This action might not be possible to undo. Are you sure you want to continue?
Indian Telecom industry is one of the fastest growing telecom markets in the world. In telecom industry, service providers are the main drivers; whereas equipment manufacturers are witnessing growth and decline in successive quarters as sales is dependent on order undertaken by the companies. Today the Indian telecommunications network with over 452.91 million(as on May 09) subscribers is second largest network in the world after China. India is also the fastest growing telecom market in the world with an addition of 10- 12 million monthly subscribers. The tele-density of the Country has increased from 18% in March 2006 to 38.88% in May 2009, showing a stupendous annual growth of about 50%, one of the highest in any sector of the Indian Economy. The Department of Telecommunications has been able to provide state of the art world-class infrastructure at globally competitive tariffs and reduce the digital divide by extending connectivity to the unconnected areas. India has emerged as a major base for the telecom industry worldwide. Thus Indian telecom sector has come a long way in achieving its dream of providing affordable and effective communication facilities to Indian citizens. As a result common man today has access to this most needed facility. The reform measures coupled with the proactive policies of the Department of Telecommunications have resulted in an unprecedented growth of the telecom sector. It is important to know that Mobile Tariff’s in India are one of the lowest in the world with local calls at 50p/min and STD calls at 1Re/min and no incoming call charge(Calling Party Pays).
Recent things to watch in Indian telecom sector are:
• • •
3G spectrum auctions Mobile Number Portability(MNP) Implementation New Policy for Value Added Service Due to technological advancement and increase in traffic. Abolition of Access Deficit Charge (ADC).
Review of Wireless (GSM and CDMA) Services
1 | Page
The Wireless Industry crossed 452.91 million-subscribers mark as by end of May 2009. This total subscribers base of 452.91 million comprise of 298.15 million GSM and 105.51 million CDMA subscribers. During the financial year 2008-09 around 130.67million subscribers were added with a growth rate of 50.00% as compared to 58.12% growth during the year 2007-08. The Department of Telecommunication (DoT) is has very aggressive plans to increase the pace of growth, targeting 500 million by 2010. Most of the expansion in subscribers is set to occur in Rural India. India’s rural telephone density has been languishing at around 16.54. The subscriber addition rate has been strong in the last 12 months but the regulatory developments will increase competition and thus curtail the long-term growth rates of individual companies. The savings through the setting of tower companies will partly go towards the higher capex and opex costs from more stringent spectrum allocation norms for the incumbents. The Telecommunications sector has been consistently adding more than 10 million subscribers every month. All the private operators GSM as well as the CDMA operators have been very consistent in their performance. However the recent regulatory developments have been negative for the telecom companies as it has increased the number operators per circle which intensified the competition. The addition of players like Aircel, Loop Telecom (formerly BPL), Tata Docomo, Virgin Mobile and a few more yet to roll out their services like Swan Telecom, and Unitech Telecom the pressure on established players is set to increase. So also with the implementation of MNP and 3G spectrum allocation the Service providers have to be the best service caterers to hold on to their market shares.
The market share of different GSM operators as on May 2009 is displayed below:
The Market leader in GSM sector being Bharti Airtel with 32% of Market share followed by Vodafone at 24%. The state owned BSNL is third in the competition with 16% of the share in the GSM market. CDMA market majors Reliance has got licence to operate(in 14 circles and 4 metro cities) in the GSM band and they have launched their services in the market. The existing players face a tough competition as Reliance and Tata (with Docomo) have existing distribution channels and brand name, and can be a potential threat to Airtel and Vodafone. So is the case for Tata Indicom which recently launched its GSM services by the name Tata Docomo in 18 circles in India.
2 | Page
Tata Docomo: Tata Docomo, the latest entrantinto the GSM market had to get some innovative and low priced packs to attract customers to switch to Tata Docomo even before the actual implementation of MNP. As a part of this they are offering 1paise calling per second for local( and STD calls as a limited period offer). The success for Tata Docomo lies in winning third generation(3G) airwaves in as many circles as possible and bringing their internationally famed expertise into the domain. The innovativeness here is they are branding their service on the basis of “value for each second”, and “pay for only what you have used”. Thus they are trying to attract customers even before the implementation of MNP. As Toshinari Kuneida- M.D.of Docomo their target is to achieve 100million customers in the next three years.
The market share of different CDMA operators as on May 2009 is displayed below:
Coming to the CDMA market, Reliance Communication is a tough market player to challenge with around 59.82% of the total CDMA market, followed by Tata Teleservices(Tata Indicom and Virgin together) which has a share of 33.67%. Virgin Mobile : Virgin Mobile as it says is “India’s ‘first’ national youth-focused mobile service”. Virgin Mobile branded services are being offered to the Indian consumers by Tata Teleservices through a brand franchise with Virgin Mobile. Virgin Mobile India will provide Tata Teleservices with experience and expertise in designing, marketing and servicing of “Virgin Mobile” branded products for the youth segment.
3 | Page
They are targeting the Youth segment by offering schemes like get paid for incoming calls, pay for the first message and get 100 messages free for that day.
Government Policies–Facilitating Industry Growth
The Indian Telecommunication system is governed by the Indian Telegraph Act,1885 (ITA 1885) and the Indian Wireless Act, 1933. The Department of Telecommunications (DoT) governs the Indian telecom industry. DoT, in coordination with its arm, Telecom Commission, looks after licensing, policy making, and frequency management. A prime ministerial council, the Group on Telecom and IT (GoT-IT), handles important ad-hoc issues if any. To streamline policy reforms and safeguard consumer interests, DoT established the Telecom Regulatory Authority of India (TRAI) in 1997. The Telecom Disputes Settlement and Appellate Tribunal (TDSAT) was also established at the same time. Another regulatory body is the Wireless Planning Commission (WPC) under the aegis of the Ministry of Communications. Issues that will affect the Telecommunication Sector in the Immediate Future Mobile Number Portability(MNP): Mobile Number Portability is a technique with which a customer can retain the same number, but change the service provider. This technique has been implemented in USA,UK, Japan etc. and is to be implemented in India. In most of the circles all over India there are more than 5 service providers (GSM and CDMA) thus leading to a fierce competition. In a few circles the number of service providers are 10 which is leading to a very tight situation and thus they are forced to offer attractive plans to attract new customers. Syniverse has been given the mandate to implement MNP services in the Northern and Western regions, classified as Zone-1 and MITS has been given the mandate to implement MNP services in the Southern and Eastern regions, classified as Zone-2. MNP expected to be a negative for the Indian Telecom Sector, but positive for Subscribers. Given the fact that India is a price-sensitive market, the likelihood of MNP succeeding is quite high. Further, as mentioned earlier, given the significant dissatisfaction with QoS, particularly in the Metro service areas, the likelihood of churn rates increasing in these areas is higher. Another factor that is likely to play out in favour of a successful experience with MNP implementation in India is the absence of long-term service contracts.
4 | Page
3G Spectrum Allocation: Analysts estimate that by 2010, the two dominant 3G technologies, CDMA2000 and Wideband CDMA (WCDMA), will account for 1.2 billion subscribers, representing 41 per cent of the global subscriber base. In urban India, there is a spectrum crunch and 3G can treble voice capacity and can solve the spectrum issue. With over 15 million 3G handsets, and 30 per cent of all future handsets sale expected to be 3G enabled, India is set to roll out 3G to provide an effective communication environment.
It will bridge the difference between urban and rural and enable the rural Indian to avail of facilities such as tele-medicine, e-education and e-governance will substantially improve their quality of life. 3G policy will help the customers most, because many telecom companies are going to bid for the spectrum, each one will try to entice the customers in their own style. At last the customers would be get benefitted. If a foreign bidder wins the bid, he will have to set up a joint venture with an Indian partner to start operations, the country's Department of Telecommunications (DOT). The foreign bidder can hold up to 74 percent of the equity in the company providing the 3G (thirdgeneration) service. If the foreign equity in the joint venture is more than 49 percent, the joint venture will also require clearance from the country's Foreign Investment Promotion Board (FIPB). However one block of spectrum in each of the service areas has already been reserved for use by two government controlled telecommunications companies - Bharat Sanchar Nigam (BSNL) and Mahanagar Telephone Nigam (MTNL). They would however have to pay a license fee for the spectrum at the highest bid in each service area.
5 | Page
Telecom industry is seeing a rise as the trend goes and has potential for growth. Taking into account the tele-density of 38.88% there is still unexplored market. The competition is fierce with around 10 Service providers in most of the 18 circles and also the implementation of MNP. The service providers have to be different and have to stick to strict service norms and provide excellent customer service in order to hold on to the market share. Thus there is intense competition in the market but at the same time scope for development in rural areas. Airtel,Idia and Vodafone have taken up initiatives to provide customized connections to Rural customers like Motor pumps control system,loud speaker phone for illiterates and so on. In a few words Telecom sector has a lot of scope for growth and the customers at the same time have the benefit to choose from a wide range of service providers offering various plans targeted to specific customers
6 | Page
• • •
www.trai.gov.in www.dot.gov.in www.wikipedia.org/wiki/Telecommunications_in_India www.telecomindiaonline.com
DoT Licensor and Frequency Management for Telecomelecom Commission http://v12.lscache5.c.youtube.com/videoplayback?ip=0.0.0.0&sparams=id%2Cexpire%2Cip%2Cipbits%2Citag%2Cb
7 | Page
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.