namely IS:800.76 The thrust in increasing rural telephony will further aggravate the diesel dependence by telecom towers. the power is either unavailable or erratic.000 tonnes of CO2 and 24. The cumulative carbon footprint of telecom towers due to diesel consumption in a year is more than 5. service providers are forced to use diesel generator sets at tower sites most of the time. IS:802 and IS:875. the power connection to telecom towers is treated as one to a “commercial establishment. there is a need to accelerate the pace of setting up the tower infrastructure in these areas. Delays and cumbersome processes for the SACFA clearances: the SACFA gives siting clearance of all wireless installations in the country. Utilization of USOF and incentives: since the next level of growth is expected to come from rural areas. Diesel fuel is subsidized.” and thus. which is not only more expensive but also polluting. This adds avoidable uncertainity in an already tough business. for the design of towers. and the load criteria for telecom towers and transmission line towers are different. Environmental issues: diesel consumed by towers results in about 17. Energy consumption: cell sites account for most of the energy consumed by mobile networks. and there are other options as well. Some agencies charge them “industry” rates.000 tonnes of carbon equivalent. Currently all the telecom operators are following IS codes. Safety: the construction of telecom towers is still a self-regulated activity throughout India. The above IS codes are primarily meant for electric/power transmission line tower design. For instance. Without it. Misplaced apprehensions on health hazards of electromagnetic radiation from mobile antennas: many state governments and municipalities have barred towers in residential areas. The site clearance basically requires examination from the point of safety for flight navigation and interference with existing wireless systems. Enabling the next wave of telecom growth in India 44 . 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. the highest tariff is applied to the telecom site.5 million tonnes. as these are dependent on diesel generators to keep running.000 per tower and the New Delhi Municipal Council (NDMC) charges INR200. there is no clarity on the rates to be paid by infrastructure companies. Although the USOF was created with the sole aim of promoting rural telephony. and it is estimated that India as a country consumes more than 2 billion liters of diesel per year for cell sites.

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

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

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

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

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

920-1.161 Spectrum available for telecom sector 20 20 18.980 2.6-21.900-1.gov. May 2010. An increasing availability of smart-phones with significant processing capacity and a wide array of applications are resulting in higher requirements of spectrum.400 2. http://www.” TRAI website.010-2. the National Frequency Allocation Plan (NFAP) is the basis for spectrum utilization and development and the manufacturing of wireless equipment.785-1. 79 “TRAI: Spectrum Management and Licensing Framework.805 1. data and other application services.3.900 1. It is estimated that the total requirement of spectrum in the next five years would be of the order of 500-800MHz including 275MHz for voice services alone.2-453. In line with estimated demand of approximately 500-800MHz spectrum across various bands out of a total 1.880 1. May 2010. In India.400 3.” TRAI website.690 3.2 Spectrum78 Spectrum. a minimum of 287MHz and a maximum of 454MHz is currently available. being a scarce natural resource.300-2. 80 “TRAI: Spectrum Management and Licensing Framework.785 1.8 35-75 35-75 0-20 (after coordination) 0-60 60 40 40 100 (ISPs) 287. accessed 10 October 2010.trai.in/Default.6 78 See 5.170 2. A mechanism to ensure transparent and non-discriminatory spectrum management is needed. page 22.500-2.710-1.2.6-21.asp. http://www.805-1. 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. Enabling the next wave of telecom growth in India 50 .400-3.880-1. for global practices.4.910 1.8 18.asp.trai. The next five years are going to see the spread of telecom services enabling subscribers to benefit from voice.300-3.110-2. plays a critical role in the provision of mobile telecom services. accessed 10 October 2010.gov.in/Default. page 22.025 2.600 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 1.161MHz79 of identified spectrum by TRAI.

4 55 53.49 0.6 150.5 31.22 0. accessed 14 January 2011. ITU .” 3g Americas website.26 0.2 63.1 0. Ernst & Young analysis.in/Default.11 0.8 59.75 0.7 38.75 15 12.4 60.6 87.35 0.asp.4 74.4 72.” TRAI website.55 0.3 74. 51 Enabling the next wave of telecom growth in India .2 78.” TRAI website.78 0.27 0. accessed 15 January 2011. May 2010.25 67.65 65 63. MHz (2008) 170 200 265 140 120 120 358 353 294 Wireless subscribers.95 76.4 75. http://www.9 83.25 10 13.55 70.1 62.37 0.75 11.5 15 15 12.36 0.48 0.4 60.2 63.2 53.6 80.6 10.5 0. page 22. 2008 (million) 46.6 66.3 31 6.3 Subscriber/MHz (million/MHz) 0.trai.5 11.63 0.4 67 61. Ernst & Young analysis.14 0.57 0. gov. “TRAI: The Indian Telecom Services Performance Indicators (July-September 2010).1 24 17.4 69.2 62.5 13.4 CDMA 15 15 13.9 52.7 0.3 19.08 Subscriber (million) Subscriber/MHz (million) 81 “TRAI: Spectrum Management and Licensing Framework.gov.4 69.trai. 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 53.31 0.15 79.48 0.3 37.accessed 10 October 2010.22 0.Country-wise spectrum availability Country Total licensed spectrum for mobile services.org/documents/MWC%202009%20Digital%20Dividend%20Pavilion-3G%20Americas%20 Erasmo%20Rojas.2 50.5 76.75 13.92 Argentina Brazil Canada Chile Colombia Mexico Spain UK US Source: “Digital Dividend Pavilion .2 37.5 150.6 14.6 77.4 63.Latin America Wireless Roadmap.49 0.15 83.8 63 53 57.3 49.4 270.15 84.63 0.15 78.6 0.75 13.8 75.2 6.asp. http://www.7 18.8 41.26 0.3gamericas.6 72.8 61.pdf.09 0.53 0.6 37.5 64.2 49.25 10 10 10 Total 68.2 4.1 44.75 15 12.2 28.2 76. January 2010. 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 33.7 0. February 2009.52 0.5 13.2 59.ICT Statistics 2008.16 0.in/Default. http://www.7 43.75 12.4 69.4 No.

The contacted limit of spectrum will be 6. http://www. Identify and vacate new spectrum bands for future use. National frequency allocation plan should be reviewed every two years. 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.2MHz for GSM operators and 5MHz for CDMA operators.Latin America Wireless Roadmap.7 100. Allocation of spectrum should be based on auctions. Re-farming Spectrum allocation Spectrum allocation should be based on technology neutrality.co. timely allocation. Spectrum allocation to new players Spectrum usage charges Spectrum sharing and trading Enabling the next wave of telecom growth in India 52 . accessed 14 January 2011. Parameters Availability Recommendations Align spectrum bands with globally harmonized bands to achieve interference-free coexistence and economies of scale.2 75-96 Source: “Digital Dividend Pavilion . accessed 14 January 2011. and to draw up a suitable schedule. 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. based on a transparent auction mechanism to determine the price. timely spectrum reconciliation and enhanced transparency. This roadmap should be made available publicly to ensure transparency. Regular spectrum audits should be carried to oversee the efficient utilization of spectrum.in/images/1-pdotfinal. http://www.3gamericas. February 2009. service flexibility. “Presentation to the DoT committee on spectrum allocation criteria. MHz 28-37 118.  Spectrum allocation to existing players 2G spectrum up to the contracted limit should be ensured as initial spectrum.Operator spectrum holdings Country/Region/Operator India Denmark EU average France Germany Italy Spain Sweden UK US Spectrum holding per operator.4 92.communicationstoday.6 92 82.6 138.pdf. The criteria for levying spectrum usage charges should be identified upfront at the time of allocation of spectrum.pdf.org/documents/MWC%202009%20Digital%20Dividend%20Pavilion-3G%20Americas%20 Erasmo%20Rojas.5 65 72. Need to bring in additional spectrum for commercial telecom services. Spectrum should be provided to the highest bidder. 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.” Communications Today. Allocation of spectrum beyond the contacted limit should be based on market mechanisms. It should be based on market price and not administered pricing.” 3g Americas website.

especially those in rural and remote areas.186 out of 62. about 184.1 39. via Dow Jones Factive. As of 31 December 2009. the Universal Service Support Policy came into effect. Multi access radio relay (MARR)-based VPT: out of 185.436 infrastructure sites spread over 500 districts in 27 states.9 16.011 broadband connections out of the proposed 888.2 VPT and RCP: around 570. In 2002.302 uncovered villages.1 15.500 have been replaced as of 31 December 2009.0 12.832 wireline broadband connections have been provided as of 31 December 2009. 53 Enabling the next wave of telecom growth in India . 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. 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. © 2010 HT Media Limited. 83 “Minister Sachin wants to ‘Pilot’ IT revolution in northeast. at affordable prices.4.3.5 55. for global practices. Out of the target of 40.4 32.121 MARR-based VPTs installed before April 2002. BSNL has provided VPTs to 61. Rural broadband: 95.” Indo-Asian News Service. However. whereas urban teledensity is about 137. 7 March 2010. As of 31 December 2009.705 rural community phones (RCPs). voice mail and email.694 have been provided as of December 2009.950 towers have been set up under this scheme.3%.83 at the end of FY10.000 VPTs are currently eligible for financial support for operation and maintenance.3 Universal Service Obligation Fund (USOF)82 NTP 1999 envisaged access to basic telecom services for all. (INR billion) 40 30 20 10 0 34.0 N/A FY05 Funds collected FY06 Funds disbursed FY07 FY08 FY09 Dec-09 Source: DoT 82 See 5.6 13. The USOF is estimated to hold around INR180 billion. about 6.2 17. 40.4%.3. rural teledensity is at 28. Tower infrastructure: provide infrastructure support to set up and manage 7.7 18. resulting in a huge digital divide. The USOF covers rural and remote areas with public access telephones and individual rural household telephones in net high cost rural and remote areas. 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.

There is a significant cash reserve lying unutilized in the USOF. The USOF should aim to achieve the following: • 100% rural teledensity by 2015 • 25-30 million broadband subscribers in rural areas over the next five years • Data coverage to all villages through cable modem termination system (CMTS) data technology by 2015 • Broadband connectivity for 250. so DoT should lower the contribution from 5% to 1% of AGR.Parameters Objectives Recommendations The USOF framework needs to be reviewed regularly to effectively utilize the funds to achieve universal service. Enabling the next wave of telecom growth in India 54 .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.

as well as its BRIC counterparts.” TRAI website. there should be balanced competition to ensure the quality and affordability of services.74%. accessed 10 October 2010. Further.in/Default.2 million.trai. connectivity. respectively. against the target of 20 million by 2010 set in the Broadband Policy of 2004. lack of vernacular content. http://www.4. page 28. Today.asp. This calls for a critical review of the Broadband Policy 2004 and the creation of appropriate infrastructure to support broadband growth.86 with a ranking of 129. behavioral and government initiatives. India has set a target of 100 million broadband connections by 2014.1 to 0. 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. http://www.85 There were just 8. The last mile access issue can be addressed through the deployment of wireless technology. Broadband should be redefined and clauses such as ‘’always on’’ and minimum speed should be removed from National Broadband Policy. use.8 million broadband connections at the end of FY10.4. 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. and skills. 86 “TRAI: Consultation Paper on National Broadband Plan.in/Default. The net broadband addition per month is just 0. June 2010. for global practices. page 3. 55 Enabling the next wave of telecom growth in India . 84 See 5.gov. in order to encourage broadband. cost and competition — are essential for improving broadband penetration. To kick-start the broadband penetration in rural and far-flung areas.4 Broadband84 India trails all developing Asian countries. The 3C’s — customer.asp. 85 “TRAI: Consultation Paper on National Broadband Plan. with a broadband penetration of just 0.” TRAI website. deployment of wireless access should be given preference and fiber media should be utilized from the already available fiber capacity across nation. 106. The drivers for broadband services are broadly classified as technological. economic. The growth of broadband is restricted by several factors such as its perceived utility. social.gov. connecting 40% of the households in the country. accessed 10 October 2010. application. June 2010. socioeconomic growth is dependent on the spread of broadband services across the country. and 118 out of 154 countries in terms of ICT access. India lags behind in terms of ITU’s ICT Development Index (IDI).3.trai. cost of device and affordability. 2004.

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

and UASL with UASL. Parameters Number of operators Service area and license stipulations Recommendations Mergers should not result in less than six operators in the circle. 57 Enabling the next wave of telecom growth in India .3.4MHz 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 stipulation regarding the minimum period of three years from the effective date of license for merger or acquisition should be done away with. Merger of license(s) shall be permitted in the following category of licenses: cellular mobile telephone service (CMTS) license with CMTS license. Market share of merged entity Lock-in period 87 See 5. for global practices. 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. unified access services license (UASL) with UASL.4. 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.5 Mergers and acquisitions87 At present. Merged licenses in all the categories above shall be in UASL category only. The TRAI recommendations dated 11 May 2010 should be followed to maintain the balance between the interests of consumers and service providers. CMTS license with UASL.

Currently. thereby leading to greater financial burden on the telecom sector. these goods could be treated as “component/ spare/accessories” of “capital goods” (i. It is important to note that currently industry players are paying service tax on RCVs. However. The levy of VAT on the activity of providing broadband connectivity services would lead to double taxation of such services. the bouquet of services has changed. January 2010. Towers and shelters fall under Chapter 73 and 94 respectively of the Central Excise Tariff Act 1985. 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. http://economictimes. Various states across India have issued show cause notices.6 Taxation Over the years. According to TRAI.cms. The Indian telecom sector is subject to numerous taxes and levies. while the dominant purpose for selling these RCVs is provision of telecom services to subscribers. As of September 2010. VAT. with the matter going up to the Supreme Court.in/Default. custom duty and other taxes. The issue was first taken up in the case of a leading telecom player by the state of Karnataka. 89 “TRAI: The Indian Telecom Services Performance Indicators (July – September 2010). Currently. as well as tax. Over the years. The Supreme Court without going into the merits of the case has ordered a relook at the matter by the state VAT authorities. It is important to note that currently the industry players are paying service tax on such broadband services. 88 “Telecom firms want lower tax burden.. This position has been adopted by industry players. 5% levy for USOF. 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. Central value-added tax (CENVAT) position on tower materials and shelters: telecom operators are availing CENVAT credit on goods such as angles. the revenue share license fee (including the USOF) is prescribed as follows: • • • • 6% to 10% of AGR for access services.gov. This includes the uniform license fee. which are used for building transmission towers. accessed 10 January 2011. 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. The issue whether the sale of RCVs should attract service tax or VAT has been a subject of constant debate and discussion.com/news/news-by-industry/telecom/telecom-firms-wantlower-tax-burden/articleshow/2753840.” TRAI website. BTS etc.89 96. thereby leading to greater financial burden on the telecom sector. http://www.indiatimes. which is 23%–25% higher than their counterparts in other Asian countries. the sector contributes significantly to GDP. channels and beams.3.trai. Enabling the next wave of telecom growth in India 58 .1% of the CDMA subscribers were prepaid subscribers. The classification of tower. accessed 15 January 2011. Denial of credit on such goods would lead to an increase in the financial burden on telecom operators. The levy of VAT on the sale of RCVs to subscribers would result in double taxation. RCV is one of the most popular ways to pay for telecommunication services.” The Economic Times.e.asp.4.) 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. or other services.4% of the GSM subscribers and 94. the significance of the telecom sector to the Indian economy has grown immensely. which account for 80%–85% of the operator revenues. • • Sale of light energy: broadband services also continue to face taxation-related concerns. 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. such as to procure merchandise. the operators pay up to 30%88 of their total revenues toward different levies. as the RCVs are witnessing liberalization in the flexibility of their usage.

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

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

India Telecom 2010 brochure In February 2006. This was followed up by incumbent operators introducing cheaper tariffs. provide leading class services. with a large majority of people using low-cost mobile handsets. giving India some of the lowest tariffs in the world.3.17 0.09 Malaysia 0. customer friendly and innovative for both local and long distance calls.05 Thailand 0.11 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. 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.2 0. Mobile tariffs per minute in US$ 0.16 0.04 Pakistan 0.01 India Phillipines Source: DoT. 61 Enabling the next wave of telecom growth in India .2 0.” It was considered affordable. Furthermore. at the same time.3 0.19 0.1 0.23 0.03 China 0. a leading operator launched the “One India Plan.4.1 0. It also removed the distinction between fixed-line and cellular tariffs.8 Consumer affordability and rural penetration The Indian telecom market has some of the lowest tariffs in the world.0 Belgium UK France Brazil 0. the increase in subscriber base and teledensity has enabled telecom companies to achieve economies of scale and.

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

The main funding for a TCOE comes from the sponsoring telecom operators.213 20. Ministry of Human Resource Development.9 10. in May 2007. Such organizations promote R&D and help in creating a talented workforce. For instance. However. 40 central universities.92 there were 504 universities and university-level institutions. a committee comprised of the DoT. page xv.4. organizations such as the Telecom Centers of Excellence (TCOE). and AUSPI submitted a report that suggested ways to form seven TCOEs across India in a PPP mode. Each TCOE is sponsored by a telecom operating company and is hosted by a premier technical or management institute. 2010 0 India US China Source: Making the Indian higher education system future ready. followed by the US and China. India has the largest number of higher education institutions. 91 Unleashing India’s Innovation.000 6. 53 state private universities.3. October 2007. 2010 In keeping with the NTP 1999’s R&D objective. which is characterized by a dynamic young population base– more than half of which is under 25 years old. COAI. In terms of size and diversity.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. the Center of Excellence in Wireless Technology (CEWIT) and the Broadband Wireless Consortium of India (BWCI) have been established. 130 deemed universities and 33 institutions of national importance. Ernst & Young. including 243 state universities. India lags behind China and the US in terms of student enrollment. However. Ernst & Young. Number of higher education institutions and student enrollment 30. 63 Enabling the next wave of telecom growth in India . FY10.9 Human resource India has the benefit of a huge population. As of December 2009. India possesses a developed higher education system that offers training in many fields. World Bank website. Government of India — Annual Report 2009–10.706 17.000 Number of higher education institutions 21. while the GoI provides basic and research infrastructure. 92 Ministry of Human Resource Development.4 30 25 20 15 10 21.8 25.000 12. only 17%91 of those in their mid–20s or older have completed their secondary education.

the provision of a single window clearance for all state-level approvals would be a vital fiscal measure. The tax on the payment of royalty should be as low as possible. localized players can expect to compete globally with established manufacturers and make their own mark in foreign markets in the long run. There is a need to align product certification with international standards and to facilitate global accreditation for the testing facility. for global practices. and policy initiatives should be focused on encouraging localized manufacturing. 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). India needs to position itself as a telecom manufacturing hub in the long term. In order to reduce transaction costs.4. In addition.Telecom Equipment and Services Export Promotion Council (TEPC).” The Viewspaper. 93 See 5. the requirement for telecom equipment in India is expected to be about INR5 trillion95 by 2015. Other significant incentives would encompass the removal of withheld tax on the fee for transfer of technology and software import. Thus. http://theviewspaper. • • Employment generation: given the right impetus. growth in the segment holds the potential to triple the country’s current employment base by FY14. In order to encourage technology transfer. accessed 02 August 2010.” LiveMint. Enabling the next wave of telecom growth in India 64 . further strengthening the case for a robust telecom manufacturing industry. resulting in the significant growth of exports to developing nations. 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. the share of locally manufactured equipment has declined to 30% in FY09 from 74% in FY04. Parameters Manufacturing hub Recommendations There is a need to set up hardware manufacturing cluster parks (HMCP) across the country and to upgrade localized infrastructure to support large volume contract manufacturing. However. reaching a value of INR518 billion94 in FY09 during the last five years.10 Equipment manufacturing93 The production of telecom equipment in India has increased at a CAGR of 29% from FY04 to FY09. supported by the banking system.livemint. the segment holds an export potential of INR450-500 billion96 by FY14.net/indian-telecom-a-tale-of-stupendousgrowth/. 28 February 2010.6.com/2010/04/01215017/Indian-telecom-firms-may-get-D. 94 “Indian Telecom: A Tale of Stupendous Growth. http://www. There should be provision for round-the-clock customs clearance. Increased competitiveness in the global market: a technologically advanced manufacturing ecosystem in India prospectively offers an international platform to telecom manufacturers. customs clearance for imports and exports should be done on a self-declaration basis. html. page 4. The value of telecom equipment exports was INR81 billion in FY09 during the last five years. 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. accessed 20 October 2010. It is necessary to ensure the free movement of the equipment/raw materials. royalty payments of up to 5% on domestic sales and 8% on exports should be exempted from income tax. In addition. 01 April 2010. Export promotion The Government could create a sizable export promotion fund for the Telecom Equipment and Services Export Promotion Council (TESEPC). 96 Policy Recommendations to Increase Domestic Telecom Growth and Exports of Telecom Equipment & Services . Fiscal incentives Domestic telecom equipment manufacturers may be allowed to have access to external commercial borrowing for capital expenditure and working capital requirements. 95 “Indian telecom firms may get DoT boost. According to DoT estimates.3.

Africa. similar to the Telecom Finance Corporation. 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 . 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. Latin America. Russia and Eastern Europe. Leading class R&D centers in the PPP mode should be promoted. to assist and provide guidance to those who want to set up a manufacturing facility. Set up an autonomous body. R&D should be the key focus. A fund for R&D and product development for the segment should be created.Bilateral trade programs Telecom exports from India may be included in bilateral trade agreements with emerging markets in regions such as South Asia. Service hubs Telecom equipment manufacturers should be encouraged to create service hubs to develop a global network and strengthen their presence across India. A detailed program should be created to attract investment in the manufacturing of accessories such as batteries and chargers for mobile handsets.

The biggest barrier to setting up telecom towers and other infrastructure is the wide variation in the approval process adopted by local bodies. For India to achieve 85% teledensity. The telecom infrastructure service provider needs to apply to the local municipality or panchayats for permission to build a tower.4. Once the existing tower is at capacity. There is also a need for an empowered committee or similar structure to engage with roads and power ministries. and GoI should declare mobile and tower infrastructure as “Critical Infrastructure Services. which avoids duplication of capex. The rollout subsidy could be fixed at a flat amount based on the approved tower design for a period of five years. These are not matters of local self-government or municipal departments. a new tower could be awarded through a bidding process. 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. This mandate should be included in bylaws of the local and state governments. Telecom/broadband connectivity should be considered a necessity such as water and power in every housing facility. Also. GoI should announce a National Telecom Critical Infrastructure Policy (NTCIP). single window clearance and preferential treatment for sharing and incentives need to be addressed in a timely manner. 97 See 5. If an existing tower is not operating at 100% capacity. then no new tower should be allowed in that zone. they should be adopted in a timely manner.7. The profitability is dependent on the ability to increase tenancy on the tower. Every tower should be fully utilized. for global practices. Enabling the next wave of telecom growth in India 66 . At present. which are directly connected with the growth of tower infrastructure. Given the challenges that the industry faces. low working capital requirements and high incremental profitability. A 70-meter tower could service an area of 2-3 square kilometers. the tower business is characterized by high initial capital investments.11 Telecom infrastructure97 Infrastructure growth is critical to the rollout of services. If legislative amendments are needed. There is a need for national ROW policy for rollout of backhaul network. Technological approaches that can potentially reduce the direct and indirect costs of creating telecom infrastructure should be encouraged. Tower infrastructure needs to come under the Indian Telegraph Act. there is no uniform approval process across states for setting up telecom infrastructure. 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. and there could be distance guidelines for the same. the rents charged. stable and predictable cash flow. in-building solutions and DAS make it possible to conserve spectrum and reduce the visual impact of towers. it needs 95% coverage. But the lack of guidelines or standard procedures results in enormous delays and huge cost implications. The march of technology-IP/converged platforms is leading to integrated technology-neutral host platforms. 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.” Tower infrastructure should be erected in accordance with the NTP and licenses granted by the GoI under the Indian Telegraph Act.3. but are matters liable to be governed by the GoI or regulatory authority constituted by it in accordance with the NTP. Full utilization of towers— optimum sharing There should be laws governing the rollout of towers. Moreover. Such practice is being followed in developed countries such as the US. Civic issues Civic issues such as zoning regulation. the scale and spread of the tower portfolio and the ability to raise capital. creating a uniform taxation regime.

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

There should be incentives for tower companies to optimize fuel and power costs. Operators are also experimenting with the use of non-conventional sources of energy wherever feasible for meeting energy requirements.800MHz) and because a person’s height makes the body an efficient receiving antenna. These measures have the potential to reduce the carbon footprint significantly. Service providers are using green shelters or deploying outdoor BTS wherever found feasible to reduce power consumption. a positive public stand by the regulator would be extremely helpful. Operators should be encouraged to use green technologies. 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. While the operators are making their best efforts to educate the general public. increase the energy efficiency of new network equipment and optimize network technology to increase energy efficiency. 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. Even for limited camouflaging. 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 1.000 renewable energy base stations could reduce annual carbon emissions by up to 6. Further. at similar radio frequency exposure levels. Alternative sources of energy need to be developed and deployed wherever found feasible. and not for all generic urban areas. annual carbon emissions could be reduced. Furthermore. The feasibility of using biofuels is also being studied. In fact. 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.3 million tonnes. there is a need to fix the feed strength to control radiation emissions. radio and television broadcast stations have been in operation for the past 50 or more years without any adverse health consequence being established. due to their lower frequency. 118. the body absorbs up to five times more of the signal from FM radio and television than from base stations. Local authorities and consumer groups should be made more aware of this. Misplaced apprehensions on health hazards of electromagnetic radiation from mobile antennae-BTS International institutions like the World Health Organization. Enabling the next wave of telecom growth in India 68 . depending on a variety of factors such as the proximity to the antenna and the surrounding environment. the British Medical Association.002% to 2% of the levels of international exposure guidelines.

Regulatory restrictions related to interconnection of data and public switched voice networks interfere with the realization of these services’ full potential. However. and are largely premised on the provision of mass market consumer voice services. Lawful interception The proper treatment of data services under the ILD and NLD licenses. India does not rank in the top 10 data revenue earning countries. 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. November 2010. Interconnection regime and cable landing station (CLS) access Access charges under existing Reference Interconnect Offers (RIOs) should be fair. 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.4. Taxation 98 Enterprise Sector. It should be retail minus and avoid vertical price squeeze by the incumbent. Ranking of subscribers. Need to eliminate the cumulative assessment of licensing fees on the purchase of inputs. 69 Enabling the next wave of telecom growth in India . most regulations are voice-centric and do not cover issues related to enterprise service providers. Access charges under new RIOs for accessing new cables should represent only the actual incremental network costs of providing the access services. with attention given to MPLS and IP-VPN services. To promote competition in the IPLC segment. Costing should be in place for RIO charges to ensure proper cost-oriented charges. Despite the large number of players entering the enterprise data segment.12 Enterprise data The share of data service in India’s total telecom revenue is about 11% as compared with many other countries where it ranges from 20% to 40%. 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. non-discriminatory and cost-based. Therefore. should be clarified. specifically LIRC. BPO customers need variable per minute usage-based pricing model both for inbound and outbound calls. In line with international practice. The security/lawful monitoring and interception requirements applicable to enterprise data services should be specified. these licenses do not allow the use of adequate encryption in accordance with current commercial standards to protect confidential information. which imposes double taxation on ILD and NLD license holders. which do not connect to a public network. including lawful interception  and monitoring conditions.3. International private leased circuit (IPLC) regime Indian BPOs are addressing contact center requirements globally to collect voice calls outside of India and transporting them over an IPLC or MPLS link provided by the authorized service providers. Association of Competitive Telecom Operators. current ILD and NLD licenses were drafted before the development of current GTS services and technologies. data revenue. telecom licenses are voice-centric. In the interest of national security. Therefore. the customer should undertake to make its encryption key available to the licensed entity on demand. a wholesale pricing regime should be introduced.

it poses challenges that need to be addressed from a regulatory perspective. Convergence has evolved due to the processes of digitalization and computerization. In the near future.4. telecom and telephone. broadcasting and internet-based services by a single operator.13 Convergence99 The ITU defines convergence as the integration of customer end terminal equipment.3. It is essential to create a regulatory framework that addresses the issues arising from both technological and business convergence. 99 See 5.8. or access devices such as the telephone. Triple play is also used to define the end result of convergence. Enabling the next wave of telecom growth in India 70 . with a service provider offering a bundle of services. which refers to the combination of three services — internet. most of the telecom operators provide broadband services in addition to voice communication services. As a result. Technological convergence has made way for business convergence. television and personal computer. a telco provides video. Today. In the US and Hong Kong. Hence. for global practices. 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. Market-related convergence arises due to consumer expectations of one-stop service availability and bundling of services. taking convergence to a new level. Convergence has led to increased competition in the marketplace. At the same time. whereas another telco provides triple play through a single channel. data and telephone through separate channels. impacting both the telecommunications and broadcasting sector as a whole. commercial power lines have been used to provide telecommunication and internet services. it is expected that these lines will become an alternate medium for providing information services. Convergence creates opportunities such as the combination of either equipment or businesses to provide multiple telecommunications.

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

Enabling the next wave of telecom growth in India 72 . tourism and search engines • Ticketing (e. the rollout of 3G services and increasing usage of WAP.9.. the UID scheme and financial inclusion. driven by the uptake of services such as mobile web browsing. 4. including current affairs. cinema) • Shopping (i. Going forward.g. Mobile phones provide the consumer an opportunity to transact anytime and anywhere. The m-commerce service umbrella in India has been limited primarily to payment and transfer systems.4. web-enabled phones and smartphones by mobile subscribers is expected to play an important role in the growth of m-commerce. purchase of goods and services) Mobile transfer • Prepaid card top-up • Person-to-person transfers • International remittances 100 See 5. booking tickets for transportation services such as trains and taxis and online shopping. train. with synergy existing between e–commerce and m–commerce. mobile banking and multimedia messaging service (MMS). in India is expected to boost market growth..1 m-commerce100 The next revolution that is expected through the use of mobile phones is the emergence of m-commerce. 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.e.4. with each broad category providing an array of services. for global practices. m–commerce finds its applications across various end markets such as banking and financial institutions.4. especially in the case of banking and internet-based purchases. It is forecasted to overtake e-commerce in terms of the number of transactions. paying bills for utilities such as power and gas. The rollout of 3G services m-commerce Mobile banking • Inter–account fund transfer • Account inquiry • Stock trading • Bill payment Mobile payments • Information services.

Mobile payment technology will transform the nature of physical interaction between consumers. delivery of health care information to practitioners. The initial application will focus on mobile banking. transportation and other emerging industries are expected to be at the forefront in adopting M2M communication. coupons and advertising would pick up. disruptive business models and reduced legal and professional fees. Ericsson. It offers a huge potential for health care delivery in India.4. page 2.4 M-health M-health applications include the use of mobile devices in collecting community and clinical health data. with mobile money becoming a truly rich and integrated application for consumer convenience. adoption of other services such as ticketing. to extend affordable health care to all in the country. government. researchers and patients. finance. This will cause a reduction in the cost of transactions. December 2010. 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. education.3 Mobile money Mobile communication and secure mobile transaction opportunities will bring a transformation in the manner in which money is managed.2 M2M communication According to Ericsson. 4. thereafter. The key advantages provided by M2M include cost and spectrum efficiency. mobilized and generated in future.4. It will significantly impact the banking industry. real-time monitoring of patient vital signs and direct provision of care via mobile tele-medicine. bill payment related to utility and others will become a major application.4. over a period of time.4. redundancy and coverage. to look at account information and transfer small amounts of money between various accounts. and will enable networks to support automated machine communications. with machine– to–machine (M2M) communication being the key driver behind this exponential increase in connected devices. merchants and banks. monetary settlements. There are a number of government schemes and other initiatives from medical service providers offering tele-medicine services. Utilities. health care. 73 Enabling the next wave of telecom growth in India . service quality and security. 4. owing to increased volume. the world is expected to witness 50 billion101 connected devices in 2020. M2M is characterized by small amounts of data between the device and network.

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

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

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

and through promoting regulatory certainty through a fair.2. transparent and participatory renewal process. Public consultation procedures and the right to appeal also increase the prospects for a successful renewal process.pdf.110– 2.0 Nominal 4. 5.0 2.0 Note: The “beauty contest” approach purports to allocate licenses to operators who best meet stated pre-set criteria. Spectrum Re-farming of spectrum • The US Government created the Spectrum Relocation Fund (SRF) in December 2004. http://www.0 120.pdf.doc. page 50.0 51.710–1. The 102 “3G Mobile Licensing Policy.4 44.7 1. http://www.” National Telecommunications and Information Administration website.0 10.755MHz band paired with the 2.0 each 44.0 35.ntia.103 the Federal Communications Commission (FCC) concluded the auction of Advanced Wireless Services (AWS) in the 1. In September 2006. 77 Enabling the next wave of telecom growth in India .508. This is done through the principle of renewal expectancy.520. It is essential to provide details about license renewal or reissue.0 45.155MHz band. gov/reports/2008/SpectrumRelocation2008. which provides a funding mechanism through which federal agencies can recover the costs associated with relocating their radio communications systems from certain spectrum bands. Policy-makers and regulators should focus on creating interest among providers and providing incentives for long-term investment. accessed 22 October 2010.870.08 116. which were authorized to be auctioned for commercial purposes. 103 “1710–1755MHz spectrum band relocation. accessed 12 October 2010.080.482.710–1.8 360. The 1.390.” ITU website. and ensure sufficient lead times and transitional arrangements in the event of non-renewal or changes in licensing conditions.itu. page 1.Allocation of 3G mobile licenses102 Country Austria Australia Canada Finland France Germany Italy South Korea Netherlands New Zealand Norway Portugal Spain Sweden Switzerland UK Number of licenses 6 6 5 4 4 6 5 3 5 4 4 4 4 4 4 5 Mobile incumbents 4 4 4 3 3 4 4 2 5 2 2 3 3 3 2 4 Method Auction Auction Auction Beauty contest + nominal fee Beauty contest + nominal fee Auction Auction Beauty contest + fee Auction Auction Beauty contest + fee Beauty contest + fee Beauty contest + fee Beauty contest Auction Auction Date November 2000 March 2001 January 2001 March 1999 July 2001 July 2000 October 2000 End 2000 July 2000 January 2001 November 2000 December 2000 March 2000 December 2000 December 2000 April 2000 Sum paid (US$ million) 610.0 351.755MHz band used by federal agencies was reallocated to AWS under the provisions of Commercial Spectrum Enhancement Act (CSEA).070.0 3. including the use of the SRF to facilitate relocation of federal communications systems.int/osg/spu/ni/3G/casestudies/GSM-FINAL.

The critical success factors for spectrum trading include a large number of buyers and sellers.pdf. accessed 12 October 2010. 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. One of the key recommendations of the Independent Review of Government Spectrum Holdings (IRGSH) was a regular review of all defense band allocations. inland waterways and rivers.6GHz band. and spectrum regulation. is guaranteed the moment it is needed. and facilitates the provision of innovative new wireless services in the commercial market.e. the Ministry of Communications and the Ministry of Defense have agreed to make 2x75MHz spectrum available for WiMAX in the 3. and de facto control. Innovation and Skills website. the Australian Communications and Media  Authority (ACMA) reviewed government spectrum holdings. In 2003.” UK Department for Business. • Geographical sharing: in certain situations. simplifying them in mid-2004. The FCC distinguished between de jure rights. bis.e. the FCC formulated rules for spectrum trading.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. In 2010. but transfers management control of the spectrum. Spectrum trading • Spectrum trading gives public and private sector entities the opportunity to decide which spectrum to release or share. the FCC proposed the concept of developing smart devices that adjust to the spectrum they use and take advantage of underused spectrum. page 28. the UK Department of Trade  and Industry’s spectrum strategy committee. assignment of the license to another party. http://www. While it is important to ensure that access to spectrum 104 “A Strategy for Management of major Public Sector Public Holdings. New Zealand was the first country to introduce open market trading of spectrum.4–3. The committee formulated the strategic plan for the Ministry of Defense (MoD). and it has begun a program to identify which spectrum can be released and time frame for releasing it. promotion of innovation and flexibility. giving them the option to deploy LTE immediately. 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. uk/files/file38572.6GHz band to support the nationwide deployment of nextgeneration mobile broadband services. i. as a part of spectrum re–farming. in 2004. The MoD has management rights to 35%104 of the spectrum bands listed in the UK Frequency Allocation Table (UKFAT).gov. The re–allocation benefits the country’s mobile operators. ANATEL.. The secondary trading of spectrum provided benefits such as economic efficiency. civil aeronautical.. In 1989. The 2. In Italy. sharing or reallocation opportunities for 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. i. transferee retains the license and legal responsibilities. In 2006. in consultation with the Office of Communications (Ofcom). the Brazilian telecommunications regulator. and innovation in the supply and demand for radio-based technologies. Enabling the next wave of telecom growth in India 78 . civil maritime. Further. • In March 2007. Spectrum assigned to the maritime sector may need to be used for maritime radio services only near the coastline.AWS auction raised US$13. Such spectrum could be made available for other applications inland. • • • • • Sharing of spectrum • Time sharing: defense needs to use part of the spectrum only in crisis situations during exercises. spectrum is needed only in certain geographical areas. emergency and public safety services (E&PSS) and science services. agreed to re-allocate spectrum in the 2.6GHz band had previously been allocated to multichannel multipoint distribution service (MMDS) operators to support pay-per-view TV services. the possibility exists to use the spectrum for other applications the primary user does not need.

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

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

The number of organizations currently evaluating the use of virtualization techniques is growing: 81 4.4 million fixed broadband subscribers. 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. Emerging markets such as India need to adopt leading practices that facilitate rapid and cost-effective deployment of broadband technologies.7% 26. The Information Security Management System (ISMS). Intel 37. whereas African countries were able to add 2. increased risks: 3. infrastructure. Broadband penetration by country 2009 Netherlands Korea UK Finland US Australia China India 0% Source: OECD. The essential leading practices that enable countries to increase broadband penetration include: adoption of regulations that embraces innovation and competition.pdf. form PPPs. However. The broadband ness controls will be implesecurity has increased: penetration rate ingrowth in theeconomies is nearly to mitigate new or The survey revealed developed mented organization’s annual investment in information security. Of all participants.com/Assets/PDF/Article/WA-323857001. urban–rural divide and other factors that impact broadband penetration are very different in developing nations. Furthermore. For instance.7% 0. during 2005–08.5% 26. content and applications.8 million107 broadband subscriptions across the world. encourage competitive ecosystems. 23% of 107 World Broadband Statistics: Short report. The firm combination of national objectives toward broadband services with leading practices is expected to enable developing nations to achieve benefits of broadband growth.5.5 million fixed broadband subscribers. 23%. that emerged were increases in the global respondents stated that 108 “Intel: Realizing the benefits of broadband.4% 23.” ITU. Other top trends next 12 months. Broadband Broadband networks are an essential infrastructure for the global economy. Investment in information world in terms of broadband penetration. invest in infrastructure and latest technology. if China is excluded from the developing world. The trend of actions that organizations have taken to control the leakage of Enabling the next wave of telecom growth in India 5. as they provide businesses and consumers with fast and continuous access to internet–based services. Point Topic Ltd. regulatory environment. Increased security aware1. and release spectrum for the sustainable deployment of broadband services.108 in comparison with 4% in developing economies. Broadband services have economic benefits both in developed and developing nations. Booz & Company analysis There are more than 497. Although the world is witnessing a rise in broadband penetration.4. identity and access management computing.. However. as against only 8% by systems. which covers the overall . http://www. 2010. the growth rate is much higher in the developed world.” Intel website.intel.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. a large digital divide exists between the developed and the developing 2. Eastern Europe added 19. However. 61% (46% globally) agreed that their organization will spend more this year in information security than it did last year. page 4. Indian organizations. page 2. accessed 12 auditing capability and stronger they have embraced cloud October 2010.1% 33.5% 29. it declined to just 2%. TRAI.

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

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

and in 1991. It employed more than 80. The mobile telecom cluster. Enabling the next wave of telecom growth in India 84 . and Denmark based PTTs. Norway-. • Skilled workforce: Finland has a strong skilled workforce. academic and research institutions. the country redirected its trade to the West. Strategic initiatives 109 Caroline Lesser. in the late 1990s.6.5. the economy shifted to ICT and consumer electronics. includes a wide range of stakeholders. with electronics and electrotechnics accounting for about 25% of the country’s exports. • Deregulation and increased competition: in the late 1980s and early 1990s. “Market Openness. However. including mobile application developers. The country has invested in a number of technical universities. component manufacturers and electronics contract manufacturers. In 1991. with telecom equipment manufacturing accounting for 90% of the ICT manufacturing in 2003. telegraph and telephone (PTT) operator developed the Nordic mobile telephony standard in collaboration with Sweden-. Equipment manufacturing Finland: Market openness. Finland’s state-owned post. secondary and tertiary education is free of charge. which more than doubled between 1985 and 2005. and joined the European Union in 1993. the first GSM network was launched in Finland. the country’s ICT sector has benefitted from investment in R&D. Finland deregulated the telecom sector by the adoption of the Telecommunications Act and a new Radio Act. particularly in the ICT sector. • First-mover advantage: in the 1970s. equipment manufacturers. mobile network operators. An increase in FDI has resulted in technology transfer and cooperation that has helped to fuel the telecom sector. the Finnish economy was dominated by forest-related industries. • Specialization in telecom: Finland’s ICT sector has developed specialization in the manufacturing and export of telecom equipment. with Nordic countries benefitting from the first-mover advantage in the mobile telecom industry worldwide. After the collapse of the Soviet Union in 1991. content owners and content providers for mobile applications. These changes were primarily driven by higher education and the emergence of knowledge-based industries. • Foreign direct investment: in 1993. Finland removed the restriction on foreign ownership in Finnish firms and restrictions on capital inflows.000 firms in 2000. networks were opened to free competition. which is also known as Finland’s Wireless Valley. Trade Liberalisation and Innovation Capacity in the Finnish Telecom Equipment Industry. The country witnessed more than fivefold growth in FDI from 1990 to 2000. primarily driven by a robust educational system in which basic. From 1987 to 1997.” OECD Publishing. which encourages cooperation among a wide range of manufacturers and suppliers. public certification and standardization authorities and financial service providers. consulting firms. liberalization and innovation drive the telecom equipment industry109 Background • Prior to the 1990s.000 people in over 4. • Development of clusters: the development of the Finnish telecom industry is also attributed to the emergence of an ICT cluster. which has facilitated the emergence of Finland in the telecom sector by providing a large pool of engineers. Finland lowered the entry barriers through the introduction of reforms. Further. 29 July 2008.

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

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

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.

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

Glossary AWS A2P ACMA ACTO ADC AGR ARPU AUSPI BSCs BTS BWA BWCI CAGR CDB CEWIT CLS CMRS CMSPs CMTS CMTS COAI CPE CPP CRBT CRTC CSC CSEA CVD DAS DoT DSL Advanced Wireless Services Application-to-person Australian Communications and Media Authority Association of Competitive Telecom Operators Access deficit charge Adjusted Gross Revenue Average Revenue Per User Association of Unified Telecom Service Providers of India Base Station Controllers Base Transceiver Stations Broadband Wireless Access Broadband Wireless Consortium of India Compound annual growth rate Cut-out Distance Band Center of Excellence in Wireless Technology Cable Landing Station Commercial Mobile Radio Spectrum Cellular Mobile Service Providers Cellular Mobile Telephone Service Cable Modem Termination System Cellular Operators Association of India Customer Premises Equipment Calling party pays Caller Ring Back Tones Canadian Radio-television and Telecommunications Commission Common Services Centers Commercial Spectrum Enhancement Act Countervailing Duty Distributed Antennae Sharing Department of Telecommunications Digital Subscriber Lines 89 Enabling the next wave of telecom growth in India .

E&PSS FCC FDI FICCI FY G2B G2C G2E G2G GBT GMPCS GoI GST HMCP IAMAI IBA ICASA ICNIRP ICRIER ICT IDI ILD IMEI IPF IP-I IPLC IP-VPN ISPAI IT ITeS ITU Emergency & Public Safety Services Federal Communications Commission Foreign direct investment Federation of Indian Chambers of Commerce and Industry Financial Year Government-to-business Government-to-citizen Government-to-employee Government-to-government Ground-Based Towers Global Mobile Personal Communications Services Government of India Goods and Services Tax Hardware Manufacturing Cluster Parks Internet & Mobile Association of India Independent Broadcasting Authority IBA Independent Communications Authority of South Africa International Commission on Non Ionizing Radiation Protection Indian Council for Research on International Economic Relations Information and Communications Technology ICT Development Index International long distance International Mobile Equipment Identity Infrastructure Provisioning Fee Infrastructure Provider-I International Private Leased Circuit IP-based Virtual Private Network Internet Service Providers Association of India Information Technology IT-enabled Services Sectors International Telecommunication Union 90 .

Telephone and Telegraph Rural Community Phones Recharge Coupon Voucher Reference Interconnect Offer 91 Enabling the next wave of telecom growth in India .KADO kbps KYC MARR MCD MMDS MMS MNP MNREGA MoD MoU MPLS MSCs MTNL NCAER NDMC NeGP NFAP NLD NRAs NTCIP NTP OFC P2A P2P PAN PCOs PMRTS POPs PPP PSU PTT RCP RCV RIOs Korean Agency for Digital Opportunity and Promotion kilobit per second Know Your Customer Multi Access Radio Relay Municipal Corporation of Delhi Multichannel Multipoint Distribution Service Multimedia Messaging Service Mobile number portability Mahatama Gandhi National Rural Employment Guarantee Act Ministry of Defense Minutes of usage Multiprotocol Label Switching Mobile Switching Centers Mahanagar Telephone Nigam Limited National Council of Applied Economic Research New Delhi Municipal Council National e-Governance Plan National Frequency Allocation Plan National long distance National Regulatory Authorities National Telecom Critical Infrastructure Policy National Telecom Policy Optic fiber communication Person-to-application Person-to-person Permanent Account Number Public Call Offices Public Mobile Radio Trunked Services Point of Presence Private-public Partnership Public Sector Undertakings Posts.

RKM RNC ROW RPM RTT SACFA SATRA SIM SRF TCOE TDSAT TEC TEMA TESEPC TRAI UAS UID UIDAI UKFAT UMTS USOF VAS VoIP VPNs VPTs VSNL WMO WPC WTO Route Kilometer Radio Network Controllers Right of way Rate per minute Roof-top tower Standing Advisory Committee on Radio Frequency Allocation South African Telecommunications Regulatory Authority Subscriber Identity Module Spectrum Relocation Fund Telecom Centers of Excellence Telecommunications Dispute Settlement and Appellate Tribunal Telecommunication Engineering Center Telecom Equipment Manufacturers Association Telecom Equipment and Services Export Promotion Council Telecom Regulatory Authority of India Unified Access Service Unique identification number Unique Identification Authority of India UK Frequency Allocation Table Universal Mobile Telecommunications System Universal Service Obligation Fund Value-added services Voice over Internet Protocol Virtual Private Network Village Public Telephones Videsh Sanchar Nigam Limited Wireless Monitoring Organization Wireless Planning & Coordination Wing World Trade Organization 92 .

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Enabling the next wave of telecom growth in India 96 .

With a nationwide membership of over 1.500 corporates and over 500 chambers of commerce. set up in 1927. 97 Enabling the next wave of telecom growth in India . FICCI espouses Indian businesses and speaks directly and indirectly for over 250.000 business units. FICCI maintains the lead as the proactive business solutions provider through research. conferences. is the largest and oldest apex organization of Indian business. seminars and meets for promoting business.About Federation of Indian Chambers of Commerce and Industry (FICCI) FICCI. FICCI organizes a large number of exhibitions. interactions at the highest political level and global networking.

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

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

Enabling the next wave of telecom growth in India 100 .

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