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

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

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

e.. 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.Focus areas Taxation Recommendations The upcoming goods and service tax (GST) regime should aim to simplify the tax structure for the industry. However. which imposes double taxation on ILD and NLD license holders FDI Given the importance of foreign investment. there is no unique. Enabling the next wave of telecom growth in India vii . 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. convergence. 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. with all services and goods being taxed at a standard rate Special consideration needs to be given on certain areas in the backdrop of the peculiarities of the telecom sector such as “place of supply rules” i. the policy should consider raising the upper limit on foreign investment to encourage more foreign players to invest in the capex-intensive telecom sector Policies should also cover areas like financial inclusion. m-commerce. the state where GST will be paid for different kind of telecom services.

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

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

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

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

1.9. Outlook 9 10 12 14 15 16 17 19 21 22 27 28 3. Wireline 2. Overview of the Indian telecom industry 2.7.1. Telecom equipment manufacturing in India 2. Key challenges of NTP 1999 31 34 41 4 Key enablers 4.3. National long distance and international long distance 2.1. Evolution of the telecom sector in India 2. Infrastructure 2.3. Achievements and setbacks of NTP 1999 3. Connected India: telecom vision 2020 4.8.2.6.3.1. Value-added services 2.1 4. Internet and broadband subscribers 2.3.2.2. Indian telecom sector 1. Overview 1.4. Wireless 2. Key enablers under existing scenario 4. History of the Indian telecom industry 2.2.10.Contents 1.11. Connected Indian: telecom mission 2020 4. Key achievements of NTP 1999 3. Regulatory framework 2. Importance of telecom 3 3 5 2.2 Licensing Spectrum 45 46 47 48 48 50 1 Enabling the next wave of telecom growth in India .5.

3.14 Security 4.3 4.3.3.6 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 4.5 4.4.4.6 4.4.10 Equipment manufacturing 4.4.4.4.4. Global practices Conclusion Glossary 75 87 89 Enabling the next wave of telecom growth in India 2 .3.1 4.3.7 m-commerce M2M communication Mobile money M-health M-education Financial inclusion MNREGA and UID 5.3.7 4.8 4.3.3.3.3.4 4.3.2 4.13 Convergence 4.4.4 4.11 Telecom infrastructure 4.5 4. Key enablers for potential opportunities 4.3 4.4.12 Enterprise data 4.3.

1 2 3 4 India: Rising growth potential. In FY10 (financial year ended 31 March 2010). low-priced handsets.com/news/redefining-the-hindu-rate-ofgrowth/104268/0. with the further opening of the economy and the creation of regulatory institutions to march toward fully competitive markets. compared with 3. “India’s Macroeconomic Indicators.9%3 of GDP. In less than a decade.” Export-Import Bank of India website.6%4 of total GDP in FY10. page 8. “Redefining The Hindu Rate Of Growth. low tariffs and significant investments in telecom infrastructure and networks. 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. The easy access to mobile services is the outcome of positive regulatory changes. accessed 19 October 2010. As a result of liberalization. intense competition among multiple operators.” The Financial Express. accessed 10 October 2010. accounting for nearly 3. respectively. India has grown rapidly from a “command and control” economy to a market-based economy.eximbankindia. http://www. to GDP. India is now closely integrated with the global economy and is considered one of the pillars of global economic growth.financialexpress. The Indian economy maintained a growth rate of more than 5% even during the global recession.1 Indian telecom sector 1. the telecom sector has been the major contributor to India’s growth. 3 Enabling the next wave of telecom growth in India .6%.pdf. while the industrial sector and agriculture sector contributed 28. 13 October 2010.5%2 annually from 1950 to 1980.12 April 2004. November 2008. Within the services sector. http://www. The process of liberalization started in the mid-1980s and gathered momentum in the 1990s. Overview Over the past two decades.5% and 14. India’s service sector was estimated to account for 56. DBS Group Research.1. India 2012: telecom growth continues. 26 August 2010. Ernst & Young report.com/ind-eco. India’s GDP has been rising by more than 7%1 annually in the past decade.

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

It is one of the main architects of the accelerated growth and progress of different segments of the economy. business communication. a government organization.2.html. security. shared on a rotating basis. World Bank. There is a substantial relationship between increase in teledensity and the economic development of a region. for instance.” through which fishermen are provided free mobile handsets. lowers transaction costs and is an effective substitute for infeasible physical transport. reduced business risk and made those involved with fishing feel much safer at sea.6% points.1 Economic growth Indian telecom has emerged as one of the greatest economic success stories.” LiveMint. registering a consistent overall growth rate of more than 35% over the past decade in terms of subscribers. along with free access to information service. The advantages of the advent of telecommunications are manifold and explicitly verifiable from the phenomenal success of the sector. Narrowing access gaps and removing barriers to information dissemination are prerequisites for promoting equitable and sustainable development as well as political and social cohesion. “High-teledensity states grew faster. 1. Bihar could have witnessed 4% faster growth if it had enjoyed the same teledensity as Punjab. According to a study by the Indian Council for Research on International Economic Relations (ICRIER). 5 Enabling the next wave of telecom growth in India . mobile telephony has made the rural and underdeveloped markets much more efficient. Samar Srivastava. says study.http://www. a 1% increase in mobile subscribers is estimated to increase per capita GDP by about US$200. The usage of mobile phones has enabled fishermen to respond quickly to market demand and prevent wastage.2% faster. It has helped to reduce the time spent by agents and owners waiting for boats. page 17. States with 10%6 higher teledensity have grown 1. September 2010. accessed 10 October 2010.2. According to a World Bank study. states with a higher teledensity have grown faster than those with lower teledensity. In other words. The MS Swaminathan Research Foundation (MSSRF). 19 January 2009. Mobile telephony had a profound impact on the fishing community in the southern state of Kerala.com/2009/01/19224316/ Highteledensity-states-grew-f. and have helped those who catch the fish communicate with merchants and transporters in an efficient and effective manner. response to emergencies and in the overall strengthening of the sociocultural ethos of the country. creates efficient information flows. has partnered with a leading telecom equipment and service provider to provide “Fisher friend. The well-distributed network of telecommunication services results in widening markets. Mobiles have helped to co–ordinate demand and supply. Importance of telecom Telecommunication is pivotal to a country’s socioeconomic growth.livemint.1. a 10%5 increase in teledensity is known to boost GDP growth by 0. 5 6 Unfinished Business: Mobilizing new efforts to achieve the 2015 millennium development goals. Increasing connectivity is highly instrumental in improving governance. By virtue of being a carrier and disseminator of information.

However. customer support centers. software development. Moreover. human resource services. In return. The provision of telecom services in rural areas and the obscure hinterland has made previously abandoned areas highly accessible. providing the following advantages: • • • 7 Challenges Before An Integrated India: Bridging The Urban . employment and a strong socio-cultural ethos Open rural areas to foreign investment. 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. With more untapped territories being connected through telecom. RuralShores is an initiative that aims to reverse the trend. Further. leading to the inclusion of rural India in the global economic milieu and reducing the rural-urban divide.2 Job creation Besides being one of the largest revenue generators. the lack of employment opportunities in rural India has forced people belonging to villages to move to the cities. improving access to and connectivity with health centers. The telecom sector has led to the growth of a range of communication technology-enabled activities and services. 1. the spread of telecom and information services to rural areas is enabling the setup of rural business process outsourcing (BPO). the quality of life in rural area improves. Communication facilities in rural areas are critical for the development of rural India. processing of insurance claims. Operations such as data entry. and establishing the mobile testing of diseases. RuralShores: bringing jobs to rural India Over the years. It helps combat epidemics such as HIV/AIDS and malaria by supplying information on treatment and control. Indian villages account for 70%7 of the country’s total population. revenue accounting. As a result. 56% of the country’s income. • • • 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. creating an atmosphere of economic diversification. call center operations. low employee attrition and the potential for scalability. Nielsen. thus reducing the pressure of urban migration 1.2. 64% of consumption expenditure and 33% of national savings. health and increased citizen participation in civil society. Enabling the next wave of telecom growth in India 6 . a committed workforce and business continuity.1.3 Social development Connectivity fosters social development. This represents an innovative approach in providing quality health care whenever and wherever needed. telecom is also a major creator of jobs. generating awareness.4 Rural development According to FICCI and Nielsen study. resulting in the organized aggregation of supply and demand Providing enhancement of microfinancing. the hitherto dormant economic potential is being increasingly tapped.2. corporations benefit through cost-effectiveness due to the lower costs associated with a rural ecosystem.Rural Divide. Telecommunication helps provide access to health care and allied services. It aims to introduce rural youth to BPO and to provide employment in their village. guaranteed service levels. page 13. Participation in the initiative is an act of corporate social responsibility. August 2010. systems engineering and systems design and integration are popular examples. technology transfer and entrepreneurship Facilitating national and regional integration. including improved education.2.

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

making sure the worker is paid for the day. as these become a tool for commerce. The challenges surrounding these programs include job cards for those demanding work. http://www.ciol. 1. transfer funds.. In India.3 billion by 2013. the Center of Excellence in Wireless Technology (CEWIT) and the Broadband Wireless Consortium of India (BWCI) have been established. strengthening health networks. In pursuance of the NTP 1999’s objective toward R&D.9 1. leading class services and a global presence. Enabling the next wave of telecom growth in India 8 . Efforts are constantly being made to devise more affordable technology for the masses. trade stocks and purchase financial products such as insurance. Mobile banking enables customers of banks and other financial institutions to access their account information. • Helping lower child mortality and improve maternal health: this is done by providing information on nutrition. the introduction of electronic muster rolls. there is a significant focus on technology with the potential to improve rural connectivity. m-commerce finds its applications across various end markets such as banking and financial institutions. 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 introduction of GPS-enabled biometric systems at the grass-roots level continues to remain a challenge. the TCOEs have focused on the technological and management challenges that Indian operators face in reaching all sections of society while offering affordable solutions. places great emphasis on research and development 9 “Nokia to rollout mobile banking in India. For instance. (R&D). NTP 1999. taking relevant education that is well aligned to the needs of the communities to their doorstep. Furthermore. the value of mobile payment transactions in India is expected to reach approximately US$1. the generation of intellectual property right (IPR). These organizations have helped to create synergy among academia. 14 April 2010. an integrated system for taking biometric attendance through handheld devices and transmitting it through mobile phones for authentication is expected to solve the challenge of attendance.10 Provide impetus to initiatives such as MNREGA and Aadhaar The GoI has undertaken programs such as the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) and AadhaaR — Unique Identification Authority of India (UIDAI). paying bills for utilities such as power and gas. monitoring health trends and provisioning primary health care. the telecom industry and the Government for the creation of new services and applications. 1. For instance. Mobile phones provide consumers an opportunity to transact anytime and anywhere.com/News/News/News-Reports/Nokia-to-rollout-mobile-banking-in-India/134910/0/. the elimination of ghost workers.and the Indira Gandhi National Open University. formulated by the GoI. thus overcoming cultural and language barriers. wage payments and the authorization of wages electronically.2. Once a worker has logged in. booking tickets for transportation services such as trains and taxis and online shopping. which aim to provide inclusive growth. organizations such as Telecom Centers of Excellence (TCOE). This is one of the most befitting instances of the telecom and internet revolution.8 m–commerce This is the next revolution that is expected to emerge through the use of mobile phones. accessed 12 October 2010.2. the development of manufacturing capability.2. this data could be transmitted to MNREGA. focus on global telecom standardization activities and the promotion of entrepreneurship.9 Facilitating research and development The growth in high-speed communication and advances in internet technology are making India a major R&D hub. The integration of such programs with mobile telephony is expected to benefit such programs of national importance. According to Cybermedia India Online Limited.” CyberMedia India Online Ltd.

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

and Mahanagar Telephone Nigam Limited (MTNL) were formed.2. Chennai. The formulation of NTP 1994 was followed by the launch of mobile telephony in India in 1995. growth in the initial years was very slow due to high mobile handset prices as well as the high tariff structure of service providers. universal licensing regime. to set up 5 million lines per year • 1985: Establishment of DoT • 1986: Establishment of VSNL and MTNL • 1991: Telecom equipment manufacturing completely deregulated • 1992: VAS opened to private sector participation • 1994: NTP 1994 • 1997: Establishment of TRAI • 1999: NTP 1999 • 2000: Establishment of TDSAT • 2003: Unified Access Service License (UASL). and were under government control. Its history begins with the laying down of the first experimental electric telegraph line in Kolkata. In the early 1980s. However. the sector underwent its first wave of change. respectively. In January 2000. and calling party pays (CPP) • 2004: Broadband policy. Telecom equipment manufacturing was also de–licensed in 1991. Karachi and Ahmedabad. which is now known as Tata Communications. Interconnect Usage Charges (IUC). the Telecommunications Dispute Settlement and Appellate Tribunal (TDSAT) was established to take over the adjudicatory and disputes functions from TRAI. 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 .1. Mumbai. Further. and the NTP was announced in 1994. Following independence. with exchanges being opened in Kolkata. in 1986. In 1881. 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. Telephone and Telegraph (PTT). The introduction of the New Industrial Policy 1991 initiated the liberalization process in India. and the TRAI was established in 1997. NTP 1999 enabled the telecom sector to reach an average subscriber growth rate of more than 35%. telephone services were introduced. all foreign telecommunication companies in India were nationalized to constitute the Posts. The introduction of NTP 1999 heralded pro-consumer policies. DoT was established in 1985 to provide domestic and long-distance services in India. primarily due to initiatives taken by the regulator and service providers. two wholly government-owned companies — Videsh Sanchar Nigam Limited (VSNL). VSNL and MTNL aimed at providing services to international and metropolitan areas. The liberalization of the sector resulted in the need for a regulator. 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 bidding process continued for a period of 16 days. The GoI subsequently issued licenses in November 2003. Operators were allowed to share infrastructure in their tower installations. Additionally. raising INR385. 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. the GoI raised in excess of INR1 trillion from the auction of 3G and BWA services. among others. In March 2008. entertainment. The GoI offered two 20MHz blocks in the 2. the amount payable by BSNL and MTNL for 3G services pushed the total auction revenue to INR677. In February 2008. INR1.3GHz range in each of the country’s 22 circles. in case UASL was not allocated spectrum due to non-availability. Thus. During the same year. In May 2003. 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.6 billion). 11 Enabling the next wave of telecom growth in India . e–commerce. as these constitute an essential and possibly the most expensive component in the entire telecom service delivery infrastructure. March 2007 and January 2008.2 billion for the B circles. through which all local incoming calls were made free. the DoT approved the sharing of infrastructure among mobile operators. providing statutory status to the USOF in December 2003. Allocation of spectrum and grant of wireless license was subject to availability and. which covered the levy paid by mobile operators to the state–run operator. ADC was the fee paid by private mobile operators to the state-owned BSNL. which permitted an access service provider to offer both fixed and/or mobile services under the same license. In November 2005. the licensee was required to endeavor to rollout services using wireline technology. Further. January 2004. reaching the final stage in May 2010.2 billion (US$14. in February 2004. The reserve price for 3G services was categorized on the basis of circles — INR3. the GoI introduced the Unified Access Service (UAS) licensing regime. the TRAI abolished the access deficit charge (ADC). using any technology.2 billion) in auction revenues. and INR300 million for the rural C circles. education and medicine. 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.4 billion (US$8. The fund was introduced to provide access to telegraph services to people in rural and remote areas at affordable prices.7 billion to the GoI. December 2006. the calling party pays (CPP) regime was introduced. The Broadband Policy 2004 specified targets in terms of subscribers. the Universal Service Support Policy came into effect.In 2002. FDI limit in the telecom sector was increased from 49% to 74%. which witnessed fierce bidding for spectrum. In 2004. The GoI commenced the auction for 2x5MHz in the 2100MHz band for 3G services in April 2010. the Government concluded the auction of BWA services across India. which mainly used the proceeds of ADC to develop rural telephony services. The seven winners were required to pay INR509.2 billion for the more populated A and Metro circles. The GoI also introduced the Broadband Policy 2004. new UASL guidelines were issued. BSNL. The bidding process continued for 34 days. Following the auction of 3G mobile services. The auction aimed at allotting three to four 3G licenses for each of the 22 regional circles. the DoT issued guidelines for the intra-circle merger of cellular mobile telephone service (CMTS)/UAS licenses.

The key stakeholders as a part of the regulatory environment in the telecom ecosystem include the Ministry of Communications & Information Technology (MICT). R&D and standardization and validation of equipment. licensing and coordination matters relating to telegraphs. and the Telecom Regulatory Authority of India Act. among other matters Enabling the next wave of telecom growth in India 12 . administrative monitoring of public sector undertakings (PSUs). the Telecom Commission. telegraph and other means of communication The laws governing the telecom sector include the Indian Telegraph Act. 1997 DoT • The DoT is a part of the MICT. and four part-time members that are secretaries to the GoI of the concerned departments The Telecom Commission is responsible for policy formulation. wireless. Regulatory framework A number of positive regulatory changes have driven growth in the sector. the Indian Wireless Telegraphy Act. Its key responsibilities include: • • • • Policy. wireless spectrum management. 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. 1933.2. MICT • • • The MICT is part of the Indian Government. The key feature of India’s regulatory regime is transparency in industry information. an open approach and encouragement of consultation with stakeholders.2. The key departments of the ministry include the Department of Telecommunications. data. post. and the Department of Posts The MICT formulates policies with respect to telecom. the Telecom Regulatory Authority of India (TRAI) and the Telecom Dispute Settlement & Appellate Tribunal (TDSAT). 1885. licensing. Department of Telecommunications (DoT). the Department of Information Technology. telephones.

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

accessed 10 December 2010. 12 Ernst & Young analysis. affordable handsets.6 FY03 7.html.5 FY00 61.3 40% 30% 20% 10% 18.1% to reach 621.pdf. 13 “Position paper on the Telecom sector in India.9 FY07 3. Subscriber base and teledensity (wireless and wireline) 800 Total subscribers (million) 700 600 500 400 300 200 100 0 2. Lower costs and the additional benefit of mobility that is associated with wireless subscribers have led to the stagnation of the wireline subscriber base.” Department of Economic Affairs – Ministry of Finance.3 621. As of September 2010.trai.7 FY08 FY09 FY10 Sep-10 0% Total subscribers Source: TRAI Teledensity According to TRAI.12 whereas wireline subscribers account for 4. the total subscriber base grew from FY00 through FY10 at a compound annual growth rate (CAGR) of 36.9% 140.7% Source: TRAI 10 “TRAI Press Release No. high economic growth. with the mobile segment leading this growth. com/2010/05/30230743/Telcos-to-recoup-3G-bid-money. In the past decade. Urban and rural subscriber base. The wireless segment has been registering monthly mobile additions of about 15 to 2011 million subscribers. The telecom revolution in the country has impacted both the urban and rural population. Overview of the Indian telecom industry India is the world’s second-largest telecom market.com/ pdf/ppp_position_paper_telecom_122k9. “Telcos to recoup 3G bid money in 5-6 years: Analysys Mason.2. The total subscriber base (including wireline and wireless) reached 723. The capital cost to provide mobile service varies in the range of US$50–US$90 per subscriber. page 4. Enabling the next wave of telecom growth in India 14 .1%. accounting for 95.3% FY01 4.9%.5 429. However. 11 Shauvik Ghosh. http://www.0 FY02 5.4 FY05 300.2% 205.5 FY04 9. hypercompetition in the sector.livemint.6% 36.3 FY06 70% 60% 723. 30 May 2010.0% 26. http://www.0% 98.2% 12.13 in comparison with US$200–US$350 per subscriber for wireline. accessed 10 October 2010. urban subscribers account for more than 65% of the overall subscriber base.asp.3 million10 in September 2010. September 2010 100%= 723. reduced tariffs. the total teledensity has risen above 50%.9% 28.gov. wireless subscribers constitute the majority of the total subscriber base. December 2009.0% 76. leading toward a huge urban–rural digital divide.3 million Teledensity (%) 50% Rural 32. infrastructure sharing and the introduction of positive and enabling regulatory reforms. 63 /2010. accessed 12 October 2010.”TRAI website.7% 37.3% Urban 67.3.in/Default.1% 54.3 million subscribers. http://pppinindia.3% 45. Such phenomenal growth can be attributed primarily to the country’s large population.” LiveMint.0% 52.

July 2010. The road ahead for the Indian telecom sector is expected to be more eventful.gov. http://www. mobile number portability (MNP) and the growth of manufacturing.8% 391.8% 52. The advent of NTP 1999 paved the way for aggressive growth in the wireless subscriber base.2.3 million15 subscribers in Wireless subscribers in India 800 700 Wireless subscribers (millions) 600 500 400 300 200 100 0 1. October 2006.6% 1.9% GSM GSM subscribers constitute about 84.8 165.1% of the total wireless subscriber base.05–0. Over an extended period.” Zinnov Research and Consulting. VAS.1% Source: TRAI 14 Ernst & Young analysis. 84.7 4.2 14.9 0. FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 Sep-10 Wireless subscribers Teledensity Source: TRAI Wireless subscribers: GSM vs. 16 “Penetration of Mobile Telephony in India & Value added services in Indian Mobile Telephony market. with average monthly subscriber additions in the range of 0.zinnov.2% 6.pdf. September 2010 100% = 687.2% 3.6 0.6% 58. The wireless subscriber base in India grew from FY00 through FY10 at a compound annual growth rate (CAGR) of 77. primarily due to the advent of new services such as 3G.7 584.com/presentation/Mobile_VAS.” TRAI website.6% 9. the gap between GSM and CDMA has widened as the GSM subscriber base has grown more rapidly. and this growth is primarily attributed to the growth in wireless services. India’s mobile market is the second largest in terms of subscribers in the world after China.1 261.1 22.4. Mobile services were commercially launched in India in 1995.5%14 to reach 584. http://www.7 million CDMA 15.1 million16 subscribers.trai. accessed 10 October 2010.0% 98.7% 687.4% 3. 15 Enabling the next wave of telecom growth in India .in/Default.March 2010).3 49. Wireless India has emerged as one of the world’s fastest-growing telecom markets.asp.0 33. page 2.8 33. CDMA.0% 70% 60% 50% Teledensity (%) 40% 30% 20% 10% 0% FY10. 15 “TRAI: The Indian Telecom Services Performance Indicators (January .5 13. accessed 15 October 2010. In the initial years of mobile telephony. the growth in the number of subscribers was very low.

3% -3. Furthermore.3%17 during the period between FY00 and FY10.1% of the subscribers in FY10.asp. cheaper handsets.6% FY00 Wireless FY10 Wireline 93.in/Default.9% -3. driven by the immense potential for data growth.4 38.2. the wireline subscriber base has declined due to lower mobile tariffs. accessed 10 October 2010.9% 32. the urban market has dominated the wireline subscriber base.1%.6 million village public telephones (VPTs) in India.7 18.0% 26.3 7.7 17. the advantage of mobility among wireless networks and inadequate infrastructure of the wireline network. 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 -3.4 41.” TRAI website.5 40. Enabling the next wave of telecom growth in India 16 . additional private players have also ventured into the fixed-line market. accessed 15 January 2011.3% -1.1% Source: TRAI. video on demand and videoconferencing.9%. July 2010.6 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. Although wireline infrastructure in India is not as extensive as wireless infrastructure.4% of the subscribers. the wireline market accounted for 93.9% 94. DoT In FY00. accounting for 73. the wireline subscriber base was 37 million. The wireline market is dominated by the governmentcontrolled incumbent players. the emergence of new technologies such as fiber to the home is expected to drive the growth of the wireline market in India. besides other new technologies. January 2010. in FY10.9% 3. http://www.5 million19 public call offices (PCOs) and 0.8 39.trai. 17 Ernst & Young analysis. 18 “TRAI: The Indian Telecom Services Performance Indicators (January .in/Default. wireline service continues to face stiff competition from wireless services.6% 40. where they see higher revenue growth and continue to invest extensively.asp.18 with a teledensity of 3.7% 38.gov. In the recent past. 19 “TRAI: The Indian Telecom Services Performance Indicators (July .4% 5. Although fixed-line operators are trying to offer VAS such as high-speed internet access.gov. Apart from these two players. Over the years. http://www.0 25% 20% 35. Wireline The Indian wireline market grew at a CAGR of 3.0 37. there is a significant opportunity for future growth.” TRAI website.September 2010). it accounted for 5.1% 22. In the future. the major wireline operators in India also operate mobile networks.3% 41.3% 0.5.1 41. improved mobile coverage. As of September 2010. In FY10.March 2010).trai.7% -2. there were 3.

the evolution of technology and increase in bandwidth has given rise to internet connections at speeds faster than traditional dial–up connections. Further. it has made significant inroads in the urban market. The opportunities hold a much larger promise for India’s large low-income population and a growing economy.” International Telecommunications Users Group website. June 2010.8 million. the number of internet and Internet and broadband subscribers (million) 20 15 10 5. such as opportunities for education. a 10%22 increase in broadband penetration leads to a 1. http://intug. governance.2 FY05 9. satellite media. cable television networks. Booz & Company.2 million and 8.6.9%20 and 117.2 broadband subscribers has increased at a CAGR of 23.6 5 0 0. which envisions the creation of a framework through various access technologies such as optical fiber. access to personal computers and electricity.5% increase in labor productivity in a country. 21 Bringing Mass Broadband to India: Roles for Government and Industry. whereas traditional internet connections have a speed of less than 256 kbps. it is estimated that a 10%21 increase in broadband penetration translates to a 1. 22 “Broadband Commission Presents Report to United Nations.8 6.3% increase in GDP. The DoT formulated the Broadband Policy 2004. Also. knowledge sharing.3 3. This falls short of a Broadband Policy’s goals of 40 million internet subscribers and 20 million broadband subscribers by the end of 2010. Although the internet is a function of various factors such as literacy.2. From FY05 through FY10. According to Booz & Company. The minimum threshold speed for a broadband connection is 256 kilobits per second (kbps) or more. FY06 FY07 Internet subscribers FY08 FY09 Broadband subscribers FY10 Sep 10 Source: TRAI 20 Ernst &Young analysis. respectively in FY10. governance. employment and the delivery of services. terrestrial wireless and future technologies.9 1. September 2010. Broadband brings a number of benefits.5 10.3 13.9 11. digital subscriber lines (DSL) on copper loop. 17 Enabling the next wave of telecom growth in India .4 2.5% to reach 16.1 8. entrepreneurship and services.3 6. org/2010/10/09/international-insights-%E2%80%93-september/.3 17. accessed 25 October 2010.9 16. Internet and broadband The internet has revolutionized the lifestyle of many Indians by creating a new means of communication. Broadband infrastructure plays a vital role in a country’s achievement across domains such as social progress and economic development.

Broadband penetration continues to be very low in India.0% Market share by subscribers of technologies in broadband. The share of wireless technology continues to be negligible and remains to be fully exploited.0% 10.5% 31. primarily in business districts or high–end residential areas of the larger cities. September 2010 3.8% 4. As of September 2010.5% DSL Cable modem Ethernet Wireless Others 86. and 86. September 2010 1. broadband users are concentrated in urban areas. Currently. despite a structured framework that included ambitious goals to be met in 2010.6% 0.6% 4.9% of the market share in broadband access. . The key factors responsible for the widespread adoption of broadband include affordability and availability.5% of the market share in internet access.Market share by subscribers of technologies in internet access.5% 6.6% Source: TRAI Source: TRAI Digital subscriber line (DSL) is the preferred technology among service providers for both internet access and broadband services.3% 0. DSL constituted 50. especially in the case of broadband services.5% DSL Dial-up Wireless Cable modem Ethernet Others 50.

network storage and enterprise voice solutions. Voice over Internet Protocol (VoIP) is considered a key enterprise application for lowering operating costs. network integration. It has spurred the demand for IP-based virtual private network (IP-VPN) services in India. the financial services sector and the government. A majority of global operators in this space are also offering VAS such as network security.169 23 Industry estimates.200 510 130 150 80 350 600 180 52 72 2.556 FY09 930 480 70 110 65 210 250 130 30 56 1. 19 Enabling the next wave of telecom growth in India .027 FY11E 1. internet connectivity. The other services relevant to this segment are international private leased circuits. The growing demand for connectivity is coming primarily from the IT and IT-enabled services sectors (ITeS). multiprotocol label switching (MPLS) based IP-VPN services.7.262 FY10 1. network management.900 31 4.2. managed services and network security services are provided by global operators in partnership with Indian IT companies.251 39 5.064 495 92 125 75 260 370 150 45 61 2.800 45 6. Most large global players have set up operations in India to cater to the connectivity needs of their customers. With telecom and IT converging. 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$10 billion mark in the next five years. and national and international data connectivity. Enterprise segment revenues23 Activity Private line VPN Ethernet Managed business VoIP Managed IP telephony Hosting services Application services Security Continuity and recovery Managed storage Outsource task Contact center Total (US$ million) FY08 829 423 40 92 51 161 170 110 20 40 1.600 20 3.

26 “India among the Top Few Fastest Growing Telecom Markets.3% 176. with its revenues reaching INR176 billion26 in FY10. Market size of ILD 200 Market size (INR billion) 150 100 50 0 115. http://voicendata.3 0.3 97.25 However.com/content/vnd100_2010vol-II/110070520.3 13.6% in FY 2009-10. the Indian market for NLD grew by 13.ciol. FY10. India’s ILD services were opened up for private players. 27 DoT Annual Report 2009–10.7% to reach total revenues of INR164 billion.0 144.0 30. the GoI had issued 24 ILD27 service licenses. Enabling the next wave of telecom growth in India 20 . with the sale of the strategic stake in VSNL to the Tata Group. the GoI had issued 29 NLD24 service licenses.Department of Telecommunications.0 17.7% FY08 FY09 FY10 Growth (%) Growth (%) Market size (INR billion) 48.2% 150.0% 115. As of December 2009.” Voice & Data. http://voicendata.asp.3% 35.9 FY07 Market size (INR billion) Source: Voice and Data Growth (%) In 2002. accessed 18 October 2010. without any restriction on the number of operators.Department of Telecommunications. ILD has witnessed steady growth.” Voice & Data.com/content/vnd100_2010vol-II/110070519.1 1.asp. with the annual license fee being reduced to 6% of the AGR. As of December 2009. the market slowed in FY10. Market size of NLD 180 160 140 120 100 80 60 40 20 0 60% 50% 164.NTP 1999 opened up the NLD service for private operators. FY10.0% 40% 30% 20% 10% 0% 71.0% 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. accessed 18 October 2010. In FY10.ciol. 25 “India’s NLD market has grown by 13.3% 25. primarily due to a decline in ARPU across all operators.

http://www.9 15.4% 3. From 2005-09.1%. 29 Ernst & Young analysis.5% 6.” 19. Source: International Trade Centre Although a few Indian mobile operators have a significant presence globally.3 518.” India Climate Portal.9 Source: International Trade Centre Share of imports by country of origin. accessed 10 October 2020.3 200 140.4% 3.com/2010/04/01215017/Indian-telecomfirms-may-get-D.6 19. accessed 02 August 2010. companies in the manufacturing segment are yet to feature in the global telecom landscape. inadequate tax benefits and competition from low-cost Chinese equipment.8.html. Ministry of Communications and IT.0 2. Furthermore. GOI. chipsets.7 1. 02 September 2010.” CyberMedia India Online. “Policy recommendations to increase domestic telecom growth and exports of telecom equipment and service. 28 “Telecom equipment manufacturing in India needs help urgently. with the exception of telecom towers and cables. Despite the growth of a localized manufacturing environment in India.4% China South Korea 59. the market for wireless infrastructure equipment is estimated to be US$8–10 billion.9% and 112.2.” “Telecom Equipment & Services Export Promotion Council (TEPC). the manufacturing and exports of telecom equipment grew at a CAGR of 33. Manufacturers in India face challenges such as high logistics costs.9% 4. 21 July 2010.3% 3.livemint. India is a strong market for global telecom equipment vendors.0 412.5 0 FY04 FY05 FY06 Production 236.ciol. according to a leading telecom equipment manufacturer.30 and equipment worth INR190 billion was imported in 2009. including routers and switches. The majority of telecom segments are highly dependent on imports.2 2008 2009 8. “Indian telecom firms may get DoT boost. 2009 100%=US$8.0 100 4.3 2005 1.7 2006 2007 3. http://www. 21 Enabling the next wave of telecom growth in India . http://www.0 120 100 80 60 40 20 FY08 FY09 Exports 0 Value of telecom equipment imports to India 10 Imports (US$ billion) 8 6 4 2 0 1.29 respectively. Telecom equipment manufacturing The telecom equipment industry comprises products such as cell phones.0 160. with the remainder coming from global companies manufacturing in India. 30 “Time to go local in telecom equipment purchase. accessed 12 October 2010. an unreliable power supply.1% Sweden US Singapore Hong Kong Others According to industry estimates. the demand for telecom equipment is expected to be worth US$70–100 billion28 in 2015. only 40% of the requirement for equipment is met through local sourcing.7 81.” LiveMint.9 billion FY07 Note: Includes both indigenous and offshore production Source: DoT. DSL and cable modems and networking devices. Telecom equipment manufacturing and exports Production (INR billion) 600 500 400 300 178.0 140 Exports (INR billion) 110.org/telecomequipment-manufacturing-in-india-needs-help-urgently-21-july-2010-t.climatechallengeindia. wireless and landline infrastructure equipment.com/News/News/News-Reports/ Time-to-go-local-in-telecom-equipment-purchase/140758/0/.

Falling prices of telecom services will help to increase their affordability.1 Mobile network Typically. As of March 2010. the number of operators providing their services from a particular site influences the extent of civil infrastructure installed at the site. Telecom infrastructure industry in India. “Growth of Telecom Sector. page 9. fire extinguisher.45532 telecom towers in the country. GBTs can accommodate up to six tenants. Infrastructure The Indian telecom success story is built around the wireless segment. hurdles to the erection of cellular towers and value added tax (VAT) levies on broadband services delivered through fiber media. diesel generator set  and security cabin. accessed 28 October 2010. ROW.8 million. Finally. Ernst & Young analysis. However. core network and other transmission equipment. whether it is GSM. Crisil Research. the civil infrastructure and backhaul. shelter room. Civil infrastructure includes components such as tower site. price. including ROW related issues.” Lok Sabha. ICRA Rating Feature. It is not influenced by the type of the communication technology being used. with each BSC being connected to a base transceiver station (BTS). Enabling the next wave of telecom growth in India 22 . cables. radio access network. The BTSs are installed in a contiguous manner. there were 425. Infrastructure Provider-I (IP-I) can provide assets such as dark fiber. steel tower. and safety and aesthetic concerns. node B. frequency band of operation and spectrum 31 32 33 34 35 2. radio antennas. Infrastructure development plays a crucial role in the development of the wireless sector.2. each of which is connected to base station controllers (BSCs). depending on the height of the tower. page 5. battery backup. March 2009. growing at a CAGR of more than 75%31 in the past decade in terms of the number of subscribers. ICRA Rating Feature.4 to 2. Backhaul consists of the intermediate links between the core of the network and the various sub-networks. the rollout of infrastructure will become easier. Rooftop towers (RTTs) are placed on the roofs of high-rise buildings. and the demand for more services will translate into the development of more telecom infrastructure. topography.34 Electronic infrastructure consists of the electronics needed to run a wireless network such as a BTS or cell site. It can also create active infrastructure. air conditioner.9. http://loksabha. Civil infrastructure includes the complementary elements of a cellular network that ensure that the electronic components are operational. The components of mobile networks include the electronic infrastructure. It connects the electronic infrastructure at the tower site with the BSC and MSC. civil infrastructure forms about 60% of the cost of setting up a network. The radius of each BTS varies from 500 meters to as much as 8-10 km. The National Telecom Critical Infrastructure Policy is expected to address these concerns as well as the issues affecting telecom providers on the state level. December 2008. 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. 3G or BWA.in/. while electronic infrastructure forms the remaining 40%.2 Towers and in-building solutions Telecom towers are broadly classified as ground-based and rooftop towers. as the safety and aesthetic issues related to the setup of towers are addressed. 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.9. power regulation equipment. Competition will give further impetus to the development of infrastructure. However. The rollout of services by operators takes place only on the back of robust telecom infrastructure. so as to facilitate the handing over of signals from one BTS to another like a chain. Telecom infrastructure industry in India. GBTs involve a capital expenditure in the range of INR2. page 6.9. duct space and tower through simple registration without paying any license fee. Typically. March 2009.33 depending upon subscriber usage. availability. Telecom towers and allied infrastructure. The development of the telecom infrastructure depends on four key factors: rollout. 2. The wireless sector has charted an impressive growth trajectory. feeders. on behalf of the licensee. The policy should clearly define the role of the Central Government and the states to help catalyze telecom sector growth. it does not play any role in carrying wireless signals. CDMA. competition.nic. a mobile network in a circle consists of mobile switching centers (MSCs).

184 391. Meghalaya.028 2.in/scripts/BS_ViewMasterCirculardetails.321 20.455 telecom towers in India. The GoI provides certain benefits specifically to infrastructure companies.678 425. This constitutes an essential and possibly the most expensive component in the entire telecom service delivery infrastructure. RTTs can accommodate two to three tenants.090 52. Mizoram and Tripura Kerala and Lakshadweep Total Public sector 2.418 Towers 25.608 2.644 17.121 41.are shorter than GBTs and are common in urban and highly populated areas. Sikkim. 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.512 488 3. and emergency services. Daman and Diu Maharashtra and Goa Karnataka Madhya Pradesh and Chhattisgarh West Bengal.611 18.322 26.494 24. there are an estimated 425. Haryana and Chandigarh Uttar Pradesh and Uttarakhand Andhra Pradesh Punjab and Himachal Pradesh Jammu and Kashmir Tamil Nadu and Pondicherry Bihar and Jharkhand Nagaland. operators used their tower infrastructure for competitive advantage.rbi.in/Default.392 22.aspx. mass transit systems.920 23.gov. accessed 01 February 2011.102 26. 2.207 34.455 Source: “Growth of Telecom Sector. accessed 28 October 2010.trai.995 25. As a result. Over the past couple of years. State-wise number of towers States Rajasthan Gujarat.766 21. Manipur.071 1. The tax benefit encourages the participation of private sector through investment. Today.” Lok Sabha.387 5. which need reliable communications for efficient incident management and personal safety. However.037 Private sector 23.102 38.350 28.899 6.271 3.494 34.634 4. implying a subscriber-per-tower ratio of 1.708 8.396 18. shopping malls.323 38.337 720 2. 23 Enabling the next wave of telecom growth in India . there are three types of tower companies — pure-play tower companies. accessed 20 September 2010. these involve a capital expenditure of INR1.371 8. 37 “Master Circular .9. Currently. tenancy level for the industry stands at 1.154 1. stadiums and office buildings an essential requirement.577 2.177 41. Andaman and Nicobar Assam and Arunachal Pradesh Delhi.5-2 million.in/.” TRAI website January 2011.3 Telecom infrastructure in India Initially. Coverage is required to meet the needs of both the general public. asp.854 3.752 1.org.008 4.nic. Typically.55. the growth of mobile communications has made the provision of radio coverage within airports. operators with towers and operator-owned tower companies. telecom operators have hived off their telecom towers into separate entities.630 31.242 17. In recent years. 36 “TRAI: Consultaion paper on issues related to telecommunication infrastructure policy. which expects its mobile phones to work at all times.614 35.460.36 In July 2010.098 57. In-building solutions are designed to improve the reception of radio frequency signals indoors to meet the increasing demand for high-quality mobile services. where there is paucity of real-estate space. the leading operators have opted to share their infrastructure. http://loksabha.” Reserve Bank of India.275 23. telecom towers were accorded Infrastructure Status37 by the RBI.794 369 1. http://www. over the past few years. Orissa. http://www.392 45.428 4.Exposure norms.

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. where mobile teledensity is barely in the double digits.9.6 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). power shortages.5 Future growth potential. further increasing capex requirements. 10. massive amounts of funds can be saved. 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.6 557. and has a pre-tax margin of 7%–8%. state electricity boards. service providers have strong incentives to share infrastructure. Due to higher costs of land development.4 Energy requirements Currently. Average diesel consumption per site per hour is about 2. land owners and so on before the tower and electronic infrastructure can be completed. more groundbased towers will be needed. 2. Spectrum constraints and network quality: for operators in urban areas. the industry has pumped in INR1 trillion and another INR400–500 billion is expected to be invested in the next two years. energy. Capital expenditure (capex) and operating expenditure (opex) savings: the setting up of a countrywide cellular network requires substantial capex.9. 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. 39 Industry estimates.5x in the course of this decade. a higher proportion of ground-based towers.5 liters. such as land and energy. which is subsidized by GoI. it will allow a better use of spectrum.2. 38 Industry estimates. while the tower company earns revenues. Enabling the next wave of telecom growth in India 24 . Rollouts in rural and semi-urban areas: as wireless service providers penetrate rural and semi-urban areas. Tower sharing could help operators maintain quality network coverage throughout the city. translating to 6 million liters of diesel per day.0 2. Overall. It is estimated that infrastructure sharing in its current form has helped achieve savings of INR557. On average.2 81. The dependence on diesel could be reduced if the Government utilized that subsidy to support a move toward renewable energy options such as solar. 27 million units of electricity are consumed per day. the concept of infrastructure sharing assumes special importance. and infrastructure sharing will act as an important tool to achieve faster rollouts and save operating and capital expenditure in these areas. In its more complex forms. Since many rural areas are far-flung. With sharing. It is estimated that tenancy levels will rise to between 2–2. capital and interest costs.6 billion resulting from savings in infrastructure provisioning fee (IPF). Such an arrangement works well for both partners.4 Savings (INR billion) 476. A significant part of the network rollout is likely to come in the untapped rural areas. as the tenant paying a higher rent to the tower company accelerates the time-to-market process.9. superior network quality is a sustainable differentiating factor that helps to reduce customer churn and command premium prices. investments required and emerging trends The industry faces low profitability. additional security. insurance costs. 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. Against this background.6 Goals of infrastructure sharing The key beneficiary of infrastructure sharing is the subscriber. significant investments will be required. This translates to consumption of more than 2 billion liters of diesel per year for cell sites. unclear land ownership and expensive backhaul connectivity costs in the rural areas. and newer operators can build an assetlight model.

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

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

asp. 27 Enabling the next wave of telecom growth in India . IAMAI. followed by technology enablers (10%–20%) and content aggregators (10%–15%). July 2010 Source: Mobile VAS in India: 2010.6 75. Mobile VAS in India: 2010. short-code providers. In terms of revenue distribution among various market participants.10. creating opportunities for both telecom operators and companies engaged in VAS. handset manufacturers and content converters. The demand for mobile VAS is driven by the increase in the mobile subscriber base. mobile payments and money transfer. IAMAI. is also expected to drive the market for mobile VAS. IAMAI. Value-added services (VAS) According to the Internet and Mobile Association of India (IAMAI). games and services such as m–commerce and m–radio. The rollout of 3G services is expected to drive the mobile VAS market in the future. July 2010. out of the total amount paid by end users (excluding P2P SMS). followed by music.2. the mobile VAS in India was estimated to be worth INR145. media companies.gov. IAMAI.1 93. which provides services such as mobile banking. July 2010 41 42 43 44 Mobile VAS in India: 2010. content aggregators or developers.0 145. with India being one of the leading mobile markets for the young. Moreover. “TRAI Press Release No. Market size of VAS 160 Market size (INR billion) 140 120 Growth (%) 100 80 60 40 20 0 28. The demand for mobile VAS is mostly driven by the youth. technology enablers. July 2010. The mobile VAS revenues in the country are driven by the P2P SMS service. approximately 60%–80%43 is captured by mobile operators.in/Default.0 billion41 in 2010. Mobile VAS in India: 2010. Entertainment mobile VAS constitutes 57% of the overall revenues followed by information mobile VAS (39%) and m-commerce (4%). as well as aggressive marketing efforts by telecom operators to spread awareness about their services such as updates and alerts.” TRAI website. 63 /2010. polytones and truetones as well as caller ring-back tones (CRBT). growing at a CAGR of more than 50% during 2006–10. 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.5 45. person-to-application (P2A) SMS. July 2010. which has exceeded the 700 million44 mark. http://www.0 Revenue distribution of VAS services (%) 100 15 15 60 10 2006 2007 2008 2009 2010F Operator revenue Technology enabler Content aggregator Content owner Total Source: Mobile VAS in India: 2010. the decline in ARPU has compelled mobile operators to focus on mobile VAS to generate additional revenues.42 The key mobile VAS include person-to-person (P2P) SMS.trai. IAMAI. accessed 10 October 2010. The growth of m–commerce. The key participants in the mobile VAS market include content owners. monotones. application-to-person (A2P) SMS.

11.9% 97.185. respectively. the ARPU continues to shrink.asp. Ernst & Young analysis 45 “TRAI: The Indian Telecom Services Performance Indicators (January . leading to falling profit margins of mobile operators.in/Default.600 1.217.9% 10.0 5% 0% 20.com/.2 3G subscribers 3G subscribers as a percentage of wirless subscribers (%) 3G subscribers (million) 3G is the next generation mobile technology which is capable of delivering broadband content.1% 92.2% 44.400 1. Although the telecom sector is witnessing strong customer additions every month. 46 Ernst & Young analysis. with a significant number of multiple and inactive Subscriber Identity Module (SIM) owners. accounting for 20% of the total wireless subscriber base.3 1. Further. accounting for 12% of the total wireless subscriber base. Wireless subscribers in India Wireless subscribers (million) 1.trai.217. the country’s wireless teledensity is expected reach 97.7% 63. 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. accessed 16 October 2010.2 million45 mobile subscribers.gov.1 2009 2010 2011F 2012F 2013F 2014F 2015F 2020F Wireless subscribers Source: TRAI.8 80% 1. Further.049.2% 109. including a host of rich multimedia services such as video calling.2 923. 3G services will drive the expansion of wireless services in future.1 525. 47 Ovum: Mobile regional and country forecast pack: 2010–15. accessed 10 October 2010. location based services and remote access/ VPN applications.1 million47 subscribers in 2015.7% 25% 20% 15% 303. http://www.46 to reach 1.5 1.1 Wireless At the end of December 2010.1 1. 3G subscribers forecast 350 300 250 200 150 100 50 0 3. video on demand. Teledensity (%) 87. Future subscriber growth is likely to hinge upon rural and low-income users.7% 752.0 72.0 118.ovumkc.March 2010). 3G subscribers are expected to reach 142 million by 2015.11.11.0% 101.0 2011F 2012F 2013F 2014F 2015F 2020F 3G subscribers 3G subscribers as a % of wireless subscribers Source: Ovum. during the period 2010–15. there were 752. DoT.4 10% 142.0% 11. Ovum.9% 120% 100% Enabling the next wave of telecom growth in India 28 .8% 35.9% 8.200 1.1%.9% 95. Ernst & Young analysis Teledensity 2.000 800 600 400 200 0 77. 3G subscribers are expected to be more than 300 million by 2020. According to Ovum. http://www.” TRAI website. the number of wireless subscribers in India is expected to increase at a CAGR of 10.134.2% and 110% in 2015 and 2020. July 2010.8 60% 40% 20% 0% 1. Outlook 2. Ovum website.2.0 6.516.

Ovum website. accessed 10 October 2010.com/. http://www. accessed 10 October 2010.” TRAI website.49 to reach 29.trai. 29 Enabling the next wave of telecom growth in India . the wireline subscribers are forecasted to reach 26. The wireline market is in decline. during the period 2010–15.3 million broadband subscribers in India.5 29. Ernst & Young analysis 48 “TRAI: The Indian Telecom Services Performance Indicators (January . there were 10.3 Wireline There were 35. the broadband connections are estimated to reach 150 million by 2020.5 32.March 2010).3 2.9 33.1 26. the number of wireline subscribers in India is expected to decrease at a CAGR of nearly 4%.trai. http://www.asp. http://www. DoT. Ovum. page 16.gov.5 48 100 150 Source: “TRAI: Consultation Paper on National Broadband Plan. July 2010. Further. According to Ovum.1 30. Considering increasing broadband demand. accessed 16 October 2010.3 million in 2020.1 million50 by 2015. June 2010.1 35. 50 Ovum: Fixed voice connections forecast pack: 2008–15. a trend that is expected to continue. The growth in the mobile market is seen as the cause of the decline. 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.1 34.ovumkc. The growth of broadband is expected to increase with uptake of 3G and BWA services.11.11. 49 Ernst & Young analysis.asp. Ernst & Young analysis 37.1 million48 wireline subscribers at the end of December 2010.2.” TRAI website.4 Broadband As of September 2010.gov.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.in/Default.

with the introduction of 3G and BWA services. accessed 16 October 2010. The growth in revenues is driven by cheaper mobile handsets.0%.5 7. Ovum website.8 45.5 Revenue and capex Over the years.9 15. lower tariffs. to reach US$51.1%51and 7.0 34. 52 Ovum: Forecast of service provider revenue and capex. respectively. respectively by 2020.2 15.7 11.11.1 48.8 51. the Indian telecom sector has witnessed an increase in revenues and contribution toward GDP.0 10.0 13.2 billion and US$ 13. Revenue break-up: voice and non-voice 10% 17% 22% 27% 32% 38% 90% 83% 78% 73% 68% 62% 2011F 2012F 2013F Voice 2014F 2015F Non-voice 2020F Source: Pyramid Research. the contribution of non-voice services towards the industry revenues is expected to reach 38% by 2020. Other services such as ILD. Ernst & Young analysis 51 Ernst & Young analysis.2. Revenue and capex forecast Revenue and capex (US$ billion) 70 60 50 40 30 20 10 0 32.com/. http://www. According to Ovum.ovumkc.0452 billion and US$14.4 14.9 2009 2010F 2011F Revenues 2012F 2013F 2014F Capex 2015F 2020F Source: Ovum. 2009-2014.3 38.8 43. Ernst & Young analysis Over the years.0 57. during the period 2009–15. Enabling the next wave of telecom growth in India 30 . NLD and VAS are also expected to drive revenue growth.97 billion by 2015.9 billion. the increase in mobile penetration in both urban and rural areas. Further.1 13. 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. including BWA penetration. industry revenues and capital expenditure are expected to increase at CAGR of 8. industry revenues and capex are expected to increase to US$57. and the adoption of VAS.

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

making it more affordable by fixing a suitable tariff structure and making rural communication mandatory for all fixed service providers Increase rural teledensity from 0.4% to 4% by 2010. 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. 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. for all cities with a population greater than 200.000 by 2002 • • • • Enabling the next wave of telecom growth in India 32 . the emergence of India as a major manufacturing base and a major exporter of telecom equipment. global standards in the quality of service. achieving universal service across all villages.The NTP 1999 aims at making India competitive in the global telecom market through growth in exports. using technologies including international services digital network (ISDN). and protection of the country’s security interests. The key objectives of the policy include telecommunication for all and within the reach of all. FDI and domestic investment.

NTP 1999 has been a catalyst for the telecom sector: • Growth in the subscriber base (723. R&D and customer care. among others • Among the lowest tariffs in the world. e. especially reliability.0%) • Contribution of telecom to overall GDP of almost 3%.. and the adoption of per-second billing by various operators • Robust growth in revenues — industry revenues recorded at US$35 billion • Increased FDI in the telecom sector — accounts for more than 8% of cumulative FDI inflows in the past decade • The promotion of manufacturing of telecom equipment in India and the growth of telecom exports • Growth of the telecom industry has led to the development of new business ecosystems. mobile value-added services (MVAS) encompass mobile operators.3 million) and in teledensity (61. aggregators and technology enablers Sector still faces challenges for growth: • Spectrum re-farming and effective management of spectrum in a transparent manner • Creation of an effective licensing framework where amendments are carried out in consultation with service providers • “Critical” Infrastructure Status along with uniform policy and single window clearance • Energy requirements. technology. content creators. providers.5% in 2000 • Creation of jobs across sales and marketing. especially telecom specialists • Fixed mobile convergence (FMC) 33 Enabling the next wave of telecom growth in India . 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.g. up from 1.

R. The impact of mobile telephony on rural areas has been profound.3%55 and 28. The improvement in rural teledensity Urban and rural teledensity 140% 120% 100% Teledensity (%) 80% 60% 40% 20% 0% 8.0% FY06 18. a Harvard University economist.3% 0.ac.in/Default.9% 0.1% 1.0% 119.9%.7% FY00 10. NTP 1999 has been instrumental in the growth of telecom in both urban and rural areas.2% 2.” TRAI website. about 70% of the population in India lives in rural areas.8% FY05 12.5% 12.pdf. The overall teledensity target of 15% by 2010 was achieved in FY07.02%53.9% 4.gov.9% 52. 55 “TRAI: The Indian Telecom Services Performance Indicators (July – September 2010). 63 /2010. http://www.4% 65.” The Quarterly Journal of Economics. geographical spread.2% FY08 14.0% 24. page 76.2% 9. the overall teledensity as of September 2010 stood at 61.6% 1. Key achievements of NTP 1999 3. 2007. http://www.7% 137. January 2010. respectively.54 Urban teledensity and rural teledensity at the end of September 2010 were 137.1. there is an uneven distribution of teledensity among Indian states resulting in slow economic development of the states and their surrounding regions.trai. low per capita income and the cost of maintaining phones in rural areas.” Indian Institute of Kanpur website. and mobile penetration stands at a meager 28.in/Default. As a result. the level had increased to only 1. the teledensity level in the country was 0.3% 28.2% FY02 FY03 20.3% poses a critical challenge due to low population density. FY09 FY10 Sept 10 Urban teledensity Source: TRAI Rural teledensity Total teledensity 53 “Rural Telecom and IT. with rural teledensity being far ahead of the NTP 1999 target.4% 61.0% 26. Following independence. Enabling the next wave of telecom growth in India 34 .4% in rural India. Market Performance and Welfare in the South Indian Fisheries Sector.6% FY04 38. accessed 15 January 2011.2% 9. 54 “TRAI Press Release No.asp. http://www. 56 Jensen.2% 1.in/3inetwork/html/reports/IIR2007/04-Rural Telecom.2% 5. and its targets have been achieved well in advance. the introduction of mobile telephony in Kerala increased the fishing community’s profits by 8%.9% FY01 14. “The Digital Provide: Information (Technology).0%.3% 4.1 Teledensity Reforms in the telecom sector have been encouraged by the active participation of the public and private sector.9% 47. Although India has witnessed a steep rise in teledensity over the past few years. by 1998. It has helped reduce the cost and time of transactions and has visibly compensated for the poor infrastructure.1.gov. There is a significant opportunity for service providers to increase penetration in rural areas and generate revenues.3.1% 1. accessed 10 December 2010. which was set at 4% by 2010.3% 3.3% 26.7% 37. the disparity between urban and rural areas in terms of mobile penetration has increased significantly..4% 2.8% 5.4%.” TRAI website. According to a study by Robert Jensen. Currently.iitk.56 decreased fish prices by 4% and consumption of fish increased by 6%.trai. Furthermore.asp.8% FY07 89.

00057 direct employees. The expansion of the Indian BPO industry is a classic example of indirect employment.678 FY07 193 2. media. 57 Overview of Telecom Industry. Dun & Bradstreet 3.5 26. The ratio of the number of subscribers per employee is very high in the case of private operators in India.9% 47.891 9. R&D and customer care.2 Teledensity and employment Over the past decade. 35 Enabling the next wave of telecom growth in India . technology.0% FY06 432.7 20. It has paved the way for a knowledge. December 2009. Dun & Bradstreet website.089 FY06 158 1.9 34. Employees of private and PSU operators 100%= 436. The sector has created direct employment across various business areas such as sales and marketing. R&D and financial services. Mix of private and PSU operators.1% 56. FY10 The Indian telecom industry employs more than 430.7% 90.5% 79.771 14.110 The development of telephony in India has played an important role in altering the structure of the economy. private telecom players have considerably expanded their operations.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.4 140.5% 65. technology. with the majority of these employees being a part of the public sector undertakings (PSU). which augurs well for sectors such as IT/ITES. education.8% 52.1.Total teledensity by state in India. as well as indirect employment.0% 89. by subscriber base 100%= million 98.3% FY07 PSU operators Private operators Subscribers per employee ratio in India FY05 PSU operators Private operators 132 1.7% 85.3% FY05 429.and information-based economy.5% 205.5% 429.7% 300.3% 73.400 11.3 43. which has resulted in an increase in employment opportunities in the telecom sector.

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 past decade. adding numerous features ranging from monochrome screens to touch screens. Indian companies have reached overseas destinations to tap new markets and have acquired technologies.8 101. new product mix.7 Global outreach of Indian telecom companies In the early 1990s. usually with a minority ownership. http://dipp. India’s FDI outflows (debit) have grown at a CAGR of 47. page 13.4 FY06 FY07 FY08 FY09 FY10 3. access to niche technologies.2 95. M&A provide benefits such as expansion of global footprint. India has witnessed prominent diversification in the industry composition of overseas activities of Indian firms. and foreign affiliations were formed through joint ventures.4 7 5.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. 3G and an improved user interface.1. Over the next few years. August 2009. and the ASP of smartphones is expected to drop below US$200.” Department of Industrial Policy & Promotion.6 billion69 in FY09. Global Positioning System (GPS). the average selling price (ASP) of both feature phones and smartphones has been on the decline. However.8 billion in FY01. enhanced memory. email. monotone ringtones to MP3 ringtones. Globally.6 6 5 4 3 2 1 0 Value (US$ billion) 3. the ASP of feature phones is expected to be US$50. greenfield investments were a popular mode of overseas investment among Indian firms.5 108 6. The market has witnessed investment in the form of greenfield projects.7 80 60 40 20 0 33. and the majority of this capital value has been used to acquire companies. The share of manufacturing in the investment activity has Source: Voice & Data 69 “NCAER: FDI in India and its growth linkages. 39 Enabling the next wave of telecom growth in India .0 5.in/. In line with the change in the pattern of investments. According to the National Council of Applied Economic Research (NCAER). a wider customer base and growth momentum. Indian mobile handset market 120 100 Volume (million units) 4.5% to reach a projected US$18. from US$0. Video Graphics Array (VGA) to 8-to-12-megapixel cameras. the structure of ownership has also shifted toward majority and full ownership. mobile handsets have evolved rapidly. Over the period. FDI by firms belonging to developing countries has gained momentum and has become an integral part of globalization.nic. Macquarie Capital In the past decade. accessed 10 October 2010. the price of feature phones is declining at a faster rate than smartphones.6 71.

0 62.declined considerably. Bangladesh FLAG Telecom Group Ltd Teleglobe International Holdings Ltd.0 30. Key overseas M&A by Indian firms Year 2010 2010 2003 2005 2010 2000 Target company Zain Africa BV Warid Telecom.0 194.0 Source: Thomson ONE Banker Enabling the next wave of telecom growth in India 40 .0 300. The Indian telecom sector has actively been a part of the global M&A activity. leading to the emergence of telecom giants from India.8 177. 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) 10.700. whereas the share of services has increased.

gov. the bandwidth required by 2014 may be as high as 800MHz. in the absence of a long-term plan to meet future requirements. Globally.htm.74 Spectrum bands such as the 900MHz band are of great value to mobile operators due to the longer ranges these can support.asp.72 in comparison with 33% in Brazil.trai. the affordability and availability of broadband services and inadequate infrastructure. the growth of wireline phones is not in sync with the rise in the number of wireless subscribers. inadequate content and applications in regional languages. The Broadband Policy 2004 has failed to keep pace with advances in technology and failed to boost the telecom sector. India lags behind in terms of availability of spectrum for commercial use.5 million in FY06 to 37 million in FY10. 41 Enabling the next wave of telecom growth in India . therefore requiring lesser BTSs density and lower capital and operating expenditure.2.dot.” TRAI website. India has an internet penetration of 7%. Currently. January 2010.” TRAI website.gov. 3. the Broadband Policy 2004 had anticipated 40 million71 internet subscribers and 20 million broadband subscribers by 2010. http://www. the telecom sector continues to face various issues that act as impediments to its growth. cheaper handsets. page 339.9 million70 internet subscribers and 10. May 2010. http://www.3 Spectrum challenges The Indian telecom industry has witnessed phenomenal growth in the number of subscribers. 71 “Broadband Policy 2004. according to TRAI. broadband penetration levels in India are far below other emerging countries such as Brazil.in/Default.2. 31% in Russia and 28% in China. accessed 15 January 2011. Despite India’s status as an IT superpower.asp.September 2010). Russia and China. accessed 10 October 2010. The decline has been due to lower mobile tariffs. the advent of new technologies is expected to create conflicts for spectrum. the Indian telecom industry is expected to reach 1 billion73 wireless subscribers by March 2014. 3. May 2010. In line with the growth of subscribers.” TRAI website. page 7. improved mobile coverage. However.in/ntp/broadbandpolicy2004. 73 “TRAI: Spectrum Management and Licensing Framework.in/Default. wireline and wireless complement each other.3. 3. 70 “TRAI: The Indian Telecom Services Performance Indicators (July . 74 “TRAI: Spectrum Management and Licensing Framework. there were 17.asp. along with the benefit of VAS such as internet for the urban and rural population and the abolition of the digital divide. Despite being the second-largest market in terms of the subscriber base. September 2010.” DoT website.2. According to Boston Consulting Group.3 million broadband subscribers in India. broadband penetration is accepted as a measure of a country’s ability to compete as an economic power.gov. accessed 10 October 2010.trai.2.in/Default. accessed 10 October 2010. Furthermore. page 18. with a CAGR of 77.1 Growth of wireline The wireline segment has added just 10 million users since the introduction of the NTP 1999. However. and the number of wireline subscribers has fallen from 41. According to TRAI. 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. Although wireline infrastructure in India has been in place for an extended period. 72 The Internet’s New Billion. the advantage of mobility among wireless networks and the inadequate infrastructure of the wireline network.5% during the period FY00–10. http://www. Key challenges of NTP 1999 NTP 1999 envisaged the affordability and availability of telecommunication services for the common populace.gov. http://www. The availability of spectrum for commercial services in India is below the required levels. the need for spectrum to service these subscribers has also increased. Boston Consulting Group.2 Growth of broadband As of September 2010. The sluggish growth in broadband services is attributable to the absence of low-cost devices.trai.

the GoI announced the policy for 3G mobile services. to the government operator on a pro bono basis In 2001. the GoI auctioned 2x4.4MHz of start–up spectrum for GSM-based services Two operators were selected for each License Service Area (LSA).1GHz band with reserve prices for different categories of LSAs In May 2010. The GoI raised INR385.7 billion to the GoI within 10 days of the closing of the auction. and incumbents were kept out of fresh allocations.3GHz range in each of the country’s 22 service areas. along with 2x4. Start-up spectrum of 2x4. 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. 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. 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. Although firms were awarded licenses after paying the required entry fee. the e–auction of 3G mobile services was concluded after 183 rounds of bidding across all service areas. it totalled to INR677. Subsequently. and opted for the auction of a start–up spectrum of 2x5MHz in the 2. irrespective of the quantity they held.4MHz in 1.in/tnl_jces_Sep_2009/Spectrum%20allocation%20 procedure.nic. in addition to 25MHz in the 2. All of the 71 blocks up for auction across the 22 service areas were sold: • Third stage: 2006–08 Criterion for allocation of spectrum • • • • Fourth stage: 2008–10 Policy on 3G and 3G auctions • • • • All the winners of the auction were required to pay INR509. the bandwidth for broadband services (WiMAX) was auctioned by the GoI. All operators were expected to pay higher spectrum usage charges.5MHz of spectrum per operator in each LSA Second stage: 2003–06 Unified Access Service (UAS) licenses • • In November 2003. the fourth operator license was issued using a three-stage auction procedure. licensees were required to pay a percentage of annual revenue as spectrum charges In 2002. 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.” Integrated Defense Staff http://ids. in 2001. The GoI allocated spectrum to new telecom players in service areas across India The defense services agreed to vacate 2x20MHz in the 1. and TRAI continued to maintain that there was a shortage of 2G spectrum A new SBN policy was defined.1GHz UMTS band The DoT proposed new 2G spectrum usage charges for all operators.2MHz per circle in case of GSM players and above 5MHz for CDMA In August 2008. Including the amount paid by state-owned BSNL and MTNL. It auctioned two 20MHz blocks in the 2.pdf accessed 02 August 2010 Enabling the next wave of telecom growth in India 42 .2 billion Following the completion of the 3G auctions. the third operator license was awarded.800MHz was given to the winning bidder: • • In addition to the entry fees.Spectrum and license allocation timeline in India First stage: 1995–2003 Auctioning scarce spectrum • • • In 1995. in line with TRAI’s recommendations.800MHz band. It laid down a roadmap for the allotment of 2x12.4 billion from the broadband wireless auction Source: “A peep into RF spectrum allocation process in India.4MHz of start-up spectrum in the 900MHz band.

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

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. IS:802 and IS:875. the Municipal Corporation of Delhi (MCD) charges INR100. Further. Delays and cumbersome processes for the SACFA clearances: the SACFA gives siting clearance of all wireless installations in the country. and there are other options as well. Safety: the construction of telecom towers is still a self-regulated activity throughout India. Energy consumption: cell sites account for most of the energy consumed by mobile networks.000 tonnes of carbon equivalent. while others charge “commercial” rates. Currently all the telecom operators are following IS codes. and the load criteria for telecom towers and transmission line towers are different. citing concerns over alleged health hazards relating to BTS.000 tonnes of CO2 and 24. Diesel fuel is subsidized. as these are dependent on diesel generators to keep running.76 The thrust in increasing rural telephony will further aggravate the diesel dependence by telecom towers. For instance. The site clearance basically requires examination from the point of safety for flight navigation and interference with existing wireless systems. They do not reflect the fact that USOF subsidies are perhaps most urgently required to defray the cost of infrastructure creation in rural areas. 76 Industry estimates. Environmental issues: diesel consumed by towers results in about 17.5 million tonnes. 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. for the design of towers. the highest tariff is applied to the telecom site. there is no clarity on the rates to be paid by infrastructure companies. Grievance redressal: there is no clear grievance escalation/ redressal mechanism that infrastructure companies can seek when a conflict arises. the fund rules are too cumbersome and lack focus. service providers are forced to use diesel generator sets at tower sites most of the time. Secondly. Without it.Taxation on towers: multiple levies and high taxes are imposed for setting up mobile towers. Some agencies charge them “industry” rates. This increases the dependence on diesel. there is a need to accelerate the pace of setting up the tower infrastructure in these areas. Power consumption: one of the major problems faced is the lack of reliable grid power. Utilization of USOF and incentives: since the next level of growth is expected to come from rural areas. Although the USOF was created with the sole aim of promoting rural telephony. which is not only more expensive but also polluting. Enabling the next wave of telecom growth in India 44 . In large parts of India.000 per tower and the New Delhi Municipal Council (NDMC) charges INR200.” and thus. the power connection to telecom towers is treated as one to a “commercial establishment. Misplaced apprehensions on health hazards of electromagnetic radiation from mobile antennas: many state governments and municipalities have barred towers in residential areas. namely IS:800.000 per tower as a one-off registration fee in Delhi.

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

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

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

Fee There should be a uniform license fee across all telecom circles. In November 2003.1. for global practices. subject to its availability and efficient usage. the number of incumbent telecom service providers varies from four to six. should be fixed. Globally. Enabling the next wave of telecom growth in India 48 . are currently imposed on the industry. states levy additional taxes such as octroi. in India. excluding the USOF. which aggregate to 30% of the revenues earned by telecom companies. A uniform revenue share license fee of 1%. the GoI introduced the UAS licensing regime. using any technology. a licensee is entitled to obtain a certain amount of spectrum. mobile or both services under the same license. The policy must preserve competition and ensure that no service is given a price arbitrage over others.1 Licensing77 The telecom sector has evolved from a monopolistic regime in the early 1990s to 12–14 licensees in a circle now. including service tax and license fees (such as universal service obligation fees and spectrum charges). stamp duty. Multiple levies. 77 See 5. Moreover. with the allocation of spectrum separate from the allocation of a license. Since there is a significant cash reserve lying unutilized in the USOF. VAT. However.3. DoT should consider lowering the contribution from 5% of AGR to 1% of AGR. which let the provider offer fixed.4. The GoI has issued many new UAS licenses since the introduction of the UAS regime. Pure internet service providers should continue to be free of any license fees. under the UAS regime. Parameters Spectrum and license Recommendations Need to have a single universal license for all telecom services. entry tax and levies on towers. Key enablers under existing scenario 4.3.

renewal procedures. 49 Enabling the next wave of telecom growth in India . 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.License renewal Ensure regulatory certainty and ease investor concerns: • Provide a clear license renewal regime that includes legislation. 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.

accessed 10 October 2010.500-2.170 2.6 78 See 5.880 1.710-1. May 2010.in/Default.300-2.trai. for global practices. http://www.2 Spectrum78 Spectrum. 80 “TRAI: Spectrum Management and Licensing Framework. page 22.in/Default.gov.805 1.900-1. An increasing availability of smart-phones with significant processing capacity and a wide array of applications are resulting in higher requirements of spectrum. A mechanism to ensure transparent and non-discriminatory spectrum management is needed.110-2. It is estimated that the total requirement of spectrum in the next five years would be of the order of 500-800MHz including 275MHz for voice services alone.asp.010-2.400 3.3.900 1.asp.400 2.trai.880-1.300-3.025 2.6-21.980 2. Enabling the next wave of telecom growth in India 50 . being a scarce natural resource.400-3. 79 “TRAI: Spectrum Management and Licensing Framework. a minimum of 287MHz and a maximum of 454MHz is currently available.690 3.” TRAI website.6-21.gov.2.4.2-453. May 2010.600 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 1.805-1.785 1.161 Spectrum available for telecom sector 20 20 18. In India.910 1. The next five years are going to see the spread of telecom services enabling subscribers to benefit from voice. data and other application services.785-1. In line with estimated demand of approximately 500-800MHz spectrum across various bands out of a total 1.161MHz79 of identified spectrum by TRAI. plays a critical role in the provision of mobile telecom services.8 18. the National Frequency Allocation Plan (NFAP) is the basis for spectrum utilization and development and the manufacturing of wireless equipment. http://www.920-1. accessed 10 October 2010. 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 1.8 35-75 35-75 0-20 (after coordination) 0-60 60 40 40 100 (ISPs) 287. page 22.” TRAI website.

6 87.3 49.6 0.75 12.5 64.35 0.26 0.25 10 10 10 Total 68.4 270.5 76.49 0.2 49.3 74.5 11. page 22.52 0.4 67 61.Country-wise spectrum availability Country Total licensed spectrum for mobile services.65 65 63.6 37.4 74.95 76.4 69.2 28.36 0.5 15 15 12.3 37. ITU .8 61.” TRAI website.11 0.4 55 53.5 0.trai.2 53.48 0.7 0.26 0.2 63.75 15 12. http://www.9 83. January 2010.4 No.pdf.org/documents/MWC%202009%20Digital%20Dividend%20Pavilion-3G%20Americas%20 Erasmo%20Rojas.53 0.” TRAI website. accessed 14 January 2011.asp. February 2009.48 0.75 15 12.6 14.22 0.27 0.in/Default.4 63.37 0.trai.2 50.25 67.15 78.15 79.6 80.49 0.ICT Statistics 2008. MHz (2008) 170 200 265 140 120 120 358 353 294 Wireless subscribers.63 0.6 77.7 43. 2008 (million) 46.1 24 17.31 0.22 0.4 69.7 38.3 31 6.16 0. Circle-wise spectrum allocated in India81 Circle Allocated spectrum (MHz) GSM Delhi Mumbai Kolkata Maharashtra Gujarat Andhra Pradesh Karnataka Tamil Nadu Kerala Punjab Haryana Uttar Pradesh — West Uttar Pradesh — East Rajasthan Madhya Pradesh West Bengal Himachal Pradesh Bihar Orissa Assam North East Jammu & Kashmir 53.2 4.5 150.6 66. of operators GSM 12 11 10 12 11 12 12 11 11 12 12 11 11 12 11 10 11 12 11 10 10 10 CDMA 4 4 4 4 4 4 4 4 4 5 4 4 4 4 4 4 4 4 4 4 4 4 Total 16 15 14 16 15 16 16 15 15 17 16 15 15 16 15 14 15 16 15 14 14 14 33.15 84.25 10 13.1 62.2 63.6 150.6 72.5 31.3gamericas.8 41.7 18.75 13. accessed 15 January 2011. http://www.8 63 53 57.4 60.75 13.gov.09 0.55 70. http://www.2 78.2 37.” 3g Americas website.8 59.4 60.in/Default.asp.2 59.7 0.4 69.15 83. Ernst & Young analysis.Latin America Wireless Roadmap.78 0.08 Subscriber (million) Subscriber/MHz (million) 81 “TRAI: Spectrum Management and Licensing Framework.75 11.1 44.63 0.5 13.2 76.8 75. 51 Enabling the next wave of telecom growth in India .3 19.2 62. Ernst & Young analysis.9 52.6 10.accessed 10 October 2010.14 0.57 0.4 72. gov.4 CDMA 15 15 13.5 13.55 0.4 75.75 0.1 0. “TRAI: The Indian Telecom Services Performance Indicators (July-September 2010).92 Argentina Brazil Canada Chile Colombia Mexico Spain UK US Source: “Digital Dividend Pavilion .3 Subscriber/MHz (million/MHz) 0.2 6. May 2010.

The criteria for levying spectrum usage charges should be identified upfront at the time of allocation of spectrum. Spectrum allocation to new players Spectrum usage charges Spectrum sharing and trading Enabling the next wave of telecom growth in India 52 . Allocation of spectrum beyond the contacted limit should be based on market mechanisms. timely spectrum reconciliation and enhanced transparency. http://www. Spectrum should be provided to the highest bidder. service flexibility. 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.2MHz for GSM operators and 5MHz for CDMA operators.co.in/images/1-pdotfinal. Regular spectrum audits should be carried to oversee the efficient utilization of spectrum. 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.6 92 82. 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.5 65 72.” Communications Today.pdf. MHz 28-37 118. It should be based on market price and not administered pricing. Re-farming Spectrum allocation Spectrum allocation should be based on technology neutrality. The contacted limit of spectrum will be 6. timely allocation.  Spectrum allocation to existing players 2G spectrum up to the contracted limit should be ensured as initial spectrum. Parameters Availability Recommendations Align spectrum bands with globally harmonized bands to achieve interference-free coexistence and economies of scale. accessed 14 January 2011.” 3g Americas website.6 138. February 2009. Need to bring in additional spectrum for commercial telecom services. “Presentation to the DoT committee on spectrum allocation criteria.7 100.4 92.Operator spectrum holdings Country/Region/Operator India Denmark EU average France Germany Italy Spain Sweden UK US Spectrum holding per operator.Latin America Wireless Roadmap. Identify and vacate new spectrum bands for future use. and to draw up a suitable schedule. http://www.3gamericas. accessed 14 January 2011. This roadmap should be made available publicly to ensure transparency.pdf. National frequency allocation plan should be reviewed every two years. Allocation of spectrum should be based on auctions.2 75-96 Source: “Digital Dividend Pavilion . based on a transparent auction mechanism to determine the price.communicationstoday.org/documents/MWC%202009%20Digital%20Dividend%20Pavilion-3G%20Americas%20 Erasmo%20Rojas.

7 March 2010. at affordable prices. Rural broadband: 95.011 broadband connections out of the proposed 888.2 17.121 MARR-based VPTs installed before April 2002.832 wireline broadband connections have been provided as of 31 December 2009. the Universal Service Support Policy came into effect.3%. 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. As of 31 December 2009. BSNL has provided VPTs to 61. resulting in a huge digital divide.1 39.705 rural community phones (RCPs).302 uncovered villages. for global practices.3. The USOF is estimated to hold around INR180 billion. However. 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. In 2002.186 out of 62.694 have been provided as of December 2009.4.950 towers have been set up under this scheme.83 at the end of FY10.1 15. rural teledensity is at 28. 53 Enabling the next wave of telecom growth in India . voice mail and email.436 infrastructure sites spread over 500 districts in 27 states. Out of the target of 40. about 184. Multi access radio relay (MARR)-based VPT: out of 185. 40.6 13. 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. about 6.3.7 18.3 Universal Service Obligation Fund (USOF)82 NTP 1999 envisaged access to basic telecom services for all. especially those in rural and remote areas.4 32. 83 “Minister Sachin wants to ‘Pilot’ IT revolution in northeast. Tower infrastructure: provide infrastructure support to set up and manage 7.9 16. As of 31 December 2009.0 12. whereas urban teledensity is about 137. The USOF covers rural and remote areas with public access telephones and individual rural household telephones in net high cost rural and remote areas.0 N/A FY05 Funds collected FY06 Funds disbursed FY07 FY08 FY09 Dec-09 Source: DoT 82 See 5.4%.2 VPT and RCP: around 570.500 have been replaced as of 31 December 2009.000 VPTs are currently eligible for financial support for operation and maintenance.5 55. (INR billion) 40 30 20 10 0 34.” Indo-Asian News Service. © 2010 HT Media Limited. via Dow Jones Factive.

Enabling the next wave of telecom growth in India 54 .Parameters Objectives Recommendations The USOF framework needs to be reviewed regularly to effectively utilize the funds to achieve universal service. The USOF should aim to achieve the following: • 100% rural teledensity by 2015 • 25-30 million broadband subscribers in rural areas over the next five years • Data coverage to all villages through cable modem termination system (CMTS) data technology by 2015 • Broadband connectivity for 250.000 gram panchayats by 2012 • At least 20 active public information kiosks with at least 256 kbps speed in every district headquarters by 2015 Potential usages The USOF should be utilized for the following: • Provision of public telecom and information services • Provision of household telephones in rural and remote areas as may be determined by GoI from time to time • Creation of infrastructure for provision of mobile services in rural and remote areas • Provision of broadband connectivity to villages in a phased manner • Creation of general infrastructure in rural and remote areas for development of telecommunication facilities • Induction of new technological developments in the telecom sector in rural and remote areas Method of allocation Fund collection Subsidies should be distributed through transparent market-oriented allocation methodology. There is a significant cash reserve lying unutilized in the USOF. so DoT should lower the contribution from 5% to 1% of AGR.

in order to encourage broadband. The drivers for broadband services are broadly classified as technological. Today. India lags behind in terms of ITU’s ICT Development Index (IDI). deployment of wireless access should be given preference and fiber media should be utilized from the already available fiber capacity across nation. page 3. 84 See 5.1 to 0. The net broadband addition per month is just 0. 2004. and 118 out of 154 countries in terms of ICT access. page 28. and skills. India has set a target of 100 million broadband connections by 2014. social. against the target of 20 million by 2010 set in the Broadband Policy of 2004. connecting 40% of the households in the country. application. cost of device and affordability.74%. with a broadband penetration of just 0. Broadband services should be encouraged using wireless media because the laying of fibers block by block at district headquarters would be costly and time-consuming. Further. there should be balanced competition to ensure the quality and affordability of services. Broadband should be redefined and clauses such as ‘’always on’’ and minimum speed should be removed from National Broadband Policy.4. lack of vernacular content.asp. http://www.asp. behavioral and government initiatives. 106. To kick-start the broadband penetration in rural and far-flung areas.” TRAI website.4 Broadband84 India trails all developing Asian countries. 85 “TRAI: Consultation Paper on National Broadband Plan. The last mile access issue can be addressed through the deployment of wireless technology. as well as its BRIC counterparts.gov. connectivity. June 2010. 86 “TRAI: Consultation Paper on National Broadband Plan.86 with a ranking of 129. accessed 10 October 2010.gov. socioeconomic growth is dependent on the spread of broadband services across the country. http://www. The 3C’s — customer. respectively.” TRAI website. for global practices.8 million broadband connections at the end of FY10. This calls for a critical review of the Broadband Policy 2004 and the creation of appropriate infrastructure to support broadband growth.trai. economic. June 2010. The growth of broadband is restricted by several factors such as its perceived utility. accessed 10 October 2010. cost and competition — are essential for improving broadband penetration. 55 Enabling the next wave of telecom growth in India .in/Default.3.85 There were just 8. use.2 million.trai.4.in/Default. 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.

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

CMTS license with UASL. 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. Merged licenses in all the categories above shall be in UASL category only. The TRAI recommendations dated 11 May 2010 should be followed to maintain the balance between the interests of consumers and service providers.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. 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. unified access services license (UASL) with UASL.4. for global practices.3. Parameters Number of operators Service area and license stipulations Recommendations Mergers should not result in less than six operators in the circle. The stipulation regarding the minimum period of three years from the effective date of license for merger or acquisition should be done away with. and UASL with UASL. The share of a merged entity should not be greater than 30% in terms of sub-base or AGR. Market share of merged entity Lock-in period 87 See 5.5. Merger of licenses shall be restricted to the same circle.5 Mergers and acquisitions87 At present.

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. as well as tax. 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.cms.in/Default. while the dominant purpose for selling these RCVs is provision of telecom services to subscribers. the significance of the telecom sector to the Indian economy has grown immensely. http://economictimes.89 96. 5% levy for USOF.4.gov. The issue whether the sale of RCVs should attract service tax or VAT has been a subject of constant debate and discussion. VAT.” The Economic Times. This includes the uniform license fee. the bouquet of services has changed. The Indian telecom sector is subject to numerous taxes and levies. This position has been adopted by industry players.indiatimes. The Supreme Court without going into the merits of the case has ordered a relook at the matter by the state VAT authorities. January 2010. 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. these goods could be treated as “component/ spare/accessories” of “capital goods” (i. Various states across India have issued show cause notices.) 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 are used for building transmission towers.e.6 Taxation Over the years. The issue was first taken up in the case of a leading telecom player by the state of Karnataka. The levy of VAT on the activity of providing broadband connectivity services would lead to double taxation of such services. 89 “TRAI: The Indian Telecom Services Performance Indicators (July – September 2010). According to TRAI. As of September 2010. Denial of credit on such goods would lead to an increase in the financial burden on telecom operators. thereby leading to greater financial burden on the telecom sector. However. • • Sale of light energy: broadband services also continue to face taxation-related concerns. It is important to note that currently the industry players are paying service tax on such broadband 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. RCV is one of the most popular ways to pay for telecommunication services. the operators pay up to 30%88 of their total revenues toward different levies.com/news/news-by-industry/telecom/telecom-firms-wantlower-tax-burden/articleshow/2753840.4% of the GSM subscribers and 94. The classification of tower. channels and beams. It is important to note that currently industry players are paying service tax on RCVs. Central value-added tax (CENVAT) position on tower materials and shelters: telecom operators are availing CENVAT credit on goods such as angles. which account for 80%–85% of the operator revenues. thereby leading to greater financial burden on the telecom sector. the revenue share license fee (including the USOF) is prescribed as follows: • • • • 6% to 10% of AGR for access services.trai.3. accessed 15 January 2011. such as to procure merchandise. Currently.asp. accessed 10 January 2011. Currently. with the matter going up to the Supreme Court. as the RCVs are witnessing liberalization in the flexibility of their usage.1% of the CDMA subscribers were prepaid subscribers. which is 23%–25% higher than their counterparts in other Asian countries. or other services. Enabling the next wave of telecom growth in India 58 . BTS etc.. Towers and shelters fall under Chapter 73 and 94 respectively of the Central Excise Tariff Act 1985. the sector contributes significantly to GDP. Over the years.” TRAI website. The levy of VAT on the sale of RCVs to subscribers would result in double taxation. custom duty and other taxes. 88 “Telecom firms want lower tax burden.

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

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

3.2 0. Furthermore. Mobile tariffs per minute in US$ 0. The DoT has been successful in providing world-class telecom infrastructure at globally competitive tariffs and has reduced the digital divide by extending connectivity to unconnected areas. a leading operator launched the “One India Plan. This was followed up by incumbent operators introducing cheaper tariffs.” It was considered affordable.2 0. provide leading class services.8 Consumer affordability and rural penetration The Indian telecom market has some of the lowest tariffs in the world.1 0. customer friendly and innovative for both local and long distance calls.3 0.23 0.04 Pakistan 0. the increase in subscriber base and teledensity has enabled telecom companies to achieve economies of scale and. at the same time. 61 Enabling the next wave of telecom growth in India . It also removed the distinction between fixed-line and cellular tariffs.4.0 Belgium UK France Brazil 0.16 0.11 0. giving India some of the lowest tariffs in the world.03 China 0. with a large majority of people using low-cost mobile handsets.09 Malaysia 0. India Telecom 2010 brochure In February 2006.1 0.17 0.01 India Phillipines Source: DoT.05 Thailand 0. The plan enabled customers to make calls to any phone from one end of the country to the other for INR1 any time during the day.19 0.

This arrangement will allow SMEs. Similarly. operators in Bangladesh have designed products and services such as micro prepaid topups. On the other hand. home offices and other organized/ unorganized groups in rural and remote areas to serve the needs of the population in a holistic way. The services will be provided only by the underlying access provider who will continue to address the related compliance requirements. The entity will not replicate the efforts of service provider. and also allow consumers to transfer airtime between each other and use it as currency. easy market entry. small office. Pakistan has taken initiatives on the policy and regulatory front by removing import duties on mobile handsets and reducing SIM card activation charges to make mobile communication more affordable. and low risk enable the creation of policy and a regulatory approach that helps to drive down tariffs. which are available in very small increments. Enabling the next wave of telecom growth in India 62 . In order to drive penetration in rural and remote areas. There is a need to create a regulatory framework that enables greater sharing. Factors such as transparent regulation. increased usage and highly utilized networks also help lower tariffs.Drivers of affordable mobile communication • • • • • Transparent regulation Easy market entry Lower tax burden Low risk License reforms to permit mobile resale Innovative business model Reduction in capex and opex Increased usage Highly utilized networks Policy and regulatory approach Affordable mobile communications Operator strategies • • • • Affordable mobile communication is driven by policy and a regulatory approach and operator strategies. it is important that alternative models such as mobile resale be introduced. lower tax burden. operator strategies such as innovative business models. Resale of mobile services will allow an entity to resell mobile services after buying connections in wholesale from the underlying service provider. For the service provider. the entity buying connections in wholesale will be the customer. reduction in capital expenditure and operational expenditure. The entity will sell the connections to their end customer and contract and bill them in their own capacity for the services provided.

page xv. Ministry of Human Resource Development.706 17.4 30 25 20 15 10 21. 92 Ministry of Human Resource Development. in May 2007. while the GoI provides basic and research infrastructure. 2010 In keeping with the NTP 1999’s R&D objective. The main funding for a TCOE comes from the sponsoring telecom operators. COAI.9 Human resource India has the benefit of a huge population. Number of higher education institutions and student enrollment 30.000 Number of higher education institutions 21. Such organizations promote R&D and help in creating a talented workforce. India lags behind China and the US in terms of student enrollment. 63 Enabling the next wave of telecom growth in India .8 25.92 there were 504 universities and university-level institutions. 2010 0 India US China Source: Making the Indian higher education system future ready. Each TCOE is sponsored by a telecom operating company and is hosted by a premier technical or management institute. 130 deemed universities and 33 institutions of national importance. organizations such as the Telecom Centers of Excellence (TCOE).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. In terms of size and diversity.9 10. FY10. only 17%91 of those in their mid–20s or older have completed their secondary education. As of December 2009.000 6. For instance. India has the largest number of higher education institutions. including 243 state universities. a committee comprised of the DoT. 40 central universities.000 12. October 2007. 53 state private universities.4. However. However. 91 Unleashing India’s Innovation. Ernst & Young. World Bank website. followed by the US and China. India possesses a developed higher education system that offers training in many fields. and AUSPI submitted a report that suggested ways to form seven TCOEs across India in a PPP mode. which is characterized by a dynamic young population base– more than half of which is under 25 years old.213 20. Ernst & Young.3. the Center of Excellence in Wireless Technology (CEWIT) and the Broadband Wireless Consortium of India (BWCI) have been established. Government of India — Annual Report 2009–10.

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

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

If legislative amendments are needed. the tower business is characterized by high initial capital investments. a new tower could be awarded through a bidding process.” Tower infrastructure should be erected in accordance with the NTP and licenses granted by the GoI under the Indian Telegraph Act. but are matters liable to be governed by the GoI or regulatory authority constituted by it in accordance with the NTP. which are directly connected with the growth of tower infrastructure. for global practices. At present. there is no uniform approval process across states for setting up telecom infrastructure. it needs 95% coverage. Such practice is being followed in developed countries such as the US. in-building solutions and DAS make it possible to conserve spectrum and reduce the visual impact of towers. then no new tower should be allowed in that zone. The rollout subsidy could be fixed at a flat amount based on the approved tower design for a period of five years. If an existing tower is not operating at 100% capacity. GoI should announce a National Telecom Critical Infrastructure Policy (NTCIP). This mandate should be included in bylaws of the local and state governments. The profitability is dependent on the ability to increase tenancy on the tower.11 Telecom infrastructure97 Infrastructure growth is critical to the rollout of services. which avoids duplication of capex. low working capital requirements and high incremental profitability. single window clearance and preferential treatment for sharing and incentives need to be addressed in a timely manner. the rents charged. The march of technology-IP/converged platforms is leading to integrated technology-neutral host platforms. For India to achieve 85% teledensity. there is a need to lay down a National Telecom Critical Infrastructure Policy on the lines of NTP 1999 elaborating uniform procedures for land acquisition. But the lack of guidelines or standard procedures results in enormous delays and huge cost implications. Full utilization of towers— optimum sharing There should be laws governing the rollout of towers. There is also a need for an empowered committee or similar structure to engage with roads and power ministries.4. Telecom/broadband connectivity should be considered a necessity such as water and power in every housing facility. and there could be distance guidelines for the same. Technological approaches that can potentially reduce the direct and indirect costs of creating telecom infrastructure should be encouraged. The telecom infrastructure service provider needs to apply to the local municipality or panchayats for permission to build a tower. they should be adopted in a timely manner. Enabling the next wave of telecom growth in India 66 . Once the existing tower is at capacity. Also. A 70-meter tower could service an area of 2-3 square kilometers. Moreover. the scale and spread of the tower portfolio and the ability to raise capital.7. Every tower should be fully utilized. Given the challenges that the industry faces. There is a need for national ROW policy for rollout of backhaul network. Tower infrastructure needs to come under the Indian Telegraph Act. 97 See 5. and GoI should declare mobile and tower infrastructure as “Critical Infrastructure Services. These are not matters of local self-government or municipal departments. Civic issues Civic issues such as zoning regulation. creating a uniform taxation regime. and extending subsidies and other packages to create a conducive environment to boost national telecom infrastructure building and thereby ensure the increased participation of all the stakeholders. Parameters State subject Recommendations There is an urgent need for simplification and harmonization of complex rules and processes so that unreasonable barriers do not impede the rollout of infrastructure. stable and predictable cash flow. The biggest barrier to setting up telecom towers and other infrastructure is the wide variation in the approval process adopted by local bodies.3.

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

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

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

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

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

paying bills for utilities such as power and gas.e. Going forward. with each broad category providing an array of services. including current affairs. mobile banking and multimedia messaging service (MMS). tourism and search engines • Ticketing (e. The m-commerce service umbrella in India has been limited primarily to payment and transfer systems. The rollout of 3G services m-commerce Mobile banking • Inter–account fund transfer • Account inquiry • Stock trading • Bill payment Mobile payments • Information services. Enabling the next wave of telecom growth in India 72 .4. in India is expected to boost market growth. driven by the uptake of services such as mobile web browsing. with synergy existing between e–commerce and m–commerce. especially in the case of banking and internet-based purchases.9.4. m–commerce finds its applications across various end markets such as banking and financial institutions. 4.g. the UID scheme and financial inclusion.1 m-commerce100 The next revolution that is expected through the use of mobile phones is the emergence of m-commerce. train. 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. purchase of goods and services) Mobile transfer • Prepaid card top-up • Person-to-person transfers • International remittances 100 See 5. for global practices. cinema) • Shopping (i. It is forecasted to overtake e-commerce in terms of the number of transactions.. booking tickets for transportation services such as trains and taxis and online shopping. the rollout of 3G services and increasing usage of WAP.4. 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..

The initial application will focus on mobile banking. with machine– to–machine (M2M) communication being the key driver behind this exponential increase in connected devices. finance. It will significantly impact the banking industry. delivery of health care information to practitioners. health care. disruptive business models and reduced legal and professional fees. 4. transportation and other emerging industries are expected to be at the forefront in adopting M2M communication.2 M2M communication According to Ericsson. coupons and advertising would pick up. 4. This will cause a reduction in the cost of transactions.4. real-time monitoring of patient vital signs and direct provision of care via mobile tele-medicine. education. service quality and security.4. to extend affordable health care to all in the country. The key advantages provided by M2M include cost and spectrum efficiency. There are a number of government schemes and other initiatives from medical service providers offering tele-medicine services. page 2.4 M-health M-health applications include the use of mobile devices in collecting community and clinical health data. Mobile payment technology will transform the nature of physical interaction between consumers. the world is expected to witness 50 billion101 connected devices in 2020. 73 Enabling the next wave of telecom growth in India . and will enable networks to support automated machine communications. Utilities. redundancy and coverage. merchants and banks. December 2010. to look at account information and transfer small amounts of money between various accounts. bill payment related to utility and others will become a major application.3 Mobile money Mobile communication and secure mobile transaction opportunities will bring a transformation in the manner in which money is managed. mobilized and generated in future. over a period of time.4. owing to increased volume. It offers a huge potential for health care delivery in India. adoption of other services such as ticketing. thereafter. government. with mobile money becoming a truly rich and integrated application for consumer convenience. researchers and patients. where the ability to conduct transactions from anywhere and at any time inherently lends itself to real-time 101 The World of 50 billion connections. M2M is characterized by small amounts of data between the device and network. monetary settlements. Ericsson.4.

4. an integrated system for taking biometric attendance through hand-held devices and transmitting it through mobile phones for authentication is expected to solve the challenge of attendance. It aims to bridge the supplydemand gap of high-quality teachers in the country. students and peers through collaboration in a distributed environment.4. It enables a virtual community to facilitate the learning activities of teachers.6 Financial inclusion Financial inclusion is central to the overall task of inclusive growth. For instance. and help them earn their daily wages. Enabling the next wave of telecom growth in India 74 . 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. The UID program is critical to improving the delivery of social services. this data could be transmitted to MNREGA.4.7 MNREGA and UID MNREGA and UID strive for providing inclusive growth. The ability of the Indian telecom sector to reach the masses owing to its scale and built-in affordability will help to achieve financial inclusion.5 M-education M-education offers innovative use of mobile and wireless technologies for education. The integration of such programs with mobile telephony will benefit the nation.4. MNREGA achieves twin objectives of rural development and employment. Financial inclusion aims to bring the unbanked and under-banked population into the organized financial services framework and assist in growth of the electronic payments market in India. about 80% of households do not have bank accounts. 4. 4. Once workers have logged in. subsidies and other government programs while also strengthening national security. In India.

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

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

pdf. and ensure sufficient lead times and transitional arrangements in the event of non-renewal or changes in licensing conditions.pdf.int/osg/spu/ni/3G/casestudies/GSM-FINAL. 5.0 35.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) 610.080. 77 Enabling the next wave of telecom growth in India . and through promoting regulatory certainty through a fair. 103 “1710–1755MHz spectrum band relocation.103 the Federal Communications Commission (FCC) concluded the auction of Advanced Wireless Services (AWS) in the 1.390. transparent and participatory renewal process. http://www. It is essential to provide details about license renewal or reissue.520.0 51.0 45.710–1.482.870. which were authorized to be auctioned for commercial purposes. Public consultation procedures and the right to appeal also increase the prospects for a successful renewal process.0 3.2. This is done through the principle of renewal expectancy. accessed 22 October 2010.508.755MHz band paired with the 2. The 102 “3G Mobile Licensing Policy. gov/reports/2008/SpectrumRelocation2008.8 360.7 1.0 2.0 120. including the use of the SRF to facilitate relocation of federal communications systems.ntia.755MHz band used by federal agencies was reallocated to AWS under the provisions of Commercial Spectrum Enhancement Act (CSEA).0 Note: The “beauty contest” approach purports to allocate licenses to operators who best meet stated pre-set criteria.0 351.710–1. The 1.08 116. Policy-makers and regulators should focus on creating interest among providers and providing incentives for long-term investment. which provides a funding mechanism through which federal agencies can recover the costs associated with relocating their radio communications systems from certain spectrum bands.4 44.110– 2.” ITU website. page 1. accessed 12 October 2010.0 10. Spectrum Re-farming of spectrum • The US Government created the Spectrum Relocation Fund (SRF) in December 2004. page 50.0 Nominal 4.070.0 each 44.155MHz band.” National Telecommunications and Information Administration website. http://www. In September 2006.doc.itu.

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

Communication service providers are obliged to contribute to this fund in many countries. a separate universal service fund has been set up. On the other hand. 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. with a relatively small geographical area and high population density. 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. In Mexico. page 19. governments should consider whether they should create a USOF for broadband services. USO services were provided by incumbent operators. subsidies are granted according to formulas for compensating operators already serving high-cost rural areas within their operating territory. In the UK. ANATEL has imposed a coverage obligation rather than a funding mechanism. 79 Enabling the next wave of telecom growth in India . 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.org/dataoecd/59/48/36503873. The contribution rate ranges from 0. http:// www. with the aim of increasing overall teledensity. accessed 20 October 2010.3. have not considered the creation of a universal fund.5% (plus federal contributions) 1% 1% 1% Considering USOF for rural wireless broadband services With the rising importance of broadband. after liberalization of the telecom sector. or proposing to expand into high-costs areas. countries with large geographic areas and consequently much higher costs to serve rural areas have funds that aim to cater for the rural population. However.oecd.5. In most countries. Universal Service Obligation Fund In many countries. a competitive tender mechanism was used. Most European countries. As a result. BT is the designated USO provider.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. The Brazilian legal framework uses a variety of tools to achieve universal service. the telecom regulator. In Greece.pdf.1% in France to 6% in Malaysia.

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

that emerged were increases in the global respondents stated that 108 “Intel: Realizing the benefits of broadband. form PPPs. Investment in information world in terms of broadband penetration.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. Eastern Europe added 19. invest in infrastructure and latest technology.intel.” ITU. However. The trend of actions that organizations have taken to control the leakage of Enabling the next wave of telecom growth in India 5. Other top trends next 12 months. which covers the overall . urban–rural divide and other factors that impact broadband penetration are very different in developing nations. as against only 8% by systems. 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. Broadband penetration by country 2009 Netherlands Korea UK Finland US Australia China India 0% Source: OECD. page 4.. Emerging markets such as India need to adopt leading practices that facilitate rapid and cost-effective deployment of broadband technologies.7% 26. The firm combination of national objectives toward broadband services with leading practices is expected to enable developing nations to achieve benefits of broadband growth.4 million fixed broadband subscribers. Indian organizations. Although the world is witnessing a rise in broadband penetration. The Information Security Management System (ISMS). However. regulatory environment.1% 33. TRAI. 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. Furthermore. increased risks: 3. infrastructure. 23% of 107 World Broadband Statistics: Short report. Broadband Broadband networks are an essential infrastructure for the global economy. The number of organizations currently evaluating the use of virtualization techniques is growing: 81 4.com/Assets/PDF/Article/WA-323857001.108 in comparison with 4% in developing economies. during 2005–08. http://www. 61% (46% globally) agreed that their organization will spend more this year in information security than it did last year.3% 7. Of all participants.8 million107 broadband subscriptions across the world. The essential leading practices that enable countries to increase broadband penetration include: adoption of regulations that embraces innovation and competition. encourage competitive ecosystems.5% 26.5. However. the growth rate is much higher in the developed world. Broadband services have economic benefits both in developed and developing nations. 23%.4. identity and access management computing.5% 29.4% 23. 2010. it declined to just 2%. page 2. a large digital divide exists between the developed and the developing 2. accessed 12 auditing capability and stronger they have embraced cloud October 2010. and release spectrum for the sustainable deployment of broadband services. Point Topic Ltd. as they provide businesses and consumers with fast and continuous access to internet–based services. Booz & Company analysis There are more than 497. Intel 37. content and applications. Increased security aware1. For instance.pdf. if China is excluded from the developing world.5 million fixed broadband subscribers.7% 0.” Intel website. whereas African countries were able to add 2.

South Korea Policy element Objectives Action • The South Korean Government created an action plan for the emergence of a knowledge-based  society. formulated the action plans. and launched the Korean Agency for Digital Opportunity and Promotion (KADO) • Encourage infrastructure investment by incumbents and market entrants  • Support construction of new high-capacity digital broadband backbone. technology demonstration projects. where all have the confidence to access the new and innovative services delivered by computer. The Korean Digital Divide Act created the five–year master plan to close the digital divide. 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. through funding • Financial support for R&D. 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 . 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. mobile phone. subsidies for purchase of personal computers by low-income citizens • Promote digital literacy • Support e–governance. e–commerce. re-engage those who have been disaffected and equip children with skills increasingly essential in the workplace • Have Ofcom research the prospects for home broadband adoption. personalized and efficient • Use ICT to reduce social exclusion Priorities • Transform learning with ICT • Set up a digital challenge for local authorities to achieve both excellence and equity in ICT • Make the UK a safe place to use the internet • Promote the creation of innovative broadband content • Create a strategy for the transformation of delivery of key public services • Have Ofcom (the independent regulator and competition authority for the UK telecom industry) set out regulatory strategy • Improve access to technology for the digitally excluded and ease technology use for the disabled Incentives and initiatives • Ensure that ICT is embedded in education to improve the quality of the learning experience for all. 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. with each citizen having access to a personal computer.

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

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

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

Radio network controllers (RNC) may be shared physically. radio. 5.ovumkc. The Ministry of Transport and Communications may. optic fiber. All operators may share sites and masts. Venezuela.8. the rollout of 3G has provided the required impetus to drive widespread adoption of m-commerce services.e.9. but operators must retain logical control over their networks and spectrum. Brazil. In India. It is also the regulator of the UK communications industries. television. the Philippines and South Africa have been the largest adopters of this service. the Australian Broadcasting Authority and the Australian Communications Authority merged to form the Australian Communications and Media Authority. Paraguay. However. cable TV services require approvals at the municipal level. Mobile networks in North America witnessed growth in data services that were also driven by the introduction of smartphones. Office of Telecommunications. voice revenues are expected to decline at a CAGR (2008–15) of 1. In July 2000. provided such networks can offer sufficient capacity and that the arrangement is without substantial disadvantage to subscribers. m-commerce Globally.com/. Convergence • In the US. as well as to regulate telecom common carriers and service providers. After smartphones were released. 111 Ovum: Mobile regional and country forecast pack: 2010–15. In July 2005. the regulatory functions of the Broadcasting Standards Commission. In Canada in 2002. Enabling the next wave of telecom growth in India 86 . the Federal Communications Commission (FCC) is an independent agency that regulates interstate and international communications by radio. the Canadian Radio-television and Telecommunications Commission (CRTC) is an independent public authority to regulate and supervise all aspects of the Canadian broadcasting system.5 billion111 in 2015.1% to reach US$19. wire. the mobile switching center (MSC) may not be shared. implement accounting separation and is subject to price and accounting controls for national roaming. and took over the functions of two previous regulators – the South African Telecommunications Regulatory Authority and the Independent Broadcasting Authority. There are commercial agreements between the main operators. and Mexico have also implemented m-commerce successfully. Latin American countries such as Uruguay. allow fulfillment of the coverage requirements through roaming in networks based on other technologies than Universal Mobile Telecommunications System (UMTS). telecommunications and wireless communications services. a number of commercially negotiated and regulated agreements exist between the two main operators and the MVNOs. Telecom operators that provide IPTV services on their broadband networks have demanded amendments to the regulations to allow them to provide national franchise and rollout of services. satellite and cable and content. Ghana. In Canada. This has made it possible for telephone companies to receive a statewide franchise to provide video services that compete with cable.but required each operator to maintain 30% of its network separately. Argentina.. m-commerce is very popular in countries where most of the population is unbanked. subject to an individual consideration. Independent Television Commission.7% during the same period. Radio Authority and Radio Communications Authority were combined to form Ofcom. networks’ packet data grew nine times larger than voice services. P-P radio lines) may be shared. the state of Texas passed a bill deregulating the telecom markets. the Independent Communications Authority  of South Africa was established. publish tariffs and reference offers. as the cable industry underwent the time-consuming and expensive process to secure city-by-city franchises over the last three decades. All transmission routes (i. http://www. Ovum website. Countries such as Sudan. The cable industry has opposed this demand. For core networks. accessed 16 October 2010. It is the regulator of the telecommunications and the broadcasting sectors. with responsibilities across television. • • • 5. Recently. The main operator is obliged to provide national roaming and MVNO access. cables. but data revenues are expected to increase at a CAGR of 16. • • In Norway.

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

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

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

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

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

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

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Enabling the next wave of telecom growth in India 96 .

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

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

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

Enabling the next wave of telecom growth in India 100 .

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