TELECOM INDUSTRY

Report

Under the Guidance of

Dr. Rajib Dhar

Submitted by:
Sathyendra (20810052)
Satish Pawar (20810053)
Saumyajit Mandal (20810054)
TELECOM Industry

Index

 Executive Summary
 History of Telecom Industry in India
 PESTEL Analysis
 Advantages and Opportunities in Indian Conditions
 Scenario post 2016 
 Government policies, regulators, key laws, imp legal issues like AGR
 Impact of covid and increased data consumption n
 conclusion
 references

A Brief History of Telecom Industry in India comprising of

Telephone, Internet Broadcasting, Television Broadcasting, and
Radio Broadcasting:
1. History of Telephone Communications in India:
 1850: Telecommunication in India is started with the Telegraph, which was started by
IndiaPost. In 1850 the first successful electric telegraph line was started between Calcutta
and Diamond Harbour.
 1853: After the successful launch of the electric Telegraph in Calcutta, the Telegraph was
established in several other contemporary Indian Cities like Agra, Peshawar, Mumbai,
Bangalore, and Chennai.
 1881: Due to the successful usage of the Telegraph in India, the Government of India gave
license to The Oriental Telephone Co ltd.
 1882: Telephone Exchange was established in Calcutta, Mumbai & Madras. Subscriber
Number: Just 93.
 1902: First wireless telegraph station established between Sagar Island and Sandhead.
 1907: First Central Battery of telephones introduced in Kanpur.
 1914: First Automatic Exchange installed in Shimla, Himachal Pradesh.
 1927: Radio-telegraph established between the UK and India. Estabished by Lord Irwin by
exchanging greetings with King George V.
 1933: Radiotelephone system established between the UK and India.
 1947: During the time of Independence, the Subscriber number rose to 82,000. After this
the Department of Electronics and Telecommunications Engineering was incorporated by
the Government of India. First Electronics & Telecommunications Engineering department
started in India at the Government Engineering College, Jabalpur.
 1953: 12 channel carrier system introduced in India.
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 1960: First subscriber trunk dialling route established between Lucknow and Kanpur.

 1975: First PCM system commissioned and established between Mumbai City
and Andheri telephone exchanges.
 1976: First digital microwave junction was introduced.
 1979: First optical fibre system for local junction commissioned at Pune.
 1980: First satellite earth station for domestic communications established at Uttar Pradesh.
 1983: First analogue Stored Programme Control exchange for trunk lines introduced at
Mumbai.
 1984: Digital Exchange was started in 1984, for which C-DOT was established (Centre for
Development of Telematics).
 1986: MTNL and VSNL, the two operational sections of C-DOT was separated and MTNL
was given Operational right in Mumbai and VSNL in Delhi.
 1994: National Telecommunication Policy was declared by Government of India, giving
Operational Permission to several Private Players. The Country was divided into 20
Telecom Circles and 18 Mobile Circles, and started bids.

 1995: First mobile telephone service started on non-commercial basis on 15 August 1995

in Delhi. Internet Introduced in India starting with Laxmi Nagar, Delhi 15 August 1995.
 1997: TRAI, the Telecom Regulatory Authority of India was established to regulate
Pricing and Rates.
 2000: Telecom Disputes Settlement and and Appellate Tribunal (TDSAT) was established
to ensure smooth communication between Licensor, Licensee, Service Provider and
Customer.
 2000: C-DOT was changed to Department of Telecommunication Services and VSNL
changed to BSNL. More private players were given License Eg. Reliance
Telecommunications, TATA Indicom, Loop Mobile, Hutch, Airtel, Idea etc.
 2000-2008: GSM and CDMA subscribers rose to 375 million with increase in sale of
Chinese Mobile Phones.
 2007: Hutch was acquired by Vodafone.
 2009: Telecom Operators banned usage of 30 lac Chinese Mobile Phones, which amounted
to almost 8% of total number of Subscribers in India.
 2012: SC declared the cancellation of licenses of several Telecom Operators as
Unconstitutional. (2G Scam). This resulted in several telecom services like TATA Telecom
Services, Unitech, Alliance Infratech, Loop, MTS etc. to close operations with heavy Fines.
 2016: Reliance JIO started was introduced in Indian Telecommunication Market.
 2017: Airtel acquired Telenor, TATA Teleservices Ltd., TATA Docomo. Reliance
Communication stopped operations due to failure of Aircel and MTS in Indian Market.
 2018: Vodafone and Idea was merged to Vodafone Idea Ltd.
 2019: Reliance Communications declared Bankruptcy.
 2020: Present: Vodafone-Idea Ltd. (26.75%), JIO (34.82%), Airtel (27.76%), and BSNL
(10.66%).

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Market Share as on 30th June, 2020

JIO Airtel Vodafone-Idea BSNL

BSNL
11%

JIO
35%
Vodafone-Idea
27%

Airtel
28%

2. History of Television Broadcasting in India:

 1959: Terrestrial television in India was started with the experimental telecast starting in
Delhi on 15th September, 1959 with a small transmitter device and a makeshift studio.
 1965: Daily transmission began as a part of All India Radio (AIR).
 1967: Doordarshan was debuted.
 1972-1975: Television Service was extended to Bombay and Amritsar. Only 7 Indian
Cities had Television service back then.
 1976: Television Service was separated from All India Radio (AIR).
 1982: Colour telecast of the 1982 Asian games.
 1991: Private and International Service Providers like STAR Network, ZEE Network,
CNN etc. were given license for Telecasting.
 2011: Ministry of Information and Broadcasting declared Shift from Analog to Digital
systems in Television broadcasting.
Implementation in Phases for Digital Shift
Phase Area Regulatory Date Final Implementation
Date
I 4 Metro Cities: Kolkata, Delhi, 30th June, 2012  31st October, 2012
Chennai, Mumbai (Delhi & Mumbai)
 15th February, 2013
(Kolkata)
 17th August, 2017
(Chennai)
st st
II 38 Cities with Population > 1 million 31 March, 2013 1 January, 2014
III Rest of the Urban Cities having 30th September, 31st January, 2017
Municipalities 2014
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IV Rest of India 31st December, 31st March, 2017

2014

3. History of Radio Broadcasting in India:

 1923: First Broadcasting was done by Bombay Presidency Radio Club.
 1927: Indian Broadcasting Company Ltd. (IBC) was formed with two stations at Calcutta
and Bombay.
 1930-1932: The Government Of India took over all Broadcasting Services from Private
players.
 1936: On 8th June, 1936, The All India Radio (AIR) was formed.

4. History of Internet Communications in India:

 1986: Education Research Network (ERNET) was launched only for Education and
Research purposes.
 1995: NICNet operated by National Informatics Centre was launched for communications
between Government Institutions.
 1995: VSNL launched first commercially available Internet Service on 15th August, 1995.
During this time VSNL had monopoly and other Private Internet Providers were not
allowed.
 2004: Broadband Service launched in India.
 2020: Present: India has the 2nd highest number of internet users in the world. The
following table gives a Statistics of internet subscriber in India as on 31st December, 2019

Statistic Figure
Total no. of Subscribers 718.74 million
Narrowband Subscribers 56.806 million
Broadband Subscribers 661.938 million
Wired Subscribers 22.386 million
Wireless Subscribers 696.36 million
Urban Subscribers 450.31 million
Rural Subscribers 268.43 million
Overall Net Penetration 54.29%
Urban Net Penetration 106.22%
Rural Net Penetration 29.83%

PESTEL Analysis
PESTEL analysis is a management framework used to analyze the external factors or
macro forces affecting projects, brands, businesses, sectors, etc. The result of PESTEL analysis is
used to identify threats and weaknesses, which are used in a SWOT analysis.

In marketing, before making any decision, it is fundamental to conduct a PESTEL analysis.

It should be repeated at a regular period to find out changes in the macro-environment. Those
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organizations successfully monitor and respond to macro-environmental changes, have the upper
hand in competition, and create a competitive advantage.

PESTLE stands for:

 P- Political
 E- Economic
 S- Social
 T- Technological
 E- Environmental
 L- Legal

Political Factors:
These factors include government policy, political stability or instability, foreign trade
policy, tax policy, labor law, environmental law, trade restrictions, etc. The political factor
determines the extent to which the government influences an organization, industry, or sector.

Economic Factors:
These factors include tax system, employment or unemployment rates, interest rates,
foreign exchange rates, repo rates or reverse-repo rates, inflation, etc. These factors directly affect
an organization and its profitability.

Tax system:

1st July 2017, the Indian government announced a new method of taxation, GST. The
telecom industry's taxation increased from 15% (service tax) to 18% (GST). In addition to this new
tax burden, the telecom industry has to pay GST on levies, including spectrum fees, license fees,
spectrum usage, etc. When combined with all the taxes, operators pay around 30% of their
revenue. GST allows operators the tax paid on purchase can be used to offset the sale tax.
However, due to hyper-competition average revenue per customer has decreased. That is why;
operators are not able to pass their tax liabilities to their customers. Due to this, almost 30,000
crore rupees are locked in the industry level as an input tax credit.

Telecom industries are providing services around India, and due to the GST system, they
have to report revenues as per states and union territories. Due to this requirement, operators have
to spend extra and hire an additional workforce to stay compliant.

Earlier telecom companies were registered centrally, and they would file returns annually.
As per the GST system, they have to register and submit returns within the state, and they have to
file it 2-3 times in a month. Besides, the filing has to be done transaction-wise for both expenditure
and income. The sector’s operational burden, resource consumption, and time have widened
because of this whole process.

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On the other hand, GST allows telecom operators to avail tax credit on import equipment,
and they can also claim a refund on IGST paid on domestic products and equipment. This move
can increase domestic production capacity. As a result, dependency on other countries can be
limited.

Domestic and export:

The Indian telecom industry is mostly dependent on imports only. India imports telecom
equipment from china, Sweden, the US, Finland. TRAI saw it as a threat, and they made some
provisions on exports to limit imports. TRAI targeted India to aim to achieve the objective of net-
zero imports of telecom equipment by 2022. TRAI assigned 1000 crore rupees funds for promoting
research and innovation in the sector in India. The government wants to shift the telecom sector's
paradigm from an import-based sector to an export-based industry by introducing new policies.
The current standoff between India-China has increased this process speed.

Social Factors:
These factors include demography of the population, education levels, cultural trends,
lifestyle changes, attitude change, population growth, age distribution, etc. These factors directly
impact an organization as marketers have to understand customers, social environment, and what
drives them to make future decisions.

Education:

The Telecom sector is giving access to education in rural areas. The Telecom industry
provides mobility to a remote location, accessibility to the poor. During the lockdown, the
education sector used the telecom industry for teaching, learning, online classes, cloud services,
etc. Students are moving from offline to an online system; the dependence on the telecom sector is
increasing day-by-day. The primary fuel of many businesses is internet data. The usage of the
internet is also growing; in that sense, the telecom industry has a potential future to succeed. After
the hyper-competition, the accessibility of internet data became more straightforward. That is why;
the poor can have access to the internet, which was earlier costly.

Businesses like Byju’s, Vedantu, Toppr, etc. are increasing their market share in the
education sector. The market share of E-learning will cross INR 100billion by the end of 2020.
Apart from that, youtube information channels are spreading their legs in the education sector. In
all, the future of the telecom sector is increasing concerning the education sector.

Health Sector:

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Healthcare delivery is set to change its course shortly. Telecom development results in the
enhancement of quality of delivery. The significant development is in the field of medicine
delivery sector. Business like NETMEDS, Pharmeasy, etc. are gaining their momentum in the
market. The rate has increased dramatically after the coronavirus spread. People are concerned
with social distance norm. Therefore, people are ordering from an online medical store rather than
going to a nearby store. The online doctor consultancy sector is at the seed level; soon, it will also
grow. The future growth of the health care sector, especially online medical stores, is inevitable.
That implies the telecom sector will also increase.

Online Delivery:

We have seen the e-commerce boom after 2014. Many companies came out of nowhere
and growing an all-time high. Companies like Amazon, Flipkart, Snapdeal, etc. are spreading their
legs to rural areas, threatening small store markets. These companies are dependent on the telecom
sector only. Online food delivery companies like Zomato, Swiggy, Uber Eats, etc. are also solely
reliant on the telecom sector. Therefore, as they grow, the telecom industry will also increase.

Overall, the attitude of society has been changing. This attitude is positive in the telecom
industry. Therefore, as the social factor, the telecom industry will grow.

Technological Factors:
These factors include automation, research, and development, new technology, etc. It also
has unique ways of producing, distributing as well as logistics of goods and services. Marketers
can decide where to focus, what kind of product to create with technological factors.

The Telecom industry is capital intensive. Therefore, the product cycle and services must
stay long before returns are visible. Licensed operators, spectrum, etc. price paid prior to run
telecom business. It shows the industry is a prepaid system before having any profit. On the other
hand, the telecom industry is positively changing due to new technologies. For example, the
telecom industry has to install fiber optic cables over outdated copper wire cable now. The needs
and requirements for telecom services are advancing.

After the hyper-competition, JIO came into the picture; all companies moved their system
to 4G technology. The previous companies like Airtel, Idea, etc. have to change their approach. In
return, particular technological assets became liabilities to their companies. Besides, they are
facing a crunch in market share.

Now, companies are moving for 5G technology, and JIO has an upper advantage over other
companies. Most telecom companies, except JIO, are facing a crunch in customer influx. On the
other hand, customers are getting new technology at a low cost. Therefore, more and more
customers are joining telecom services. In all, the telecom sector has a bright future except for
individual companies.

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Environmental Factors:
These factors include environmental impact, ecological imbalance due to business. The
importance of Corporate Sustainability Responsibility (CSR) is rising; customers are checking the
CSR index before purchasing anything. On the other hand, firms have to think before deciding due
to the scarcity of raw materials, pollution targets, and meeting the government's carbon footprint
targets.

One of the main issues is widespread mobile telephone towers and aerial cabling. They are
diluting the aesthetics of that area. Their electromagnetic radiations have a certain effect on human
health and the biosphere, but the government claims the other way around. Some studies claim the
EM waves are partially affecting human organs and some studies claim that EM having an adverse
effect. The result of these arguments is yet to be seen, but people are a little concerned about
radiation.

The government of India claims, “current evidence does not confirm the existence of any
health consequences from exposure to the low-level electromagnetic field.” The government has
put some regulations on the level of EM waves.

In September 2013, WHO, in online question and answers, has mentioned that "Studies   to
date provide no indication that environmental exposure to RF fields or EM waves, such as from base
stations, increases the risk of cancer or any other disease."

On the other hand, due to chronic extreme weather, the telecom industry faces wear and
tear of certain equipment. That is a threat to the telecom sector overall.

Legal Factors:
The firm must understand legal norms to avoid violation of any legislation. It includes
employment legislation, customer laws and rights, health and safety, product labeling, and product
safety.

Post-2016 Scenario in India: Boom in Internet Usage:

Reliance JIO became available for the public on 5th September, 2016. And in just 3 years it became
the largest Mobile Network Operator in India with over 387.5 million subscribers.

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The Numbers are astonishing. Kotak Institutional Equities’ Data states that at an industry level,
data volumes jumped up by a whopping 4160% to 20.3 billion GB in the Q3, 2019, in comparison
to Q2, 2016. And Data usage per Customer increased from 500MB/Month to 10.6GB/Month.

 Data Explosion:
As per TRAI’s data, Data
Subscribers have doubled
and their share among the
subscriber base increased
from 32% to 57% in 3
years. Usage of 3G and
4G services increased
from 14% to 52% of total
subscriber base in India.

 Increase in Data Demand:

Total Voice traffic
increased by 110% to 2.4
trillion minutes. Unlimited
Voice plans led to Voice
usage per customer to
increase to a whopping 700
minutes/month/user.

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 Increase in Talk-time and

Data Usage:
The increased Data usage
and talk-time is caused by
lower tariff rates. Average
revenue/user decreased by
41% as per TRAI Data.

 Decrease in Bill Amounts

of course:
Revenues and Profits of
Industry decreased sharply.
Vodafone-Idea LTD. faced
severe blows while Airtel
did relatively more profits,
although net profits fell. In
Q2, 2016 Airtel earned
profits of ₹3444 crores, but
in Q3, 2019 it was only
₹1650 crores. In the
meantime, Reliance JIO’s
Profits saw a steep increase,
with increased expenses too,
resulting in low ROI.

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Impact of COVID and increased data consumption:

Nationwide lockdown created idle individuals. People were using streaming channels for
entertainment. Besides, the education sector moved online, work from home trend, increased data
consumption. India’s internet consumption rose by 13% after the nationwide lockdown was
imposed. According to the telecom ministry, data that showed Indians consumed 308 petabytes
(PB) or 308,000 terabytes (TB) daily on an average.

The government claimed that the increase was within the capacity of telecom sector. “We
have the capacity to handle a spike of 20% without any duress. We optimized the fiber optics
network and have not yet reported any breakdown,” said DoT official.

Many online streaming services such as Youtube and Netflix downgraded video quality;
thus, data consumption had minimized. It helped networks to meet the increased demand.
Speedtest, a site that analyses internet access performance across the globe, showed a 6% decline
in fixed-line speeds and 18% in mobile speeds compared to the early march.

References:
 https://en.wikipedia.org/wiki/Telecommunications_in_India#The_beginning
 https://en.wikipedia.org/wiki/List_of_telecom_companies_in_India
 https://en.wikipedia.org/wiki/Internet_in_India#History
 https://en.wikipedia.org/wiki/Doordarshan
 https://en.wikipedia.org/wiki/Television_in_India#:~:text=Terrestrial%20television%20in
%20India%20started,All%20India%20Radio%20(AIR).&text=In%20the%20same%20year
%2C%20color,introduced%20in%20the%20Indian%20market.
 https://en.wikipedia.org/wiki/Digital_television_transition_in_India
 https://en.wikipedia.org/wiki/All_India_Radio#History
 YouTube
 TRAI
 https://doordarshan.gov.in/about-doordarshan
 http://allindiaradio.gov.in/
 Live Mint E-newspaper
 DataWrapper: https://www.datawrapper.de/
 https://blog.oxfordcollegeofmarketing.com/2016/06/30/pestel-analysis/
 International Journal of Innovative Technology and Exploring Engineering (IJITEE) ISSN: 2278-3075,
Volume-9 Issue-2, December 2019
 https://www.bajajfinserv.in/insights/how-has-gst-impacted-the-telecom-sector#:~:text=The
%20Indian%20telecom%20sector%20contributes,has%20now%20increased%20to
%2018%25.&text=%2D%20GST%20allows%20for%20an%20input%20tax%20credit.
 https://link.springer.com/referenceworkentry/10.1007%2F978-3-319-69627-0_119-1
 https://www.hindustantimes.com/india-news/india-s-internet-consumption-up-during-covid-19-
lockdown-shows-data/story-ALcov1bP8uWYO9N2TbpPlK.html
 https://www.who.int/
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