Telecom Industry

Business Environment Domain Study
By Anjana (36), Prachi (16), Puneet (51), Sandeep (50) PGPM 508 Under the guidance of Dr. Pallavi Mody S. P. Jain Institute of Management & Research

Telecom Industry

Executive Summary
The rapid growth in Indian telecom industry has been contributing to India’s GDP at large. Telecom industry in India started to set up in a phased approach. Privatisation was gradually introduced, first in value-added services, followed by cellular and basic services. Telecom Regulatory Authority of India (TRAI), was established to regulate and deal with competition (the service providers). This gradual and thoughtful reform process in India has favoured industry growth. Upcoming services such as 3G and WiMax will help to further augment the growth rate. The Indian telecommunications industry is one of the fastest growing in the world and India is projected to become the second largest telecom market globally by 2010. This is evident from the facts of Telecom Industry for example, India added 113.26 million new customers in 2008, the largest globally. The country’s cellular base witnessed close to 50 per cent growth in 2008, with an average 9.5 million customers added every month. This would translate into 612 million mobile subscribers, accounting for a tele-density of around 51 per cent by 2012. It is projected that the industry will generate revenues worth US$ 43 billion in 2009-10. In this report we have tried to capture most of the areas of Telecom Industry. Major highlights of the report are History of Telecom Industry, Current Industry Analysis, Role of TRAI, Spectrum allocation, FDI Regulation, Competitive advantages, Outsourcing in Telecom, Emerging Technologies, Latest Innovation, and Growth Trends, Mergers and Acquisitions.

Anjana, Prachi, Puneet, Sandeep

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Telecom Industry

Table of Contents
Executive Summary....................................................................................................................................... 2 1 Indian Telecom Industry ....................................................................................................................... 6 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 History ........................................................................................................................................... 6 Quick Facts .................................................................................................................................... 6 Telecom services ........................................................................................................................... 6 Industry Sectors ............................................................................................................................ 7 Growth Avenues ........................................................................................................................... 8 Industry Revenue (2002-2010) ................................................................................................... 10 Subscriber Growth ...................................................................................................................... 11 Major Players .............................................................................................................................. 11 Wireless Service Providers (Market share) ......................................................................... 12 Handset Manufacturers (Market share) ............................................................................. 12

1.8.1 1.8.2 1.9 1.10 1.11 1.12 2

Major Investments ...................................................................................................................... 13 Rural Telephony .......................................................................................................................... 13 Exploring the rural telecom opportunity .................................................................................... 13 Policy Initiatives .......................................................................................................................... 14

Telecom Regulatory Authority of India (TRAI) .................................................................................... 15 2.1 2.2 2.3 2.4 2.5 Mission ........................................................................................................................................ 15 Role of TRAI ................................................................................................................................. 15 Recommendatory Functions ....................................................................................................... 15 Mandatory Functions .................................................................................................................. 15 Other functions ........................................................................................................................... 16

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Spectrum Auctions in India Vis-à-vis Worldwide ................................................................................ 17 3.1 3.2 3.3 3.4 Spectrum Auction Scenario in India ............................................................................................ 17 Gaps in Indian Spectrum Auction Licensing Scenario ................................................................. 18 3G Spectrum allocation policy in India in 2009........................................................................... 19 Comparison-Spectrum Allocation Policy in UK ........................................................................... 20

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India’s Competitive Advantage ........................................................................................................... 21 4.1 4.2 4.3 Stable Economic Outlook ............................................................................................................ 21 Large Market Potential ............................................................................................................... 22 Large Talent Pool ........................................................................................................................ 22 3

Anjana, Prachi, Puneet, Sandeep

Telecom Industry

4.4 5

Low Labour Cost.......................................................................................................................... 23

The Road Ahead .................................................................................................................................. 25 5.1 5.2 5.3 5.4 5.5 5.6 Gradual Progression in Telecom Sector ...................................................................................... 25 Acquiring New Subscribers through expansion in Rural India .................................................... 26 Selling More to Existing Subscribers ........................................................................................... 26 Government Initiatives ............................................................................................................... 26 The reasons for the increasing importance of MVAS can be classified as:................................. 26 Defining VAS................................................................................................................................ 27 Basic definition of a VAS ..................................................................................................... 27 Definition as per TRAI ......................................................................................................... 28

5.6.1 5.6.2 5.7 5.8

Mobile VAS in rural market ......................................................................................................... 28 Access devices for MVAS ............................................................................................................ 29 GPRS Handsets .................................................................................................................... 29 3G Handsets ........................................................................................................................ 30

5.8.1 5.8.2 6

Key trends in telecom industry ........................................................................................................... 31 6.1 Mobile Number portability (MNP) .............................................................................................. 31 The Inhibitors ...................................................................................................................... 31 MNP Implementation globally ............................................................................................ 32

6.1.1 6.1.2 6.2 6.3 6.4 7

Wimax v/s 3G .............................................................................................................................. 33 Mobile Virtual Network Operator (MVNO) ................................................................................ 34 IPTV ............................................................................................................................................. 35

Industry Updates................................................................................................................................. 37 7.1 Consolidation in Industry. ........................................................................................................... 37 Idea Cellular’s Acquisition of Spice Telecom....................................................................... 37 Vodafone’s entry into India ................................................................................................ 37 Telenor-Unitech Deal .......................................................................................................... 38 TTSL – DoCoMo Deal. .......................................................................................................... 38 Bharti-MTN deal (in talks). .................................................................................................. 38

7.1.1 7.1.2 7.1.3 7.1.4 7.1.5 7.2 7.3

FDI Investments in the Telecom Sector in India: ........................................................................ 40 Outsourcing by Telecom Service Providers in India .................................................................... 41 Hutchitson Essar (now Vodafone) and Nokia Deal: ............................................................ 41 Bharti Airtel’s IT Outsourcing to IBM: ................................................................................. 41 4

7.3.1 7.3.2

Anjana, Prachi, Puneet, Sandeep

................2 8....................................................................................................................3...... 44 9 10 Conclusion ....... 48 Anjana.................. Sandeep 5 ..................4 8 Bharti’s Outsourcing to Alcatel-Lucent: ........ 43 High Speed Downlink Packet Access (HSDPA) .......................................................................................................................Telecom Industry 7.........3.............................................. 43 8......................................................... 44 4G or Fourth Generation Networks ..............................................1 8.......................................................................................................................... 47 Appendix A ................................................... 42 Future Technology Trends ...................................... 46 References ................................................................................3 7....................................................................................... Puneet............3 IP Multimedia Subsystem (IMS) ............................. 42 Bharti Outsourcing Deal with Nokia & Ericsson .................................................... Prachi.................

Telecom industry in India is specifically emphasizing on latest technologies like GSM (Global System for Mobile Communications). radio.Telecom Industry 1 Indian Telecom Industry 1.94 million 36.8 licensees began operations in Aug 1995 Birth of a regulator: TRAI NTP 1999 (New Telecom Policy) CAGR of around 85% since 1999 FDI: 74% (2005) having the world's lowest call rates the fastest growth in the number of subscribers (45 million in 4 months). television and Internet. PMRTS (Public Mobile Radio Trunking Services).76 million 37. Puneet.2 billion 100 Million 1. which are Fixed Service Provider (FSPs) and Cellular Services.3 Telecom services Telecommunication sector in India is primarily subdivided into two segments. the world's cheapest mobile handset the world's most affordable colour phone Early to Mid 90’s: A Messy Affair Late 90’s          2000+ 2007-2009 1.2 Quick Facts Total telecom subscribers : Wireless subscribers : Wire line subscribers : Tele density : India’s service providers revenue in Q1 (2009): India’s Rural Mobile Phone Users : 429.49% FDI . CDMA (Code Division Multiple Access). Telecom industry in India constitutes some essential telecom services like telephone. Sandeep 6 .3% Introduction of public pay phones Private Sector allowed DoT. MTNL and VSNL formed Telecom policy 1994 . Fixed Line and WLL(Wireless Anjana.Basic telephony service to private operators .98 per cent $8.1 History 1851 1947 1980’s: The Beginning        Introduction of Telegraph services Foreign Telecom Companies nationalized to form PTT Tele-density in 1980-81: 0. the fastest sale of million mobile phones (in a week). Prachi.72 million (March 2009) 391.

global giants in mobile devices have set up their manufacturing facitilities in India. All major telecom equipment suppliers have their R&D centers in India. IBM Indi Wipro. The discussions in this document is mainly restricted to only Telecom Service Providers. Telecom Telecom Equipment Manufacturers: Nokia. Sasken From holistic point of view telecom industry can be divided to four sub-sets. India has a prospering market specifically in GSM mobile service and the number of subscribers is growing very fast. In last 5 years. Aricent. Reliance.Telecom Industry Local Loop ). Anjana. Ericsson Telecom Service Providers: BharatiAirtel. Prachi. Vodafone. Motorola. Cisco. Sandeep 7 . The major forces in Indian telecom industry are Service providers. Idea. Puneet. Samsung Telecom Solutions Providers: TechMahindra.4 Industry Sectors Network Infrastructure Companies: Alcatel-Lucent. Internet PMRTS VSATs Radio Paging GMPCS Basic Services Mobile Services 1.

Puneet. many service providers are considering infrastructure sharing offers the following advantages:       Improved service quality Increased affordability for customers Faster roll out of services in rural and remote areas Significant reduction in initial set up costs Increased environmental aesthetics Lower operating costs for service providers   Enterprise Telecom Services includes key services. IT infrastructure enabled unified communication services.5 Growth Avenues  Managed services is another segment that is attracting telecom companies. they completely or partially outsource their infrastructure or network management operations. dedicated telecom communication systems. In such cases. such as voice over Internet protocol (VoIP). Sandeep 8 . To reduce their network deployment costs. Telecom service providers are increasingly targeting enterprises by providing dedicated services and is expected to witness major developments in near future. Prachi. On account of the rapidly growing subscriber base. Anjana. etc. service providers find it difficult to manage their infrastructure and network management operations.Telecom Industry 1.

aims to connect 74. thereby. Internet services and other value-added services. rural telephony will require major investments. however. WiMAX is expected to accelerate economic growth and assist in providing better education. Internet.   India expects to replicate its 2G growth in 3G services. such as location information and mobile transactions.  Value Added Services:The VAS industry was worth USD 632 million in 2006–07. The VAS industry is currently focussing on the entertainment sector. Thus. especially wireless services. Sandeep 9 . it is expected to be a major factor in driving telecom services in India. healthcare and entertainment services. such as the Indian film industry and cricket. it will lead to the increased use of telecom services. Aircel is the pioneer in WiMAX technology in India. the 3G spectrum is among the major investment opportunities and growth drivers of the telecom industry.  WiMAX has been one of the most significant developments in wireless communication in the recent past. Prachi. offering great market opportunities for telecom players. This segment will boost the demand for telecom services. 3G The Indian government plans to auction the spectrum for 3G services by inviting bids from domestic as well as foreign players.  The immense potential for 3G is reflected by the 30–40 percent annual growth in ValueAdded Services. Reliance and VSNL have acquired licenses in the 3. and creating a competitive environment that offers better services to consumers. Anjana. Competition is likely to heat up in the VPN segment as DoT has relaxed the norms for private players. Therefore.011 million opportunity. value-added services and enterprise services. The state-owned player. Cell phone manufacturers are striving to develop USD 100 priced 3G handsets for the Indian market. equipment.000 villages through WiMAX. there is scope for growth in other avenues as utility-based services. The industry is estimated to grow by 60 percent in 2007–08 and become an USD 1. BSNL.Telecom Industry  Virtual Private Network is a private data network that provides connectivity within closed user groups via public telecommunication infrastructure.     It is estimated that India will have 13 million WiMAX subscribers by 2012. Since this mode of communication provides network access in inaccessible locations at a speed of more than 4 Mbps. Bharti.3GHz range to utilise the opportunities offered by this domain.  Rural Telephony: As the government targets to increase rural teledensity from the current 2 percent to 25 percent by 2012. Puneet.

however. India has become the second country in the world to have more than 100 million CDMA-based (code division multiple access) mobile phone subscribers after the US.Telecom Industry 1.8 billion in India. by 2012.11 per cent over the additions made the previous month. The Indian telecommunications industry is on a growth trajectory with the GSM operators adding nearly 9 million new subscribers in April 2009. which has 157 million CDMA users. Sandeep 10 . fixed line revenues are expected to touch US$ 12.2 billion while mobile revenues will reach US$ 39. Puneet. a growth of 3. do not include the GSM subscriber additions made by Reliance Telecom. The figures. taking the total user base to 297 million.6 Industry Revenue (2002-2010) According to a Frost & Sullivan industry analyst. Prachi. Year 2002-03 2003-04 2004-05 2005-06 2006-07 2008-09 2009-10(forecasted) Revenue(US$ billion) 9 10 11 15 20 32 43 Revenue(US$ billion) Revenue(US$ billion) 43 32 15 20 9 10 11 Anjana.

Anjana. with an average 9. There have been talks about 3G and IPTV pushing growth. The country’s cellular base witnessed close to 50 per cent growth in 2008.94 at the end of April 2009. Besides. With this growth.Telecom Industry 1.7 Subscriber Growth India added 130 million new customers in 2008-09. This would translate into 612 million mobile subscribers. According to Business Monitor International. However. the services will be used only in urban areas. It is estimated that by mid 2012.47 million. According to an industry expert the subscriber base will not expand beyond 800 million in coming years from current number 400 million. The third generation of mobile services (3G) will be used by telcos to gain more spectrum. around half the country's population will own a mobile phone. The company recently achieved the magic figure of 100 million subscribers.gov. Prachi. the total number of telephone connections reached 441. but would try and rock the applecart of existing operators. The growth in Indian market could start tapering off very soon. the new operators would not remain fringe players in the Indian market. Source: www. By April 2009. and is looking to spread its risks by entering new geographies (Bharti-MTN deal is discussed in Industry Update Section). ARPUs in India have steadily falling($5-$6). Bharti-Airtel expects a bloodbath in the Indian telecom market in the near future.5 million customers added every month. Also. the largest globally.8 Major Players Bharti-Airtel leads the wirless market with 24% market share. the overall tele-density reached 37.trai. Puneet. accounting for a tele-density of around 51 per cent by 2012.in 1. Be it an Aircel or Etisalat. With 12-13 players present in the market there would be a severe pressure on margins. Sandeep 11 . India is currently adding 8-10 million mobile subscribers every month. but it all seems far-fetched.

Handset Market 5% 6% 7% 8% 15% Nokia Sony 60% Samsung Motorola LG Others Anjana. Mobile phone production is estimated to grow at a CAGR of 28.coai.1 Wireless Service Providers (Market share) As on June 30th 2009 Bharti Airtel 18% Vodafone Essar 24% BSNL IDEA Aircel 18% 11% 11% Reliance GSM MTNL Loop Mobile Tata Teleservices 8% 1% 1% 3% 5% Source: www. Sandeep 12 .com 1.8. Nokia Leads the market with whopping 60% share.3%. Prachi. totaling 107 million handsets by 2010. Puneet.2 Handset Manufacturers (Market share) India's telecom equipment manufacturing sector is set to become one of the largest globally by 2010.Telecom Industry 1.8. Korean giant Samsung currently at number there is looking forward increase its market share to 20% through aggressive marketing.

will put in about US$ 1. Some deals are discussed in detail in industry consolidation section. Universal Service Obligation (USO) subsidy support scheme is also being used for sharing wireless infrastructure in rural areas with around 18.5 billion over the next 5 years in India. followed by Himachal Pradesh (17. which launched GSM mobile services in Bangalore in February 2009.9 Major Investments The booming domestic telecom market has been attracting huge amounts of investment which is likely to accelerate with the entry of new players and launch of new services. most companies are now sweating it out by hard selling their products and services in the rural areas of the region.16 billion in its WiMax project. Though the rural mobile penetration is highest in Punjab (20. Japanese telecom major NTT DoCoMo acquired a 27. India's leading telecom company in revenue terms. to 39 percent now. Sandeep 13 .10 Rural Telephony Rural India had 76. 1. 92 per cent of the villages in India have been covered by the VPTs. Norway-based telecom operator Telenor has bought a 60 per cent stake in Unitech Wireless for US$ 1. at least 100 million will come from rural areas. SSTL is also planning to invest US$ 5.65 million fixed and Wireless in Local Loop (WLL) connections and 551. Puneet.31 per cent equity capital of Tata Teleservices for about US$ 2.23 billion. a joint venture between Russia-based telecom major Sistema and Shyam Group in India.Telecom Industry 1.6 billion in November 2008.064 Village Public Telephones (VPT) as on September 2008.63 per cent) and Haryana (10. Telecom operator Aircel.58 million over the next year to set up base stations across the state.000 towers by 2010. Prachi. huge investments are being made into this industry. Buoyed by the rapid surge in the subscriber base.20 per cent).        The Russian government is likely to pick up equity amounting to US$ 670 million-US$ 700 million in Sistema Shyam TeleServices Ltd (SSTL). by the end of this financial year. Vodafone Essar will invest US$ 6 billion over the next three years in a bid to increase its mobile subscriber base from 40 million at present to over 100 million. Bahrain's Batelco has signed a deal to buy 49 per cent in Chennai-based S-Tel. 1. Anjana. As a result. Therefore. a couple of years ago.11 Exploring the rural telecom opportunity It is believed that of the next 250 million people expected to go mobile.69 per cent). Kerala (10. BSNL. the geographical coverage of mobile telephony in India has gone up from 13 percent. a GSM service provider. plans to invest US$ 220.09 per cent). for US$ 225 million.

      100% foreign direct investment (FDI) is permitted through the automatic route in telecom equipment manufacturing FDI ceiling in telecom services has been raised to 74% Introduction of a unified access licensing regime for telecom services on a pan-India basis Plan to introduce mobile number portability in a phased manner The government is implementing a program of connecting 66. Anjana. The Department of Telecommunications (DoT) has stated that foreign telecom companies can bid for 3G spectrum without partnering with Indian companies.12 Policy Initiatives The government has taken many proactive initiatives to facilitate the rapid growth of the Indian telecom industry. would they need to apply for unified access service licence (UASL) and partner with an Indian company in accordance with the FDI regulations. Only after winning a bid.Telecom Industry 1.822 uncovered villages under the Bharat Nirman programme. Prachi. Sandeep 14 . The government will invest US$ 2 billion to set up 112.000 community service centres in rural India to provide broadband connectivity in 2008-09. Puneet.

Sandeep 15 . In pursuance of above objective TRAI has issued from time to time a large number of regulations. The directions. Puneet. broadcasting and cable services in a manner and at a pace which will enable India to play a leading role in the emerging global information society.4 Mandatory Functions    Ensure compliance of terms and conditions of license Fix the terms and conditions of their inter connectivity between service providers Ensure Technical compatibility and effective inter-connection between different service providers Anjana. interconnection and quality of service as well as governance of the Authority.2 Role of TRAI One of the main objectives of TRAI is to provide a fair and transparent policy environment which promotes a level playing field and facilitates fair competition. 2. orders and regulations issued cover a wide range of subjects including tariff. orders and directives to deal with issues coming before it and provided the required direction to the evolution of Indian telecom market from a Government owned monopoly to a multi operator multi service open competitive market.Telecom Industry 2 Telecom Regulatory Authority of India (TRAI) 2.1 Mission To ensure that the interests of consumers are protected and at the same time to nurture conditions for growth of telecommunications. 2.3 Recommendatory Functions     Need and timing for introduction of new service provider Terms and conditions of licence to a service provider Revocation of license for non-compliance of terms and conditions of license Measures to facilitate competition and promote efficiency in the operation to facilitate growth in industry Technological improvement in services by service providers Inspection of type of equipment used by service provider Measures for Technological development Efficient Management of available spectrum     2. Prachi. The functions of TRAI can be divided as : Recommendatory function and Mandatory Function.

5 Other functions    Levy fees and other charges as determined by regulations Perform administrative functions as entrusted to it by Central government or as per TRAI act Notify in Official Gazette the service rates and message rates within and outside India Snapshot of TRAI functions Anjana.ensure this by periodical survey Lay-down and ensure time period for providing local and long-distance circuits of telecommunication between different service providers Maintain inter-connect agreement register Ensure compliance of USO(universal service obligation)    2. Puneet.Telecom Industry   Regulate arrangements for sharing of revenues amongst service providers Lay-down the standards of QoS to be provided by service provider. Prachi. Sandeep 16 .

spectrum auctions ensure efficient usage by allocating it to those entities that value it most. Potential service providers were required to seek foreign partners.com how. In order to allocate spectrum amongst competing service providers. categorized as A. Despite this early start. demand for spectrum has increased. the first being a pre-qualification based on the evaluation of financial net worth (linked to the category of circle and service bid for) and experience in service provision and the second stage involved Anjana. spectrum auctions ensure the efficient use of spectrum by allocating it to those entities that value it most. Digital technology has increased the scope of applications and created new areas of service provision. 3. B. With private initiatives increasing in telecom and broadcast service provision. For service provision. Puneet. services have been slow to roll out. From a regulatory and policy perspective. as it was felt that no Indian company had the requisite financial strength and technical know Source: www. The key challenge before regulatory agencies is to design auctions in such a way as to meet the objective of fostering competition while at the same time ensuring that bidders can effectively use the spectrum for their business. regulator and service provider. Despite technological changes that reduce the demand for spectrum.telenor. the entire country was divided into roughly 20 circles. Prachi. for example. while also generating revenues for governments.Telecom Industry 3 Spectrum Auctions in India Vis-à-vis Worldwide Spectrum auctions have been used with significant success in many developed countries. bidding was a two-stage process. its success in service provision has been low.1 Spectrum Auction Scenario in India While India was one of the early adopters of spectrum auctions. The key challenge before regulatory agencies is to design auctions in such a way as to meet the objective of fostering competition while at the same time ensuring that bidders can effectively use the spectrum for their business. telecom licences were auctioned for basic and cellular services from 1991 by the Department of Telecom (DoT). regulatory agencies often use auctions. or C depending upon their revenue potential. The circles were mostly co-terminus with the DoT’s administrative boundaries and the states. For all licenses. But auctions may lead to unexpected outcomes as. But auctions may lead to unexpected outcomes due to unanticipated problems with their design leading to unexpected bidder behavior such as collusion and over-bidding. while also generating revenues for governments. Sandeep 17 . or auctions may be poorly designed. Cellular telephony and wireless Internet are examples of such services. when regulatory agencies have inadequate market information. the incumbent government policy maker. In India. From the regulatory and policy perspective. availability of spectrum continues to be a constraint. there may be a mismatch between expected and actual bidder behavior.

Prachi. the financial bids were to be evaluated on the rental to be charged to the customer for the first 3 years. regulation and operations led to several delays and lowered the credibility of the government. Confusion in DoT was also evident from the manner in which it handled the interconnect issues. For cellular services. there were separate licenses for the four major metros of Kolkata (Calcutta).(The airtime tariffs were fixed by DoT. The GOT drafted the National Telecom Policy in 1999. Managing the caps on the number of circles or delays in clearances after the bids were opened showed a lack of adequate preparation in the auction design process. industrialists and professionals to evolve a future policy framework for the sector. with the award going to the highest bidder drawn from those that satisfied the pre-qualification conditions. Subsequently. Sandeep 18 . The establishment of TRAI and NTP 99 brought about major changes to the licensing process and converting the licence fee to a revenue sharing regime signaling the governments changing perspective and willingness to bear a part of the market risk.Telecom Industry evaluation of bids. Global System for Mobile Communications (GSM) was the chosen technology and for basic services. This was presumably effected outside the DoT as the government felt that the DoT might not be able to conceive a radically different roadmap or might thwart the involvement of the private sector or produce a regulatory framework crafted in the DoT’s vested interest. an interconnect framework has been put in place (although problems persist) and service provision has accelerated. The entry fee was based on a percentage of the total amount of the original bid. Mumbai (Bombay) and New Delhi. 1561 based on the amounts specified by the winners. The licenses for the circles containing the metros excluded these cities. For cellular licences. The government then set up a group on telecom (GOT). it was required to design the auctions to facilitate service provision. that consisted of top-level bureaucrats. The bids were single stage. Subsequent to the bid opening.2 Gaps in Indian Spectrum Auction Licensing Scenario The absence of clear separations in DoT’s responsibilities for policy. and bidders were evaluated on an annual license fee for the duration of the license. Chennai (Madras). Anjana. As a part of the package. the rentals were fixed at Rs. All existing license holders could ‘‘migrate’’ to a new regime that involved a one time payment as entry fee and an annual revenue share with the government. provided that all operators withdrew their court cases against the government on a variety of issues such as delays in clearances. 3. Puneet. a combination of fiber optic and wireless in the local loop (WLL) was selected. converted to its net present value at a specified discount rate. it saw its position threatened by impending private participation and set impediments in the service roll out. service roll out continued to be slow. This change greatly facilitated private sector participation and several operators subsequently commenced services.the operators also agreed to allow the government to increase the number of players in their service areas.2 (NTP 99) which presented a roadmap for resolving the impasse. The second highest bidder had to match the highest bid in order to obtain the license. subject to a minimum amount. even though some winning bids had zero out in metros. For metro licenses. whereas in its role as a policy maker.) The licensee fee was a flat amount for the first 3 years and then was linked to the number of subscribers. Despite these initiatives. Like all incumbents.

i. In the present context. Prachi. The market is slated to capture more than 11. as well as foreign players and creating a competitive environment that offers better services to consumers. It offers voice capacity that is four to five times higher than that of 2G services. many national players have already completed 3G trials. BSNL has charted out a plan for launching 3G services in 250 cities. India Inc.Telecom Industry 3. Reliance and Idea. In other areas. then that would be just the possibility of two new Operators coming to play.3 per cent of all mobile subscribers by 2010. In the race towards lowering the entry barrier for 3G services. Therefore. In June 2009 the DoT (Department of Telecom) in India has announced the radio spectrum that will be made available when 3G licenses are eventually auctioned off.It could be the case that just 4 Operators are given radio spectrum around Delhi .given that two incumbents (BSNL and MTNL) already have some licenses in each zone.6 million.      In addition.e. Puneet. telemedicine. awaits the rollout of 3G services. there is apparently going to be more provision for private players . The greater availability of spectrum in these other zones is due to the Defence Ministry giving up some of its Spectrum. Private players. Therefore. Therefore. 3G technology is extremely relevant for India. the 3G spectrum is among the major investment opportunities and growth drivers of the telecom industry. such as Bharti. it is likely to create an initial subscriber base of 3. Anjana.meaning up to 11 ‘Operators’ could enter business. are also ready to offer this service in 10-20 major Indian cities. companies plan to offer bundled service packages with subsidised handsets. 21. Airtel and MTNL are very keen on leveraging their first mover advantage in this field. it will be a good solution for education.3 million people. games and music. Even if 2 per cent of the 180 million cellular subscribers adopt 3G technology as soon as it is launched. Sandeep 19 .3 3G Spectrum allocation policy in India in 2009 In the conducive business environment. etc.     The immense potential for 3G is reflected by the 30-40 per cent annual growth in value added services The global revenue for 3G is 60 per cent higher than that of other services Cellphone manufacturers are striving to develop US$ 100-priced 3G handsets for the Indian market India expects to replicate its 2G growth in 3G services. it would not be incorrect to assume that 3G is poised to create the next mobile revolution in India. However. it is an ideal platform for low-cost cellular services It can fulfil the need of fast developing mobile penetration in rural areas It can meet the demand for high-speed data and content rich services in the urban landscape It can play a vital role in augmenting the competitiveness of the country’s large BPO segment It can be a way forward to achieve the Government’s broadband objectives..With regard to its business potential. The Indian government plans to auction the spectrum for 3G services by inviting bids from domestic. The Indian market is well poised to leverage the 3G service offerings in content categories such as sports.

could provide roaming services over the existing 2G network to new 3G customers. and going to HSPA+ (3. Puneet. mandated that incumbents would have to provide roaming to the new entrants.5G) level. In contrast. academia and other interested parties in designing the auctions. This allowed regulatory agencies in these countries to auction spectrum for all services rather than having to choose allocation mechanisms separately for various services. the Radio Communications Agency that conducted the 3G auctions in UK and Oftel (the UK regulator) went through a detailed public discussion involving industry. The government felt that new entrants needed certainty regarding their ability to be able to provide roaming over the existing networks and. particularly as many other countries are already at HSPA (3. a new entrant needed to establish a roaming arrangement with the incumbent 2G providers. 3. or in one go. Hopefully something will be resolved soon.keeping in mind the past discrepencies. as India is beginning to really lag behind in 3G technologies. Incumbents who won a 3G license. Sandeep 20 . The incumbents could thwart competition by denying or delaying roaming facilities to the new entrants. therefore. The incumbents sought several changes to the originally proposed roaming conditions which would be to their advantage. there were already four established mobile players that had 2G licenses covering nearly 97 percent of the area and 90 percent of the population. Anjana. and whether the relevant spectrum is sold in tranches. In the UK. The FCC.4 Comparison-Spectrum Allocation Policy in UK The UK 3G auction took the necessary steps to design the auction appropriately.currently there are disputes over how many Operators can exist per zone. Prachi.75G) soon.Telecom Industry There is still much to-ing and fro-ing to be done though over the 3G licenses themselves . Such a mandate necessitated a change in the existing licenses that was undertaken for the dominant providers.

it has now revised its previous estimates and claims that by 2050. India’s emergence as a leading destination for foreign investment is a result of positive indicators such as a stable 6 per cent annual growth.Telecom Industry 4 India’s Competitive Advantage An analysis of the Indian telecom industry under the Porter’s Diamond Model reveals that India offers a competitive advantage for firms operating in the country. India and China). The country’s economic growth has become more attractive due to the rising share of the services sector in the GDP. AT Kearney ranked India as the second-most attractive democracy in its FDI confidence index. which accounts for 75 per cent of India’s GDP. India is the fastest growing free market democracy in the world.1 Stable Economic Outlook A decade of reforms has opened the country to greater competition and spurred industries to become more efficient. It is also expected to achieve the highest growth rate among the BRIC countries (Brazil.18 billion(July 24th 2009) and Foreign Direct Investment (FDI) of US$ 15 billion. rising foreign exchange reserves of over US$ 266. 4. Sandeep 21 . as well as the manufacturing sectors. The success of MNCs is a proof that India is an attractive investment destination. and a market with enormous potential due to its large size and diversity. India offers significant business opportunities to the services. This is because India offers benefits such as cost advantage in product development and back-office processing and the large-scale availability of skilled English-speaking professionals. Russia. Goldman Sachs had earlier predicted that India will become the third-largest economy in the world. It has a mature and dynamic private sector. Anjana. The middle class population is also a significant market for any business entity. India is currently the fourth-largest economy on PPP basis and is well positioned on a continuously increasing growth curve. India’s huge domestic market and buoyant economic growth have always attracted foreign investors. Puneet. Prachi. However. India will even surpass the US and become the second-largest economy after China. Some of the key advantages of investing in India are outlined below.

Anjana. This large base of skilled manpower offers unparalleled advantages to the companies operating in India. or they have outsourced their work to a third party in India. Approximately 33 per cent of India’s population will be residing in urban areas by 2026.000 post graduates.500 research institutes. 4. By 2013.000 engineers. As a result. India is one of the largest consumer markets in the world. India will become a large consumer of world resources . another 200 million people will be joining the league. 2. as against 28 per cent in 2001. thereby offering numerous opportunities to marketers around the globe. The numerous BPOs and KPOs flourishing in India are a direct consequence of companies choosing the latter option.100. about 54 per cent of the country’s total population was below 25 years of age. Puneet. It has been forecasted that 15 years down the line. The country’s upper middle class spends 6 percent of its earnings on telecom services.000 other graduates and around 9. many multinational companies have either established operation hubs in India to leverage this sizeable talent pool.Telecom Industry 4.be it natural or manmade. Indians will be approximately four times richer than they are today. Indians will purchase five times more cars and consume three times more crude oil than they do today. According to the 2001 census. representing an exponential growth in the ‘consuming class’. 300. Sandeep 22 .3 Large Talent Pool The working age population is expected to rise by 83 per cent by 2026. Prachi.2 Large Market Potential Around 30-40 million people in India join the middle class every year.000 PhDs. the spending power of consumers is increasing rapidly. India has over 380 universities and about 1. Due to rapid economic growth and rise in disposable income. which churn out approximately 200. As per this forecast.

The country has also emerged as a major R&D hub with more than hundred Fortune 500 companies based in India. An apt example is Nokia. has estimated that off shoring operations to India can provide a cost benefit of up to 40 to 60 per cent. It has pumped in US$ 150 million into its Chennai facility.Telecom Industry 4. The company believes that this initiative will help the company in reducing time to market and respond better to customer requirements. which has set up its manufacturing operations in India considering the long term sustainable demand for mobile telephony. India has one of the lowest labour costs among the developing countries. Government of India. Prachi.4 Low Labour Cost CII estimates that manufactured product outsourcing accounted for US$ 10 billion in 2007. The Ministry of Commerce. Sandeep 23 . Anjana. as compared to developed countries. which is the foremost factor for attracting multinational giants in every sector. Puneet. The value will escalate to US$ 50 billion by 2015.

Many telecom and equipment and software companies are based in India. Growing affordability and lifetime free schemes have care a market at the bottom of the pyramid. Factor Conditions Demand conditions - Presence of skilled labour pool. Increasing disposable income of consumers. . - India has a large middle class of 300 million. -The government extends full support to industry through reform processes. - Chance Firm strategy structure and rivalry. - Government Related and supporting industries - - Competent handset manufacturers have produced the lowest priced handsets for the Indian market. Prachi. Puneet. as well as those of consumers. profitability.Policies are in place to safeguard the interests of service providers. Sandeep 24 . Many new handset have been launched. Increasing demand due to changing lifestyles and growing attraction for mobiles with new features.Telecom Industry - - Intensive competition in the country has made it possible for service providers to offer the services with lowers fare in the world. Low teledensity (~18%) offers huge future potential. Handset players are setting up manufacturing bases in India for better operation management. Rapidly developing robust telecom infrastructure. Porter’s Diamond Model – Indian Telecom Industry Anjana.

Telecom Industry 5 The Road Ahead The target for the 11th Plan period (2007-12) is 600 million phone connections with an investment of US$ 73 billion. In fact.1 Gradual Progression in Telecom Sector The progression chart below depicts the major regulations and events driving the extra ordinary growth of Telecom sector from year 1999 to 2008. Puneet. Sandeep 25 . Prachi. According to the CII Ernst & Young report titled 'India 2012: Telecom growth continues'. the real potential for telecom service growth is still lying untapped. Anjana. This would result in further reduction of voice tariffs. the Industry players are aiming to achieve the following   Acquiring new subscribers by expanding in Semi Urban and Rural India Selling more services to existing subscribers The recent TRAI recommendation permitting PC-to-phone calls where ISPs can offer cheaper STD calls and even free local calls. India is the world’s largest untapped mobile market 5. as against US$ 31 billion in 2008. there is an enormous potential for various valueadded services. This would lead to increased focus on MVAS by mobile operators. Through these changing regulations and events. In order to capitalize this opportunity of meeting the consumer needs in highly competitive market the operators have reduced the tariffs to attract consumers with low purchasing power primarily in semi urban and rural India. In fact lucrative offers like being paid for incoming calls have transformed the scenario completely. revenue from India's telecom services industry is projected to reach US$ 54 billion in 2012. Apart from the basic telephone service.

the challenge is to develop alternative revenue streams and retain customers by creating a basis for differentiation in high-churn markets. Now that voice has got commoditized these operators are using MVAS for their Anjana. operator margins also have shrunk owing to competition and lower “Average Revenue per User” (ARPU) as the major growth is coming from bottom of the pyramid. Therefore it is very important for them to differentiate themselves from the others. In recent developments. DoT aims at erecting 11.  Number of Licensees: With increasing number of licensees (98 UASL. In such a scenario mobile VAS sector is a potential long-term revenue stream as it will be easier to sell more to the existing customers. This certainly explains the future penetration of these services in remotest of villages. As ARPU declines and voice gets commoditized. The USO fund was an initiative taken up by the government to increase rural teledensity. Puneet. 5. 5. Sandeep 26 .4 Government Initiatives Government also has supported the growth of this sector by coming out with a number of initiatives for the low end subscribers of rural India.3 Selling More to Existing Subscribers This is relatively easier as compared to acquiring new customers. Under the second phase.Telecom Industry 5. All the towers are expected to be erected and commissioned by December 2008. Also since now the new subscriptions will largely happen at the bottom of the pyramid therefore the new subscriptions will further lower the average revenue per user. and 37 cellular licenses) in the telecom space the average numbers of operators in many circles have increased to 5-6 operators offering more choices to the consumer.5 The reasons for the increasing importance of MVAS can be classified as: Decrease in ARPU despite increase in MOU: Though the subscriber base is growing at a rapid pace and has positively impacted industry revenues. Prachi. and Universal Service Obligation (USO) fund was one such initiatives. BSNL and two private operators will erect 427 towers in remote areas offering over four lakh mobile connections. 5. Big operators like Airtel have claimed that soon mobile connections and recharge vouchers etc will be available at all such places from where people buy match boxes. increasing subscriber base in urban market would be all the more challenging. Need for differentiation: There is a greater need among the telecom operators to differentiate themselves from each other. Thus the competition among the operators has increased tremendously.000 towers throughout the country to offer over 11 million mobile connections ADC was levied by Telecom Regulatory Authority of India (TRAI) in 2003 to provide support for BSNL's rural telephone obligation.2 Acquiring New Subscribers through expansion in Rural India Acquiring customers have always been a great challenge for companies. Therefore a lot of operators with adequate support from Government are eyeing the rural market for future growth. Telecom Regulatory Authority of India (TRAI) has recently given orders for the withdrawal of the ADC (Access Deficit Charge) and the subsequent passing of the benefit to the consumers by the telecom operators. Given the current level of saturation in Metros and Urban Market and cut throat competition among operators .

Department of Telecom has planned to allow five 3G operators in each circle depending on the availability of spectrum. The mobile phone has evolved from a mere communication device to an access mode with an ability to tap a plethora of information and services available in the ecosystem.6 Defining VAS But the fundamental question that remains is how VAS is defined. Puneet. A detailed definition of VAS might have an impact on the licensing issues surrounding VAS. Therefore capitalizing on value added services will give operators opportunity to increase ARPU by providing premium services. A clear MVAS definition is not only required to clear the air among the MVAS providers but it will also have an impact on the dynamics of the Value chain. The value added services are characterized as under: Not a form of core or basic service but adds value in total service offering.  Stands alone in terms of profitability and also stimulates incremental demand for core or basic services  Can sometimes be provided as stand alone. Increasing need and demand from consumers: In addition to the above supply side reasons the ‘pull effect’ from consumers asking for more than just basic telephony is also a key driver for MVAS services. Saturation in Metro and Urban Market: The metro/urban areas offer high level of penetration and have significant mobile subscribers. Telecommunication has moved beyond providing just basic voice calls. 5. Television and PC. Prachi.Therefore there would be a greater need to differentiate one self in order to attract new customers and retain the existing ones. Let’s look at different VAS definitions floating in the market.1 Basic definition of a VAS Value Added Service (VAS) in telecommunication industry refers to non-core services.1 per minute as compared to the tariff in developed nations like USA and UK where the call rates are Rs. Anjana.13 and Rs7-8 respectively. after Cinema halls. As we have seen. The tariff in India is one of the lowest at Rs.  Do not cannibalize core or basic service. Today most of the consumers are seeking more from their communication device apart from just mobility and desire to stay connected. 5. In such a highly saturated market with the entry of MVNO’s the competition will get fierce. Sandeep 27 .6.Telecom Industry      differentiation and marketing these services heavily for creating awareness among the consumers. Decreasing Call Rates: In order to attract consumers with relatively low purchasing powers primarily from Semi Urban and Rural India the operators have drastically reduced the call rates making it affordable to even the lower segment of society. 3G bidders who are non operators: The arrival of new technologies will give rise to greater competition as many non operators are also bidding for the 3G licenses. the core or basic services being standard voice calls and fax transmission including bearer services. This is the reason why it is now being referred to as the ‘fourth screen’.

7 Mobile VAS in rural market The next wave of Telecom growth will come from the bottom of the pyramid.Telecom Industry  Can be add-on to core or basic service and as such can be sold at premium price. A classic example is of P2P SMS. But whether the statement can be extended to MVAS depends on some key factors. generate awareness and thirdly.  May provide operational synergy with core or basic services. second is to communicate the services to them i. For majority of the population in the rural segment.2 Definition as per TRAI In the Unified Access Service License (UASL). One way to do this is to communicate through regional SMS for which a separate SMS gateway needs to be installed. In some cases. Marketing the content in rural market is going to be all the more challenging. Some of the operators do not consider P2P SMS as part of their VAS revenue. VAS is defined as follows“Value Added Services are enhanced services which add value to the basic teleservices and bearer services for which separate licence are issued” The Government of India issues licenses for the following Value Added Services: Public mobile trunking service  Voice mail service  Closed users group domestic 64 kbps data network via INSAT satellites system  Videotex service  GMPCS  Internet  Audiotex  Unified messaging service 5. Sandeep 28 . Current voice MVAS charges are expensive from a rural consumer perspective Anjana. the value added service becomes so closely integrated with the basic offering that neither the user nor the provider acknowledge or realize the difference. Apart from the identification of rural consumer needs and development of relevant content. communication of these services to the rural population would be a bigger challenge. One is to clearly identify the need of the rural segment. This would require right packaging and pricing of MVAS. Providing cheap access mode to end consumer would be another key booster to rural MVAS. Therefore the better communication option is Voice in regional languages. 5. Rural should not always be interpreted as poor and therefore some categories of MVAS might apply directly to them. Literacy level of the geographical area will be another limitation. The challenge with regional voice is not only investment but also blockage of the already scarce spectrum. to provide an easy and cheap access mode to the rural consumers. the mobile phone is the first communication device.6. All these 3 are quite big challenges and therefore needs to be addressed adequately for MVAS to take off in Rural India. A value added service may demonstrate one or more of these characteristics and not necessarily all of them. Puneet.e. Prachi.

8. mandi rates. finance.g. Therefore by leveraging on these two aspects MVAS can be a success in rural area.Telecom Industry therefore that also would need to be addressed for e. etc. Puneet. Of the total mobile subscribers in India 65 million possess GPRS-enabled handsets. Prachi. Of all those who posses GPRS enabled handsets only 20-25% of them have got the GPRS activated and only about 15% use it. Health. job opportunities etc are potential areas.1 GPRS Handsets Currently the penetration of GPRS enabled handsets are close to 26% in India as against 99% in South Korea and 76% in Japan. Anjana. Mobile also has the potential to evolve as a key entertainment mode considering lack of other entertainment options in rural areas. Connectivity will provide Information VAS on Agriculture necessary for the farmer’s livelihood e.g. The industry has witnessed some type of content being downloaded more in small towns of UP and Bihar rather than in metros like Delhi and Mumbai.8 Access devices for MVAS 5. Even in case of developed nations like South Korea and Japan not more than 50% of the subscribers owning GPRS enabled handsets use it. Moreover they would also need to increase its awareness and educate the consumers on how to use GPRS. MVAS is going to address two main needs of rural consumers. Therefore for MVAS to grow to its full potential the handset manufacturers will have to look at ways to manufacture GPRS enabled phones which are affordable and user friendly. 5. weather. the ‘sachet model’ could prove to be successful here. Sandeep 29 .connectivity and entertainment mode. This clearly indicates that the consumer today engage more in text based services than the web based applications.

More importantly. Since our broadband penetration is abysmal. Puneet. Unlike most other countries. we are looking at 3G services not only as premium services but also as an extension of 2G. Prachi. Sandeep 30 . These subscribers are currently using mobile handsets which are internet-enabled and are potential broadband subscribers with the deployment of advanced wireless technologies such as 3G. Given that mobile phones are much cheaper as compared to PCs. 3G will solve problems more in rural India. According to Indian Cellular Association (ICA) about 5% of mobile users already have handsets that can work on 3G spectrum. Anjana.Telecom Industry 5.2 3G Handsets The market for 3G in the country is expected to be huge with over 65 million wireless subscribers. out of all those possessing the 3G enabled handsets the number of people who would use 3G services would be determined by the quality of content available. the demand for broadband on mobile is expected to be much greater. 3G would provide a much required boost to it. In addition. Therefore the shift towards 3G would depend on affordability of handsets along with the quality of content available. who use their handsets to access data services on the Web.8.

within any country. thereby ensuring better services in all respects.Telecom Industry 6 Key trends in telecom industry 6. i. From the wireless carrier’s perspective the change is anything. Referring to the recent example of the US. The experience of developed countries exhibits that local number portability for fixed wireline was introduced within two to three years of introduction of competition to incumbent state telcos.1. and visiting location registers (VLRs)." Why mobile number portability (MNP)? When fully implemented nationwide by both wireline and wireless providers. for resolving implementation issues. because they can change wireless service providers without worrying about notifying friends. service types. short messages service center. order activation. switches. Anjana. based on the cost factor. this is the best method to increase the efficiency of the service provider by increasing the competition. Puneet. Especially any system that relies on mobile identity numbers (MINs) or mobile directory numbers (MDNs) will be affected. Service Providers have been constantly bargaining for time. The FCC on this plea gave wireless carriers in the US another year. has been the implementation cost. maintenance and CSC systems. In short. customer service. Prachi. Examples of critical systems and processes that would be affected are: billing. The cost estimate for the implementation of WNP in developed nations like the US can be very helpful for the other countries. home location registers (HLRs). who wish to think on the lines of number portability. Sandeep 31 . till November 2003. 6. where each of the large carriers would need to spend $50–60 million to institute the service and an equivalent sum to maintain it.e. this is a deceptively simple and very welcome change. From the subscribers’ perspective. portability will remove one of the most significant deterrents to changing service. and or locations. and then aggressively pursue the customers of other carriers thereafter. To add on increased marketing costs are to be realized as the carriers look to lock up their current base before number portability is implemented. call delivery. invoices and other materials for businesses. family and business contacts that their wireless number is changing.. but simple.1 Mobile Number portability (MNP) One of the most frequent definitions that prevail in the telecom circles for number portability is: "Number portability is a circuit-switch telecommunications network feature that enables end users to retain their telephone numbers when changing service providers. stationery. roamer registration and support. being able to ‘port’ a number from one provider to another eliminates the hassle and expenses of changing business cards. from their respective governments. Virtually all of wireless carriers’ systems are affected. calling name presentation. caller ID. In addition. providing unprecedented convenience for consumers and encouraging unrestrained competition in the telecommunications industry. directory assistance.1 The Inhibitors Huge Costs: One of the most common barriers in MNP implementation.

In Australia. issues related to contract. While it has worked in markets like Hong Kong and Australia. MNP worked in Hong Kong due to the speedy porting process and the availability of already implemented solution (for fixed-line services). the regulator effectively promoted number portability and was able to maintain the maximum porting time of just under three hours. among others. The provider. France.2 MNP Implementation globally Globally. Ireland. Prachi. It’s like a blessing in disguise for the customers. lack of consumer awareness. However. it has not been able to produce any significant results in these markets. which they need to recover before the subscriber moves to the new service provider (NSP). Furthermore. albeit with the same number. Malta. in Finland. Singapore was the first country to implement MNP in 1997. Softwares need to be upgraded to provide proper routing of calls.1. Sandeep 32 . overboard of paperwork. which has its portability compatible would be expected to attract maximum customers and will emerge the winner. Germany. where initially the implementation was viewed as a success due to dearth of minimal contract periods and high migration incentives. Off late. Puneet. technical difficulties and poor customer service. it failed to bear fruit in the UK. 6. Pakistan. The carriers need to upgrade their networks to handle portability requests. the old service provider (OSP) has to perform a query to identify if there are any billing amounts pending. operators failed to sustain the momentum. Cost Recovery and Bill Reconciliation/Query Processing: When a customer plans to shift. which will amount to some cost.Telecom Industry Customer Retention/Increased Competition: Every subscriber in a race to retain its customer would like to offer its customers best services so as to save them from porting. Infrastructure Upgrade: To support WNP. The failure in most markets where MNP was implemented is attributed to factors like half-hearted implementation. as they would get better service irrespective of the carrier. Anjana. many countries have adopted the MNP model to prevent market doldrums and putting pressure on service providers to furnish more services at a competitive price level. a company has to upgrade both its hardware and software capabilities. followed by Hong Kong in 1999 and Australia in 2001.

Bharat Sanchar Nigam Ltd. Most of the companies have had beta-runs of the technology. analysts expect the two emerging wireless technologies to battle it out for supremacy. According to a top official with a service provider. In India. However. WiMax or Worldwide Interoperability for Microwave Access is a telecom technology that enables wireless transmission of data. telecom service providers are in various stages of WiMax implementation.16E (mobile).16D (fixed) and IEEE 802. However. the government needs to have a clear roadmap. To make MNP utilitarian for consumers. it is essential to have a backup center connected over secured redundant leased lines. Prachi. Another reason for the industry pinning its hopes on WiMax is its ability to increase the broadband penetration. Some companies have commercially launched fixed WiMax services in certain cities. the first country in Southeast Asia to introduce MNP in March 2007. 3G scores for voice.Telecom Industry The neighboring country Pakistan. There is no doubt that if implemented successfully. The technology is available as IEEE 802. Intel. 6. companies like Tata Communications Internet Services. This center should also be located on a different seismic area. Bharti Airtel and Reliance Communications are the proponents of WiMax. It offers downloads of up to 70 Mbps as compared to the 15 Mbps that 3G provides. increasing the internet penetration. The regulators therefore need to build their fundamentals. Wimax may lead to increased broadband penetration. Puneet. While opponents of WiMax say currently it cannot be used for mobile applications. this will adversely impact services like GPRS and e-mail on mobile as Anjana. 3G cellular showdown is poised to become one of the next great market battles in the telecom industry. According to experts. MNP can be a big boon for Indian cellular subscribers. Pakistan has over 90 mn cellular subscribers with approximately 95% of them pre-paid. the approach of the government and gaps in implemetation planning. considering the overall market dynamics and past experiences. in turn. its success can be strictly questioned in the long run. strategic policies and should define strict guidelines and timelines for the service providers.2 Wimax v/s 3G The WiMAX vs. Mobile WiMax offers download speeds of around 20 Mbps. and the user experience of the Internet will be irreversibly changed in the process. Fortunes will be made and lost in this battle. Sandeep 33 . With the Department of Telecommunications gearing up for simultaneous release of 3G and WiMax spectrum. disaster recovery and business continuity are also critical elements for MNP providers and hence. WiMax makes huge sense for companies as it enables them to provide cheaper mobile internet and broadband services. the first mobile WiMax network was introduced in Italy this July. One of the reasons for such poor response is the pitiable customer service and time consuming process during porting the number. experienced less than 1% portability.

Slowly MVNO phenomenon catching up in Asia and other parts of the world also. Patel added. as providing the last mile over the conventional digital subscriber lines would be timeconsuming and costly. Usually they they buy minutes of use from the licensed telecom operator and then resell minutes of usage to their customers of MVNO. using regular telecom operator's network with which they have a business arrangements.Telecom Industry users might move over to WiMax-enabled devices for data. According to a consultant of Ernst & Young service providers would mainly use the technology for gaining traction with the customers. Sandeep 34 . 6. Prachi.000-10. The company was the world's first Mobile Virtual Network Anjana.3 Mobile Virtual Network Operator (MVNO) Mobile Virtual Network Operator (MVNO) is a GSM phenomenon where an operator or company which does not own a licensed spectrum and generally with out own networking infrastructure. The industry will know the winner in the next six months. Instead MVNOs resell wireless services under their brand name.000. An example for MVNO is Virgin Mobile. Australia and Canada. The Telecom Regulatory Authority of India has set a target of 20 million broadband connections by 2010 from the current 4. while the CPEs for 3G would be cost Rs 10. Puneet. even though they might stick with 3G or 2G spectrum for voice. 3G Spectrum Price To be auctioned WiMax DoT has recommended 25% of reserve price of 3G spectrum Simultaneous Evolving technology New technology 70 Mbps 20 MBPS Result Advantage WiMax Spectrum Allocation For Voice services Equipment/Standard Data download speeds (fixed) Data download speeds (mobile) Simultaneous Best technology Evolved over the years 15 Mbps 15 Mbps Neutral Advantage 3G Advantage 3G Advantage WiMax Advantage WiMax Operators will have to use 3G spectrum to revive voice services that are being choked by a dearth of 2G spectrum. The WiMax customer premise equipment (CPE) is priced at Rs 5.3 million. when the spectrum allocation is complete. Virgin Mobile plc is a mobile phone service provider operating in the UK.000 and above. and the US. Currently MVNOs are emerging in fast pace in European markets and beginning in USA also. The industry expects WiMax to bridge the gap.

voice over IP (VOIP) or digital phone. while the MVNO offers its own advanced and differentiated services based on exploitation of their own IN infrastructure. IPTV Anjana. It does not maintain its own network. In Canada. and customer care operations. IPTV is typically bundled with other services like Video on Demand (VOD). In Australia. It requires a subscription and IPTV set-top box. Prachi. 6. collectively referred to as Triple Play.4 IPTV IPTV (Internet Protocol Television) delivers television programming to households via a broadband connection using Internet protocols. In this way. MNVO's can treat incumbent infrastructure such as radio equipment as a commodity. each MVNO and the network operator could focus on their own niche markets and form customized detailed services that would expand their customer reach and brand. and instead has contracts to use the existing network(s) of other providers. launched in the UK in 1999. but it is expected that other carriers will offer the technology in the future. While sometimes offering operational support systems (OSS) and business support systems (BSS) to support the MVNO. In the UK.Telecom Industry Operator. billing. Puneet. another weather and traffic and still another could provide instant messaging capabilities. marketing. allowing for customer acquisition and preventing the MVNO from needing to compete on the basis of price alone. This would help to ensure a more efficient use of the spectrum but some incumbent providers argue that the market is already competitive and intervention is not necessary. Virgin Mobile operates on the Optus network. The ITU has received several requests to study the issue. MVNO's have full control over the SIM card. it uses the Bell Mobility network. One MVNO could provide sports news. Because IPTV arrives over telephone lines. These networks use different technology (GSM in the UK and Australia and CDMA in the US and Canada). branding. Usually MVNO's do not have their own infrastructure. Virgin Mobile uses the T-Mobile network. the incumbent mobile operators most keep their own OSS/BSS processes and procedures separate and distinct from those of the MVNO. Sandeep 35 . the Sprint network is the carrier. Regulation of MVNO’s So far MVNOs have not been regulated in any country. and Web access. specifically to provide input on whether government intervention is necessary to allow MVNOs to offer services and applications at a lower price to consumers. In the future a cell phone user may be able to subscribe to a network operator plus multiple MVNOs for specific data services over the same phone. In the US. and offers key advantages over existing TV cable and satellite technologies. The goal of offering value-added services is to differentiate versus the incumbent mobile operator. some providers are actually deploying their own Mobile Switching Centers (MSC) and even Service Control Points (SCP) in some cases. Some MVNO's deploy their own mobile Intelligent Network (IN) infrastructure in order to facilitate the means to offer value-added services. telephone companies are in a prime position to offer IPTV services initially. In this way.

if a dinner function runs longer than expected. You can watch one show. and the United Kingdom. Using a cell phone or PDA. Spain. reportedly purchased a software delivery system for IPTV services from Microsoft in 2004 for $400 million dollars. Just call home and remotely set the IPTV box to record it. Hong Kong. For example. and Verizon has also made a deal with Microsoft for IPTV software. while using picture-in-picture to channel surf! IPTV viewers will have full control over functionality such as rewind. Anjana.Telecom Industry promises more efficient streaming than present technologies. it also adds many advantages that may play into market pricing. IPTV is already growing in the international market. However. fast-forward. a subscriber might even utilize remote programming for IPTV. France. you don't have to miss your favorite program. Puneet. with providers in many countries including Japan. Ireland. and watch it from dual angles simultaneously using picture-in-picture viewing. such as a touchdown. One of the advantages of IPTV is the ability for digital video recorders (DVRs) to record multiple broadcasts at once. IPTV opens the door to real-time participation from people watching at home. According to Alcatel. Italy. one leading provider. it will also be easier to find favorite programs by using "custom view guides. the real advantage of IPTV is that it uses Internet protocols to provide two-way communication for interactive television. Caller ID might pop up on screen as your telephone rings. Another application would be the ability to turn on multiple angles of an event. One application might be in game shows in which the studio audience is asked to participate by helping a contestant choose between answers. However. If you IPTV is packaged with digital phone. pause. In the United States SBC. and so on. One can also receive Web service notifications while watching IPTV for things such as incoming email and instant messages. Sandeep 36 . Prachi. and therefore theoretically reduced prices to operators and subscribers alike." IPTV even allows for picture-in-picture viewing without the need for multiple tuners. Alcatel is working with Microsoft to develop a "global solution" for IPTV services.

8% stake of Spice Communications at Rs 77. The deal gave them access to one of the fastest growing mobile markets in the world. Anjana. New policies will seek to curb this license arbitrage. 7. 3G and WiMax license will spur M&A and partnership activity. Small players like Spice Telecom operating at only a few circles(Karnataka and Punjab) will find difficult to compete with the nationwide players in the long run. This will result in partnerships joint ventures and equity sellout to foreign players.1 Idea Cellular’s Acquisition of Spice Telecom There were three transactions as part of this acquisition.1 Consolidation in Industry.716 crore. acquisition of shares of Spice. Also there’s restriction by TRAI with respect to number of operators per telecom circle. Sandeep 37 .1. The final price was a reduction of $180 million from the originally agreed price of $11.1. The deal was strategically important for Idea Cellular as it was looking forward to transfer itself into a pan-India telecom service provider. Puneet.Telecom Industry 7 Industry Updates 7.30 a share for Rs 2. Prachi. Smaller players with operations in only a few circles will find in difficult to compete with the nationwide players. Idea acquired 40.9 billion in cash for acquiring the 52% stake held by Hutchison Telecom International (HTIL) in Indian mobile firm Hutch-Essar. With respect to shares. a non-compete fee and a capital infusion of about Rs 7300 crores received from TM International Bhd (TMI). Telecom players are looking to tap into global funds to finance their aggressive growth plans. The spectrum auctioned by GoI is a scarce resource nowadays and cost a premium.08 billion. Vodafone is the largest mobile telecommunications network company in the world. “Unbundling of the corporation” will continue as companies will seek f or economies of scale and lower startup cost by infrastructure sharing. The industry may see consolidation with these smaller operators being acquired by the larger ones.75 HK dollars per share following the completion of the formalities. There was a share swap in which Spice shareholders got 49 Idea shares for every 100 Spice shares held. So it makes sense to acquire a small telecom operator. 7.2 Vodafone’s entry into India Vodafone paid a discounted price of $10. HTIL declared a special dividend of 6. New license holders will continue to look to sell their stake at a premium. So it was a win-win deal for both companies. An additional Rs 544 crore was paid to the promoters of Spice group as 'non-compete fee'.

Sandeep 38 .1. In the first phase.5% ownership in Unitech Wireless. Anjana. will be among the world's 10 biggest telecom companies.130 crore for a further 15. The difficulties faced by the firm in spreading its domestically successful i-mode service internationally typify the obstacles it has faced overseas. they got 33. but they are also falling fast.5.1. Asia and Middle East.25% in Unitech wireless via equity infusion.1 Strategic benefits to both players Synergies would be sought from a number of areas. 7.1. As per the deal. Meanwhile. Prachi. 7. DoCoMo’s international expansion plans have not always proven successful. including procurement. The acquisition is expected to be completed by end of this quarter. In the second phase they completed the acquisition for a 49 per cent stake in Unitech Wireless by paying Rs 1. with the firm historically preferring to take small stakes in firms and then try to influence their strategy. R&D and international network sharing. as other leading carriers have chosen to do.1. Bharti is under pressure in its home country due to severe competition and looking forward to spread its risk across geographies. The deal could be win-win for both parties. The enterprise valuation of Unitech Wirelsss is about Rs 10.900 crore. the African telecom operator is also encountering some of the problems that its counterpart in India is confronting. Japanese carrier NTT DoCoMo acquired 26 per cent stake in Tata Teleservices (TTSL).3 Telenor-Unitech Deal Norwegian Telecom major Telenor is in the process of acquiring controlling stake of 67.5 Bharti-MTN deal (in talks).” 7. operational best practice. MTN may have higher ARPUs (in the range of $12-20). value-added services. The two companies will not overlap in each other’s business operations: Bharti Airtel will be the primary vehicle for Bharti and MTN to pursue further expansion in Africa and the Middle East. Puneet. Recently Bharti Airtel has re-started its audacious merger bid with MTN that could create a $61-billion transnational telecom goliath with combined revenues of $20 billion and over 200 million subscribers across Africa. DoCoMo had said “participating proactively in TTSL’s management by providing human resources and technical assistance to help realise improved network quality and the possible introduction of leading-edge. With Tata.Telecom Industry 7. by increasing its stake in Unitech Wireless. It has been less prepared to take majority stakes and impose its will. The Tata DoCoMo-branded GSM service has already started in Southern India and gradually will be expanded nationwide.4 TTSL – DoCoMo Deal. Telenor will infuse cash in four stages and at each phase.5 per cent stake in the company.

For instance.  Besides. While Africa has one-third of the world’s population. it would be imperative for them to incrementally expand into untapped areas. Anjana. MTN’s strong foothold in some growing markets such as South Africa. will be the advantage of economies of scale for the new entity. which ensures all cash operations. there is a lot of potential in Africa as three-fourths of the continent is still untapped. if it materializes. Botswana. The high subscriber base and financial muscle will give Bharti-MTN the desired edge while dealing with vendors. Of late. In recent times. Sandeep 39 . the economies of scale of the complete outfit (Bharti-MTN) would be taken into account. such as those pertaining to investments in other geographies or sourcing of equipment. Without a partner. as there could be orders worth a billion dollars in other projects. and visible fallout of the deal. Prachi. Bharti could learn how to roll out infrastructure in rural India.  Africa is quite like rural India and from that perspective.2 Takeaways for Bharti  The biggest takeaway for Bharti is in the form of access to new geographies with high growth potential. The fact that 95 percent of Africa is prepaid.Telecom Industry With both Bharti and MTN operating in high-growth geographies. fits perfectly into Bharti’s plans. which would be time-consuming and capital intensive.1. Bharti could be on a sticky wicket. Once the merger happens.  MTN has operations in 21 countries across Africa and the Middle East and is one of the largest emerging market mobile operators globally. The most important. Bharti would not be involved only in MTN’s day-to-day activities. 7. Bharti would have to embark on a Greenfield project. This offers plenty of room for expansion. companies are more amenable to mergers and acquisitions. Besides.5. Bharti would be ready to take off in other geographies. This would offset whatever concerns there may be with respect to the small population size in countries where MTN operates. the vendor would not hesitate to lap it up. even if the company places an order worth just $1 million. its telephonic density is just 30 per cent. without local knowledge (with respect to the market and government regulations). companies are finding it tough to obtain easy funds for expansion. Collaborating with each other would seem the logical way ahead. Puneet. which calls for more collaboration if corporate intend to expand. Iran and Nigeria ensures that when the growth in India starts to slow down. The Indian telco does not have the expertise in running multicountry operations. but it would also have a say while making bigger strategic decisions.  The options for Bharti were to go either the Greenfield way or with an experienced partner.

Although Nokia-Siemens has bridged this divide faster. Bharti would be able to tap this market through MTN’s expertise. had almost wrecked the Vodafone-Vodacom deal.513. MTN is strong in the value-added services (VAS) and mobile commerce space. 7. By working with MTN. The investment was majorly in handset manufacturing and telecom service provider.38 1275. Prachi. as and when mobile commerce picks up in India (after RBI’s approval).1. As per this Act. It is tough for intercontinental companies to merge seamlessly because of cultural divide. FDI in Telecommunication Sector (US$ million) 2345.65 521 680 129 116 2008-09 2007-08 2006-07 2005-06 2004-05 2003-04 Anjana. MTN has a vast experience in running multi-country operations and overcoming regulatory hurdles. 7. which has influence over President Jacob Zuma. This makes telecommunication the third-largest sector to attract FDI in India in the post liberalization era. The country’s strong trade union. the cumulative FDI inflow. life for Bharti will get a lot of easier. from August 1991 to March 2007.3 Major Challenges for the merger     One of the major challenges would be the integration of the company on the ground. blacks are ensured a minimum shareholding management seats and voting rights. Congress of South African Trade Unions (COSATU). Sandeep 40 .Telecom Industry   In addition. The Black Empowerment Act could pose a challenge. it was because both the companies were European.5.2 FDI Investments in the Telecom Sector in India: The Indian telecom industry has always allured foreign investors.22 million. as it is meant to safeguard the rights of the black population. In fact. Puneet. So. Alcatel-Lucent for instance is still trying to adjust to cultural divide. in the telecommunication sector amounted to US$ 7.

5 billion in the past two and a half years in the Indian telecom sector. The company exports around 20 per cent of its volume to South-east Asia. service providers find it difficult to manage their infrastructure and network.2 Bharti Airtel’s IT Outsourcing to IBM: Another dimension of managed service is telecom. investors have outlaid US$ 1. The company has already produced 25 million handsets in its Chennai facility. It will pump in an additional US$ 150 million to this set up. Prachi. communication and network management solutions for enterprises. thereby further reducing the cost. India has the potential to become the electronics manufacturing hub of the world. 7. In such cases. Advantages of Managed Service • Smooth management of technological complexity • Opportunity to strengthen core competency • Reduction in financial outlay • Touching base with new processes and technologies 7. IT help desk services and end-to-end connectivity and fulfilling all telecom and communication requirements.Telecom Industry With stable macroeconomic impetus and numerous other advantages. With the world now recognising India’s manufacturing potential. 7. together offer telecom and IT solutions in India.3 Outsourcing by Telecom Service Providers in India Managed service is another segment that is attracting telecom companies.server management and storage management). The solutions and services portfolio comprises of the remote monitoring of servers. The company has also shifted its first Global Network Solutions Centre (GNSC) to India.1 Hutchitson Essar (now Vodafone) and Nokia Deal: A case in point is Nokia which is managing the network for Hutchison Essar Limited in 19 circles in India. The company manages 39 cellular networks in 30 countries. Its Indian centre will act as a global hub for other Nokia operation centres. India will receive an additional US$ 2 billion investment in the next one year. Local manufacturing allows companies to avoid 4 per cent countervailing duties on imported handsets. Puneet. On account of the rapidly growing subscriber base. the Indian telecom handset manufacturing market is likely touch US$ 7 billion by 2010. Having successfully capitalised on the business potential of managed service. security operations and network operations. Anjana. Bharti Televentures and IBM.3. Nokia is already earning 30 per cent of its total revenue from this segment. Sandeep 41 .This information technology outsourcing deal with infotech major IBM is estimated to be in the range of $700-750 million for a ten-year period. the Middle East and Africa.providing data centre services (including server hosting. An example is Nokia.3. Excited by the record-breaking industry growth. they completely or partially outsource their infrastructure or network management operations.

The agreement specifies that payments made to IBM India will be linked to the percentage of revenue generation by BTVL and pre-defined service level agreements. finances and regulation. Gujarat. customer relationship management and data warehousing. IBM will consolidate BTVL's data centre. supply. e-mail and online collaborations are included in it. Prachi. including customer services to global majors. It has enabled Bharti to concentrate on customers. 7. Puneet.The deal involves the creation of a joint venture with Alcatel-Lucent holding 76 per cent of the equity. planning. Internet. he said. software and IT service requirements to IBM.3. This also marks Bharti’s third major deal with Nokia in the last two years. IT helpdesk and enhance its disaster recovery centre capabilities. Maharashtra & Goa.The deal includes all customer-facing IT applications like billing. Sandeep 42 . thereby increasing the consumption of content on the Bharti network. with the actual payment being linked to utilisation of capacity and fulfillment of agreed quality of service parameters. As per the three-year contract. Nokia will provide managed services and expand Airtel’s GSM/GPRS/EDGE networks in eight circles of Mumbai. 7. In addition. marketing. Anjana. installation. This has enabled Bharti to focus on its core areas: product innovation. Orissa. The percentage-linked revenue payment is modelled to decrease with BTVL's increase in revenue.3 Bharti’s Outsourcing to Alcatel-Lucent: Telecom major Bharti Airtel has a $500-million deal to Alcatel-Lucent for outsourcing the management and servicing of its broadband and fixed line network for five years. West Bengal and Madhya Pradesh. branding and pricing. Bihar. value added services. This comes close on the heels of Bharti’s recent signing of a $1bn three-year service contract with Ericsson towards design.The joint venture will help accelerate performance as Bharti migrates to the next generation networks for the broadband and telephone customers. and Bharti having the remainder 24 percent. The network monitoring operations will be carried out from Nokia’s state-of-the-art Global Network Services Center in Chennai.Telecom Industry The deal involved outsourcing of BTVL's hardware. Bharti would have 100% ownership of the networks supplied by Nokia. This will make usage of data services easy.On the infrastructure front.4 Bharti Outsourcing Deal with Nokia & Ericsson Bharti Airtel awarded a $400m contract to Nokia for expanding its managed GSM networks in eight circles. The deal also envisages Nokia to deploy its WAP solution across Bharti’s national network to enhance its mobile packet core network capabilities. This emphasises Bharti’s policy towards outsourcing all operational activities.3. commissioning and upgrading of its network in 15 telecom circles. Kolkata.

1 IP Multimedia Subsystem (IMS) IP Multimedia Subsystem (IMS) is a generic architecture for offering multimedia and voice over IP services. IMS is access independant as it supports multiple access types including GSM. such as web browsing. Prachi. It is also intended to allow operators to introduce new services. IMS will make Internet technologies. WCDMA. IMS consists of session control. WLAN. connection control and an applications services framework along with subscriber and services data. the interfaces for service developers are also based on IP protocols. such as web browsing. e-mail. such as push-to-talk. WAP and MMS.Telecom Industry 8 Future Technology Trends In this section we have listed down the future technologies which are in roadmap and are speculated to make an impact on current business model of telcos. push-to-view. a multimedia session between two IMS users. Wireline broadband and other packet data applications. Some of the possible applications where IMS can be used are:          Presence services Full Duplex Video Telephony Instant messaging Unified messaging Multimedia advertising Multiparty gaming Video streaming Web/Audio/Video Conferencing Push-to services. push-to-video Effectively. IMS uses open standard IP protocols. between an IMS user and a user on the Internet. defined by 3rd Generation Partnership Project (3GPP). defined by the IETF.and circuit-switched networks. It enables new converged voice and data services. employing a range of different wireless and fixed access Anjana. at the top level of their packet-switched networks. IMS provides a unified architecture that supports a wide range of IP-based services over both packet. instant messaging and video conferencing available to everyone from any location. Moreover. So. Puneet. while allowing for the interoperability of these converged services between internet and cellular subscribers. 8. IP Multimedia Subsystem is standardized reference architecture. Sandeep 43 . CDMA2000. So users will be able to execute all their services when roaming as well as from their home networks. and between two users on the Internet is established using exactly the same protocol.

in the same way as Enhanced Data rates for GSM Evolution (EDGE) does in the Global System for Mobile communication (GSM) world. 8. fixed) services will come about through the high session data rate. it is probable that the radio access network will evolve from a centralized architecture to a distributed one. high speed data will drive forward the fourth generation (4G) as short-range communication emerges. Convergence with other network (enterprise. will be another driver. Sandeep 44 . 8. and will be less expensive for users than dedicated channels. A key point of IMS is that it is intended as an open-systems architecture: Services are created and delivered by a wide range of highly distributed systems (real-time and non-real-time. HSDPA provides a smooth evolutionary path for Universal Mobile Telecommunications System (UMTS) networks to higher data rates and higher capacities. The evolution from 3G to 4G will be driven by services that offer better quality (e.2 High Speed Downlink Packet Access (HSDPA) High Speed Downlink Packet Access (HSDPA) is a packet based technology for W-CDMA downlink with data transmission rates of 4 to 5 times that of current generation 3G networks (UMTS) and 15 times faster than GPRS. more sophistication in the association of a large quantity of information. video and sound) thanks to greater bandwidth. Currently .g. with a high degree of personalization and synchronization between various user appliances. and improved personalization. Prachi.3 4G or Fourth Generation Networks 4G or Fourth Generation is future technology for mobile and wireless comunications. possibly owned by different parties) cooperating with each other. Currently 3G networks are under deployement. It is a different approach to the more traditional telco architecture of a set of specific network elements implemented as a single telco-controlled infrastructure. low cost. and broadband networks. A user could. Service and application ubiquity. It will be the successor for the 3Rd Generation (3G) network technology. or a user could maintain a single integrated contact list for all types of communications. The introduction of shared channels for different users will guarantee that channel resources are used efficiently in the packet domain. The impact on network capacity is expected to be Anjana. video and TV services are driving forward third generation (3G) deployment. multimedia. pay for and download a video clip to a chosen mobile or fixed device and subsequently use some of this material to create a multimedia message for delivery to friends on many different networks. Approximatly 4G deployments are expected to be seen around 2010 to 2015. The basic voice was the driver for second-generation mobile and has been a considerable success. Puneet. Real life end-user speeds will be in the range of 2 to 3 Mbps. And in the future. The latest release boosts downlink speeds from the current end-user rate of 384 kbps (up to 2 Mbps according to standards) to a maximum value according to standards of 14.Telecom Industry technologies. At the same time. for example.4 Mbps. fixed. A single IMS presence-and-availability engine could track a user's presence and availability across mobile. It will require an always-on connection and a revenue model based on a fixed monthly fee.

Machine-to-machine transmission will involve two basic equipment types: sensors (which measure parameters) and tags (which are generally read/write equipment). high capacity. handhelds) is expected to grow rapidly as they become more user friendly. and simple autonomous terminals. Sandeep 45 . Anjana. The infrastructure will be much more distributed than in current deployments. facilitating the introduction of a new source of local traffic: machine-to-machine. Key infrastructure design requirements include: fast response. investment that is in line with the growth in demand. Prachi. Fluid high quality video and network reactivity are important user requirements. It is expected that users will require high data rates.Telecom Industry significant. Puneet. low user charges. Personal digital assistants. high session rate. rapid return on investment for operators. for data and streaming applications. similar to those on fixed networks. Mobile terminal usage (laptops.

Also the easing of the regulations by TRAI . Sandeep 46 . The customer is driving this revolution and will see more unique and sophisticated offerings coming his way. 3. The rural areas which have remained untapped will see an insurgence of services. Anjana. the FDI influx will make the telecom space in India a must watch in the coming years.Telecom Industry 9 Conclusion The Indian Telecom Service provider industry is gearing for a revolution.75G and the next big thing-4G and the VAS services will keep the customer asking for more. Puneet. The 3G which will pave the way for 3.5G. Prachi.the ease of spectrum licensing.

[10]World Bank Report: Spectrum auctions in India: lessons from experience Anjana. Bharti-MTN deal [7] Moneycontrol. [6] Business India : Telecom Takeover.A Report.com: Idea Spice deal [8] Business Standard: Vodafone Hutch deal [9] IntoMobile: India’s 3G License Plans Updated.MARKET & OPPORTUNITIES. [2] Cellular Statistics – Cellular Operator Association of India [3] IAMAI & eTechnology Group@IMRB: MOBILE VALUE ADDED SERVICES IN INDIA. Sandeep 47 .Poaching with Portability. [4] Telenor Entering India: Investment Update [5] Voice and Data(May 2009): Mobile Number Portability . Puneet.Telecom Industry 10 References [1] IBEF report 2007-08 : Telecommunication . Prachi.

76 Million % Growth During Quarter 12.68% Urban Subscribers 309.87%) Village Public Telephones (VPT) 5.82 Million Source www.93% Urban Wireless Subscribers 282.71 Million (28%) 297.8 % Wireline Subscribers Total Wireline Subscribers 37.88%) 94.22 Million 117.66 % Rural Teledensity 14.Telecom Industry Appendix A SNAPSHOT (Data As on 31st March 2009) Telecom Subscribers (Wireless +Wireline) Total Subscribers 429.38 Million Urban Wireline Subscriber (72.98 % Urban Teledensity 88.gov.54 Million 5.30% 6.20 Million Wireless Subscribers Total Wireless Subscribers 391.29 Millions (28%) Overall Teledensity 36.05 Million(72%) Rural Wireless Subscribers 109. Puneet.43 Million (72%) Rural Subscribers 120.15% 27.72 Million % Growth During Quarter 11.12%) Internet & Broadband Subscribers Total Internet Subscribers (including Broadband) % Growth During Quarter Broadband Subscribers Wireless Data Subscriber 13.61 Million Public Call Office (PCO) 6. Prachi.trai.13%) 10.96 Million % Growth During Quarter 0.in Anjana.26 Million GSM Subscribers (75.50 Million CDMA Subscribers (24.58 Millions Rural Wireline Subscribers (27. Sandeep 48 .