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

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

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

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

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

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

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

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

10.1 4.1.2. Achievements and setbacks of NTP 1999 3. Overview of the Indian telecom industry 2.2.6. Indian telecom sector 1. Telecom equipment manufacturing in India 2.4.9.Contents 1. Importance of telecom 3 3 5 2. Outlook 9 10 12 14 15 16 17 19 21 22 27 28 3. Infrastructure 2.3.8.2.3.1. Internet and broadband subscribers 2. Evolution of the telecom sector in India 2. National long distance and international long distance 2.3. History of the Indian telecom industry 2. Connected India: telecom vision 2020 4. Wireline 2.7. Key challenges of NTP 1999 31 34 41 4 Key enablers 4. Wireless 2.2.1. Key achievements of NTP 1999 3. Key enablers under existing scenario 4.2 Licensing Spectrum 45 46 47 48 48 50 1 Enabling the next wave of telecom growth in India .5.3. Value-added services 2. Overview 1.11. Connected Indian: telecom mission 2020 4. Regulatory framework 2.1.

3 4.8 4.4.9 Universal Service Obligation Fund (USOF) Broadband Mergers and acquisition Taxation Foreign direct investment (FDI) Consumer affordability and rural penetration Human resource 53 55 57 58 60 61 63 64 66 69 70 71 72 72 73 73 73 74 74 74 4.10 Equipment manufacturing 4.4.5 4.3.4 4.3 4.3.13 Convergence 4.4.1 4. Global practices Conclusion Glossary 75 87 89 Enabling the next wave of telecom growth in India 2 .3.3.3.7 m-commerce M2M communication Mobile money M-health M-education Financial inclusion MNREGA and UID 5.2 4.3.4.4 4.6 4.3.12 Enterprise data 4.3. Key enablers for potential opportunities 4.4.14 Security 4.4.4.3.5 4.7 4.3.6 4.11 Telecom infrastructure 4.4.3.3.4.

Overview Over the past two decades.com/news/redefining-the-hindu-rate-ofgrowth/104268/0. 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. DBS Group Research. low-priced handsets. 26 August 2010. 1 2 3 4 India: Rising growth potential. compared with 3. accessed 19 October 2010.6%4 of total GDP in FY10. intense competition among multiple operators. Ernst & Young report. http://www. In FY10 (financial year ended 31 March 2010).com/ind-eco. India 2012: telecom growth continues. low tariffs and significant investments in telecom infrastructure and networks. In less than a decade.pdf. November 2008. with the further opening of the economy and the creation of regulatory institutions to march toward fully competitive markets. respectively. 3 Enabling the next wave of telecom growth in India . accessed 10 October 2010. “India’s Macroeconomic Indicators. The easy access to mobile services is the outcome of positive regulatory changes. while the industrial sector and agriculture sector contributed 28. India’s GDP has been rising by more than 7%1 annually in the past decade. “Redefining The Hindu Rate Of Growth. the telecom sector has been the major contributor to India’s growth.6%.12 April 2004. page 8.5%2 annually from 1950 to 1980. The process of liberalization started in the mid-1980s and gathered momentum in the 1990s. The Indian economy maintained a growth rate of more than 5% even during the global recession. Within the services sector.1. India’s service sector was estimated to account for 56. As a result of liberalization.9%3 of GDP. http://www.5% and 14. India is now closely integrated with the global economy and is considered one of the pillars of global economic growth. to GDP. accounting for nearly 3.” Export-Import Bank of India website.” The Financial Express.eximbankindia.1 Indian telecom sector 1.financialexpress. India has grown rapidly from a “command and control” economy to a market-based economy. 13 October 2010.

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

a government organization. Importance of telecom Telecommunication is pivotal to a country’s socioeconomic growth.html. accessed 10 October 2010. “High-teledensity states grew faster. 5 Enabling the next wave of telecom growth in India . a 10%5 increase in teledensity is known to boost GDP growth by 0. There is a substantial relationship between increase in teledensity and the economic development of a region. for instance.” LiveMint. business communication. According to a World Bank study. Samar Srivastava. registering a consistent overall growth rate of more than 35% over the past decade in terms of subscribers. a 1% increase in mobile subscribers is estimated to increase per capita GDP by about US$200. The MS Swaminathan Research Foundation (MSSRF).1. States with 10%6 higher teledensity have grown 1. creates efficient information flows.http://www. Increasing connectivity is highly instrumental in improving governance. page 17. and have helped those who catch the fish communicate with merchants and transporters in an efficient and effective manner. shared on a rotating basis. It is one of the main architects of the accelerated growth and progress of different segments of the economy. It has helped to reduce the time spent by agents and owners waiting for boats. The advantages of the advent of telecommunications are manifold and explicitly verifiable from the phenomenal success of the sector. The well-distributed network of telecommunication services results in widening markets. says study. reduced business risk and made those involved with fishing feel much safer at sea. Mobile telephony had a profound impact on the fishing community in the southern state of Kerala.livemint. World Bank. 1. has partnered with a leading telecom equipment and service provider to provide “Fisher friend. security.2.1 Economic growth Indian telecom has emerged as one of the greatest economic success stories. mobile telephony has made the rural and underdeveloped markets much more efficient.6% points.” through which fishermen are provided free mobile handsets.2% faster. By virtue of being a carrier and disseminator of information.2. Mobiles have helped to co–ordinate demand and supply. September 2010. Bihar could have witnessed 4% faster growth if it had enjoyed the same teledensity as Punjab. In other words. states with a higher teledensity have grown faster than those with lower teledensity. along with free access to information service. According to a study by the Indian Council for Research on International Economic Relations (ICRIER).com/2009/01/19224316/ Highteledensity-states-grew-f. Narrowing access gaps and removing barriers to information dissemination are prerequisites for promoting equitable and sustainable development as well as political and social cohesion. 5 6 Unfinished Business: Mobilizing new efforts to achieve the 2015 millennium development goals. response to emergencies and in the overall strengthening of the sociocultural ethos of the country. 19 January 2009. The usage of mobile phones has enabled fishermen to respond quickly to market demand and prevent wastage. lowers transaction costs and is an effective substitute for infeasible physical transport.

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

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

the value of mobile payment transactions in India is expected to reach approximately US$1. 1. the telecom industry and the Government for the creation of new services and applications.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).2.and the Indira Gandhi National Open University. Efforts are constantly being made to devise more affordable technology for the masses. the introduction of electronic muster rolls.3 billion by 2013. taking relevant education that is well aligned to the needs of the communities to their doorstep. thus overcoming cultural and language barriers. this data could be transmitted to MNREGA. • Helping lower child mortality and improve maternal health: this is done by providing information on nutrition. the introduction of GPS-enabled biometric systems at the grass-roots level continues to remain a challenge.. http://www. (R&D). the generation of intellectual property right (IPR).9 Facilitating research and development The growth in high-speed communication and advances in internet technology are making India a major R&D hub. organizations such as Telecom Centers of Excellence (TCOE). making sure the worker is paid for the day. 14 April 2010. transfer funds.ciol. These organizations have helped to create synergy among academia.2. According to Cybermedia India Online Limited. there is a significant focus on technology with the potential to improve rural connectivity. paying bills for utilities such as power and gas. monitoring health trends and provisioning primary health care. as these become a tool for commerce. For instance. NTP 1999.com/News/News/News-Reports/Nokia-to-rollout-mobile-banking-in-India/134910/0/. focus on global telecom standardization activities and the promotion of entrepreneurship. Mobile banking enables customers of banks and other financial institutions to access their account information. 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. leading class services and a global presence.2. In pursuance of the NTP 1999’s objective toward R&D. Furthermore. strengthening health networks. For instance. In India. 1. Enabling the next wave of telecom growth in India 8 . The challenges surrounding these programs include job cards for those demanding work.” CyberMedia India Online Ltd. wage payments and the authorization of wages electronically. which aim to provide inclusive growth. Once a worker has logged in. 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 integration of such programs with mobile telephony is expected to benefit such programs of national importance.9 1. places great emphasis on research and development 9 “Nokia to rollout mobile banking in India. booking tickets for transportation services such as trains and taxis and online shopping. This is one of the most befitting instances of the telecom and internet revolution. the TCOEs have focused on the technological and management challenges that Indian operators face in reaching all sections of society while offering affordable solutions. the development of manufacturing capability. trade stocks and purchase financial products such as insurance. Mobile phones provide consumers an opportunity to transact anytime and anywhere. formulated by the GoI. the Center of Excellence in Wireless Technology (CEWIT) and the Broadband Wireless Consortium of India (BWCI) have been established. accessed 12 October 2010.8 m–commerce This is the next revolution that is expected to emerge through the use of mobile phones. m-commerce finds its applications across various end markets such as banking and financial institutions. the elimination of ghost workers.

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

Mumbai.1. Telephone and Telegraph (PTT). with exchanges being opened in Kolkata. Telecom equipment manufacturing was also de–licensed in 1991. in 1986. NTP 1999 enabled the telecom sector to reach an average subscriber growth rate of more than 35%. and calling party pays (CPP) • 2004: Broadband policy. 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.2. In the early 1980s. Its history begins with the laying down of the first experimental electric telegraph line in Kolkata. telephone services were introduced. the sector underwent its first wave of change. the Telecommunications Dispute Settlement and Appellate Tribunal (TDSAT) was established to take over the adjudicatory and disputes functions from TRAI. In January 2000. which is now known as Tata Communications. 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. and were under government control. DoT was established in 1985 to provide domestic and long-distance services in India. However. Chennai. In 1881. Interconnect Usage Charges (IUC). 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. The introduction of NTP 1999 heralded pro-consumer policies. respectively. Karachi and Ahmedabad. primarily due to initiatives taken by the regulator and service providers. growth in the initial years was very slow due to high mobile handset prices as well as the high tariff structure of service providers. all foreign telecommunication companies in India were nationalized to constitute the Posts. VSNL and MTNL aimed at providing services to international and metropolitan areas. and the TRAI was established in 1997. The liberalization of the sector resulted in the need for a regulator. and the NTP was announced in 1994. and Mahanagar Telephone Nigam Limited (MTNL) were formed. Further. The formulation of NTP 1994 was followed by the launch of mobile telephony in India in 1995. 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 . universal licensing regime. The introduction of the New Industrial Policy 1991 initiated the liberalization process in India. two wholly government-owned companies — Videsh Sanchar Nigam Limited (VSNL).

INR1. the Universal Service Support Policy came into effect. Operators were allowed to share infrastructure in their tower installations. 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. education and medicine. through which all local incoming calls were made free. the DoT issued guidelines for the intra-circle merger of cellular mobile telephone service (CMTS)/UAS licenses.2 billion for the B circles. The Broadband Policy 2004 specified targets in terms of subscribers. among others.2 billion (US$14. BSNL. January 2004. FDI limit in the telecom sector was increased from 49% to 74%. the amount payable by BSNL and MTNL for 3G services pushed the total auction revenue to INR677. the GoI raised in excess of INR1 trillion from the auction of 3G and BWA services. the calling party pays (CPP) regime was introduced. which permitted an access service provider to offer both fixed and/or mobile services under the same license. the GoI introduced the Unified Access Service (UAS) licensing regime. which witnessed fierce bidding for spectrum. the TRAI abolished the access deficit charge (ADC).In 2002. which mainly used the proceeds of ADC to develop rural telephony services. The GoI subsequently issued licenses in November 2003. new UASL guidelines were issued. the licensee was required to endeavor to rollout services using wireline technology. In November 2005. e–commerce. providing statutory status to the USOF in December 2003. In March 2008.6 billion). The seven winners were required to pay INR509.2 billion for the more populated A and Metro circles. During the same year. raising INR385. Allocation of spectrum and grant of wireless license was subject to availability and. the DoT approved the sharing of infrastructure among mobile operators. The GoI offered two 20MHz blocks in the 2.7 billion to the GoI. entertainment. telecom towers were accorded “Infrastructure Status” by the Reserve Bank of India (RBI). mobile services had outpaced fixed-line services with nearly 45 million mobile subscribers. as these constitute an essential and possibly the most expensive component in the entire telecom service delivery infrastructure. and INR300 million for the rural C circles. 11 Enabling the next wave of telecom growth in India . reaching the final stage in May 2010. In May 2003. ADC was the fee paid by private mobile operators to the state-owned BSNL. The auction aimed at allotting three to four 3G licenses for each of the 22 regional circles. using any technology. in case UASL was not allocated spectrum due to non-availability. in February 2004. In 2004. The bidding process continued for a period of 16 days. March 2007 and January 2008. The bidding process continued for 34 days. The reserve price for 3G services was categorized on the basis of circles — INR3. the Government concluded the auction of BWA services across India. Additionally.2 billion) in auction revenues. which covered the levy paid by mobile operators to the state–run operator.4 billion (US$8. The fund was introduced to provide access to telegraph services to people in rural and remote areas at affordable prices. December 2006. The GoI commenced the auction for 2x5MHz in the 2100MHz band for 3G services in April 2010. Further. In July 2010. which recognized the ubiquitous potential of broadband services and their contribution toward the GDP growth and improved quality of life through e–governance. Thus. The GoI also introduced the Broadband Policy 2004.3GHz range in each of the country’s 22 circles. In February 2008. Following the auction of 3G mobile services.

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

the GoI established the Telecom Dispute Settlement & Appellate Tribunal (TDSAT). as an authority separate from the TRAI to handle disputes in the telecom sector The functions of TDSAT are to adjudicate any dispute between a licensor and licensee. and to hear and dispose of appeals against any decision or order of TRAI The appellate tribunal consists of a chairperson and two other members 13 Enabling the next wave of telecom growth in India . between two or more service providers. The key powers and functions of the authority include: • • • • • • • • • • • • • • • Recommending the need for a new service provider. 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. and between a service provider and a group of consumers. that may be entrusted to TRAI by the central government.TRAI • TRAI was established as an independent statutory regulatory authority under the TRAI Act in 1997. such as administrative and financial functions. or as may be necessary to carry out the provisions of the TRAI act TDSAT • • • In April 2000.

3% 45.3% Urban 67.2% 205. “Telcos to recoup 3G bid money in 5-6 years: Analysys Mason.3 FY06 70% 60% 723. urban subscribers account for more than 65% of the overall subscriber base.3 621.trai. http://www. The telecom revolution in the country has impacted both the urban and rural population. accounting for 95.1% to reach 621.6% 36.3% FY01 4.12 whereas wireline subscribers account for 4. with the mobile segment leading this growth.0% 98.9% 140.4 FY05 300.9% 28. page 4. The total subscriber base (including wireline and wireless) reached 723.html. 11 Shauvik Ghosh.1%.5 FY00 61. The wireless segment has been registering monthly mobile additions of about 15 to 2011 million subscribers. Lower costs and the additional benefit of mobility that is associated with wireless subscribers have led to the stagnation of the wireline subscriber base.3. http://pppinindia. Subscriber base and teledensity (wireless and wireline) 800 Total subscribers (million) 700 600 500 400 300 200 100 0 2.0 FY02 5.9%. 30 May 2010. 63 /2010.5 429. wireless subscribers constitute the majority of the total subscriber base. September 2010 100%= 723. In the past decade. accessed 10 October 2010. December 2009. As of September 2010.9 FY07 3. Urban and rural subscriber base. 12 Ernst & Young analysis. http://www.0% 76.com/ pdf/ppp_position_paper_telecom_122k9. Such phenomenal growth can be attributed primarily to the country’s large population.0% 52.3 million subscribers.asp.7% 37. Enabling the next wave of telecom growth in India 14 .3 million Teledensity (%) 50% Rural 32.” Department of Economic Affairs – Ministry of Finance. accessed 12 October 2010. high economic growth. com/2010/05/30230743/Telcos-to-recoup-3G-bid-money.1% 54. the total subscriber base grew from FY00 through FY10 at a compound annual growth rate (CAGR) of 36.3 40% 30% 20% 10% 18.livemint. accessed 10 December 2010. leading toward a huge urban–rural digital divide. Overview of the Indian telecom industry India is the world’s second-largest telecom market.6 FY03 7.3 million10 in September 2010.” LiveMint. the total teledensity has risen above 50%.7 FY08 FY09 FY10 Sep-10 0% Total subscribers Source: TRAI Teledensity According to TRAI. reduced tariffs.”TRAI website.in/Default.gov.7% Source: TRAI 10 “TRAI Press Release No.13 in comparison with US$200–US$350 per subscriber for wireline. affordable handsets.pdf.2% 12.5 FY04 9. hypercompetition in the sector. 13 “Position paper on the Telecom sector in India. infrastructure sharing and the introduction of positive and enabling regulatory reforms.2. The capital cost to provide mobile service varies in the range of US$50–US$90 per subscriber.0% 26. However.

6 0.9% GSM GSM subscribers constitute about 84. The advent of NTP 1999 paved the way for aggressive growth in the wireless subscriber base.8% 391.1 million16 subscribers. accessed 15 October 2010.1 22.3 49.0% 98. July 2010. and this growth is primarily attributed to the growth in wireless services.8 165.in/Default.zinnov.8 33. http://www.05–0.2 14.2.5 13. Over an extended period.pdf. The road ahead for the Indian telecom sector is expected to be more eventful. 16 “Penetration of Mobile Telephony in India & Value added services in Indian Mobile Telephony market.6% 1. the growth in the number of subscribers was very low. October 2006.6% 9. mobile number portability (MNP) and the growth of manufacturing.1% Source: TRAI 14 Ernst & Young analysis.8% 52. with average monthly subscriber additions in the range of 0.com/presentation/Mobile_VAS.0 33.6% 58. 84.7 4. primarily due to the advent of new services such as 3G.4. FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 Sep-10 Wireless subscribers Teledensity Source: TRAI Wireless subscribers: GSM vs.2% 6.March 2010). VAS. 15 Enabling the next wave of telecom growth in India . Mobile services were commercially launched in India in 1995.7 584.2% 3. http://www.0% 70% 60% 50% Teledensity (%) 40% 30% 20% 10% 0% FY10.5%14 to reach 584.” Zinnov Research and Consulting. Wireless India has emerged as one of the world’s fastest-growing telecom markets.3 million15 subscribers in Wireless subscribers in India 800 700 Wireless subscribers (millions) 600 500 400 300 200 100 0 1. September 2010 100% = 687. page 2. the gap between GSM and CDMA has widened as the GSM subscriber base has grown more rapidly. The wireless subscriber base in India grew from FY00 through FY10 at a compound annual growth rate (CAGR) of 77.1 261.7% 687.7 million CDMA 15. accessed 10 October 2010.asp.9 0.4% 3.gov. 15 “TRAI: The Indian Telecom Services Performance Indicators (January .1% of the total wireless subscriber base. CDMA. In the initial years of mobile telephony.trai. India’s mobile market is the second largest in terms of subscribers in the world after China.” TRAI website.

3% -3. Enabling the next wave of telecom growth in India 16 .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% 6.3 7.6 million village public telephones (VPTs) in India.9% 32.asp.1% of the subscribers in FY10. In the recent past. Although wireline infrastructure in India is not as extensive as wireless infrastructure.1 41. 18 “TRAI: The Indian Telecom Services Performance Indicators (January . http://www. wireline service continues to face stiff competition from wireless services.8 39. The wireline market is dominated by the governmentcontrolled incumbent players.18 with a teledensity of 3. In FY10.in/Default. the urban market has dominated the wireline subscriber base.7 17. cheaper handsets. Apart from these two players. Wireline The Indian wireline market grew at a CAGR of 3.4 38. DoT In FY00. January 2010. 19 “TRAI: The Indian Telecom Services Performance Indicators (July . the emergence of new technologies such as fiber to the home is expected to drive the growth of the wireline market in India.0% 26.4% 5. the advantage of mobility among wireless networks and inadequate infrastructure of the wireline network.gov. Although fixed-line operators are trying to offer VAS such as high-speed internet access. July 2010.4 41. the wireline market accounted for 93. there is a significant opportunity for future growth. it accounted for 5. besides other new technologies. Over the years.9% -3.2. where they see higher revenue growth and continue to invest extensively.3% 0.trai. there were 3.5 40.7% -2. http://www.” TRAI website. in FY10.1%.asp.March 2010). improved mobile coverage.1% Source: TRAI.9%. In the future. driven by the immense potential for data growth.1% 22. the wireline subscriber base was 37 million. accounting for 73.9% 3. accessed 15 January 2011.3% -1. 17 Ernst & Young analysis.4% of the subscribers.” TRAI website.in/Default.7% 38.7 18. 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. additional private players have also ventured into the fixed-line market.5 million19 public call offices (PCOs) and 0. the wireline subscriber base has declined due to lower mobile tariffs.trai.0 37. accessed 10 October 2010. video on demand and videoconferencing.9% 94.6% FY00 Wireless FY10 Wireline 93. As of September 2010.September 2010).0 25% 20% 35. the major wireline operators in India also operate mobile networks.gov.6% 40.3% 41.5. Furthermore.3%17 during the period between FY00 and FY10.

governance. FY06 FY07 Internet subscribers FY08 FY09 Broadband subscribers FY10 Sep 10 Source: TRAI 20 Ernst &Young analysis. Internet and broadband The internet has revolutionized the lifestyle of many Indians by creating a new means of communication. terrestrial wireless and future technologies. whereas traditional internet connections have a speed of less than 256 kbps. 17 Enabling the next wave of telecom growth in India . access to personal computers and electricity. Broadband brings a number of benefits.9 11. it has made significant inroads in the urban market. June 2010. September 2010.9 16. such as opportunities for education. satellite media.” International Telecommunications Users Group website.2 broadband subscribers has increased at a CAGR of 23. From FY05 through FY10.9%20 and 117. Booz & Company. employment and the delivery of services. The minimum threshold speed for a broadband connection is 256 kilobits per second (kbps) or more. The opportunities hold a much larger promise for India’s large low-income population and a growing economy.3 17.3 6.5 10. the evolution of technology and increase in bandwidth has given rise to internet connections at speeds faster than traditional dial–up connections.8 6. The DoT formulated the Broadband Policy 2004. cable television networks.2.5% to reach 16.6.1 8. which envisions the creation of a framework through various access technologies such as optical fiber. digital subscriber lines (DSL) on copper loop.5% increase in labor productivity in a country. 22 “Broadband Commission Presents Report to United Nations. Broadband infrastructure plays a vital role in a country’s achievement across domains such as social progress and economic development.2 FY05 9. This falls short of a Broadband Policy’s goals of 40 million internet subscribers and 20 million broadband subscribers by the end of 2010.3 13. Although the internet is a function of various factors such as literacy. Also. knowledge sharing. it is estimated that a 10%21 increase in broadband penetration translates to a 1. accessed 25 October 2010. respectively in FY10. Further. http://intug.2 million and 8.6 5 0 0. a 10%22 increase in broadband penetration leads to a 1. entrepreneurship and services. According to Booz & Company.8 million. 21 Bringing Mass Broadband to India: Roles for Government and Industry. org/2010/10/09/international-insights-%E2%80%93-september/. the number of internet and Internet and broadband subscribers (million) 20 15 10 5.9 1. governance.3% increase in GDP.3 3.4 2.

primarily in business districts or high–end residential areas of the larger cities. DSL constituted 50.5% DSL Cable modem Ethernet Wireless Others 86.6% Source: TRAI Source: TRAI Digital subscriber line (DSL) is the preferred technology among service providers for both internet access and broadband services. The share of wireless technology continues to be negligible and remains to be fully exploited. Broadband penetration continues to be very low in India.0% Market share by subscribers of technologies in broadband. Currently. . The key factors responsible for the widespread adoption of broadband include affordability and availability.3% 0. and 86.5% DSL Dial-up Wireless Cable modem Ethernet Others 50. especially in the case of broadband services.5% 6. broadband users are concentrated in urban areas. despite a structured framework that included ambitious goals to be met in 2010. September 2010 1.9% of the market share in broadband access.0% 10. September 2010 3.8% 4.6% 4.5% 31.Market share by subscribers of technologies in internet access.6% 0. As of September 2010.5% of the market share in internet access.

A majority of global operators in this space are also offering VAS such as network security.251 39 5. The growing demand for connectivity is coming primarily from the IT and IT-enabled services sectors (ITeS). internet connectivity. The other services relevant to this segment are international private leased circuits. network management.064 495 92 125 75 260 370 150 45 61 2. multiprotocol label switching (MPLS) based IP-VPN services.7.800 45 6.027 FY11E 1. 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. 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. With telecom and IT converging. network integration. Most large global players have set up operations in India to cater to the connectivity needs of their customers.600 20 3. It has spurred the demand for IP-based virtual private network (IP-VPN) services in India.2. network storage and enterprise voice solutions.262 FY10 1. and national and international data connectivity.169 23 Industry estimates.556 FY09 930 480 70 110 65 210 250 130 30 56 1.900 31 4. managed services and network security services are provided by global operators in partnership with Indian IT companies. the financial services sector and the government.200 510 130 150 80 350 600 180 52 72 2. Voice over Internet Protocol (VoIP) is considered a key enterprise application for lowering operating costs. 19 Enabling the next wave of telecom growth in India .

9 FY07 Market size (INR billion) Source: Voice and Data Growth (%) In 2002.ciol. with the sale of the strategic stake in VSNL to the Tata Group. 25 “India’s NLD market has grown by 13.ciol.0 144.com/content/vnd100_2010vol-II/110070519.1 1.7% to reach total revenues of INR164 billion.0 30. the GoI had issued 29 NLD24 service licenses. 27 DoT Annual Report 2009–10.asp. ILD has witnessed steady growth. the market slowed in FY10. 26 “India among the Top Few Fastest Growing Telecom Markets. accessed 18 October 2010.3% 176.0 17.com/content/vnd100_2010vol-II/110070520. primarily due to a decline in ARPU across all operators.25 However.3% 35. with the annual license fee being reduced to 6% of the AGR. FY10.2% 150. India’s ILD services were opened up for private players.” Voice & Data. the Indian market for NLD grew by 13.asp. In FY10.” Voice & Data.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 2009–10.0% 40% 30% 20% 10% 0% 71.0% 115.7% FY08 FY09 FY10 Growth (%) Growth (%) Market size (INR billion) 48. Market size of ILD 200 Market size (INR billion) 150 100 50 0 115. As of December 2009. FY10.3 0. Enabling the next wave of telecom growth in India 20 . http://voicendata.3% 25.3 97. the GoI had issued 24 ILD27 service licenses. with its revenues reaching INR176 billion26 in FY10.NTP 1999 opened up the NLD service for private operators. As of December 2009.Department of Telecommunications. http://voicendata. without any restriction on the number of operators. accessed 18 October 2010.6% in FY 2009-10.Department of Telecommunications.3 13. Market size of NLD 180 160 140 120 100 80 60 40 20 0 60% 50% 164.

6 19.” LiveMint. with the exception of telecom towers and cables.30 and equipment worth INR190 billion was imported in 2009.2 2008 2009 8.0 412. The majority of telecom segments are highly dependent on imports. the market for wireless infrastructure equipment is estimated to be US$8–10 billion. Furthermore. From 2005-09. “Policy recommendations to increase domestic telecom growth and exports of telecom equipment and service. “Indian telecom firms may get DoT boost.3 2005 1.9 billion FY07 Note: Includes both indigenous and offshore production Source: DoT. India is a strong market for global telecom equipment vendors.livemint. 02 September 2010. DSL and cable modems and networking devices.29 respectively.7 2006 2007 3. Despite the growth of a localized manufacturing environment in India.” “Telecom Equipment & Services Export Promotion Council (TEPC).9 15. GOI.9% 4. Source: International Trade Centre Although a few Indian mobile operators have a significant presence globally. accessed 10 October 2020. 29 Ernst & Young analysis. an unreliable power supply.3 518.3 200 140. http://www. chipsets.4% 3.0 120 100 80 60 40 20 FY08 FY09 Exports 0 Value of telecom equipment imports to India 10 Imports (US$ billion) 8 6 4 2 0 1. companies in the manufacturing segment are yet to feature in the global telecom landscape. http://www. inadequate tax benefits and competition from low-cost Chinese equipment.html. Manufacturers in India face challenges such as high logistics costs.1%. with the remainder coming from global companies manufacturing in India.” India Climate Portal. Telecom equipment manufacturing The telecom equipment industry comprises products such as cell phones.4% China South Korea 59. 30 “Time to go local in telecom equipment purchase.0 140 Exports (INR billion) 110.” 19.9 Source: International Trade Centre Share of imports by country of origin. including routers and switches.” CyberMedia India Online. http://www. wireless and landline infrastructure equipment.9% and 112. 2009 100%=US$8. the demand for telecom equipment is expected to be worth US$70–100 billion28 in 2015.7 1.0 2. accessed 02 August 2010.ciol. accessed 12 October 2010.7 81.com/2010/04/01215017/Indian-telecomfirms-may-get-D.3% 3. Ministry of Communications and IT. 28 “Telecom equipment manufacturing in India needs help urgently. according to a leading telecom equipment manufacturer.4% 3.5% 6.5 0 FY04 FY05 FY06 Production 236.org/telecomequipment-manufacturing-in-india-needs-help-urgently-21-july-2010-t. the manufacturing and exports of telecom equipment grew at a CAGR of 33.1% Sweden US Singapore Hong Kong Others According to industry estimates.climatechallengeindia. 21 Enabling the next wave of telecom growth in India . Telecom equipment manufacturing and exports Production (INR billion) 600 500 400 300 178.0 100 4.8.com/News/News/News-Reports/ Time-to-go-local-in-telecom-equipment-purchase/140758/0/. 21 July 2010.2.0 160. only 40% of the requirement for equipment is met through local sourcing.

9. Infrastructure The Indian telecom success story is built around the wireless segment. power regulation equipment. the rollout of infrastructure will become easier.33 depending upon subscriber usage. air conditioner. However. a mobile network in a circle consists of mobile switching centers (MSCs). steel tower.in/.nic. Crisil Research. The wireless sector has charted an impressive growth trajectory. 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. and the demand for more services will translate into the development of more telecom infrastructure. price. The National Telecom Critical Infrastructure Policy is expected to address these concerns as well as the issues affecting telecom providers on the state level. depending on the height of the tower. cables.34 Electronic infrastructure consists of the electronics needed to run a wireless network such as a BTS or cell site. Ernst & Young analysis.9. Rooftop towers (RTTs) are placed on the roofs of high-rise buildings. However. http://loksabha. Finally. whether it is GSM. and safety and aesthetic concerns. The components of mobile networks include the electronic infrastructure. 3G or BWA. the civil infrastructure and backhaul. It can also create active infrastructure.” Lok Sabha. diesel generator set  and security cabin. ICRA Rating Feature. radio access network. topography. Telecom infrastructure industry in India. with each BSC being connected to a base transceiver station (BTS). Typically.1 Mobile network Typically. as the safety and aesthetic issues related to the setup of towers are addressed. The BTSs are installed in a contiguous manner. on behalf of the licensee. hurdles to the erection of cellular towers and value added tax (VAT) levies on broadband services delivered through fiber media. fire extinguisher. 2. so as to facilitate the handing over of signals from one BTS to another like a chain. battery backup. page 5. competition.2. accessed 28 October 2010. Telecom towers and allied infrastructure. GBTs can accommodate up to six tenants. including ROW related issues. availability. radio antennas. while electronic infrastructure forms the remaining 40%. Civil infrastructure includes components such as tower site. duct space and tower through simple registration without paying any license fee. shelter room. frequency band of operation and spectrum 31 32 33 34 35 2. Falling prices of telecom services will help to increase their affordability. Infrastructure Provider-I (IP-I) can provide assets such as dark fiber. 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. ICRA Rating Feature. December 2008. It is not influenced by the type of the communication technology being used. ROW. node B. The rollout of services by operators takes place only on the back of robust telecom infrastructure. civil infrastructure forms about 60% of the cost of setting up a network. Civil infrastructure includes the complementary elements of a cellular network that ensure that the electronic components are operational. Telecom infrastructure industry in India. each of which is connected to base station controllers (BSCs). Enabling the next wave of telecom growth in India 22 . The radius of each BTS varies from 500 meters to as much as 8-10 km. It connects the electronic infrastructure at the tower site with the BSC and MSC. The development of the telecom infrastructure depends on four key factors: rollout. there were 425. page 9. growing at a CAGR of more than 75%31 in the past decade in terms of the number of subscribers. Backhaul consists of the intermediate links between the core of the network and the various sub-networks. The policy should clearly define the role of the Central Government and the states to help catalyze telecom sector growth. “Growth of Telecom Sector.8 million. As of March 2010.45532 telecom towers in the country. core network and other transmission equipment.2 Towers and in-building solutions Telecom towers are broadly classified as ground-based and rooftop towers. page 6.9. it does not play any role in carrying wireless signals. Competition will give further impetus to the development of infrastructure. GBTs involve a capital expenditure in the range of INR2. CDMA.4 to 2. Infrastructure development plays a crucial role in the development of the wireless sector. feeders. March 2009. March 2009. the number of operators providing their services from a particular site influences the extent of civil infrastructure installed at the site.

Today.org.350 28.794 369 1.” Lok Sabha. Andaman and Nicobar Assam and Arunachal Pradesh Delhi.207 34. stadiums and office buildings an essential requirement.275 23.008 4.371 8. Typically.322 26.071 1. 2.899 6. The GoI provides certain benefits specifically to infrastructure companies. accessed 01 February 2011. shopping malls.102 38. In recent years. operators used their tower infrastructure for competitive advantage.242 17.460.577 2.418 Towers 25.271 3. tenancy level for the industry stands at 1.387 5. State-wise number of towers States Rajasthan Gujarat. mass transit systems. the leading operators have opted to share their infrastructure.995 25.in/scripts/BS_ViewMasterCirculardetails. Mizoram and Tripura Kerala and Lakshadweep Total Public sector 2.028 2. which need reliable communications for efficient incident management and personal safety. asp. operators with towers and operator-owned tower companies. Currently.are shorter than GBTs and are common in urban and highly populated areas.” Reserve Bank of India. 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.037 Private sector 23. Orissa.102 26.9. and emergency services.396 18.aspx.55. over the past few years. 37 “Master Circular . 36 “TRAI: Consultaion paper on issues related to telecommunication infrastructure policy.323 38.678 425.in/. In-building solutions are designed to improve the reception of radio frequency signals indoors to meet the increasing demand for high-quality mobile services.090 52. these involve a capital expenditure of INR1.” TRAI website January 2011. which expects its mobile phones to work at all times. accessed 28 October 2010. http://loksabha. Meghalaya. Sikkim. implying a subscriber-per-tower ratio of 1. Manipur.611 18. This constitutes an essential and possibly the most expensive component in the entire telecom service delivery infrastructure. 23 Enabling the next wave of telecom growth in India .455 Source: “Growth of Telecom Sector. telecom operators have hived off their telecom towers into separate entities.184 391.3 Telecom infrastructure in India Initially.920 23.494 34. telecom towers were accorded Infrastructure Status37 by the RBI.644 17.Exposure norms. where there is paucity of real-estate space.121 41.854 3. Over the past couple of years.608 2.634 4. The tax benefit encourages the participation of private sector through investment.494 24.trai.177 41.630 31. Coverage is required to meet the needs of both the general public. there are an estimated 425. RTTs can accommodate two to three tenants.rbi.154 1.512 488 3.098 57.708 8.36 In July 2010. However. http://www. Haryana and Chandigarh Uttar Pradesh and Uttarakhand Andhra Pradesh Punjab and Himachal Pradesh Jammu and Kashmir Tamil Nadu and Pondicherry Bihar and Jharkhand Nagaland.337 720 2.752 1.614 35. the growth of mobile communications has made the provision of radio coverage within airports.766 21.in/Default. accessed 20 September 2010.455 telecom towers in India. there are three types of tower companies — pure-play tower companies.nic. Daman and Diu Maharashtra and Goa Karnataka Madhya Pradesh and Chhattisgarh West Bengal.5-2 million.392 45.321 20.392 22.428 4. http://www. As a result.gov.

additional security.2 81. a higher proportion of ground-based towers. translating to 6 million liters of diesel per day. energy.0 2.38 Estimated cost savings resulting from infrastructure sharing39 Component Capex (including interest) Opex saving as a result of infrastructure provisioning fee savings Opex saving as a result of shared energy costs Total opex savings Total savings (capex and opex) 71.6 Goals of infrastructure sharing The key beneficiary of infrastructure sharing is the subscriber.5 Future growth potential. Due to higher costs of land development. service providers have strong incentives to share infrastructure. It is estimated that infrastructure sharing in its current form has helped achieve savings of INR557. capital and interest costs.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). unclear land ownership and expensive backhaul connectivity costs in the rural areas. Enabling the next wave of telecom growth in India 24 . Against this background. the concept of infrastructure sharing assumes special importance.9. A significant part of the network rollout is likely to come in the untapped rural areas. and has a pre-tax margin of 7%–8%. as the tenant paying a higher rent to the tower company accelerates the time-to-market process. Such an arrangement works well for both partners. 2. where mobile teledensity is barely in the double digits. state electricity boards. Spectrum constraints and network quality: for operators in urban areas. Average diesel consumption per site per hour is about 2.6 billion resulting from savings in infrastructure provisioning fee (IPF). 27 million units of electricity are consumed per day. With sharing. massive amounts of funds can be saved. while the tower company earns revenues. 10.6 557. It is estimated that tenancy levels will rise to between 2–2. Infrastructure sharing serves the following goals: Optimal use of scarce resources: infrastructure sharing in its simpler forms will lead to better use of scarce national resources. 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. more groundbased towers will be needed. 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. In its more complex forms. superior network quality is a sustainable differentiating factor that helps to reduce customer churn and command premium prices.5 liters.4 Savings (INR billion) 476. and newer operators can build an assetlight model. and infrastructure sharing will act as an important tool to achieve faster rollouts and save operating and capital expenditure in these areas. Capital expenditure (capex) and operating expenditure (opex) savings: the setting up of a countrywide cellular network requires substantial capex. Overall. 38 Industry estimates. On average.9. land owners and so on before the tower and electronic infrastructure can be completed. further increasing capex requirements. Rollouts in rural and semi-urban areas: as wireless service providers penetrate rural and semi-urban areas.9.4 Energy requirements Currently. the industry has pumped in INR1 trillion and another INR400–500 billion is expected to be invested in the next two years. investments required and emerging trends The industry faces low profitability. power shortages.2. Tower sharing could help operators maintain quality network coverage throughout the city. Since many rural areas are far-flung.5x in the course of this decade. 39 Industry estimates. such as land and energy. insurance costs. it will allow a better use of spectrum. The dependence on diesel could be reduced if the Government utilized that subsidy to support a move toward renewable energy options such as solar. significant investments will be required. which is subsidized by GoI. This translates to consumption of more than 2 billion liters of diesel per year for cell sites.

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

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

1 93.6 75. July 2010 41 42 43 44 Mobile VAS in India: 2010. out of the total amount paid by end users (excluding P2P SMS). Moreover. The mobile VAS revenues in the country are driven by the P2P SMS service. which has exceeded the 700 million44 mark. July 2010. IAMAI. IAMAI.trai.42 The key mobile VAS include person-to-person (P2P) SMS. http://www. Mobile VAS in India: 2010. The rollout of 3G services in the near future is expected to provide consumers with new and improved services such as highspeed data transfer. Content owners end up getting approximately 5%–10% of the overall revenues. content aggregators or developers. Entertainment mobile VAS constitutes 57% of the overall revenues followed by information mobile VAS (39%) and m-commerce (4%).in/Default.” TRAI website. monotones. with India being one of the leading mobile markets for the young. as well as aggressive marketing efforts by telecom operators to spread awareness about their services such as updates and alerts. The rollout of 3G services is expected to drive the mobile VAS market in the future. 27 Enabling the next wave of telecom growth in India . The demand for mobile VAS is driven by the increase in the mobile subscriber base. person-to-application (P2A) SMS. “TRAI Press Release No.0 Revenue distribution of VAS services (%) 100 15 15 60 10 2006 2007 2008 2009 2010F Operator revenue Technology enabler Content aggregator Content owner Total Source: Mobile VAS in India: 2010. The growth of m–commerce.5 45. is also expected to drive the market for mobile VAS. which provides services such as mobile banking. IAMAI.2. July 2010 Source: Mobile VAS in India: 2010. short-code providers. the decline in ARPU has compelled mobile operators to focus on mobile VAS to generate additional revenues. July 2010. application-to-person (A2P) SMS.gov. approximately 60%–80%43 is captured by mobile operators. technology enablers. Market size of VAS 160 Market size (INR billion) 140 120 Growth (%) 100 80 60 40 20 0 28. July 2010. games and services such as m–commerce and m–radio.0 billion41 in 2010. growing at a CAGR of more than 50% during 2006–10.asp. Value-added services (VAS) According to the Internet and Mobile Association of India (IAMAI). handset manufacturers and content converters. accessed 10 October 2010.10. creating opportunities for both telecom operators and companies engaged in VAS. 63 /2010.0 145. media companies. followed by technology enablers (10%–20%) and content aggregators (10%–15%). The demand for mobile VAS is mostly driven by the youth. In terms of revenue distribution among various market participants. Mobile VAS in India: 2010. The key participants in the mobile VAS market include content owners. mobile payments and money transfer. the mobile VAS in India was estimated to be worth INR145. polytones and truetones as well as caller ring-back tones (CRBT). IAMAI. followed by music. IAMAI.

0% 11.8 80% 1.0 6.ovumkc. July 2010.March 2010).049.1%.4 10% 142.11.0 2011F 2012F 2013F 2014F 2015F 2020F 3G subscribers 3G subscribers as a % of wireless subscribers Source: Ovum. Ernst & Young analysis 45 “TRAI: The Indian Telecom Services Performance Indicators (January .asp.” TRAI website. 3G subscribers forecast 350 300 250 200 150 100 50 0 3.2. DoT. with a significant number of multiple and inactive Subscriber Identity Module (SIM) owners.in/Default. 3G subscribers are expected to be more than 300 million by 2020. there were 752.0% 101. Future subscriber growth is likely to hinge upon rural and low-income users. accounting for 20% of the total wireless subscriber base.11.9% 8.5 1.9% 97.0 118. during the period 2010–15.7% 752. http://www. Wireless subscribers in India Wireless subscribers (million) 1.11.com/.000 800 600 400 200 0 77.217. location based services and remote access/ VPN applications. accounting for 12% of the total wireless subscriber base. According to Ovum. Ernst & Young analysis Teledensity 2.2% 109.1% 92. respectively. 47 Ovum: Mobile regional and country forecast pack: 2010–15.1 Wireless At the end of December 2010. Outlook 2.185. Further.0 5% 0% 20. the ARPU continues to shrink. 3G subscribers are expected to reach 142 million by 2015.2 923. 46 Ernst & Young analysis. Although the telecom sector is witnessing strong customer additions every month.200 1.2% 44. Ovum website.2% and 110% in 2015 and 2020.8% 35. accessed 16 October 2010.1 2009 2010 2011F 2012F 2013F 2014F 2015F 2020F Wireless subscribers Source: TRAI. Further.1 million47 subscribers in 2015.trai. the number of wireless subscribers in India is expected to increase at a CAGR of 10.217. 3G services will drive the expansion of wireless services in future. video on demand.400 1. including a host of rich multimedia services such as video calling.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.gov.0 72.8 60% 40% 20% 0% 1.9% 95.9% 120% 100% Enabling the next wave of telecom growth in India 28 . the country’s wireless teledensity is expected reach 97.1 1. http://www.516. 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.2 million45 mobile subscribers.9% 10.134. Teledensity (%) 87. accessed 10 October 2010. leading to falling profit margins of mobile operators.46 to reach 1.7% 63.1 525.600 1. Ovum.3 1.7% 25% 20% 15% 303.

3 million broadband subscribers in India.com/. accessed 16 October 2010. 49 Ernst & Young analysis.3 Wireline There were 35.11. page 16. accessed 10 October 2010. the number of wireline subscribers in India is expected to decrease at a CAGR of nearly 4%.1 30.3 2.1 million50 by 2015.in/Default. 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. http://www.” TRAI website.5 29. 50 Ovum: Fixed voice connections forecast pack: 2008–15. The wireline market is in decline.in/Default.5 32. http://www. Ernst & Young analysis 48 “TRAI: The Indian Telecom Services Performance Indicators (January . accessed 10 October 2010. Ovum. Further. http://www.1 26. 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. July 2010.4 Broadband As of September 2010.9 33. The growth in the mobile market is seen as the cause of the decline. the broadband connections are estimated to reach 150 million by 2020.gov.trai.asp.gov. June 2010. during the period 2010–15. a trend that is expected to continue.5 48 100 150 Source: “TRAI: Consultation Paper on National Broadband Plan. the wireline subscribers are forecasted to reach 26. DoT. The growth of broadband is expected to increase with uptake of 3G and BWA services. According to Ovum. Considering increasing broadband demand.trai. 29 Enabling the next wave of telecom growth in India .1 million48 wireline subscribers at the end of December 2010.1 35.3 million in 2020.11.ovumkc.asp. Ernst & Young analysis 37.” TRAI website.March 2010). Ovum website.2.1 34. there were 10.49 to reach 29.

5 7. 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. and the adoption of VAS.0 57.0%. 52 Ovum: Forecast of service provider revenue and capex.2. Ernst & Young analysis Over the years.ovumkc. Other services such as ILD. NLD and VAS are also expected to drive revenue growth.9 15. including BWA penetration.0452 billion and US$14. respectively. http://www.5 Revenue and capex Over the years.2 15.8 51.8 43. Ernst & Young analysis 51 Ernst & Young analysis.0 13. Revenue and capex forecast Revenue and capex (US$ billion) 70 60 50 40 30 20 10 0 32.1 48.9 billion.1 13.com/.11. to reach US$51. Enabling the next wave of telecom growth in India 30 . the increase in mobile penetration in both urban and rural areas. industry revenues and capex are expected to increase to US$57. with the introduction of 3G and BWA services.4 14.1%51and 7.0 34. accessed 16 October 2010. industry revenues and capital expenditure are expected to increase at CAGR of 8.7 11.9 2009 2010F 2011F Revenues 2012F 2013F 2014F Capex 2015F 2020F Source: Ovum. respectively by 2020. the Indian telecom sector has witnessed an increase in revenues and contribution toward GDP. According to Ovum. The growth in revenues is driven by cheaper mobile handsets. during the period 2009–15. Ovum website.3 38.0 10. The future revenue growth and increase in capex is expected to be driven by the rollout of 3G services and the increase in broadband penetration across the country.97 billion by 2015.8 45.2 billion and US$ 13. lower tariffs. Further. 2009-2014. the contribution of non-voice services towards the industry revenues is expected to reach 38% by 2020.

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

FDI and domestic investment. using technologies including international services digital network (ISDN). the emergence of India as a major manufacturing base and a major exporter of telecom equipment. The key objectives of the policy include telecommunication for all and within the reach of all. making it more affordable by fixing a suitable tariff structure and making rural communication mandatory for all fixed service providers Increase rural teledensity from 0. achieving universal service across all villages. and provide reliable transmission media in all rural areas Achieve telecom coverage of all villages in the country and provide reliable media to all exchanges by 2002 Provide internet access to all district headquarters by 2000 Provide high-speed data and multimedia capability. global standards in the quality of service.000 by 2002 • • • • Enabling the next wave of telecom growth in India 32 .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 200.4% to 4% by 2010. The policy includes specific targets: • • Make available telephone on demand by 2002 and sustain it thereafter so as to achieve a teledensity of 7% by 2005 and 15% by 2010 Encourage the development of telecom in rural areas. and protection of the country’s security interests.

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. mobile value-added services (MVAS) encompass mobile operators.g. especially reliability. up from 1. 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. especially telecom specialists • Fixed mobile convergence (FMC) 33 Enabling the next wave of telecom growth in India . content creators. 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. e.5% in 2000 • Creation of jobs across sales and marketing.3 million) and in teledensity (61. providers.0%) • Contribution of telecom to overall GDP of almost 3%. R&D and customer care.. 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.

Market Performance and Welfare in the South Indian Fisheries Sector. Furthermore. the teledensity level in the country was 0. Although India has witnessed a steep rise in teledensity over the past few years.54 Urban teledensity and rural teledensity at the end of September 2010 were 137.6% 1. the level had increased to only 1. The overall teledensity target of 15% by 2010 was achieved in FY07.3% poses a critical challenge due to low population density.3% 4. NTP 1999 has been instrumental in the growth of telecom in both urban and rural areas. Following independence. 56 Jensen. 54 “TRAI Press Release No.4%.8% 5. Enabling the next wave of telecom growth in India 34 . and its targets have been achieved well in advance.3% 28.” TRAI website. Currently.1. with rural teledensity being far ahead of the NTP 1999 target. As a result.7% 37. http://www. accessed 15 January 2011. the introduction of mobile telephony in Kerala increased the fishing community’s profits by 8%.1% 1. Key achievements of NTP 1999 3. The improvement in rural teledensity Urban and rural teledensity 140% 120% 100% Teledensity (%) 80% 60% 40% 20% 0% 8. geographical spread. It has helped reduce the cost and time of transactions and has visibly compensated for the poor infrastructure. a Harvard University economist.1 Teledensity Reforms in the telecom sector have been encouraged by the active participation of the public and private sector.56 decreased fish prices by 4% and consumption of fish increased by 6%.4% 61. accessed 10 December 2010.3. low per capita income and the cost of maintaining phones in rural areas. FY09 FY10 Sept 10 Urban teledensity Source: TRAI Rural teledensity Total teledensity 53 “Rural Telecom and IT.” TRAI website. According to a study by Robert Jensen.in/Default. and mobile penetration stands at a meager 28.2% 2. 55 “TRAI: The Indian Telecom Services Performance Indicators (July – September 2010).gov.3% 26.ac. respectively.2% FY08 14. about 70% of the population in India lives in rural areas.0% 24..4% 2.5% 12.” Indian Institute of Kanpur website. 63 /2010.6% FY04 38.3% 3. There is a significant opportunity for service providers to increase penetration in rural areas and generate revenues.0% 26.in/3inetwork/html/reports/IIR2007/04-Rural Telecom.7% 137.0% FY06 18.9% 0. “The Digital Provide: Information (Technology).9% FY01 14.9% 52. there is an uneven distribution of teledensity among Indian states resulting in slow economic development of the states and their surrounding regions.2% FY02 FY03 20.in/Default.1.trai.3% 0.02%53.” The Quarterly Journal of Economics.gov.0%. R. which was set at 4% by 2010.iitk. the overall teledensity as of September 2010 stood at 61.1% 1. http://www. January 2010.9% 47. by 1998.9%.0% 119.9% 4. page 76. 2007. The impact of mobile telephony on rural areas has been profound. http://www.pdf.2% 5.8% FY05 12.4% 65.2% 1.7% FY00 10.asp.8% FY07 89.2% 9.4% in rural India.2% 9. the disparity between urban and rural areas in terms of mobile penetration has increased significantly.trai.3%55 and 28.asp.

5% 79. R&D and financial services.8% 52. as well as indirect employment.5% 205.771 14. 57 Overview of Telecom Industry.3% 73.7% 300.5 26.5% 65.110 The development of telephony in India has played an important role in altering the structure of the economy.7% 90. technology.891 9.400 11. The ratio of the number of subscribers per employee is very high in the case of private operators in India.4 140.5% 429. media.1% 56.3% FY05 429.1. 35 Enabling the next wave of telecom growth in India . It has paved the way for a knowledge.9% 47. Employees of private and PSU operators 100%= 436. FY10 The Indian telecom industry employs more than 430.Total teledensity by state in India.00057 direct employees.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.2 Teledensity and employment Over the past decade.678 FY07 193 2.3 43.089 FY06 158 1. Dun & Bradstreet 3.9 34.3% FY07 PSU operators Private operators Subscribers per employee ratio in India FY05 PSU operators Private operators 132 1. by subscriber base 100%= million 98. December 2009. technology. with the majority of these employees being a part of the public sector undertakings (PSU).0% 89. education. The expansion of the Indian BPO industry is a classic example of indirect employment. which augurs well for sectors such as IT/ITES. R&D and customer care. which has resulted in an increase in employment opportunities in the telecom sector.7% 85.and information-based economy.7 20. private telecom players have considerably expanded their operations.0% FY06 432. Mix of private and PSU operators. Dun & Bradstreet website. The sector has created direct employment across various business areas such as sales and marketing.

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

Over the period.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. access to niche technologies.6 billion69 in FY09. the average selling price (ASP) of both feature phones and smartphones has been on the decline. email. the price of feature phones is declining at a faster rate than smartphones.1.7 Global outreach of Indian telecom companies In the early 1990s.5% to reach a projected US$18.8 billion in FY01.0 5. new product mix. Video Graphics Array (VGA) to 8-to-12-megapixel cameras. Indian mobile handset market 120 100 Volume (million units) 4.in/. However. Over the next few years. India’s FDI outflows (debit) have grown at a CAGR of 47.nic.6 6 5 4 3 2 1 0 Value (US$ billion) 3. and foreign affiliations were formed through joint ventures. the structure of ownership has also shifted toward majority and full ownership. The share of manufacturing in the investment activity has Source: Voice & Data 69 “NCAER: FDI in India and its growth linkages. greenfield investments were a popular mode of overseas investment among Indian firms. usually with a minority ownership.2 95. Macquarie Capital In the past decade. and the majority of this capital value has been used to acquire companies. The market has witnessed investment in the form of greenfield projects. Indian companies have reached overseas destinations to tap new markets and have acquired technologies. M&A provide benefits such as expansion of global footprint.5 108 6. adding numerous features ranging from monochrome screens to touch screens. from US$0. In line with the change in the pattern of investments.6 71. page 13. mobile handsets have evolved rapidly. According to the National Council of Applied Economic Research (NCAER). 3G and an improved user interface.4 7 5. Over the past decade. monotone ringtones to MP3 ringtones. August 2009. Globally. enhanced memory. the ASP of feature phones is expected to be US$50.7 80 60 40 20 0 33.” Department of Industrial Policy & Promotion. FDI by firms belonging to developing countries has gained momentum and has become an integral part of globalization. Global Positioning System (GPS). a wider customer base and growth momentum. http://dipp. accessed 10 October 2010. India has witnessed prominent diversification in the industry composition of overseas activities of Indian firms.8 101. and the ASP of smartphones is expected to drop below US$200.4 FY06 FY07 FY08 FY09 FY10 3. 39 Enabling the next wave of telecom growth in India .

0 300. 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 30.0 62.0 Source: Thomson ONE Banker Enabling the next wave of telecom growth in India 40 .700. The Indian telecom sector has actively been a part of the global M&A activity.0 194.8 177. Key overseas M&A by Indian firms Year 2010 2010 2003 2005 2010 2000 Target company Zain Africa BV Warid Telecom. whereas the share of services has increased. leading to the emergence of telecom giants from India.declined considerably. Bangladesh FLAG Telecom Group Ltd Teleglobe International Holdings Ltd.

along with the benefit of VAS such as internet for the urban and rural population and the abolition of the digital divide. Although wireline infrastructure in India has been in place for an extended period. accessed 10 October 2010. with a CAGR of 77. 41 Enabling the next wave of telecom growth in India . the advent of new technologies is expected to create conflicts for spectrum.3.72 in comparison with 33% in Brazil. accessed 10 October 2010. 71 “Broadband Policy 2004. accessed 15 January 2011. 73 “TRAI: Spectrum Management and Licensing Framework. Despite India’s status as an IT superpower. Currently. May 2010. according to TRAI. According to TRAI. Boston Consulting Group.5% during the period FY00–10. India has an internet penetration of 7%. Key challenges of NTP 1999 NTP 1999 envisaged the affordability and availability of telecommunication services for the common populace.2 Growth of broadband As of September 2010. Furthermore. wireline and wireless complement each other. http://www.9 million70 internet subscribers and 10. broadband penetration is accepted as a measure of a country’s ability to compete as an economic power. The availability of spectrum for commercial services in India is below the required levels.in/Default.htm. The decline has been due to lower mobile tariffs. May 2010. 3.1 Growth of wireline The wireline segment has added just 10 million users since the introduction of the NTP 1999.2.3 Spectrum challenges The Indian telecom industry has witnessed phenomenal growth in the number of subscribers. the bandwidth required by 2014 may be as high as 800MHz.74 Spectrum bands such as the 900MHz band are of great value to mobile operators due to the longer ranges these can support.” TRAI website. September 2010. accessed 10 October 2010. http://www. According to Boston Consulting Group. page 339.” TRAI website.trai.2. http://www.” DoT website.gov.2. page 18.September 2010). in the absence of a long-term plan to meet future requirements. India lags behind in terms of availability of spectrum for commercial use. the Indian telecom industry is expected to reach 1 billion73 wireless subscribers by March 2014. the affordability and availability of broadband services and inadequate infrastructure.” TRAI website. broadband penetration levels in India are far below other emerging countries such as Brazil. 72 The Internet’s New Billion. the growth of wireline phones is not in sync with the rise in the number of wireless subscribers.gov.asp. cheaper handsets.2. the advantage of mobility among wireless networks and the inadequate infrastructure of the wireline network. therefore requiring lesser BTSs density and lower capital and operating expenditure. the need for spectrum to service these subscribers has also increased. 70 “TRAI: The Indian Telecom Services Performance Indicators (July . page 7. 3.dot. inadequate content and applications in regional languages. http://www. In line with the growth of subscribers.3 million broadband subscribers in India.asp. However.asp.trai. the telecom sector continues to face various issues that act as impediments to its growth. 3. However. 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. The sluggish growth in broadband services is attributable to the absence of low-cost devices.in/ntp/broadbandpolicy2004. 74 “TRAI: Spectrum Management and Licensing Framework. there were 17. improved mobile coverage.gov.in/Default.trai.gov.5 million in FY06 to 37 million in FY10. the Broadband Policy 2004 had anticipated 40 million71 internet subscribers and 20 million broadband subscribers by 2010. Russia and China. Globally. 31% in Russia and 28% in China. and the number of wireline subscribers has fallen from 41.in/Default. Despite being the second-largest market in terms of the subscriber base. January 2010. The Broadband Policy 2004 has failed to keep pace with advances in technology and failed to boost the telecom sector.

to the government operator on a pro bono basis In 2001. the GoI announced the policy for 3G mobile services. Subsequently.2MHz per circle in case of GSM players and above 5MHz for CDMA In August 2008. in addition to 25MHz in the 2.4MHz of start–up spectrum for GSM-based services Two operators were selected for each License Service Area (LSA).nic. It auctioned two 20MHz blocks in the 2.2 billion Following the completion of the 3G auctions. it totalled to INR677. Including the amount paid by state-owned BSNL and MTNL. and opted for the auction of a start–up spectrum of 2x5MHz in the 2.7 billion to the GoI within 10 days of the closing of the auction. along with 2x4.in/tnl_jces_Sep_2009/Spectrum%20allocation%20 procedure. It laid down a roadmap for the allotment of 2x12.4MHz of start-up spectrum in the 900MHz band. 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 fourth operator license was issued using a three-stage auction procedure.” Integrated Defense Staff http://ids.Spectrum and license allocation timeline in India First stage: 1995–2003 Auctioning scarce spectrum • • • In 1995. Although firms were awarded licenses after paying the required entry fee. 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.pdf accessed 02 August 2010 Enabling the next wave of telecom growth in India 42 .4 billion from the broadband wireless auction Source: “A peep into RF spectrum allocation process in India.800MHz was given to the winning bidder: • • In addition to the entry fees.1GHz band with reserve prices for different categories of LSAs In May 2010.3GHz range in each of the country’s 22 service areas. 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.4MHz in 1. in line with TRAI’s recommendations.5MHz of spectrum per operator in each LSA Second stage: 2003–06 Unified Access Service (UAS) licenses • • In November 2003. The GoI allocated spectrum to new telecom players in service areas across India The defense services agreed to vacate 2x20MHz in the 1. irrespective of the quantity they held. the bandwidth for broadband services (WiMAX) was auctioned by the GoI. 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. 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. the GoI auctioned 2x4. The GoI raised INR385. Start-up spectrum of 2x4. the third operator license was awarded. licensees were required to pay a percentage of annual revenue as spectrum charges In 2002.1GHz UMTS band The DoT proposed new 2G spectrum usage charges for all operators. in 2001.800MHz band. and incumbents were kept out of fresh allocations. the e–auction of 3G mobile services was concluded after 183 rounds of bidding across all service areas.

the total number of licenses in a circle ranges from 12 to 14.6 Infrastructure Telecommunications infrastructure. The policy made the cellular license technology neutral. 3. and also allowed licensees to migrate from a fixed license regime to a revenue-sharing arrangement starting in August 1999.in/Default. data services and PCOs. Several demand prohibitive fees. Tower companies. 3.2. some treat infrastructure business in the same way they treat petty commercial undertakings. page 59. the country lags behind in terms of telecom R&D and continues to be reliant on imports. In November 2003. using any type of network equipment that met the International Telecommunication Union (ITU) or Telecommunication Engineering Center (TEC) standards. permitting an access service provider to offer either fixed or mobile services or both.gov. the allocation of spectrum is separate from the grant of license to provide service. Civic issues: there is a need to address civic issues such as zoning regulation. including voice and non-voice messages. especially away from cities and towns. http://www. in their service area of operations. and the biggest barrier to setting up telecom towers and other infrastructure is the wide variation in the approval process adopted by local bodies. 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. accessed 10 October 2010. the GoI introduced the UAS licensing regime. However.2. However. May 2010. despite being a “key infrastructure. where telecom companies see poor returns on the expensive investment required in setting up the infrastructure.3.” is far from ubiquitous. single window clearance.4 Licensing challenges NTP 1999 permitted Cellular Mobile Service Providers (CMSPs) to provide all types of mobile services.” TRAI website.75 Globally. Currently. telecom manufacturing in India has not been able to keep pace.trai. incur huge costs and delays because several state agencies are involved in granting approval for setting up towers. Telecom infrastructure service providers face several challenges. and some look at infrastructure companies as a means to finance deficits.2. 43 Enabling the next wave of telecom growth in India .5 Equipment manufacturing The Indian telecom sector has witnessed rapid growth. There are huge gaps in low-income or sparsely populated areas. others require dealing with multiple agencies. Since the introduction of the UAS licensing regime. page 59. 75 “TRAI: Spectrum Management and Licensing Framework. 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. licensees were required to use GSM technology. Prior to this. licenses are bundled with the allotment of a certain amount of spectrum. in India. which are highlighted below: Role played by multiple state agencies: there is no uniform approval process across the states. Moreover.asp. preferential treatment for sharing and incentives in a timely manner. therefore. 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.

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

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

It should be supported by different metrics of quality of services at affordable tariffs meeting the needs of different segments of society. broadband and internet services delivery to subscribers with high quality of experience. 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.1.4. Enabling the next wave of telecom growth in India 46 . data. with inclusive participation from rural India to ensure telecom coverage for all. media. video.

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

Enabling the next wave of telecom growth in India 48 . Moreover. stamp duty. with the allocation of spectrum separate from the allocation of a license. Parameters Spectrum and license Recommendations Need to have a single universal license for all telecom services. are currently imposed on the industry. Since there is a significant cash reserve lying unutilized in the USOF. Pure internet service providers should continue to be free of any license fees. including service tax and license fees (such as universal service obligation fees and spectrum charges). However. which let the provider offer fixed. the number of incumbent telecom service providers varies from four to six. entry tax and levies on towers. under the UAS regime. the GoI introduced the UAS licensing regime. Fee There should be a uniform license fee across all telecom circles. Globally. using any technology. mobile or both services under the same license. excluding the USOF.3.3.1. In November 2003. subject to its availability and efficient usage. DoT should consider lowering the contribution from 5% of AGR to 1% of AGR. a licensee is entitled to obtain a certain amount of spectrum. The policy must preserve competition and ensure that no service is given a price arbitrage over others. VAT.4. A uniform revenue share license fee of 1%. 77 See 5. in India. should be fixed. states levy additional taxes such as octroi. which aggregate to 30% of the revenues earned by telecom companies. The GoI has issued many new UAS licenses since the introduction of the UAS regime. Key enablers under existing scenario 4.1 Licensing77 The telecom sector has evolved from a monopolistic regime in the early 1990s to 12–14 licensees in a circle now. Multiple levies. for global practices.

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

A mechanism to ensure transparent and non-discriminatory spectrum management is needed.trai.025 2.3.500-2.300-3. for global practices.900 1.785 1. May 2010. http://www. In India. In line with estimated demand of approximately 500-800MHz spectrum across various bands out of a total 1.gov.6-21.2-453. accessed 10 October 2010.” TRAI website.asp.” TRAI website. a minimum of 287MHz and a maximum of 454MHz is currently available.400 3. 80 “TRAI: Spectrum Management and Licensing Framework.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. 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.6-21.400 2.805-1. data and other application services.785-1.4. 79 “TRAI: Spectrum Management and Licensing Framework.6 78 See 5.010-2. May 2010.920-1. plays a critical role in the provision of mobile telecom services. http://www.in/Default.161MHz79 of identified spectrum by TRAI.2.805 1.170 2.2 Spectrum78 Spectrum. 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 1.110-2.300-2. Enabling the next wave of telecom growth in India 50 . being a scarce natural resource. accessed 10 October 2010.gov. page 22.trai.910 1.asp.690 3. An increasing availability of smart-phones with significant processing capacity and a wide array of applications are resulting in higher requirements of spectrum.980 2.400-3. The next five years are going to see the spread of telecom services enabling subscribers to benefit from voice.710-1.900-1.in/Default.880-1. page 22.161 Spectrum available for telecom sector 20 20 18.8 18.8 35-75 35-75 0-20 (after coordination) 0-60 60 40 40 100 (ISPs) 287. the National Frequency Allocation Plan (NFAP) is the basis for spectrum utilization and development and the manufacturing of wireless equipment.880 1.

2 63.in/Default. http://www.1 62.48 0.53 0.7 0.9 52.4 69.5 13.31 0.ICT Statistics 2008.36 0.3 74.7 18. “TRAI: The Indian Telecom Services Performance Indicators (July-September 2010).75 0.2 49.26 0.5 76. accessed 15 January 2011.22 0.Country-wise spectrum availability Country Total licensed spectrum for mobile services.6 80.6 66.8 41.3 49.trai.26 0.8 59.6 0.2 59.gov.6 10. Ernst & Young analysis.4 69.15 79.3 31 6.5 13.2 28.25 10 10 10 Total 68.” 3g Americas website.7 0.63 0.2 6. 51 Enabling the next wave of telecom growth in India . accessed 14 January 2011.2 53.6 37.22 0.27 0. http://www.49 0.4 72.9 83.8 61.92 Argentina Brazil Canada Chile Colombia Mexico Spain UK US Source: “Digital Dividend Pavilion . February 2009.57 0.6 87.7 43. May 2010. MHz (2008) 170 200 265 140 120 120 358 353 294 Wireless subscribers.5 15 15 12.5 64.6 150. page 22.4 60.4 69.4 63.trai.4 270.3gamericas.1 44.2 37.75 12.3 Subscriber/MHz (million/MHz) 0.35 0.3 19. 2008 (million) 46.75 15 12.25 10 13.52 0.78 0.pdf.5 11.48 0.16 0.4 74. http://www. January 2010.2 63.4 55 53.2 50.in/Default.asp.75 15 12.4 CDMA 15 15 13.6 72.37 0.2 76.65 65 63.2 78.15 78.75 13.asp.accessed 10 October 2010.3 37.4 No. Ernst & Young analysis.5 31.4 60.75 11.5 150.” TRAI website.75 13.49 0.org/documents/MWC%202009%20Digital%20Dividend%20Pavilion-3G%20Americas%20 Erasmo%20Rojas.2 62.1 24 17.6 77.15 83.4 75.1 0. gov.6 14.08 Subscriber (million) Subscriber/MHz (million) 81 “TRAI: Spectrum Management and Licensing Framework.8 75.4 67 61. 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 53.55 70.25 67.11 0.Latin America Wireless Roadmap.09 0.95 76.63 0.2 4.5 0.14 0.” TRAI website. 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 33.55 0.8 63 53 57.15 84.7 38. ITU .

National frequency allocation plan should be reviewed every two years. http://www. timely allocation. The contacted limit of spectrum will be 6.pdf.  Spectrum allocation to existing players 2G spectrum up to the contracted limit should be ensured as initial spectrum. MHz 28-37 118. Regular spectrum audits should be carried to oversee the efficient utilization of spectrum. based on a transparent auction mechanism to determine the price.5 65 72.6 92 82. Need to bring in additional spectrum for commercial telecom services.4 92. Spectrum allocation to new players Spectrum usage charges Spectrum sharing and trading Enabling the next wave of telecom growth in India 52 . and to draw up a suitable schedule.3gamericas.in/images/1-pdotfinal. This roadmap should be made available publicly to ensure transparency.communicationstoday. Re-farming Spectrum allocation Spectrum allocation should be based on technology neutrality.” 3g Americas website. Allocation of spectrum beyond the contacted limit should be based on market mechanisms. “Presentation to the DoT committee on spectrum allocation criteria. Service providers should be allowed to enter into arrangements for transfer/sharing of spectrum among themselves so as to effectively utilize it and attain maximum spectral efficiency in the sector. service flexibility. February 2009.” Communications Today. Spectrum should be provided to the highest bidder.org/documents/MWC%202009%20Digital%20Dividend%20Pavilion-3G%20Americas%20 Erasmo%20Rojas.Latin America Wireless Roadmap. timely spectrum reconciliation and enhanced transparency. It should be based on market price and not administered pricing. Identify and vacate new spectrum bands for future use. accessed 14 January 2011. The criteria for levying spectrum usage charges should be identified upfront at the time of allocation of spectrum. Allocation of spectrum should be based on auctions.7 100. http://www.Operator spectrum holdings Country/Region/Operator India Denmark EU average France Germany Italy Spain Sweden UK US Spectrum holding per operator.2MHz for GSM operators and 5MHz for CDMA operators. Parameters Availability Recommendations Align spectrum bands with globally harmonized bands to achieve interference-free coexistence and economies of scale. 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. 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.pdf. accessed 14 January 2011.co.6 138.2 75-96 Source: “Digital Dividend Pavilion .

5 55.2 VPT and RCP: around 570.4%.705 rural community phones (RCPs). 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. 7 March 2010.3. 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. Tower infrastructure: provide infrastructure support to set up and manage 7. Multi access radio relay (MARR)-based VPT: out of 185. Rural broadband: 95. However. especially those in rural and remote areas. via Dow Jones Factive. resulting in a huge digital divide. about 6. The USOF has enabled telecom development in rural areas through the following key developments: Disbursement of the USO levy to the operators 60 50 54. The USOF covers rural and remote areas with public access telephones and individual rural household telephones in net high cost rural and remote areas. In 2002. rural teledensity is at 28.011 broadband connections out of the proposed 888.1 15. voice mail and email. The USOF is estimated to hold around INR180 billion. As of 31 December 2009.7 18.6 13.” Indo-Asian News Service. BSNL has provided VPTs to 61.832 wireline broadband connections have been provided as of 31 December 2009.000 VPTs are currently eligible for financial support for operation and maintenance.9 16.1 39.3.4. at affordable prices. for global practices. 83 “Minister Sachin wants to ‘Pilot’ IT revolution in northeast.83 at the end of FY10. 53 Enabling the next wave of telecom growth in India . about 184.694 have been provided as of December 2009. (INR billion) 40 30 20 10 0 34. whereas urban teledensity is about 137. Out of the target of 40.0 N/A FY05 Funds collected FY06 Funds disbursed FY07 FY08 FY09 Dec-09 Source: DoT 82 See 5.950 towers have been set up under this scheme. the Universal Service Support Policy came into effect. As of 31 December 2009.4 32. 40.0 12. © 2010 HT Media Limited.436 infrastructure sites spread over 500 districts in 27 states.3 Universal Service Obligation Fund (USOF)82 NTP 1999 envisaged access to basic telecom services for all.121 MARR-based VPTs installed before April 2002.500 have been replaced as of 31 December 2009.2 17.3%.302 uncovered villages.186 out of 62.

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

” TRAI website. Further. http://www.trai.2 million. To kick-start the broadband penetration in rural and far-flung areas. against the target of 20 million by 2010 set in the Broadband Policy of 2004. 2004.1 to 0. http://www.74%. The 3C’s — customer. India lags behind in terms of ITU’s ICT Development Index (IDI). India has set a target of 100 million broadband connections by 2014.trai. page 28. 86 “TRAI: Consultation Paper on National Broadband Plan. 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. in order to encourage broadband. 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. 55 Enabling the next wave of telecom growth in India .4. connectivity. use.gov. social. for global practices. The net broadband addition per month is just 0. with a broadband penetration of just 0. 84 See 5.4.in/Default. Today. 85 “TRAI: Consultation Paper on National Broadband Plan.asp. and 118 out of 154 countries in terms of ICT access. accessed 10 October 2010. This calls for a critical review of the Broadband Policy 2004 and the creation of appropriate infrastructure to support broadband growth.8 million broadband connections at the end of FY10. June 2010. behavioral and government initiatives. accessed 10 October 2010. cost of device and affordability.86 with a ranking of 129.4 Broadband84 India trails all developing Asian countries. lack of vernacular content. respectively. connecting 40% of the households in the country. page 3. June 2010.asp. The last mile access issue can be addressed through the deployment of wireless technology. socioeconomic growth is dependent on the spread of broadband services across the country. 106.3. and skills. application. economic.gov.” TRAI website. there should be balanced competition to ensure the quality and affordability of services. cost and competition — are essential for improving broadband penetration. deployment of wireless access should be given preference and fiber media should be utilized from the already available fiber capacity across nation.85 There were just 8. Broadband should be redefined and clauses such as ‘’always on’’ and minimum speed should be removed from National Broadband Policy.in/Default. as well as its BRIC counterparts. The drivers for broadband services are broadly classified as technological. The growth of broadband is restricted by several factors such as its perceived utility.

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

The stipulation regarding the minimum period of three years from the effective date of license for merger or acquisition should be done away with.3. intra-circle M&A is allowed subject to the following conditions: • • • The total number of operators in a circle should not fall below four Market share and revenues of the merged entity should be less than 40% in each circle A three-year lock-in for owner’s equity in the new operators that have been given licenses recently (no lock-in if fresh equity) Maximum spectrum of the merged entity will be capped at 15MHz for Metros and A circle and 12. and UASL with UASL. The share of a merged entity should not be greater than 30% in terms of sub-base or AGR. for global practices.5 Mergers and acquisitions87 At present. unified access services license (UASL) with UASL. Merger of licenses shall be restricted to the same circle.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. Market share of merged entity Lock-in period 87 See 5. Merged licenses in all the categories above shall be in UASL category only. CMTS license with UASL. 57 Enabling the next wave of telecom growth in India . Merger of license(s) shall be permitted in the following category of licenses: cellular mobile telephone service (CMTS) license with CMTS license.5. Parameters Number of operators Service area and license stipulations Recommendations Mergers should not result in less than six operators in the circle. The TRAI recommendations dated 11 May 2010 should be followed to maintain the balance between the interests of consumers and service providers.4.

with the matter going up to the Supreme Court. The Supreme Court without going into the merits of the case has ordered a relook at the matter by the state VAT authorities. these goods could be treated as “component/ spare/accessories” of “capital goods” (i.” TRAI website. channels and beams.in/Default. VAT. the significance of the telecom sector to the Indian economy has grown immensely. The levy of VAT on the sale of RCVs to subscribers would result in double taxation. thereby leading to greater financial burden on the telecom sector. which account for 80%–85% of the operator revenues. Over the years. Currently. Towers and shelters fall under Chapter 73 and 94 respectively of the Central Excise Tariff Act 1985. The issue whether the sale of RCVs should attract service tax or VAT has been a subject of constant debate and discussion.. accessed 10 January 2011. the operators pay up to 30%88 of their total revenues toward different levies. the bouquet of services has changed.trai. 88 “Telecom firms want lower tax burden. http://economictimes.” The Economic Times. According to TRAI. the sector contributes significantly to GDP. The issue was first taken up in the case of a leading telecom player by the state of Karnataka. while the dominant purpose for selling these RCVs is provision of telecom services to subscribers.89 96. It is important to note that currently the industry players are paying service tax on such broadband services. thereby leading to greater financial burden on the telecom sector.cms.e.4. The Indian telecom sector is subject to numerous taxes and levies.com/news/news-by-industry/telecom/telecom-firms-wantlower-tax-burden/articleshow/2753840. as well as tax.) 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. which is 23%–25% higher than their counterparts in other Asian countries.6 Taxation Over the years. 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://www. Currently. which are used for building transmission towers. This position has been adopted by industry players. 89 “TRAI: The Indian Telecom Services Performance Indicators (July – September 2010).asp. January 2010. This includes the uniform license fee. • • Sale of light energy: broadband services also continue to face taxation-related concerns. Central value-added tax (CENVAT) position on tower materials and shelters: telecom operators are availing CENVAT credit on goods such as angles. It is important to note that currently industry players are paying service tax on RCVs. RCV is one of the most popular ways to pay for telecommunication services. Enabling the next wave of telecom growth in India 58 . 5% levy for USOF.4% of the GSM subscribers and 94.3. the revenue share license fee (including the USOF) is prescribed as follows: • • • • 6% to 10% of AGR for access services. 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. custom duty and other taxes.indiatimes. Denial of credit on such goods would lead to an increase in the financial burden on telecom operators. 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. such as to procure merchandise. BTS etc. However. or other services. The levy of VAT on the activity of providing broadband connectivity services would lead to double taxation of such services. 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. accessed 15 January 2011. Various states across India have issued show cause notices. The classification of tower. as the RCVs are witnessing liberalization in the flexibility of their usage.gov. As of September 2010.1% of the CDMA subscribers were prepaid subscribers.

GST should not translate into an ambitious target to generate higher service tax revenues from the telecom sector. the non-subsumation of entertainment tax in GST could impose a significant financial impact on the telecom industry. special consideration has to be given on certain areas in the backdrop of the peculiarities of the telecom sector such as “place of supply rules90” i..e. Upcoming GST regime: according to industry experts. Further. 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. in view of the exponential growth witnessed by the telecom sector. In case entertainment tax is levied on VAS products. • 90 Place of supply rules define the place (state) which has the right to tax a service transaction. The upcoming GST regime should aim to simplify the tax structure for the industry. It is important to note that as per the current proposal.• Levy of entertainment tax on VAS products: there is a proposal in certain states to levy entertainment tax on VAS products as such products to entertain the caller. The upcoming GST regime should. thus. aim to rationalize the tax structure in the Indian telecom industry. 59 Enabling the next wave of telecom growth in India . entertainment tax is not proposed to be subsumed in goods and services tax (GST). along with the creation of a roadmap for a single unified levy. with all services and goods being taxed at a standard rate. ease in statewise compliances.

the balance between economic gains from foreign investment and national telecommunications sovereignty presents a challenging task. the telecommunications market reform has continued. Enabling the next wave of telecom growth in India 60 . telecommunication industries are often state-operated and monopolized in many countries. Given the importance of foreign investment.3. In the Asia–Pacific region. 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. 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. It results in substantial progress in meeting such countries’ basic telecommunication requirements. and enhances market competition. with countries such as the Philippines. However. In Latin America.4.7 Foreign direct investment (FDI) In the past decade. The telecom sector has been among the sectors that have witnessed substantial growth in FDI. Together. The telecom sector has a substantial impact on a nation’s economic development. and due to its influence on national security. the WTO and the ITU encourage the development of a global telecommunication infrastructure and the formation of an integrated global telecommunication market. The Indian telecom sector needs to foster a suitable environment where investment and entrepreneurship. Hence. As a result. many countries control FDI in telecom according to their economic and developmental needs. Globally. the policy should consider raising the upper limit on foreign investment to encourage more foreign players to invest in the capexintensive telecom sector. thereby enhancing economic growth in developing countries. including the development of new forms of electronic commerce. social stability and national security. prosper together. FDI in telecom brings advanced technological skills and large amounts of funds. Taiwan and Thailand opening their markets to foreign investment. globalization has led to a rapid increase in FDI. FDI in developing countries enables the development of a local telecommunication infrastructure and universal access. several countries that first privatized their domestic operators in the early 2000s are now preparing for a second round of market openings. The WTO aims to promote foreign and domestic investment. major FDI in the telecom sector is facilitated by two international organizations — the World Trade Organization (WTO) and the International Telecommunication Union (ITU).

at the same time.3.2 0.01 India Phillipines Source: DoT.09 Malaysia 0. It also removed the distinction between fixed-line and cellular tariffs.0 Belgium UK France Brazil 0. 61 Enabling the next wave of telecom growth in India .3 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.1 0. the increase in subscriber base and teledensity has enabled telecom companies to achieve economies of scale and.17 0.16 0.23 0.05 Thailand 0. Mobile tariffs per minute in US$ 0. This was followed up by incumbent operators introducing cheaper tariffs.1 0. India Telecom 2010 brochure In February 2006. giving India some of the lowest tariffs in the world. 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. a leading operator launched the “One India Plan.8 Consumer affordability and rural penetration The Indian telecom market has some of the lowest tariffs in the world. provide leading class services. with a large majority of people using low-cost mobile handsets.2 0. customer friendly and innovative for both local and long distance calls.03 China 0. Furthermore.4.19 0.04 Pakistan 0.” It was considered affordable.

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

92 there were 504 universities and university-level institutions. In terms of size and diversity. while the GoI provides basic and research infrastructure. organizations such as the Telecom Centers of Excellence (TCOE). The main funding for a TCOE comes from the sponsoring telecom operators. India lags behind China and the US in terms of student enrollment. October 2007. 92 Ministry of Human Resource Development.706 17. 2010 In keeping with the NTP 1999’s R&D objective.9 Human resource India has the benefit of a huge population.3. page xv. the Center of Excellence in Wireless Technology (CEWIT) and the Broadband Wireless Consortium of India (BWCI) have been established. a committee comprised of the DoT. Ernst & Young. including 243 state universities. As of December 2009. FY10.4 30 25 20 15 10 21.9 10. India possesses a developed higher education system that offers training in many fields.8 25. 40 central universities. Ministry of Human Resource Development. 130 deemed universities and 33 institutions of national importance. Government of India — Annual Report 2009–10. However. which is characterized by a dynamic young population base– more than half of which is under 25 years old. Ernst & Young.000 6. Number of higher education institutions and student enrollment 30. COAI. followed by the US and China. 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. 91 Unleashing India’s Innovation. in May 2007.000 12.000 Number of higher education institutions 21. 53 state private universities. World Bank website. Such organizations promote R&D and help in creating a talented workforce.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. and AUSPI submitted a report that suggested ways to form seven TCOEs across India in a PPP mode.213 20. 63 Enabling the next wave of telecom growth in India . India has the largest number of higher education institutions. only 17%91 of those in their mid–20s or older have completed their secondary education. However. For instance.4.

In addition. Export promotion The Government could create a sizable export promotion fund for the Telecom Equipment and Services Export Promotion Council (TESEPC). Fiscal incentives Domestic telecom equipment manufacturers may be allowed to have access to external commercial borrowing for capital expenditure and working capital requirements. 01 April 2010. Thus. the share of locally manufactured equipment has declined to 30% in FY09 from 74% in FY04.6. Increased competitiveness in the global market: a technologically advanced manufacturing ecosystem in India prospectively offers an international platform to telecom manufacturers. 96 Policy Recommendations to Increase Domestic Telecom Growth and Exports of Telecom Equipment & Services . 95 “Indian telecom firms may get DoT boost. html. It is necessary to ensure the free movement of the equipment/raw materials. There should be provision for round-the-clock customs clearance. supported by the banking system. According to DoT estimates. reaching a value of INR518 billion94 in FY09 during the last five years. The tax on the payment of royalty should be as low as possible. page 4. resulting in the significant growth of exports to developing nations. The value of telecom equipment exports was INR81 billion in FY09 during the last five years.Telecom Equipment and Services Export Promotion Council (TEPC).10 Equipment manufacturing93 The production of telecom equipment in India has increased at a CAGR of 29% from FY04 to FY09. localized players can expect to compete globally with established manufacturers and make their own mark in foreign markets in the long run. The case for a growing telecom electronics and equipment manufacturing industry is as follows: • Significant export potential: according to the Telecom Equipment and Services Export Promotion Council (TEPC). the provision of a single window clearance for all state-level approvals would be a vital fiscal measure.net/indian-telecom-a-tale-of-stupendousgrowth/. customs clearance for imports and exports should be done on a self-declaration basis. Other significant incentives would encompass the removal of withheld tax on the fee for transfer of technology and software import. In order to reduce transaction costs. 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. 28 February 2010. further strengthening the case for a robust telecom manufacturing industry.livemint. However.com/2010/04/01215017/Indian-telecom-firms-may-get-D. • • Employment generation: given the right impetus. accessed 20 October 2010. India needs to position itself as a telecom manufacturing hub in the long term.” LiveMint. 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. 93 See 5. and policy initiatives should be focused on encouraging localized manufacturing.” The Viewspaper. In order to encourage technology transfer. There is a need to align product certification with international standards and to facilitate global accreditation for the testing facility.4. In addition. 94 “Indian Telecom: A Tale of Stupendous Growth. the requirement for telecom equipment in India is expected to be about INR5 trillion95 by 2015. growth in the segment holds the potential to triple the country’s current employment base by FY14. 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.3. for global practices. the segment holds an export potential of INR450-500 billion96 by FY14. royalty payments of up to 5% on domestic sales and 8% on exports should be exempted from income tax. http://theviewspaper. accessed 02 August 2010. http://www. Enabling the next wave of telecom growth in India 64 .

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

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

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

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

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

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

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

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

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

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

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

The pre–qualification criteria included investment. • Since the 3G license allocation in Japan was straightforward. • The number of 3G operators was fixed at three per region. Enabling the next wave of telecom growth in India 76 .. • The selection of applicants was based on the “beauty contest” criteria (i. Licensing Hong Kong In February 2001. Sweden • In May 2000.1. • The three-license limit was driven by a shortage of spectrum. quality of service and financial capability. 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. From the sixth year on. Following the pre–qualification exercise.5. Japan • In 1998. the MPT established the technical regulations and publicized the licensing policies. • Successful bidders were expected to pay a minimum royalty fixed by the Government for the first five years of the license. In March 2000. the Hong Kong Government released its 3G licensing framework. 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 Government focused on rapid rollout and nationwide coverage. the successful bidders were required to pay royalties according to the royalty percentage determined at the time of auction. the Swedish law states that licenses are allocated based on specific criteria. with new as well as incumbent opeartors — but not fixed regional operators — being eligible. • Successful bidders were required to provide a five-year rolling guarantee of the minimum royalty payment for the entire license period. Further. The Government decided to issue four licenses for up to 31 December 2015.e. network rollout. the Japanese Ministry of Posts and Telecommunications (MPT) published the draft for the introduction of 3G services and solicited public comment. with the regulator having a total of 60MHz of spectrum for 3G services. Sweden issued an invitation to provide network capacity for UMTS mobile telecommunications services. with a guaranteed minimum payment. with the same royalty percentage applying to all licensees. the Government decided to issue four licenses through auctions. which is to the advantage of operators and consumers. as operators do not pay expensive fees to the state for the issue of licenses. the policy for comparative selection was not invoked. allotting licenses to operators who best meet stated pre-set criteria). with the number of applicants matching the number of licenses.

” National Telecommunications and Information Administration website. transparent and participatory renewal process.080. page 50.710–1. http://www. 103 “1710–1755MHz spectrum band relocation.103 the Federal Communications Commission (FCC) concluded the auction of Advanced Wireless Services (AWS) in the 1. accessed 22 October 2010. The 1. Public consultation procedures and the right to appeal also increase the prospects for a successful renewal process.390.” ITU website.755MHz band paired with the 2. gov/reports/2008/SpectrumRelocation2008.int/osg/spu/ni/3G/casestudies/GSM-FINAL. http://www. and ensure sufficient lead times and transitional arrangements in the event of non-renewal or changes in licensing conditions.4 44.7 1.doc. This is done through the principle of renewal expectancy.110– 2. In September 2006. including the use of the SRF to facilitate relocation of federal communications systems.0 51.070.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.ntia. It is essential to provide details about license renewal or reissue. Policy-makers and regulators should focus on creating interest among providers and providing incentives for long-term investment.2.0 each 44.pdf.0 3.710–1.0 Nominal 4. and through promoting regulatory certainty through a fair.0 2. page 1.520.870.0 45. which were authorized to be auctioned for commercial purposes.0 10.0 Note: The “beauty contest” approach purports to allocate licenses to operators who best meet stated pre-set criteria. 77 Enabling the next wave of telecom growth in India .508.482.0 351.0 120. 5. The 102 “3G Mobile Licensing Policy.08 116. Spectrum Re-farming of spectrum • The US Government created the Spectrum Relocation Fund (SRF) in December 2004.itu. accessed 12 October 2010.755MHz band used by federal agencies was reallocated to AWS under the provisions of Commercial Spectrum Enhancement Act (CSEA). which provides a funding mechanism through which federal agencies can recover the costs associated with relocating their radio communications systems from certain spectrum bands.8 360.155MHz band.0 35.pdf.

• In March 2007. and innovation in the supply and demand for radio-based technologies..” UK Department for Business. The MoD has management rights to 35%104 of the spectrum bands listed in the UK Frequency Allocation Table (UKFAT). and spectrum regulation. The FCC distinguished between de jure rights. page 28.6GHz band. Innovation and Skills website. in consultation with the Office of Communications (Ofcom). Further. civil maritime. and de facto control. i.gov. the Brazilian telecommunications regulator. One of the key recommendations of the Independent Review of Government Spectrum Holdings (IRGSH) was a regular review of all defense band allocations. but transfers management control of the spectrum. http://www. the FCC formulated rules for spectrum trading. Spectrum trading • Spectrum trading gives public and private sector entities the opportunity to decide which spectrum to release or share. emergency and public safety services (E&PSS) and science services. the possibility exists to use the spectrum for other applications the primary user does not need. uk/files/file38572. In 2006.e. The secondary trading of spectrum provided benefits such as economic efficiency. the Ministry of Communications and the Ministry of Defense have agreed to make 2x75MHz spectrum available for WiMAX in the 3. The committee formulated the strategic plan for the Ministry of Defense (MoD).6GHz band to support the nationwide deployment of nextgeneration mobile broadband services. is guaranteed the moment it is needed. civil aeronautical. It also provides the terms and flexibility to enter into leasing arrangements for a limited time if the bodies do not wish to dispose of the spectrum permanently. The 2. the Australian Communications and Media  Authority (ACMA) reviewed government spectrum holdings. inland waterways and rivers. In 1989. spectrum is needed only in certain geographical areas. the FCC proposed the concept of developing smart devices that adjust to the spectrum they use and take advantage of underused spectrum. Enabling the next wave of telecom growth in India 78 .6GHz band had previously been allocated to multichannel multipoint distribution service (MMDS) operators to support pay-per-view TV services.7 billion in net winning bids. sharing or reallocation opportunities for spectrum. and facilitates the provision of innovative new wireless services in the commercial market. Spectrum could be shared on a short-term or long-term basis under the condition that the use is vacated immediately when the need arises. transferee retains the license and legal responsibilities. the UK Department of Trade  and Industry’s spectrum strategy committee. promotion of innovation and flexibility. in 2004. Such spectrum could be made available for other applications inland. • Geographical sharing: in certain situations. simplifying them in mid-2004.AWS auction raised US$13. an inefficient primary mechanism of spectrum allocation that makes it necessary to move to a market-based method of secondary allocation. New Zealand was the first country to introduce open market trading of spectrum. While it is important to ensure that access to spectrum 104 “A Strategy for Management of major Public Sector Public Holdings. The critical success factors for spectrum trading include a large number of buyers and sellers. ANATEL. accessed 12 October 2010. as a part of spectrum re–farming. assignment of the license to another party. i. Spectrum assigned to the maritime sector may need to be used for maritime radio services only near the coastline. In Italy. • • • • • Sharing of spectrum • Time sharing: defense needs to use part of the spectrum only in crisis situations during exercises.pdf. In 2010.4–3.e. giving them the option to deploy LTE immediately. and it has begun a program to identify which spectrum can be released and time frame for releasing it.. In 2003. agreed to re-allocate spectrum in the 2. 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. bis. The re–allocation benefits the country’s mobile operators.

org/dataoecd/59/48/36503873.000 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. http:// www. Universal Service Obligation Fund In many countries. page 19. In the UK. after liberalization of the telecom sector. governments should consider whether they should create a USOF for broadband services. 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. In most countries. The Brazilian legal framework uses a variety of tools to achieve universal service. a separate universal service fund has been set up. 79 Enabling the next wave of telecom growth in India . have not considered the creation of a universal fund. Brazil has developed a mechanism that achieves universal objectives through obligations imposed on its licensees. the incumbent operator was required as part of its privatization to install payphones in 20. countries with large geographic areas and consequently much higher costs to serve rural areas have funds that aim to cater for the rural population.oecd. with a relatively small geographical area and high population density. ANATEL has imposed a coverage obligation rather than a funding mechanism.1% in France to 6% in Malaysia.pdf. Communication service providers are obliged to contribute to this fund in many countries. accessed 20 October 2010.3. Most European countries. As a result. 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.5. BT is the designated USO provider. In Greece. However. the telecom regulator. with the aim of increasing overall teledensity. a competitive tender mechanism was used. The contribution rate ranges from 0. USO services were provided by incumbent operators. On the other hand. In Mexico.5% (plus federal contributions) 1% 1% 1% Considering USOF for rural wireless broadband services With the rising importance of broadband. or proposing to expand into high-costs areas. subsidies are granted according to formulas for compensating operators already serving high-cost rural areas within their operating territory.

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

5% 26. Although the world is witnessing a rise in broadband penetration.4% 23. content and applications. The Information Security Management System (ISMS). Other top trends next 12 months. Eastern Europe added 19. However.108 in comparison with 4% in developing economies. Investment in information world in terms of broadband penetration. urban–rural divide and other factors that impact broadband penetration are very different in developing nations. that emerged were increases in the global respondents stated that 108 “Intel: Realizing the benefits of broadband. increased risks: 3. However.” Intel website. page 2. Increased security aware1. TRAI. The essential leading practices that enable countries to increase broadband penetration include: adoption of regulations that embraces innovation and competition. it declined to just 2%. Of all participants. The trend of actions that organizations have taken to control the leakage of Enabling the next wave of telecom growth in India 5.3% 7. However. 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. if China is excluded from the developing world. regulatory environment.1% 33.7% 0.5. whereas African countries were able to add 2. Broadband services have economic benefits both in developed and developing nations. Broadband Broadband networks are an essential infrastructure for the global economy. Indian organizations. invest in infrastructure and latest technology.” ITU.pdf. The number of organizations currently evaluating the use of virtualization techniques is growing: 81 4.intel. form PPPs.4 million fixed broadband subscribers. a large digital divide exists between the developed and the developing 2. 23%. encourage competitive ecosystems.7% 10% 20% 30% 40% Monthly broadband charges on a purchasing power parity basis (US$) 60 50 40 30 20 10 0 56 35 UAE Germany 34 Saudi Arabia 32 China 29 Japan 23 UK 22 Canada 20 US 18 Hong Kong 16 India 7 Israel Source: “Measuring the Information Society. 23% of 107 World Broadband Statistics: Short report. Point Topic Ltd. which covers the overall . identity and access management computing. infrastructure. page 4. during 2005–08. Broadband penetration by country 2009 Netherlands Korea UK Finland US Australia China India 0% Source: OECD. Booz & Company analysis There are more than 497. Intel 37. as they provide businesses and consumers with fast and continuous access to internet–based services. the growth rate is much higher in the developed world.5% 29.5 million fixed broadband subscribers.com/Assets/PDF/Article/WA-323857001.8 million107 broadband subscriptions across the world. and release spectrum for the sustainable deployment of broadband services. as against only 8% by systems. http://www. Furthermore. 61% (46% globally) agreed that their organization will spend more this year in information security than it did last year. Emerging markets such as India need to adopt leading practices that facilitate rapid and cost-effective deployment of broadband technologies.7% 26.4.. The firm combination of national objectives toward broadband services with leading practices is expected to enable developing nations to achieve benefits of broadband growth. accessed 12 auditing capability and stronger they have embraced cloud October 2010. For instance. 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. 2010.

where all have the confidence to access the new and innovative services delivered by computer. 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. formulated the action plans. subsidies for purchase of personal computers by low-income citizens • Promote digital literacy • Support e–governance. technology demonstration projects. 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. with each citizen having access to a personal computer. as well as funding for information society–related R&D • Plan to implement number portability for both wireline and wireless services • Create fund for promotion of digital literacy • Develop content for disabled people and elderly people • Create and support ICT United Kingdom Policy element Objectives Action • Create a “digitally rich” UK. and launched the Korean Agency for Digital Opportunity and Promotion (KADO) • Encourage infrastructure investment by incumbents and market entrants  • Support construction of new high-capacity digital broadband backbone. The Korean Digital Divide Act created the five–year master plan to close the digital divide. through funding • Financial support for R&D. mobile phone. 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 . 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. 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.South Korea Policy element Objectives Action • The South Korean Government created an action plan for the emergence of a knowledge-based  society.

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

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

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

. Venezuela. After smartphones were released. and Mexico have also implemented m-commerce successfully. telecommunications and wireless communications services. Ghana. Paraguay. radio. In July 2005. 5.7% during the same period. The cable industry has opposed this demand. m-commerce Globally. The Ministry of Transport and Communications may. In July 2000. wire. Ovum website. It is also the regulator of the UK communications industries. This has made it possible for telephone companies to receive a statewide franchise to provide video services that compete with cable.9. Radio network controllers (RNC) may be shared physically. For core networks. However. Mobile networks in North America witnessed growth in data services that were also driven by the introduction of smartphones. television. All operators may share sites and masts. subject to an individual consideration. optic fiber.8. but operators must retain logical control over their networks and spectrum. provided such networks can offer sufficient capacity and that the arrangement is without substantial disadvantage to subscribers. Countries such as Sudan. Enabling the next wave of telecom growth in India 86 . with responsibilities across television. the regulatory functions of the Broadcasting Standards Commission. It is the regulator of the telecommunications and the broadcasting sectors.e. 111 Ovum: Mobile regional and country forecast pack: 2010–15. publish tariffs and reference offers. Convergence • In the US. cables. networks’ packet data grew nine times larger than voice services. the state of Texas passed a bill deregulating the telecom markets. satellite and cable and content. Office of Telecommunications. the rollout of 3G has provided the required impetus to drive widespread adoption of m-commerce services.ovumkc. the Australian Broadcasting Authority and the Australian Communications Authority merged to form the Australian Communications and Media Authority. cable TV services require approvals at the municipal level. P-P radio lines) may be shared. Latin American countries such as Uruguay. as well as to regulate telecom common carriers and service providers. the Philippines and South Africa have been the largest adopters of this service. a number of commercially negotiated and regulated agreements exist between the two main operators and the MVNOs. In Canada. • • • 5.com/. m-commerce is very popular in countries where most of the population is unbanked. Brazil. the Federal Communications Commission (FCC) is an independent agency that regulates interstate and international communications by radio. Recently.1% to reach US$19. allow fulfillment of the coverage requirements through roaming in networks based on other technologies than Universal Mobile Telecommunications System (UMTS). The main operator is obliged to provide national roaming and MVNO access. the Independent Communications Authority  of South Africa was established. and took over the functions of two previous regulators – the South African Telecommunications Regulatory Authority and the Independent Broadcasting Authority. In India. voice revenues are expected to decline at a CAGR (2008–15) of 1. the Canadian Radio-television and Telecommunications Commission (CRTC) is an independent public authority to regulate and supervise all aspects of the Canadian broadcasting system. There are commercial agreements between the main operators. Radio Authority and Radio Communications Authority were combined to form Ofcom. accessed 16 October 2010. the mobile switching center (MSC) may not be shared. http://www. All transmission routes (i. Argentina. 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.but required each operator to maintain 30% of its network separately. but data revenues are expected to increase at a CAGR of 16. implement accounting separation and is subject to price and accounting controls for national roaming. • • In Norway. as the cable industry underwent the time-consuming and expensive process to secure city-by-city franchises over the last three decades. In Canada in 2002. Independent Television Commission.5 billion111 in 2015.

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

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

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

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

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

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

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

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

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

Enabling the next wave of telecom growth in India 100 .

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