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India is amongst the fastest growing telecommunications markets across the globe. The average monthly mobile subscriber growth over the past year has been 15-17 million customers. Currently, the mobile subscriber base is approximately 671 million (as of August 2010). The overall teledensity for India has already surpassed 60 percent and the market continues to exhibit unabated growth1. With the successfully concluded auctions of the 3G and BWA spectrum, this growth is set to become even more aggressive. Indian telecom operators have very effectively worked with rest of the telecom ecosystem to enable India emerge as the country which offers the lowest mobile tariffs across the globe2. All these achievements have helped India emerge as one of the most attractive investment destinations for all international players looking to win a share of the second largest mobile market in the world3. These players can also look at leveraging on the successful low-cost model that India has pioneered. During the past year, several telecom players in India have made tremendous efforts to establish themselves on the global level through cross border mergers and acquisitions. These strategic alliances are a step towards the globalization of the Indian telecommunication industry. The credit for the growth witnessed by the sector has to be attributed to the well-deﬁned regulatory provisions designed by the government. The government has been instrumental in making key policies to drive the rural growth which is expected to keep this bullish phase going strong over the next decade. Within the rural area, there is additional focus to enhance the penetration of broadband and data usage. The aim is to wirelessly connect villages and remote areas through broadband and provide access to basic facilities for health, education, banking and others. On the occasion of India Telecom 2010, the 5th International Conference and Exhibition, the Department of Telecommunications is pleased to release this report on ‘Indian Telecom Success Story – Broadband for All’. Developed by KPMG in India and FICCI, it provides an overview of the Indian telecommunications sector and will serve as a useful reference manual for all stakeholders including regulators, policy makers, telecom operators and the general public. R. Chandrasekhar Secretary Department of Telecommunications & IT Government of India New Delhi
1 ‘Monthly Telecom Scenario – August 2010’, DoT, October 2010 2 ‘Mobile tariffs in India to decline by 25 percent’, Silicon India, May 2009 3 ‘India becomes 2nd largest mobile market in the world’, The Hindu Business Line, April 2008
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The Federation of Indian Chambers of Commerce and Industry (FICCI) and KPMG are proud to present this report on “India Telecom 2010 – Broadband for All” in association with the Department of Telecommunications (DoT). , The present phase is extremely exciting for the telecommunication industry which is looking forward to 3G and BWA rollout to help re-invigorate the aggressive growth that the industry has witnessed in the past two years. Rapid swelling in the subscriber numbers has resulted in urban teledensity exceeding 100 percent. The rural market is expected to drive the next round of growth for the voice-based services, while data services will create the much needed churn within the maturing urban markets. This report highlights the importance of broadband and data services market in India. Our aim has been to highlight the key ecosystem requirements and strategies that telcos may follow in order to achieve the government targets of broadband subscriptions. This report provides the reader an insight into how the telecom industry has evolved over the last decade. The report also highlights the growing importance of broadband and how it has the potential to contribute to the overall socio-economic development of rural India We are extremely grateful to the Department of Telecommunications (DoT) for providing us with this opportunity to work with them for the India Telecom 2010 event. Amit Mitra Secretary General FICCI, India Sean Collins Global Chair KPMG’s Communications and Media practice Romal Shetty National Head Telecom KPMG in India Arpita Pal Agrawal Head - Telecom Risk & Compliance KPMG in India
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Ranked amongst some of the fastest growing economies of the world, India has registered steady growth over the last few years, especially in comparison to the OECD and other similar emerging economies1. The strengthening domestic market and enhanced domestic consumption helped India to successfully weather the global economic turmoil. The Indian telecom sector particularly, witnessed aggressive growth during the last two years, emerging as a global benchmark for other developed countries as well. All major international operators are exploring opportunities to make inroads into the Indian telecommunication sector, both for the vast customer base as well as to leverage on the low cost outsourcing model which India has been successful in pioneering. As of August 31, 2010, the country’s subscriber base (wireline + wireless) stood at 707 million2, with the overall teledensity reaching 60 percent. With increasing maturity of urban markets, the next round of growth is expected to be generated from the rural areas in the form of increased uptake of voice and databased services, as well as broadband services. The penetration of broadband in India has not been as aggressive as the wireless communication services. As of August 2010, the broadband subscriber base in India is approximately 10.08 million. The government, in recognition of the potential of broadband as a key enabler in furthering its growth agenda, has taken a strong stance to address the issue of low penetration and enhance broadband coverage across the country. The recently concluded 3G and BWA auctions are likely to be the catalyst that furthers the government’s agenda of providing broadband connectivity to the remotest parts of India. The government as well as other telecom stakeholders believe that these wireless technologies will help overcome the barriers of expensive wireline infrastructure, especially in the low revenue generating zones. The primary aim of the ‘Broadband for All’ movement is to ensure that all Indians are able to connect with the world and are able to remotely access basic facilities like health, education, banking, commerce, entertainment, utility and e-governance services to enhance their quality of life.
1 Ministry of Finance 2 ‘Monthly Telecom Scenario – August 2010’, DoT October 2010 , 3 ‘Consultation Paper on National Broadband Plan’, TRAI, Business Line, June 2010
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The government, along with TRAI and DoT, has been making tremendous efforts to achieve the desired results. TRAI is considering plans to roll-out a national optical ﬁber cable network which will act as a backbone to broadband services across the country. The funding for this project is likely to be routed through the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) for non-skilled work and from the Universal Services Obligation Fund (USOF) for material and equipment cost3. The Indian government has unveiled a prototype tablet computer that would sell for a mere INR 1,500 or USD 354 thus increasing affordability of the end user device which is essential to access the broadband services. The government is considering making broadband connections along with other equipments such as computer, printer and telephone more affordable to every gram panchayat. These initiatives, which are intended to provide universal broadband access to the rural residents of the concerned gram panchayats, are likely to be funded through the Universal Services Obligation Fund5. All these steps are clear indicators of the efforts that are being directed towards achieving strong broadband growth in India.
The private telecom players are also expected to play an important role to achieve the objective of ‘Broadband for All’, by covering the key aspects of relevant content, seamless connectivity and affordable end user device by introducing innovative business models for their broadband service offerings. Due to the rich diversity in India, locally relevant content is essential to make an impact and enhance penetration of telecom services, especially in the rural areas. The regulatory environment in India has been extremely supportive for the telcos to have achieved such phenomenal growth in the past years. The industry is now eagerly awaiting the roll-out of 3G and BWA which is expected to have a signiﬁcant impact on the sector and its growth in the next few years. The Indian telecommunication industry is at the brink of entering a fresh round of growth, to be stimulated by the launch of wireless data services. The policy makers and the private players have successfully come together with various initiatives to ensure that the industry continues to remain a shining star for India.
4 An IIT IISc-designed laptop for just INR 1,500’, Times of India, July 2010 , 5 ‘Special purpose vehicle planned for broadband push’, Hindu Business Line, July 2010
an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). All rights reserved. .catalyst for convergence Value added services in India Connecting rural India Telecom manufacturing Telecom research & development Emerging trends and technologies Green telecom Investment opportunities after broadband rollout International best practices 34 39 43 51 59 65 69 73 79 83 Conclusion About KPMG in India About Department of Telecommunications (DoT) About Federation of Indian Chambers of Commerce and Industry (FICCI) 89 91 92 92 © 2010 KPMG.Table of Contents Macro-economic view of India 1 Global telecommunications market 7 Indian telecommunications market 13 Regulatory and policy environment 19 Broadband for all 25 Broadband infrastructure Broadband . a Swiss entity.
7 percent. registering an average annual GDP growth rate of 8. the economy is expected to quadruple its current size driven by nominal annual growth of 13 percent3. rapidly expanding services sector. rising global competitiveness and increasing domestic demand have all contributed to a strong economy. In ﬁscal 2009.5 percent2. © 2010 KPMG. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). For 2010. The country experienced rapid economic growth between 2003 and 2007 . is expected to be worth INR 49 trillion (GDP at market prices). India ranks as the number one FDI destination among non-ﬁnancial investors4. By 2020. March 20.7 percent.1 Macro-economic view of India India is one of the fastest growing economies across the globe. It is also the fourth largest economy in PPP terms after USA. the country is expected to post a GDP growth of 8. 1 2 3 4 CIA – World Fact Book 2009. China and Japan1. 2010 A. which is signiﬁcantly higher than the performance of both the OECD countries and emerging Asian economies. This performance was primarily driven by the services sector. Financial Express. a Swiss entity. FDI growth. which posted a year-over-year growth of 9. the country weathered the global downturn successfully and registered a GDP growth of 6. at the end of the ﬁscal year 2010. The economic size of the country. The World Bank Ministry of Finance ‘GDP to quadruple to $ 4. . All rights reserved.8 percent.5 trillion by 2020: Edelweiss’. Progressive liberalization of government policies.T Kearney’s 2010 Conﬁdence Index .
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registering a growth of 26. which comprised more than half of the GDP in 1950-51. in 2009-10. Widely believed to be the centres of economic activity and wealth generation. the Indian economy has transformed itself from an agriculture-dependent economy to a services-driven economy. 2010 ‘India’s urbanization bonus’. 2009 ‘LIMITS OF PEOPLE’S WAR. The Telegraph. Examples include the clustering of software ﬁrms in India’s Silicon Valley (Bengaluru) or auto component ﬁrms in Gurgaon9. August 16. Higher domestic savings has resulted in higher investment. GDP Mix of India and developed economies 2005 2010P 2010P Agriculture Industry 14% 18% 58% Services 81% 71% 28% 28% 54% India 18% 1% USA 27% 2% Japan Source: EIU 5 6 7 8 9 10 ’World Population Prospects: The 2008 Revision Population Database’. Mint. India has 42 cities with a population base greater than one million7. 2 in world’. The share of agriculture.3 Key features of the Indian economy Favorable demographics: Currently the median age in India is 24 years and the country possesses a working population of close to 340 million5.4 percent (2010E) as against 22.4 percent6. Financial Express. . High savings ratio: The country has one of the highest national savings ratio of 32.9 percent for Japan and 10 percent for USA10. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). United Nations Population Database ‘India India car sales are No.Naxalism faces serious hurdles that can be used against it’. a Swiss entity. marks a watershed in the evolution of the Indian economy and takes it closer to the fundamentals of a developed economy. 2007 National Productivity Council EIU © 2010 KPMG. Rising urbanization: Currently. Urbanization adds about one percent each year. India became the second fastest automobile market in the world. these cities are estimated to contribute 60-80 percent of the total output in India8. All rights reserved. making India less vulnerable to global situations. This young and dynamic working population of India is one of the biggest factors having a positive impact on the consumption and investment pattern of the country. The beneﬁts from urbanization to the economy come from the clustering of ﬁrms and businesses which allow them to learn from each other and attract workers. which has currently got a share of 58 percent of GDP The growth of the services sector . Shift from an agrarian to a services-led economy: Over the years. is now gradually shifting in favor of the services sector. through productivity gains. April 09. For instance. January 21.
Jun-10 . CSO 11 D&B Outlook.6 Quarterly IIP (%) 14. The ﬁscal and monetary stimulus announced in the latter part of 2008 helped the economy to recuperate from the slowdown phase.6 14. corporate proﬁts deteriorated. India displayed a CAGR growth of 16. in part due to the government’s quick response in the form of stimulus which encouraged foreign investors.4 6 8.8 7 . Economic indicators Quarterly Net FII Inflows (USD Millions) 6421 5428 4017 3811 2199 1417 407 -236 -27 357 114 824 -0. FDI in India remained resilient during the crisis.1 5. the severity of the impact was considerably less as compared to emerging Asian economies. CSO Though the growth momentum of the Indian economy was substantially impacted with the onset of the global economic slowdown.8 6 6. The rise in GDP growth in the third quarter of 2009 to 8.8 17 . With most of the countries witnessing a downfall in the growth of FDI between 2007 and 2009.5 8. 200811. Sep-10 Mar-10 Jun-07 Jun-08 Jun-09 Jun-10 GDP growth GDP (%) 9. much like its global counterparts. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). Q2 2010 12 Bloomberg 13 OECD © 2010 KPMG. After witnessing deceleration in GDP growth for ﬁve consecutive quarters.6 percent.5 8. Notably.6 7 .7 8.5 Dec-07 Dec-08 Dec-09 Sep-07 Sep-08 Sep-09 -1807 -2359 Dec-07 Dec-08 Dec-09 Sep-07 Sep-08 Sep-09 Mar-07 Mar-08 Mar-09 Source: Bloomberg. was primarily due to the slow impact of increase in government spending and the improved performance of the industrial sector12.5 percent for the same period13.6 9.8 9. The manufacturing sector’s slowdown was slightly more pronounced with growth in the manufacturing output turning negative in December. All rights reserved. with the GDP registering a growth of 6.5 6. which was viewed as an initial sign of recovery in the economy.3 Dec-07 Dec-08 Dec-09 Sep-07 Sep-08 Sep-09 Mar-07 Mar-08 Mar-09 Mar-10 Jun-07 Jun-08 Jun-09 Aug-10 Jun-10 Mar-07 Mar-08 Mar-09 Mar-10 Jun-07 Jun-08 Jun-09 Source: Bloomberg.6 8. consumption and investment demand shrank. India weathered the global crisis comparatively well.3 4372 8.8 percent during the previous quarter. witnessed a substantial deceleration in growth in 2008.9 2272 7 8 5.0 percent (y-o-y) as against 5.3 9.4 From survival to revival The Indian economy. consequent to the global ﬁnancial and economic turmoil.5 5. Towards the end of 2008. a Swiss entity.3 5. and there was a shrinkage in employment opportunities.8 5. a notable turnaround in India’s real GDP growth took place during April-June 2009 quarter.4 9.2 0.
stimulus packages by government and growing conﬁdence of foreign investors was well-supported by high-performing capital markets. a Swiss entity. restocking by manufacturers following the earlier cutbacks in factory output and drawdown of inventories also aided the industrial production in the latter half of 2009. While this can partly be attributed to the low base effect. This is expected to further strengthen India as a breeding ground for knowledge and consequently innovation.134 25. May 17 2010 .311 75.8)% 16. The World Economic Forum © 2010 KPMG.483 Dow Jones NASDAQ Source: Morgan Stanley Research Domestic industrial activity also witnessed a sustained improvement during April-December 2009.0% 48. such as China and South Korea (which are already in de-growth phase)15. marked by the presence of world-class universities and management schools including the Indian Institutes of Technology (IIT) and Indian Institutes of Management (IIM).4)% (24. All rights reserved.315 22. as evident from the strong IIP growth ﬁgures. indicated by growing market capitalization of the Bombay Stock Exchange (BSE). Strong industrial and manufacturing performance.418 3.9% 2008 24.1)% (17 .414 25.506 37 .7% 56. Growth would largely be driven by: Favorable demographic proﬁle India’s high population growth has had a positive impact on productivity gains over the last 10 years – a trend likely to continue over the coming decades.5) and leaving behind outsourcing competitor China (3.begins to gain momentum.9)% (13. 7 = very Well) on the Quality of Educational Systems Index performing close to Japan (4. in contrast to much of the developed world and regional peers.0% Comments Cenvat Cut 4%: Excise duty to 8% Increased allocation to ﬂagship programmes A consumption kicker: to continue in FY10 Indirect impact Outlook The Indian economy is at its initial stages of economic progress. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”).3% 70.058 147 . The growth prospects of the economy are expected to improve signiﬁcantly in FY 2011 as the domestic demand – driven by rising private consumption and investment .791 41. The recent years have also seen considerable development in the education systems of the country. As many as 14 out of 17 major manufacturing sectors witnessed a positive growth during January-December 2009.585 138. the government consumption demand is expected to remain moderate on account of ﬁscal consolidation plan and expected steady withdrawal of stimulus packages. 14 D&B Outlook. as compared to some of the other emerging economies. The other positive aspect of this rebound in the industrial activity was that it was broad based. the focus of government spending on infrastructure sector would continue to support growth.949 78. Q2 2010 15 The Reawakening of Domestic Demand.784 55. IDFC-SSK. Government impetus The ﬁscal stimulus Impact (INR Billion) Duty cuts Additional expenditure Sixth pay commission Farm loan waiver % of GDP 500 1000 157 600 4.2)% (8.6% 77 .002 45. .939 1.200 34. The ﬁscal and monetary stimulus measures announced earlier played a major role in stimulating consumption and investment demand in the economy during 200914.8) as per the Global Competitiveness Report 2009-201016. Nonetheless.577 CAGR (27 .5% 42. Q22010 16 ‘The Global Competitiveness Report 2009-2010’.073 34. Source: Report on India Strategy.3% 80. thereby strengthening the prospects of faster recovery in the domestic industrial activity.3% 72.548 1. It is expected that the working age population will continue to grow to peak at roughly 70 percent by 2040.5 FDI inﬂows in selected countries 2007 Japan Korea Russia Brazil China India Source: OECD Indian equity markets outperform EM 2009 11.5% 12 Months returns as on March 2010 MSCI India MSCI EMF MSCI EM Asia MSCI Europe MSCI Asia Paciﬁc BSE Sensex 113.4 (where 1= Not Well. However. Business Monitor International. The country scores 4.
This is expected to result in enormous productivity beneﬁts for the economy17. the country has positioned itself as a preferred manufacturing and production centre owing to the abundance of skilled. cheap and English speaking labor. Improvement in private consumption will also result in increase in resumption of capital expansion plans by Indian corporations.7 US 154.ch © 2010 KPMG. The Planning Commission 18 ‘Global Competitiveness Report 2009-2010’. The World Economic Forum 19 www.5 6.3 -0. as announced in the Union budget of FY11. India has the lowest labor costs (per hour) and the highest availability of engineers and scientists (after Japan) in the world18. NASSCOM estimates that an approximate 400. Labor costs India Labor Force (million) Labor Costs per Hour (USD) Labor Productivity Growth (%)* 478.3 2. .0 1.2 9.0 2. All rights reserved.2 Source: Economist intelligence Unit.4 38. *Efﬁciency of labour measured in terms of output per worker (real GDP per person employed) 17 XIth Plan Documents.9 27 . Data for 2010(Estimated). a Swiss entity.osec. Low labour cost In recent years. private consumption is expected to improve.6 Improvement in private consumption With rapidly waning uncertainty on employment and expected increase in disposable income due to measures like broadening of overall income tax slabs for individuals with consequent reduction in effective individual tax. Infrastructure development The Government has put signiﬁcant emphasis on developing core infrastructure including roads and power with expected investment of over USD 500 billion from the public as well as the private sector over the next ﬁve years.5 China 815.3 3.1 2.000 diploma and degree engineers graduated in the year 2009 alone19.3 2.2 29.7 Germany 43.8 UK 31 28. a factor that helps India distinguish itself from its Asian contenders in the global outsourcing market. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”).6 25.3 France 28.5 Japan 65.
6 billion1 in 2009 with a CAGR of 22 percent over 2004-20091. June 2010 © 2010 KPMG. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). . This occurred despite some carriers experiencing marginal declines or ﬂat trends in revenues with enterprises and consumers exercising cut backs on telecom spending during the global economic slowdown. Global wireless subscribers reached 4. All rights reserved. 1 International Telecommunications Union database. a Swiss entity.7 Global telecommunications market Telecom services will continue to be one of the key growth sectors having generated revenues of roughly INR 67 trillion in 2009.
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Mobile data represents a growing part of overall ARPU as voice ARPU continues to deteriorate. All rights reserved. Japan had 43 percent of its wireless ARPU coming from mobile data services driven by early deployments of 3G services2. UBS. July 2010 Falling voice ARPUs in most countries. generated the highest mix of mobile data services globally (52 percent2 of total wireless ARPU). mobile data to drive growth Wireless ARPU ranges from USD 54 per month in Japan to under USD 5 per month in the Philippines. data ARPU (mobile data. ﬁxed data and ﬁxed internet) constituted 34 percent of the total ARPU versus 31 percent in 20083.2009 Enterprise Networking and Communications 2% Carrier Network Infrastructure 4% TOMS 2% Mobile Devices 11% Mobile Services 45% Fixed Services 36% Mobile Services 45% Fixed Services 31% Enterprise Networking and Communications 3% Telecommunications Market . October 2009 3 ‘Market Trends: Global Telecommunications Market’.3 Trillion Source: Market Trends: Global Telecommunications Market. Telecom market revenue by sector Telecommunications Market .9 Trillion Revenues – USD 2. evidently demonstrating the lower ARPU realization in emerging countries2. Indonesia and India. Gartner. July 2010 © 2010 KPMG. The blended wireless ARPU is roughly USD 18 globally.9 The continuing rise in afﬂuence levels in emerging markets and the resultant increase in the standard of living is expected to have an increasing impact on the revenue per subscriber. Globally. The country with a relatively low wireless ARPU. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). Philippines France Germany Russia Italy UK . Philippines. adoption of smartphones and increasing sale of data plans in the developed markets. Gartner.2014 Carrier Network Infrastructure 4% TOMS 2% Mobile Devices 15% Revenues – USD 1. ARPU ($) 40 30 33 29 21 20 10 0 14 10 5 4 12 8 4 U. Australia Japan South Africa China Brazil India Indonesia Netherlands Source: Global I/O: Wireless Services. UBS. declining at 10 percent per year (on a local currency basis)2. Global wireless ARPU comparison (2009) 60 49 50 40 47 54 46 The demand for applications with platforms such as Apple’s App Store continued to drive new handset launches. October 2009 2 Global I/O: Wireless Services’.S. a Swiss entity.
. Argentina. South Africa. Mobile Gaming. Platform Enablers. Nigeria. Poland and the Ukraine are expected to increase global MVAS revenues from USD 200 billion in 2009 to USD 340 billion in 20145. June 2010 © 2010 KPMG. These converged solution offerings are expected to help equipment players restore the dramatic collapse in sales witnessed in 2009. where equipment players are positioning themselves to deliver new value-added services. Consequently. Mexico.10 Convergence – shifting dynamics This quote style is in telecommunications ecosystem set in Univers 65 Bold 33pt on 36pt leading The success of the Apple’s iPhone and the App Store is a case in point of a wider ecosystem. Moreover. Indonesia. and other innovative mobile applications are more popular in developed economies as compared to SMS based and basic internet services in emerging economies. Co-opetition (Cooperative Competition) and value creation opportunities are likely to inﬂuence market direction. A good example has been MTV Networks’ partnership with AT&T for the “MTV Vault” giving AT&T subscribers exclusive access to archive content.2 billion7 subscribers as a result of the negative growth in most developed countries such as US.Religare Info Service. Value added services continue to increase its share in overall telecom revenues Uptake of mobile value added services has been on the steady rise in most of the developed countries. March 2010 International Telecommunications Union database. This is increasingly evident in the areas of uniﬁed communications and video management services. All rights reserved. faster computing power and quick access to seamless information via location-based services is likely to emerge as the norm of the day. declining voice tariffs across the world.Informa Telecoms & Media. Zambia have shown tremendous growth in wireless penetration due to ease of rollout compared to wireline deployment. Mobile Money. The telecom equipment sector is also offering new and converged services. India. These devices are increasingly emerging as strategic partners for telecom carriers. a Swiss entity. Saudi Arabia. UK and Japan and near static status in developing markets. As mobile devices become globally ubiquitous. Content Aggregators. Israel. supporting CSP’s in the transformation toward content-driven services and applications. Turkey. Bangladesh and other African nations like Ghana. Mobile Value Added Services (MVAS) accounts for more than 30 percent of the total telecom revenues as compared to 10 percent in India4. Indonesia. VAS players such as Content Developers. A key global trend observed is the shrinking of MVAS value chain. Increasing broadband adoption with declining ﬁxed line subscribers Emerging nations in Asia like India.CIOL. Egypt. Globally. resulting in low ARPUs compels operators to focus more on MVAS. technology decisions and solution offerings in the market. Content providers are forming exclusive partnerships with telecom carriers to create a marketing strategy to inﬂuence consumer decisions. With the emergence of new technologies and more countries advancing towards 3G & 4G provide a future path for MVAS to grow exponentially. July 2009 ‘Global Mobile Value-Added Services (VAS) Market’ . global wireline subscription remained stable with 1. GPS. October 2008 ‘Global Mobile Data Market to be Worth USD 340 Billion by 2014’ . High-end services such as Mobile Internet. Emerging economies such as China. Russia. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). Brazil. where the device manufacturer has had a signiﬁcant impact on the telecom carrier’s success. and Telecom Operators have started growing into each others role6. to renewed growth in 2010. 4 5 6 7 ‘MVAS: Where are we heading to?’ .
The expected broadband wireless rollouts in 2010-11 would also provide an additional impetus towards increasing broadband penetration in the country. have resulted in internet penetration levels close to thirty percent. has the third largest broadband subscriber base and one of the widely cited broadband success stories. The broadband penetration increased to 480 million7 subscribers globally with 25 percent CAGR (2004-2009). Emerging countries in Asia. . In South America. a Swiss entity. China has witnessed a blistering pace of PC-based broadband connectivity. users worldwide have been demanding higher speeds. furthering the objective of ﬁnancial inclusion being targeted by the Government. However. Fixed line data (millions) 239 247 175 60 50 2005 251 167 244 158 6352 2007 India 240 235 687 459 205 95 534 150 233 100 2006 616 234 253 105 140 70 48 2008 Japan 121 3744 2009 USA 103 3639 2010 5657 2006 China 76 2005 2007 2008 2009 2010 China India Japan USA Source: Economic Intelligence Unit database. Mobile subscriber data (millions) 772 525 347 267 110 278 115 293 119 853 677 Mobile payments to foster a trend for cashless transactions According to the GSM Association (GSMA). changes in regulation could result in the advent of end-to-end mobile payment solutions. However. mobile money in emerging markets would bring in USD 7 billion of sales . money transfer services for handset owners without a bank account itself would result in USD 5 billion of transaction fees and text message linked revenues by 2012. cable and DSL. due to surge in adoption of DSLbased broadband subscribers around 2003. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). In India. CSP’s are innovating by providing video-ondemand and other bundled services in order to increase broadband adoption. resulting in a large class of digital consumers with strong adoption and exposure to the internet in the last decade.9 for operators by 20128. All rights reserved. 2010 8 GSM Association 2009 © 2010 KPMG. offerings from some operators enable a mobile phone user to send or receive money instantly between their banking accounts. where near ubiquitous broadband availability and low tariffs.11 With software application surge and usage of advanced devices for media rich services. Of this. India too is witnessing rapid growth in broadband subscribers due to falling tariffs. with the remainder coming from indirect beneﬁts such as customer loyalty8. Middle East and Africa have seen high growth in broadband subscription while developed nations have witnessed a stable growth pattern. In Africa. Japan with over 30 million broadband lines. enabling customers to make simple ﬁnancial transactions through the mobile phone. using their mobile phone to authorize the transfer. broadband penetration has been increasing. due to lower tariffs as a result of the new submarine cables reaching its shore and the rollout of wireless broadband services. there is potential to signiﬁcantly improve broadband penetration in the country through investments in last mile connectivity such as ﬁbre.
emerging market acquisitions were mainly focused towards tapping the growth in these areas. are witnessing the beneﬁts of signiﬁcant growth in income levels due to sustained economic growth. auguring well for continued growth and development of the telecom market in the region. Frontier Communications (US). saturated markets and regulatory restrictions. Meanwhile. June 2010 © 2010 KPMG. Acquisitions in developed markets were executed with the primary objectives of consolidation. are witnessing the beneﬁts of signiﬁcant technology investments and innovation. September 2010 10 International Telecommunications Union database. a Swiss entity. Mexico’s America Movil acquired Telmex International for integrating players and providing mobile and ﬁxed line service across Latin America9. India and China. acquired wireline operations of Verizon’s 14 states to expand and achieve cost synergies worth USD 500 million annually9. Asia to continue to lead growth in wireless services The Asia Paciﬁc region driven by growth in India and China will continue to be the key growth market for global telecom over the next few years. Penetration ﬁgures in both countries continue to remain signiﬁcantly lower than developed economy levels. gaining cost synergies and utilizing network capabilities. Most top CSPs from Western Europe are encountering difﬁculties with competition. which constitute 28 percent10 of the global wireless subscriber base today. 9 Mergermarket Database. On the other hand. . Developed markets such as Japan and Korea.12 M&A activity and diversiﬁcation in emerging markets has been a vital component for success of large CSPs The world’s largest CSPs lost share in the global services market as four of the top 10 lost their positions. E. All rights reserved. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”).g.
October 2010 © 2010 KPMG.13 Indian telecommunications market The Indian telecommunications market has continued to show consistent growth during the last one year. growing push by telecom operators to rollout network in semi-rural areas and increased focus on the value added services market. especially in non-urban areas. . TRAI. TRAI.2010 Overall teledensity in India has risen to the levels of ~59. indicating huge untapped potential for . International Telecommunications Union statistics report . 1 ‘Telecom Subscription Data as on 31st August 2010’. where wireline and internet services are yet to make signiﬁcant in-roads. All rights reserved. has not yet reached the vast majority in rural areas with rural teledensity of approximately 27 percent3. there is immense potential for the sector to grow. with exciting developments such as rollout of newer circles by operators. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). Telecom continues to be one of the fastest growing sectors of the Indian economy. With a large part of the population yet to obtain access to the telecommunication market. successful auction of 3G and BWA spectrum. Even the mobile services space which has seen exponential growth in urban areas. becoming a strong contributor to India’s overall GDP and is expected to grow further. DoT. a Swiss entity.6 regions respectively. October 2010 3 ‘Monthly Telecom Scenario – August 2010’.1 percent2 in urban and rural .6 percent (as of August’10)1. Wireline services have shown relatively slow growth with low teledensity of approximately 7 percent and 1. October 2010 2 ‘The Indian Telecom Services Performance Indicators January – June 2010’.8 the sector. Mobile subscribers (share of the world) Others 65% China 16% India 13% USA 6% Source: EIU’ 2010 estimates.
All rights reserved. a Swiss entity. .14 © 2010 KPMG. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”).
ARPU declined by 6. . October 2010 © 2010 KPMG.20% Circle A Chennai 12. Kerala 27 mn .37% Circle B Circle C The Government of India opened up mobile services to private participation in 1994-95 by inviting bids for providing services in the four metropolitan cities and 18 non-metro circles.30 mn 51.54% Source: ‘Monthly Telecom Scenario – August 2010’. TRAI.60 mn 68. low ARPUs (~INR 122 per month in June. However.52 mn 76.66% UP (W) 36.01 mn 48. the numbers have risen from 6.15 Broadband is yet to reach a critical mass despite rapid growth. Metros. B and C. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). With penetration rates in metros touching 100 percent. With subscriber penetration under 2 percent5. Services were introduced in 1995 with the high tariffs resulting in poor demand.62 mn 64.64 67 .2 percent from INR 113 in March.54% Orissa 18.86 mn 91.57 mn 69. there is still immense potential in other circle categories.61 mn 134. Category A.08 million by August 2010.03% Gujarat 37 mn . October 2010 The current subscriber base of 707 million (August 2010)4 comprises 476 million urban subscribers (teledensity of ~134 percent) and 230 million rural subscribers (teledensity of ~28 percent)4.74% Karnataka 42.28% 39. DoT. DoT. The National Telecom Policy 1999 moved the industry to a revenue share model from the ﬁxed license fee and the lower tariffs resulted in the addition of ~ 12 million subscribers during the 1999-03 period as compared to less than a million subscribers added during the 1995-99 period.21 88.23 % UP (E) Bihar 43. October 2010 5 ‘The Indian Telecom Services Performance Indicators January – June 2010’.88mn 34. The 22 telecom circles in India have been classiﬁed into 4 categories viz.11% Maharashtra 49.41% Mumbai 30.98 million in August 2009 to 10.76 mn 195.21 36.33% North East 6.57% Kolkata 18. the sector has potential for aggressive growth in the future.08 mn 156.81% Delhi 32.86% HP 5. 2010) and signiﬁcant churn rates.03 mn 34. a Swiss entity. Competitive intensity in the market has contributed to reduction in tariffs and launch of innovative schemes like lifetime prepaid and low cost handset bundling which further reduced the entry 4 ‘Monthly Telecom Scenario – August 2010’.02% Subscriber base in mn 600 500 400 300 200 100 6 0 11 28 47 75 142 229 347 Haryana 16. The Calling Party Pays regime was introduced in 200304 which allowed free incoming calls for the subscribers. registering a growth of 55 percent on an annual basis4.54 mn 56.46 mn 161.13 mn 46. This revolutionary change can be designated as one of the watershed milestones in the growth of the Indian telecom sector.92 mn 57 . In the prepaid segment. the market in Metros is nearly saturated. Mobile services The Indian mobility market can be characterized as one with a very large subscriber base4 (~671 million as of August 2010).68 mn 42. particularly B and C. Mobile subscriber base and mobile teledensity across telecom circles J&K 4.09% Punjab 85.04% Metros Tamil Nadu 49. The market is highly competitive with some of the telecom circles having more than 10 operators.35 mn 41.25% 2001 2002 2003 2004 2005 2006 2007 2008 2009 H1’10 Source: TRAI Annual Report and Quarterly Reports on Telecom Services Performance Indicators Andhra Pradesh 51.00% Growth of wireless subscriber base (year end numbers) 700 636 525 Rajasthan 36. 2010 to INR 106 in June.14% Assam 10.82% West Bengal MP 30. 20105.00 mn 85. All rights reserved. During this period the government also setup the Telecom Regulatory Authority of India (TRAI) in 1997 and ‘Telecom Dispute Settlement and Appellate Tribunal (TDSAT)’ in 2000.03 mn UP (E+W) 43. high growth5 (addition of 16-18 million subscribers every month in last six months).
with the drop in mobile tariffs and increase in coverage of mobile services. But.5 million between 2006-07 and 2008-09. rural teledensity has increased from 17 percent5 in June.81 million in 1991-92 to 40. Some of the prominent categories include network equipment vendors. Active sharing is a newer area which is being looked at by telcos to reduce costs of rollout further. However. wireline over the last few years has actually seen a decline in the subscriber base. the ﬁxed line subscriber base actually decreased by 3.16 cost for a new subscriber. 1999-2000 to 2001-02. The total number6 of ﬁxed line connections in India increased from 5.76 untapped opportunity in the Indian market. October 2007 . operators are actively seeking to tap growth in rural India. 2009 to the current 26 percent5 in June 2010 which translates into addition of 83 million rural subscribers in the last one year. This decline was aggravated by slow rollout of ﬁxed line services by Telcos due to the signiﬁcantly higher total cost of service provision for ﬁxed line services compared to mobile wireless services. New players in the telecom space had hitherto concentrated on wireless space leading to low competition and promotion of wireline services. Wireline subscriber base 45 40 35 33 38 41 41 41 42 41 39 38 37 36 36 Subscribers in Mn 30 25 20 15 10 5 0 ’0 1 Source: TRAI Annual Report and Quarterly Reports on Telecom Services Performance Indicators Wireline services While wireless has seen consistent growth over the years. TRAI. net additions in ﬁxed-line subscribers started slowing down from 2. 4 ‘Monthly Telecom Scenario – August 2010’. It has been observed that the past subscriber growth has been skewed in favor of the urban market. The entire telecom ecosystem of operators. changing economic proﬁle of subscribers and the need to meet the aggressive roll-out targets. The large rural population base of around 590 million5 and low rural teledensity 27 percent4 indicates that there is still large . a Swiss entity. the operators have been under tremendous pressure to bring in operational efﬁciencies. Due to mobile substitution and lower tariffs. DoT. October 2010 5 ‘The Indian Telecom Services Performance Indicators January – June 2010’. Greater pan-India expansion by private players can signiﬁcantly lead to growth of wireline services.5 million in 2002-03 going down to 0. © 2010 KPMG. telecom implementation vendors and IT vendors. which would make the business case for serving the large but potentially low ARPU rural opportunity increasingly viable. Ju n Au e’ 1 gu 0 st ’1 0 ’0 ’0 ’0 ’0 ’0 ar ’0 ’0 ’0 ar ar ar ar ar ar M ar ar M M M M M M M M M ar ’1 0 2 3 4 5 6 7 8 9 .8 million in 2006-07 During . the sector can bounce back in the future. October 2010 6 Annual Report – 2006-07 TRAI. This has resulted in large scale opportunity for players belonging to all the categories within the telecom ecosystem. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”).5 million in 2004-05. As a testimony to this growth potential. With urban markets nearing saturation. network equipment players and passive infrastructure players are expected to evolve low-cost delivery solutions such as signiﬁcant reduction in telecom network rollout costs as well as key operating costs such as energy charges. Operators have been realizing efﬁciencies through extensive outsourcing across the telecom value chain. approximately 5-6 million customers were added to ﬁxed-line services each year. We expect to see continued heightened activity in this direction in the near future as well. with combined offering of internet/ broadband and allied services like IPTV. the aggressiveness of mobile operators in rural areas due to easier and cheaper rollout and newer offerings on BWA spectrum can further slow down the wireline penetration. the potential for wireline services remains large due to very low penetration in the wireline industry and the ability of wireline to deliver broadband at lower operating costs than wireless broadband. However. tower infrastructure companies. With downward spiraling ARPUs. All rights reserved. In addition.
Newer access technologies like BWA and 3G can completely transform the character of Internet/ broadband scenario in India. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). In 2009. which translates into approximately 10 percent of wireless industry revenues. Wireless technologies have carved a unique niche in terms of connectivity to internet with a share of nearly 7 . increasing user comfort with usage of internet applications. though currently at a low level. Prior to 2008.6 percent which is a signiﬁcant shift in the last two years. has been experiencing signiﬁcant growth over the last 2-3 years. Internet subscriber base 18 16 14 Subscribers in Mn Value added services Currently.1 14. Cable modem technology follows with 6. as operators focus more on VAS.7 10% 0% 20 0 Internet Subscribers Share of Broadband Source: TRAI Annual Report and Quarterly Reports on Telecom Services Performance Indicators Source: Industry consensus estimates. BWA will overcome the key hindrance of RoW in India. On an overall basis for accessing internet. majority of VAS revenues were attributable to SMS and that too peer-to-peer (P2P) text messages. increasing penetration of feature rich handsets. The addressable market for non-P2P SMS VAS has historically been dominated by ringtones and caller ring back tones (CRBT). Access technologies play a crucial role in broadband penetration. KPMG analysis © 2010 KPMG. a Swiss entity. DSL leads with 51 percent while dialup stands second at 33.8 13. the VAS market is worth INR 110-120 billion. This is expected to go up further.6 percent of total broadband subscribers7.5 14. non-P2P SMS VAS accounted for 5-6 percent8 of operator revenues. TRAI.2 16. a ubiquitous device for accessing the internet. While there a number of technologies being used by service providers to provide broadband services. All rights reserved.3% 9. especially with the launch of 3G services and with the availability of differentiated and customized content. This growth is being driven by the growing popularity of broadband.9 percent connection. Market split for non-P2P SMS VAS Others 11% GPRS/ WAP Products 11% CRBT 37% P2A SMS & Alerts 18% Voice Portals 23% Source: Industry Estimates for calendar year 2010. but its contribution has been fading gradually and was within the range of 35-37 percent8 of VAS revenues in 2010. .6 28% 30% 35% 38% 40% 43% 46% 47% 50% 51% 54% 57% 60% Growth of VAS revenues 50% 40% 30% 20% 140 120 100 80 60 40 91 61 119 7 .7 12. Right of Way (RoW) issues and costs of the existing broadband technologies has been a constraint for the growth of internet.4 11.2 16.5% 8. The share of VAS in wireless revenue is likely to increase to 12-13 percent by 20118.6% 12% 10% 8% 6% 4% 2% 0% 2008 VAS Revenues 2009 2010 (Estimated) Share of VAS 10. availability of vernacular content and increased user adoption of VAS applications. 12 10 26% 8 6 4 2 0 9.17 Broadband and internet services Internet subscriber base in India. continuous fall in PC prices and decreasing costs of internet/broadband access plans. This growth would be driven by increased operator focus on VAS due to continuous fall in voice tariffs.3 percent7. Over the last few years. KPMG analysis This growth has been accompanied by an associated increase in the number of internet users which have attributed to the growth of public internet cafes and multiple members of a household accessing internet. while 3G has the potential to make the mobile phone.2 9. DSL continues to be the most preferred technology and constitutes nearly 86. Information Interviews 7 ‘The Indian Telecom Services Performance Indicators January – June 2010’.1 11.5 15.2 12. non-P2P SMS VAS has been gaining importance and is likely to become a dominant contributor to VAS revenue over the next few years. October 2010 8 Industry consensus estimates.
Network deployment and management. The highly successful auctioning of 3G and BWA spectrums and entry of new telecom players in BWA auction has ensured that telecom market will see more exciting times going forward. INR 1. . 2010 and BWA Auction. July 12. enterprise customers and youth. May 21.18 New frontiers for growth 3G and BWA The last 5 years have been transformational for Indian telecom industry and the next few years are expected to bring about more stimulating and aggressive changes.063 billion10. the auction laid the groundwork for faster internet connectivity and data transfer on mobile phones. The auction of 3G spectrum was concluded on May 19. The Ministry of Communications had speciﬁed that BWA spectrum allocation would be technology neutral. and be utilized for the return path bundled with the DTH platform. 2010 10 DoT press release dated. This was closely followed by auctioning of BWA spectrum which also exceeded revenue expectations of the government. At the same time operators would be actively looking at providing 3G services to other income groups. While commercial usage is only permitted from September 2010 onwards. High speed broadband on BWA spectrum also has the potential to provide connectivity for the growing small and medium enterprises (‘SME’) segment. a Swiss entity. 20109. operators would be able to provide rich data services to HNI’s. Total revenues which the government earned from these two auctions stood at approximately. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). In the ﬁrst wave. working professionals. Sales and Marketing etc.Final Results dated. They would be speciﬁcally targeting current users of 2. May 21. All rights reserved. boosting usage of data services in the cellular market. which were not possible over the current 2G/2. The ARPU is expected to get a boost given the increased revenue contribution from data and value added services. Potential challenges that 3G players could face would span across the value chain covering innovative Product development.5G network. The market is likely to witness a wide variety of value added services being offered. as this will help spread the investment in technology/license over a wider subscriber base. 9 DoT press release dated. 2010 © 2010 KPMG.5G and/or owners of 3G enabled handsets. One of the key frontiers which would make the journey in coming years even more exciting is the launch of 3G and BWA technologies.
19 Regulatory and policy environment Over the years. 1 ‘Telecommunication Sector Report’. It also includes the Telecom Commission. . licensing terms and conditions. the following key bodies1: • The Department of Telecommunication (DoT): DoT is the central governing body for the telecommunication industry. The government has been making constant efforts to ensure that the regulatory framework is beneﬁcial for the consumers as well as the licensed operators. a Swiss entity. TRAI has recommendatory powers in areas related to licensing. It mandates in areas related to tariffs. © 2010 KPMG. facilitation • The Telecom Disputes Settlement and Appellate Tribunal (TDSAT): The TDSAT was set up to resolve all disputes between a licensor and a licensee. among others. license revocation. It is entrusted with the task of formulating policies for the development of the sector. which is an exclusive policy-making function • The Telecom Regulatory Authority of India (TRAI): TRAI is the Regulator for the sector and has a mix of mandatory and recommendatory powers. IBEF September 2009 . All rights reserved. timing. and between a service provider and a group of consumers • Wireless Planning Commission (WPC): WPC is primarily assigned the task of spectrum management • Group on Telecom and IT (GoT – IT): This was formulated to take care of ad-hoc issues. two or more service providers. interconnection and standards for quality of service. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). the Indian Telecommunication Policy and Regulatory framework has evolved into a well developed framework that facilitates effective policy formation and execution. The policy and regulatory framework for telecommunications in India consists of. awarding telecom licenses and is also accountable for spectrum management. competition.
Section or Brochure name | 20 18 © 2010 KPMG. . All rights reserved. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). a Swiss entity.
TRAI safeguards the interests of the consumers through transparency.21 National Telecom Policy (NTP) The National Telecom Policy was instituted in 1994. amended in 2000. ensuring international co-operation. The Department also allocates spectrum and manages radio communications in close coordination with the International bodies. Ensure penetration of integrated multimedia services including ISDN services. counseling the government on matters relating to telecommunication development and tracking performance and efforts of all players within the industry. TRAI Website 4 ‘About Us’. remote database access. Key regulatory bodies TRAI4 Telecom Regulatory Authority of India was established as an independent body under the TRAI Act of 1997 The act was later . This policy was an improvisation over the NTP 1994. TRAI Website 5 ‘Annual Report 2009 – 10’. The policy’s key objective was to establish telecom infrastructure across all remote locations of the country. ensuring conformity with service quality benchmarks. . enforcing measures to safeguard national security. Regulatory evolution ILDservices Calling Party Pays opened to (CPP) competition implemented BSNL established by DoT Go-ahead to the CDMA technology Attempt to boost Rural telephony Intra-circle merger guidelines established Proposed MNP implementation Number portability proposed MVNO guidelines for 3G as well as 2G disclosed 2009 2008 TRAI established as Private players Independent allowed in VAS regulator Discussions on 3G spectrum bid process 2007 1994 1992 1997 1999 2000 2002 Internet telephony initiated 2003 Unified Access Licensing regime introduced 2004 2005 2006 2010 2012 2013 2011 National Telecom Policy (NTP) formulated NTP-99 led to migration from high-cost fixed license fee to low cost revenue sharing regime Reduction of licence fees Reference Interconnect order issued FDI limit was from 49 to 74 Broadband percent policy 2004 formulated Decision on 3G services (awaited) ADC abolished DoT to release guidelines on VOIP Proposed auction of 4G spectrum Completed the auction of 3G and BWA spectrum Reduction in IUC Source: Press Search. DoT5 DoT is accountable for policy formulation. media. DoT © 2010 KPMG. to initiate and sustain aggressive growth for the telecom sector and ensure on-demand access to a telephone for every Indian. The entry of private players into the industry prompted the establishment of the act to effectively regulate the telecom players. telecom and consumer electronics • Build world-class telecom facilities in India by encouraging privatization and offering a level playing ﬁeld • Safeguard the national security of the country. A further addendum to NTP 1999 was made in November 2003. The key objectives of the policy were3: • Availability of affordable telecom services for all. A fresh round of reforms was introduced by the government in 1999 when it enforced the New Telecom Policy. allowing them to provide basic and value added services in various cities and telecom circles as per the approved government policies. All rights reserved. to help achieve stronger growth by escalating the control to a regulatory body. Services should encompass high-level services and endeavor to achieve economic development • Set up a modern integrated infrastructure which would enable the convergence of IT. ﬁxing tariffs for players. This amendment permitted a licensee to make available wireline and wireless services using any technology in a pre-determined license area after conversion to a Universal Access Service License (UASL). It is also responsible for enforcing wireless regulatory measures and monitoring the wireless transmission of all users in the country. monitoring performance reviews. World class service quality and special redressal of customer complaints are the other essential pre-determined objectives of the policy2. and government and community information systems • Ensure coverage of all areas including rural. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). It also encouraged privatization of the telecom equipments industry to help India emerge as a telecom manufacturing hub. a Swiss entity. KPMG Analysis 2 Department of Telecommunications website 3 New Telecom Policy 1999. for universal services. overlooking research and development and granting licenses to operators.
FCCBs. India has achieved such aggressive growth primarily through urban areas.Positives priced in. 2010 ‘Fact sheet on FDIs’. which accounts for 70 percent of the population. end-to-end bandwidth a) ISP without gateway* b) Infrastructure provider providing dark ﬁbre. duct space.76 percent teledensity as of August 2010. holds immense potential and remains relatively untapped. August 2010 © 2010 KPMG. tower (Category –I) c) Electronic mail and voice mail Manufacture of telecom equipments . has shown impressive growth over the past6. Overall. India’s FDI regime Sr.Automatic upto 49% . FDI Cap/Equity 74% (including FDI. This makes the Indian telecommunications sector one of the most attractive investment destinations for global players7. which has nearly 27 . 20109. The regulations governing Foreign Direct Investments have gone through different phases of transition to ensure market attractiveness for globally recognized players along with safeguarding the interests of the Indian counterparts.FIPB beyond 49% 2 ISP with gateways. the highest amongst all sectors. convertible preference shares. The urban teledensity has already breached the 100 percent mark5. FII. No. 6 7 8 9 ‘The Indian Telecom Services Performance Indicators’. 2010 ‘Telecom most favored FDI sector’. radio-paging. the sector attracted USD 612 million worth of FDI8. India’s telecommunication sector attracted almost USD 891 million in FDI. Uniﬁed Access Services. during the same period last year.FIPB beyond 49% 3 100% 4 100% . All rights reserved.Automatic upto 49% . .Automatic upto 49% .March 2010 ‘India Telecoms .FIPB beyond 49% Source: ‘FDI Policy’. JP Morgan. Public Mobile Radio Trunked Services (PMRTS) Global Mobile Personal Communications Services (GMPCS) and other value added telecom services . January .22 Telecom FDI policy India is the fastest growing telecommunications market across the globe. which account for only 30 percent of the total population. Sector/Activity Recent reports revealed that during the ﬁrst two months of this ﬁnancial year.98 billion (from April 2000) as of June. Rural India. NRI. On the other hand. TRAI. this sector has attracted FDI of about USD 9. September 01. and proportionate foreign equity in Indian promoters / Investing Company) 74% Entry route 1 Basic and cellular. a Swiss entity.FIPB beyond 49% . August 16. right of way. The well-deﬁned regulatory policy has been the fundamental reason for the inﬂow of huge international investments into the Indian telecommunication sector. Press Trust of India. GDRs. DoT Website * The government has revised guidelines for ISP’s on 24-8-2007 and new guidelines provide for ISP licenses with 74 percent FDI only. Department of Industrial Policy & Promotion Ministry of Commerce and Industry. V-Sat. tougher road ahead’.Automatic upto 49% . an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). National/ International Long Distance. Rural India. ADRs.
org ‘Telecom Subscription Data as on 31st August 2010’. 3G Services The government recently concluded the 3G and BWA auctions in June. Broadband Wireless Access is expected to provide an effective solution to the challenge of low broadband penetration. Research on India. In 2002. TRAI had recommended to DoT to open up this sector in a restricted manner. 2010 www.060 billion as spectrum fees for 3G and BWA. May 20. The present landscape is considered to be ripe for MVNOs to be introduced in India since it will allow the telcos.54 million in March 2009 to 16. Broadband Wireless Access (BWA) The auction of the BWA spectrum helped the government raise as much as INR 385 billion after 117 rounds of bidding that lasted 16 days.Final Results’. The primary requirement for this low cost option to deliver impeccable quality is high bandwidth. The Hindu. who did not manage to win any 3G spectrum. India has a broadband subscriber base of only 10. only one company managed to successfully bid for a pan-India license13. The anticipation around 3G services can be gauged from the fact that the 3G auctions was concluded after 183 rounds of bidding over a period of 34 days12. All rights reserved. BWA is expected to bridge the urban-rural digital divide and help address concerns of delivering essential services like 10 11 12 13 14 15 ‘Annual Report 2009 – 10’. In 2006. However. The launch of this technology is expected to bring India closer to the achieving the target broadband connectivity to Gram Panchayat level by 201214.Final Results’. May 21. The aggressive growth has resulted in saturation of the urban markets and the Indian telecommunication authorities are looking to introduce new technologies to sustain the market growth rate. DoT Press Release. after China10. TRAI.710 cr. ﬁnance and healthcare in rural areas. August 2009 © 2010 KPMG. VoIP The growing telecommunication industry has necessitated the demand for low cost domestic and international calls. VoIP has received signiﬁcant regulatory attention over the past decade. The rural expansion will help in the progression of tele-density and broadband penetration which will in turn have a positive impact on the overall economic growth of the country. 2010 ‘3G Auction . Many of the spectrum winners have announced that they will be ready to roll out 3G services within the next few months. Recent reports reveal that the internet subscriber base in India has risen from 13. October 2010 16 ‘The Indian Telecom Services Performance Indicators’. limited access was also given to internet service providers. The key drivers for the growth of 3G in India will be innovative content. These drivers will help ensure growth of 3G not just in urban areas but in rural areas as well.June 2010 17 DoT. 67 .23 New and upcoming regulations The Indian Telecommunication sector has seen remarkable growth and is designated as one of the fastest growing markets in the world.08 million15. This technology can be used to effectively communicate between two personal computers. In 2005. especially in rural areas across the country. This is where Voice over Internet Protocol (VoIP) will make its impact with a technology that allows the exchange of voice over internet protocol packet switches. to offer these data services via the MVNO route. Inspite of a huge amount being generated through the auctions. MVNO The Indian Government is in the process of reviewing the draft guidelines for the introduction of MVNO. The auctions were initially estimated to raise INR 350 billion and help the government contain the ﬁscal deﬁcit11. TRAI. 2008 and the DoT had accepted the proposal in February. DoT permitted unlimited internet telephony to all access providers in India. The only major deterrent for the adoption of these services will be the costs involved in setting up these services. 2010 ‘BWA Auction. who were asked for 6 percent of their revenues as license fee and were restricted from termination and carriage in India17.72 million in June 201016. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). ISPAI. infotainment and voice communications into one single device. At the end of the auction. 2009. 2010. June 12. It is also the second largest wireless network across the globe. a Swiss entity. none of the participating operators were able to win a pan-India license. These numbers suggest a 23 percent growth in internet subscriber base. DoT ‘3G sale nets Rs.indiatelecom. 3G technology has been highly anticipated over the past few years and is expected to drive the next round of sustainable growth for the Indian telecom market through convergence of entertainment.’. education. cumulatively. improved customer services and increased affordability of handsets as well as availability of VAS. . TRAI had issued a draft proposal for MVNO in August. DoT Press Release. Presently. which also implies greater propensity to utilize VoIP based services. ‘VoIP Market-India’. the government received approximately INR 1. a personal computer and a conventional phone as well as between two conventional phones. A few companies have already made inroads into the MVNO market by leveraging the franchise agreements. TRAI. April .
Government of India. in order to ensure that the telecom operators are able to provide location details of mobile customers within a precision of upto ﬁfty meters • Security and Business Continuity: DoT has approved the template of a Security and Business Continuity agreement which will need to be executed by the telecom operators and their vendors. The agreement requires the vendors to transfer their intellectual property to a third party. DoT released a set of amendments to the telecom licenses. CCA will create an encryption key for the escrow materials and the decryption key will remain with the escrow agent. 2010. switches. This move was intended to address the security concerns that were raised by the Home Ministry. a Swiss entity. Some of the key points covered in the notiﬁcation were18: • Security Policy: Within thirty (30) days of the date of the Notiﬁcation.24 New security requirements On July 28. DoT Press Release. ﬁrewall. 18 ‘Amendment to UAS license agreement for security related concerns for expansion of telecom services in various zones of the country’. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). July 28. Operators are also required to ensure that such audit agencies should not be from the same country as that of the vendors of the telecom operators • Minimal dependence on foreign engineers: Telcos were asked to ensure that dependence on foreign engineers would be made minimal and/or almost nil within a period of two (2) years from the date of the Notiﬁcation • Location Details: Operators would be required to ensure upgradation of existing equipment within one year from the date of notiﬁcation. Department of Information Technology. the telecom operators were asked to submit their organizational policy on security and security management to DoT • Network Audit: Telcos were asked to engage international accredited agencies to conduct audit and certify core equipment such as routers. The telecom operator and the vendor are required to enter into an agreement with an escrow agent authorized by Controller of Certifying Agencies (CCA) or the National Informatics Centre. . intrusion detection and prevention systems and all software associated with telecom operations and services. regarding the telecom equipment being imported from other countries. As per the terms of the agreement. All rights reserved. under which certain speciﬁc obligations were imposed upon the operators in the interest of the national security of the country. 2010 © 2010 KPMG. If the vendor fails to provide support and DoT feels it is necessary to release the source code they may obtain the same from the agent.
and wireless).21 1.4 1.25 Broadband for all Various studies have credited broadband as a catalyst for economic and social development of a country. Information and Communication for Development Report 2009 The successful auction of 3G and BWA spectrum has laid a good foundation for a push towards achieving pan India broadband infrastructure. provide for a larger and more qualiﬁed labor force. and make that labor pool more efﬁcient. which will lead us to the dream of providing “Broadband for all” This vision demands a synergetic push .43 0.4 0. service providers.77 1.12 1. Cable. . so as to provide this “universal service” to residents living anywhere in the country (urban or rural) and to the match the customer expectations across all segments (Enterprise. It has been proven that the multiplier impact of broadband growth on GDP is signiﬁcantly higher than mobile telephony growth.38 High-Incom e Econom y Low -Incom e Econom y Source: Qiang and Rossotto. 1980-2006 1.81 0. 2010 © 2010 KPMG. Availability of broadband services at affordable price levels contribute to higher GDP growth rates1.8 0.2 1 0. World Bank. 1 Consultation Paper on National Broadband Plan. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). across technologies (DSL.2 0 Fixed Mobile Internet Broadband 0. content providers & regulators). Growth effects of ICTs: Percentage point increase in GDP per capita for every ten percentage point increase in ICT penetration. a Swiss entity.6 0. amongst telecom operators (public and private) and across the broadband value chain (device manufacturers. All rights reserved.73 0. June 10. Government and Retail). Fiber.6 0. TRAI.6 1.
a Swiss entity. All rights reserved.Section or Brochure name | 26 24 © 2010 KPMG. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). .
223 42.0% 100. Contention ratio (number of subscribers accommodated in given bandwidth) 140 120 100 80 130 Inadequate wireline infrastructure Inadequate wireline infrastructure has resulted in the “last mile” challenge in providing access.3 20. The broadband penetration is less than 1 percent2. service providers provision an average 130 subscribers in 52 Kbps bandwidth. which is low compared with overall tele-density of 59.5 Mbps has been considered Source: TRAI. May 2010 DSL Coverage2 Country France Germany Italy Netherlands UK Australia Canada Japan United States Year of LLU 2001 1996 1998 1997 2000 1999 2001 2001 2003 1 percentage 98. All rights reserved.936 50. whereas internationally the same ratio is not more than 50. Uptake of broadband has been limited so far on account of multifarious factors: Quality of Service (QoS) Broadband growth has been partly constrained owing to poor QoS in terms of throughput speeds experienced by customers. Developments in Local Loop Unbundling. DoT. CRISIL Research. The absence of local loop unbundling (LLU) further restricts competition in this space by not allowing a regulatory framework wherein alternative service providers can use the existing local loop of licensed service providers to offer broadband services. .5% 95. bandwidth per subscriber reduces dramatically.2 million compared to 16-18 million per month for mobile additions2. Both these factors have predominantly undermined the growth of ﬁxed broadband services currently being provided using DSL technology. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). December 2009 2 Consultation Paper on National Broadband Plan.5 23.453 43.4 GDP per capita (USD PPP 2008)3 . as set by the Broadband Policy 2004.6 24. TRAI.8 26.1 to 0.27 The key challenges in broadband adoption The broadband penetration in India has been low despite the presence of 104 broadband service providers.0% 89.e. Due to this phenomenon. 10th June 2010 3 ‘Monthly Telecom Scenario – August 2010’.945 39. a Swiss entity. October 2010 4 TRAI.275 44.0% 91. 2003 2 OECD.1 29.868 42.3% 98. 2010 3 OECD. especially when several subscribers log in at the same time.6% 82.008 Source:1 OECD.4 30.08 million are broadband users3.7% 100. May 2010 © 2010 KPMG. Working Party on Telecommunication & Information Services Policies. The number of broadband additions is only 0. Global examples suggest that the DSL penetration has been signiﬁcantly higher in countries adopting LLU: 60 40 20 0 50 45 50 48 Czech Republic Slovakia UK Ireland India Czech Republic Slovakia UK Ireland India Note: The contention ration speciﬁed are for download speed of 512 Kbps except for Slovakia for which 1.081 46.484 37 . 43. The contention ratio4 (number of subscribers accommodated in a given bandwidth) in India is high i.0% 95. Of the approximately 17 million (ﬁxed) internet subscribers only 10. This implies that India still has some way to go in terms of achieving the original target of 20 million broadband subscribers by the end of 2010. Indicators of broadband coverage.5 37 .0% Source year End 2008 End 2008 End 2008 End 2007 End 2008 June 2008 End 2007 Sept 2008 End 2007 Broadband penetration (Dec 2009) 30. CRISIL Research.3 29.63 percent3.
08 million broadband subscribers6.62 7. Due to high initial investment and expected low returns. Availability – broadband services at the right places Although 70 percent of Indian population lives in rural areas. All rights reserved.5 9. MAIT-IMRB. broadband facility is limited to metros and major cities.5 4. Out of total 10. Lack of adequate power supply (or alternative energy sources) especially in the rural areas has also been one of the key factors for the sluggish penetration.5 6. while CDMA operators have launched EVDO based services that provides high speed access. mere 5 percent are rural subscribers.52 3. Availability of broadband is critical for development of rural areas as much as it is for the urban areas. Also.9 5.28 Support for efﬁcient broadband infrastructure deployment Right of Way (RoW) procedures and charges are fairly complicated and have concerned the service providers to venture into creation of new infrastructure (especially optical ﬁber cables) for broadband and telephony services.77 6.5 3. especially in the rural sector. October 2010 © 2010 KPMG. it is essential to concentrate on availability of the broadband to every citizen.5 5. TRAI. the consumption in household users has grown by 83 percent. 2008-2010 Key drivers of broadband acceleration It is broadly accepted and proven internationally. while the rest was contributed by business users. the PC penetration in the country. MAIT-IMRB.82 4. that Broadband growth depends on availability.38 Sep- 10. The low broadband penetration in rural areas is attributed to unavailability of transmission media connectivity up to village level.62 4.47 8.21 7. 28th July 2010 Applicability Affordability The falling prices of laptop and greater availability in terms of features and pricing has led to a 65 percent growth in sale of notebooks. In the wireless space. is low. the household users accounted for a modest 56 percent of the sales. This is expected to have a continued positive impact on uptake of broadband services. DoT. Considering the enormous power of broadband. operators are hesitant to invest in small cities/ villages or remote areas. Also. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). 28th July 2010 6 ‘Monthly Telecom Scenario – August 2010’. . Notebook sales in India (in thousands) 3000 2500 2000 1410 1500 1000 500 0 55 22 155 2004-05 377 2005-06 318 532 2006-07 2007-08 Househol ds 1027 795 770 1099 Availability 747 2008-09 2009-10 E st abl i shment Source: IT Industry Performance Annual Review: 2009-10. affordability and perceived useful applications or usage. 5 ‘IT Industry Performance Annual Review: 2009-10’. In 2009-105. the uptake has been limited due to expensive end user device. Fixed Internet Subs Fixed Broadband Subs Wireless Internet Subs Source: Indian Telecom Services Performance Reports. Growth of internet and broadband users (in Millions) 180 160 140 120 100 80 60 40 20 0 Mar- 9.87 Jun- Dec- Mar- Jun- Sep- Dec- Mar- Jun- 08 08 08 08 09 09 09 09 10 10 Cost of customer premise equipment (CPE) The relatively higher cost of CPE is another hindrance for broadband penetration.5 6.5 7. a Swiss entity.5 8.
The ICT Development Index report of the International Telecommunications Union (‘ITU’) indicates that the Broadband rates are higher at 7 percent of GNI as compared . . Large numbers of softwares are available to translate the content from one language to the other. High Cost of PC and other access devices commonly known as CPEs is one of the major impediments in spread of broadband. will be in demand. One of the measures to make CPEs more affordable may be to provide incentives through ﬁscal policies.in © 2010 KPMG. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”).Increasing the scope of broadband from just e-mail to more value added applications. Growth of internet and broadband users (in Millions) United States Canada UK Netherlands Japan India France Brazil Russia Internet is largely in English and to an extent in Hindi. Though Hindi and English are principal and secondary ofﬁcial language respectively. http://india. Though the accuracy of such software depends on the product and actual requirement. This can be a high growth driver which may require some initial nurturing but may enhance broadband demand especially to the non English literate subscribers. Economical options like use of thin client. Accessibility to applications . virtual classrooms (Tele Education).gov. recycling of old PCs / Laptops will make CPEs more affordable for the masses. Online courses. applications as well as content need to be provisioned in local languages. broadband can help in bridging this scarcity of adequate schools and teachers to provide effective education at affordable costs 7 Consultation Paper on National Broadband Plan’. tutorials and examinations will be necessary for empowering universal education where broadband can be used to impart knowledge.29 Affordability – Broadband tariffs at the right price The entry level tariff7 for broadband services has come down drastically from INR 1. June 2010 8 ‘Constitution of India’. . a Swiss entity.500 per month in 2004 to INR 200 a month in 2007 which is still higher than most countries. To ensure end-to-end local language delivery. 2010. In keeping with the “Right to Education Act” of the Government of India that came into force on April 01. content development in vernacular languages needs to be encouraged.2 percent. Video conferencing is a very useful tool. there is sufﬁcient scope to further work on these areas to boost the development of the content in Indian vernacular languages. ITU. Incentives could be in the form of reduction of taxes and levies on CPEs and ﬁnancial incentive in terms of rebate in income tax to encourage affordability of CPEs. Therefore considering speciﬁc regional requirements. National Portal of India. there are 22 ofﬁcial languages recognized by the Constitution. All rights reserved. The content in Indian vernacular languages will increase relevance and consequently interest of the local population in broadband uptake and utilization. infotainment can be a big booster for broadband. Few of the areas/applications which hold signiﬁcance to the broadband popularity and growth are: Mobile cost as %age of per capita GNI 8 7 6 5 4 3 2 1 0 0 2 4 6 8 10 12 Broadband cost as %age of per capita GNI Significant difference in broadband cost and cellular cost for India Overall telephony cost (as a %age of GNI) high in Brazil High Uptake/Popularity Email Internet Surfing Broadband and Cellular costs are similar for most of the developed markets Voice Clips Moderate Voice Chat Video Gaming Voice & Video Chat Tele-Education Tele-Medicine 0 64 Kpbs 256 Kpbs 512 Kpbs Video Streaming HD Video 2 Mbps >4Mbps Low Source: ‘ICT Development Index Report’. Conversion from speech to text and text to speech is also available for different languages. innovative use of technology in imparting education and increasing literacy is likely to drive the penetration of broadband in India. effective use of broadband in automation of operations and functions.India poses a unique challenge in terms of diversity in spoken languages. 2009 Minimum Bandwidth Required Applicability – broadband services supporting the right applications Localized Content . where students do not have to travel distances to schools and colleges. and hundreds of additional languages and dialects spoken across the county8.7 to the price basket for mobile telephony which stands at 2. The content that is available today on the • Education: In education. The broad objectives of providing ﬁscal incentives are to make CPEs affordable to the consumers and to stimulate investment for the domestic manufacturers for boosting indigenous production. and is not customized as per local needs and diversity. Entertainment content can be targeted to boost broadband demand. TRAI. however initial equipment cost is still viewed as prohibitively high. Given India’s strengths in IT and the recent trend in the traditional entertainment industry.
Hence. © 2010 KPMG. It helps ensure the cheapest deal and also helps to save time when using price comparisons on the web. entertainment seems to be key driver for generating huge demand for broadband especially in rural and computer literate population • Utility: Remote management of security for homes and business premises. A lot of development is taking place within the e-health ﬁeld. There are signiﬁcant ﬁnancial as well as social beneﬁts of online shopping. All rights reserved. Flash media. rail ticket booking. New content creation and distribution systems have enabled millions of people to distribute their contributions online with least expenditure. it has signiﬁcant potential to bring about convenience. Broadband can be an important lever in helping government realize its objectives laid out under “National E-governance Plan” . transparency and efﬁcacy in government functions and take these services to the doorstep of the citizens. place shifting) is increasing. A signiﬁcant problem plaguing the nation’s health care system is the fact that there are signiﬁcant disparities in availability of reliable health care facilities between urban and rural areas. is expected to drive the demand for broadband • E-governance: For any technology to go main stream and ﬁnd maximum applications and utility. Effective use of broadband in automation of operations and functions.e. It allows job seekers to effectively search for employment opportunities. the scope of broadband can be enhanced from just e-mail to more value added applications. online application ﬁling and trading. Rural India. “experience now” Share of real-time entertainment trafﬁc (video and . experiences higher mortality rates due to non-availability of expert advice and timely treatment. one of the biggest customers is the government. innovative use of technology in imparting education and increasing literacy will drive the penetration of broadband in India. With e-governance being the new mantra. a Swiss entity. audio streaming. Many gadgets are now available. peer casting. Broadband services in rural and remote areas can also be a very cheap and effective medium for providing banking services to the “unbanked” population of India and further the ﬁnancial inclusion agenda of the Government • Entertainment: There is dramatic increase in consumer behavior towards real-time applications i. bill payment. Thus. for example.30 • Healthcare: Another sector which can be beneﬁted from broadband penetration is healthcare. which can assist in remotely capturing vital parameters of the body which can be utilized by people living in rural areas to provide information and seek timely expert advice of doctors available in any corner of the world at a fraction of the costs • E-Banking & E-Commerce: Broadband is also useful for various utility services like online banking. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). and an increasing number of household appliances and machines communicating over IP networks. .
three telephone connections and one cable TV connection without any charge. Times of India. and provide a platform to support “Broadband for all” . 3G/BWA spectrum auction India is poised to see both 3G and BWA services before the close of 2010. the Department of Telecommunications (DoT)11 has also proposed to offer a slew of freebies at the panchayat level. India. The rural push To support the broadband infrastructure roll-out in the rural areas.500 or USD 3510. therefore.31 Achieving the vision of “Broadband for All” Despite the historical challenges identiﬁed so far. June 2010 10 ‘An IIT. regulatory aspects. 9 ‘Consultation Paper on National Broadband Plan’. The robust national infrastructure would be scalable to cater to our future requirements not only in urban areas but also in the villages. This highly affordable touch-screen device would in times to come. Conclusion Broadband is the much needed catalyst to bring about the socio-economic growth in the country. and video conferencing ability. National broadband plan TRAI has suggested the roll-out of a national optical ﬁber cable network which will act as a backbone to broadband services across the country. PDF reader. technologies (wireline as well as wireless). This includes giving three broadband connections to every gram panchayat free of charge for three years along with free installation of computer and printer. India is taking a step in the right direction as global references suggest that developed countries like Japan. nature and type of CPE. Singapore and Australia have taken similar initiatives to proliferate high-speed broadband services to their masses. the regulator as well as the government has shown willingness to reignite the broadband growth. Wi-Fi. which will be funded through the Universal Services Obligation Fund. BWA services like WiMax (or LTE) has an opportunity of reaching out to the rural masses in a costeffective manner. play a critical role in providing high-quality consumer broadband experience across the country. IISc-designed laptop for just INR 1. The Linux-based Tablet PC features most of the basic functions one might expect in a Tablet: Web browser. . The tablet also comes with a solar-power option that could make it more feasible for rural areas. Hindu Business Line. 24th July 2010 © 2010 KPMG. 23rd July 2010 11 ‘Special purpose vehicle planned for broadband push’. needs a National Broadband Plan encompassing initiatives across various ministries which would provide a platform for provision of quality broadband services across the country. It would take a holistic view covering various aspects like customer requirements (demand drivers). multimedia player.000 crore. customer segment (urban as well as rural). For making all villages broadband-enabled. an option is being explored to take optical ﬁber cables to 3. Low cost tablet PC Indian government (Ministry of HRD) has unveiled a prototype tablet computer that would sell for an affordable INR 1. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). WiMax and 3G will help in delivering the government’s target of achieving 100 million broadband subscribers by 2014. The incentives will cost about INR 2. TRAI. Wireless Broadband technologies by leveraging (or sharing) the existing wireline infrastructure (available to the public and private operators) can immensely contribute to the broadband proliferation in the country.500’. The regulator has suggested that funding for such a project could be considered from the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) for non-skilled work and from the Universal Services Obligation Fund (USOF) for material and equipment cost9. All rights reserved. a Swiss entity. The regulators as well as the government and the industry players across the value chain need to join hands so as to provide the best possible support to this national vision of “Broadband for All” .74 lakh villages having a population of 500 or more (basis Census 2001 data).
an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). . a Swiss entity. All rights reserved.Section or Brochure name | 32 30 © 2010 KPMG.
Hence. The interest in wireless broadband has now gained further momentum given the auction and allocation of 3G and BWA spectrum to private operators. In 2009. . Unlike telephony that has primarily ridden on mobile telecom infrastructure. 2010 © 2010 KPMG. requirement of multiple permits and clearances. the Government of India (GoI) is supporting increased penetration of wireline and broadband connectivity in rural and remote areas through its Universal Service Obligation Fund (USOF) activities. June 10. India has only 10.459 wireline broadband connections to individual users and public institutions over a period of next 5 years2. Some of the challenges are unavailability of last mile connectivity. availability of broadband services in India is still at a nascent stage. it signed an agreement with BSNL to provide 861. TRAI Release. Considering these impediments. 2010’. TRAI.33 Broadband infrastructure Out of the total telephone subscriber base (wireline and wireless) of over 706 million and total internet connections of approximately 17 million. These operators are expected to roll out 3G services by Q4 FY 2010 and BWA services after another 12 to 18 months3. October 2010 and ‘Telecom Subscription Data – August 31. Tata DOCOMO Press Releases. 2010 4 ‘National Broadband Plan Consultation Paper’. GoI expects wireless broadband to signiﬁcantly grow the broadband connections to 100 million by the end of 20154. and enormous opportunity exists in provisioning broadband services to current telephone users1. a Swiss entity. All rights reserved. October. land charges. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). India is a vast country and rolling out wireline broadband network expeditiously in a cost effective manner is a signiﬁcant challenge. 2010 2 ‘DoT USOF website 3 Bharti Airtel. Wireless broadband has emerged as an exciting alternative to wireline primarily due to the fact that nearly 25 percent of the country’s over 650 million wireless subscribers have successfully transitioned to become mobile internet customers.08 million broadband connections. broadband has traditionally been driven by wireline infrastructure. unavailability of Right of Way (RoW). TRAI. 1 ‘The Indian Telecom Services Performance Indicators January – June 2010’.
an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). a Swiss entity.Section or Brochure name | 34 32 © 2010 KPMG. . All rights reserved.
Broadband PON (BPON) and Gigabit PON (GPON) have been adopted and are supported by standards organizations such as International Telecommunication Union (ITU) and Full Service Access Network (FSAN). In this regard. access and last mile network. However. Hence. core. DSL) and wireless (RF Microwave) media. On the last mile network. a Swiss entity. The core network typically consists of the backbone network. which results in efﬁcient handling of vast amount of voice. In the US. Emergence of DTH and IPTV services. cost effectiveness of such large scale OFC deployment needs to be ensured. In case of wireless medium. India is a unique market with both affordability and capacity being the key drivers for demand of services. South Korea and most recently China have emerged as countries having largest deployments of FTTH services. In case of access network. switches and the medium of transmission between the base station and subscriber. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). The last mile network consists of Customer Premise Equipments (CPE) such as wireless or wireline routers. tower infrastructure is a critical component of last mile wireless network. The above countries are also extensively using OFC for broadband access network. Technologies The capacity and coverage requirement for the network increases manifold with the rise in consumer interest for rich data usage. Japan. Optical ﬁbre connectivity Given the factors of capacity and cost effectiveness. Hence. video and data. and like the core . OFC is replacing DSL as a more efﬁcient solution. wireless infrastructure especially for last mile network could be a viable alternative for offering broadband. All rights reserved. India and China currently account for about one-third of the global optical ﬁbre demand. In wireline network. Various standards such as Ethernet Passive Optical Networking (EPON). The choice of technology further takes account of parameters such as cost efﬁciency. which is primarily responsible for interconnection and switching trafﬁc across multiple access networks/zones/ circles. DSL) or wireless (RF satellite) media. various countries have adopted different OFC based deployment methodologies. mobile switching center and is responsible for managing and routing the trafﬁc within a zone or a circle. but is currently . network. AT&T leverages Fibre-to-the-Node (FTTN) service with twisted pair to the home. The last mile connectivity is provided either through wireline (OFC. coverage. OFC based transmission is expected to emerge as the primary solution and India is expected to witness large scale FTTN/ FTTH deployment going forward. Verizon Communications provides a Fibre-to-theHome (FTTH) service to select high ARPU markets within its existing territories. it is clear that OFC and wireless based technologies are emerging as preferred medium for data transmission.e. modems. . it is also moving towards packet based technologies. but is saddled with the usual challenges of deploying wireline infrastructure. Given the above. Transmission in core network is shifting towards packet based technologies such as IP/Ethernet/optical primarily on Optical Fibre Cables (OFC). gateways. e-governance initiatives of state governments and impending launch of 3G services are drivers that are expected to shoot up the demand for bandwidth. operators are opting for new technologies across the core. radio frequencies are transmitted from the base station through the antennae hosted on the towers.35 Current state of telecom infrastructure Network architecture A broadband infrastructure consists of three layers of network i. OFC has emerged as one of the preferred medium of transmission globally. dominated by the former. The access network consists of equipments such as the base station. the trafﬁc is presently handled on both wireline (OFC. © 2010 KPMG. especially for last mile network. base station controller. primarily to serve the growing capacity need of customers. In fact. and the availability of resources like frequency spectrum and optical ﬁbre. access and last mile networks for offering broadband.
such as increased adoption of active and passive infrastructure sharing and also forming strategic alliances with TEMs. . HSPA+ in 3G are expected to enable wireless broadband.000 BTSs in FY 2009 and FY 2010 respectively. 3G is expected to provide wireless broadband access to mobile users in the coming 12 – 18 months. This sharing is not expected to get constrained by tenancy capacity and mix of RTT (Roof Top Tower) and GBT (Ground Based Tower) and types of tower. Other reasons for a lower ROI in rural areas include escalation in costs and delays in setting up infrastructure in rural areas due to slow process of leasing and purchasing land from local panchayats. KPMG Analysis . few operators have already deployed 3G-ready infrastructure (i. it takes approximately twice the time to achieve positive ROI from rural areas vis-àvis urban areas. dual-port antennae) in their recent 2G rollout. Operators have rolled out approximately 140. Government of India website ‘Bharti Annual Report 2010’.e. which is largely OFC based and covers almost all the inter and intra cities and towns in India. Bharti Company Website. driven by factors such as growth in 2G wireless subscriber base and new circle rollouts by incumbent operators. . Moreover. March 2010.000 and 159. Within the technologies. to support 2G subscriber growth momentum. Cumulative BTS rollouts (FY08-12F) 5 6 7 8 ‘GIL Annual Report 2010’. However. these tower companies are expected to discipline the roll out of new towers as they expect large sharing of future BTSs (including those from wireless broadband) to be hosted on existing infrastructure. there is limited availability of last mile OFC based network in villages and it is estimated that an additional quarter of the existing wireline network would be required to cover 80-90 percent of these villages. KPMG Analysis Common Service Center Scheme. Industry discussions. Assocham 2009 Source: B&K 2007 Citi 2007 IDFC 2009. operator owned alliances and independent tower companies have rolled out around 337 . Operator-owned tower companies.15 million route km of wireline deployed.36 Wireless infrastructure Given that wireless broadband network shall be overlaid on an existing 2G footprint. coverage rollout by new operators and the launch of 3G services by BSNL and MTNL5. The coverage led roll out from operators based on such new technologies will drive the roll out of active and passive infrastructure in the near future. March 2010 ‘5th Telecom Summit’. a Swiss entity. GIL company website. Moreover. 2010. KPMG Analysis . such infrastructure sharing shall help operators reduce their capital expenditure and operating expenses. BTS. All rights reserved. GoI’s ‘Broadband for All’ project involves laying optic ﬁbre backhaul network to ensure that broadband connectivity reaches every panchayat in the country by 20126. Coverage All the operators together have around 1. Industry discussions. Cumulative BTS rollouts (FY08-10E) Source: B&K 2007 Citi 2007 IDFC 2009. which would further expedite deployment of wireless broadband. thus reducing time-to-market and improving affordability of services. Going forward. India’s wireless operators have managed to provide coverage to a vast majority of the country7. © 2010 KPMG. However. indicating that wireless infrastructure is now available almost everywhere in India. . Nonetheless. primarily driven by lower subscriber uptake8. Outlook for evolution of wireless broadband Technologies such as WiMax and/or LTE in the BWA spectrum and CDMA-EVDO. most of the existing wireless infrastructure is expected to be used for broadband deployment. operators are overcoming deployment issues by exploring unique business models to reduce the cost of serving the rural consumers.000 towers as of March 31. there still exists a signiﬁcant urban-rural difference in terms of return on investment (RoI). an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). irregular and non-availability of power supply.
since operators get a huge discount. KPMG Analysis ‘GIL Annual Report 2010’. These companies have recently deployed low-power/next generation green BTSs in countries such as China. primarily to service coverage requirements of operators. at least in the ﬁrst few years of its launch. Hence. BSNL has already rolled out 1. the country’s telecom business model is a model of efﬁciency in global telecom industry. All rights reserved. GoI initiatives such as USO Fund and push for infrastructure sharing were claimed to be instrumental in increasing the coverage of telecom services in the far ﬂung areas.956 towers spread across 500 districts in 27 states. The continued success in wireless telephony has helped the country build adequate telecom infrastructure.000 litres of diesel every year. The government is also giving due consideration to offering USOF support to the BWA spectrum auction winners to support the business case and provide a level playing ﬁeld in the rural area13.000 WiMax BTS and is in process to deploy 7 . KPMG Analysis Industry Discussions. 9 10 11 12 13 IDFC 2009. they are likely to co-locate their 3G and BWA BTSs along with 2G10. Also. Moreover. Given the fund’s support. Also. . an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). operators are sharing telecom sites and inﬂuencing tower companies to build innovative Energy Management (EM) products and solutions based on renewable sources of energy that can bring down the energy consumption. Due to its exponential growth. similar to the one followed in recent 2G rollouts. despite their attractiveness. large scale and affordability. 100. 3G is expected to contribute to c. March 2010 ‘BWA winners likely to get USO Fund support’. While broadband would require some amount of network upgrade and deployment of active infrastructure. Few of the private operators in India plan to launch 3G by the current year end. implying the telecom industry consumption of about 1. the economics of wireless broadband rollout may have to be made further favorable through India-speciﬁc initiatives focusing on reducing cost of delivery. 260.000 more BTS in rural area12. and one can expect them to come out with similar solutions for India. CIOL. Operators have identiﬁed reduction in energy consumption as a primary way to reduce total cost of operation. Department of Telecom. In this regard. existing telecom infrastructure would expedite rollout of affordable wireless broadband. Industry Discussions. According to industry estimates.000.37 Out of c. there is a lot of scope for energy rationalization at tower sites. to make broadband available for all. May 2010 ‘Universal Service Obligation Fund Implementation Status’. However.000 BTSs that are expected to be added in FY 2011 and FY 2012.8 billion liters of diesel every year11. Operators have faced and would continue to face signiﬁcant challenges in penetrating rural markets. Conclusion India is one of the most compelling telecom markets in the world. Hence. more than 70 percent on the infrastructure fee for dual tenancy on a particular tower. BTSs are being commissioned and mobile services started in a phased manner. It is expected that most of the 3G BTSs would be deployed in metros and key towns of Circle A and B categories. a Swiss entity. September 2010 © 2010 KPMG. ongoing cost reduction initiatives and expanding rural coverage would further enable operators to increase affordability and provide broadband to all. Given the power outage in India. wireless broadband is not expected to drive building of new towers. TEMs have also taken the lead in this area by supplying outdoor BTSs in India. GIL Company Website. capacity requirements for 3G and coverage requirements for BWA are most likely to drive the BTS demand9. The fund has already provided support for setting up and managing 6. which do not require air conditioned environment. This wireless broadband rollout is expected to follow 100 percent tower infrastructure model. each tower currently consumes an average of 4. Post FY 2012.
a Swiss entity.Section or Brochure name | 38 36 © 2010 KPMG. All rights reserved. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). .
an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). Likewise. Ticket-booking. ecommerce. and broadcast services over the same network as one bundled package of services at a ﬁxed monthly rate. Cable television providers can offer consumers voice. Internet Internet Services. Music. Ringtones. Internet access. Internet Services . video over cable television or Asynchronous Digital Subscriber Line (ADSL). Mobile Gaming. mobile ticketing.g Hathway. ” Convergence opportunities have seen a major growth as existing networks are modiﬁed to offer new services (e.catalyst for convergence Convergence is generally deﬁned as the ability of different networks to carry similar kinds of services (e.. Ringback tones. All rights reserved. a mobile service provider may be able to offer a subscriber data and video services. and digital television (DTV) providers can offer interactive services. Internet Services. time-shift TV Mobile TV. Convergence is also possible with wireless broadband technologies. along with traditional voice services. Inc. pushed content. Mobile Radio. different network infrastructures provide a plethora of services as depicted in the table below.. Multi-player Games. Ringback tones VOIP IP Phones. Wireless Operators (e. etc). As a result.g. Viable business models with convergence Operators Broadband and DSL Operators (e. a Swiss entity. NTT Docomo) Fixed Wireless Operators (e. such as the so-called “triple play. Press Reports © 2010 KPMG. voice over Internet Protocol (IP) or over circuit switched networks. and the modiﬁcation of cable networks to offer interactive services). Digital and Analog TV.g Airtel Telemedia) using Copper line DTH and Cable Operators (e. rollout of urban optic ﬁbre networks. Covad Wireless) Source: Telecommunications Management Group.39 Broadband . Video Calling. news content. Airtel. upgrade of telephone networks to offer ADSL. It can also be deﬁned as the ability to provide a range of services over a single network. Ringtones.g AT&T. Comcast) Converged services IPTV. Interactive Services like (Movies.g.g Vodafone. . Music Download.
40 © 2010 KPMG. All rights reserved. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). . a Swiss entity.
According to IRS. All rights reserved. Radio Mirchi Hyderabad and Radio Mirchi Chennai are put up for offering for Karnataka Airtel subscribers. France has been one of Europe’s key markets for telecom convergence. Federal Communications Commission (FCC) urged U. a Swiss entity. We felt the need for entertainment in these languages. In India. This service has been based on IRS ﬁgures of diverse population base in some particular states like Karnataka. The helpdesks are manned and active round the clock. Bharti Airtel and Radio Mirchi have envisaged possibilities of convergence targeting FM Radio listeners over mobile phone (20 percent of the listeners) and come up with Mirchi Mobile which provides Airtel customers 12 regional Radio Mirchi stations irrespective of where they live in the country. providers to make 100 Mbit/s a standard speed available to 100 million households before the end of the decade.leveraging existing cable TV networks As discussed in the previous chapter. 2. It is employed by many cable television operators to provide Internet access over their existing hybrid ﬁbre coaxial (HFC) infrastructure. the network capacity to carry these services has been improved through upgrades using ADSL2+. Indian scenario . the fastest deployment of convergence is expected to be Videotron’s announced 120 Mbit/s download / 30 Mbit/s upload service in Quebec City1.16 million Tamil. effectively provide internet services at speed upwards of 100Mbps. ISDN or DSL. the MSOs are steadily upgrading their directly owned networks to offer cable-modem services. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). However. in North America. Converged services in India Indian Multi System Operator (MSO).S. which manages an upgraded network capable of competing effectively with DSL offerings. Hathway Cable and Datacom Ltd were the ﬁrst Cable ISPs in India. The IRS ﬁgures have been synchronized with STD calling patterns on Airtel network and thus Karnataka Radio Mirchi Pune. better access of broadband infrastructure in the country is needed to provide converged offerings such as triple play. Hathway provides broadband services through its cable network on subscriber’s PC or Corporate LAN using a cable modem / router. Data over Cable Service Interface Speciﬁcation (DOCSIS) is an international telecommunications standard that permits the addition of high-speed data transfer to an existing Cable TV (CATV) system. Based on the DOCSIS (Data over Cable Services Interface Speciﬁcations) protocol. 1 Press Reports 2 KPMG Analysis © 2010 KPMG. As of end 2010. Big FM has partnered with VAS provider OnMobile Global to launch the radio experience on its mobile platform called BIG Mobile Radio. the cable homes are currently numbered at 83 million as on 20092. signiﬁcant progress can be made in increasing the quantum of broadband connections by focusing on the relatively large cable television market (CATV) in India. Similarly. With the continued growth in the mobility market.4 million Telugu and 1. out of the 46 million people in Karnataka. The U. Hathway uses its ﬁbre-optic backbone and internet nodes and data centres to provide 365X24X7 high speed internet service. like the telephone. In this scenario.41 International scenario convergence In Europe.0 technologies. The consolidated cable sector is now dominated by Numericable.S. Multi System Operators (MSO) like Hathway Cable and Datacom Ltd use DOCSIS standard and control about a ﬁfth of their subscriptions’ last miles – with the rest controlled via franchise deals with independent local cable operators (LCOs). hybrid VDSL/ﬁbre and DOCSIS 3. . it provides a level of security equal to or better than that provided by dedicatedline network access services.08 million. this still equates to a potential cable-modem market of about 15 million homes – which would give the MSOs a sizeable market for converged services with relatively lesser investment. the focused efforts of incumbent and second-tier operators in developing the bundled services has signiﬁcantly expanded the triple play model in last 2 years thereby reducing the churn as well. 2. still the services could be made available to only 20-25 percent of cable TV homes in the near term. Though.1 million have Marathi as their mother tongue. Hathway’s customer service is localised to each city and always on call. To meet the increasing demands of triple play. the relative focus on ﬁxed line investments has been limited. followed closely by existing 107 Mbit/s deployments in the USA. The number of broadband connections in the country is approximately 10.
Conclusion While. telecom industry representatives under the NGN Future Operations Group have discussed and analyzed issues relating to NGN implementation such as VOIP and submitted . IP-based packet switching is expected to be the next generation transport for converged trafﬁc. . access from multiple devices) Privacy: Protect privacy of user content (with consideration for lawful intercept) Piracy: Provide a framework for detection and prosecution. it is considered a basic voice service. All rights reserved. • • • • It is amply clear that the market and customers are moving towards a converged scenario which necessitates requisite changes in regulatory oversight framework. India is one of the most compelling telecom markets in the world. utilizing a wide range of infrastructure such as DSL and ﬁbre. in some countries is considered as a data services and regulatory frameworks are built around that whereas in some. Media and IT Advertising: Targeted advertising and Next generation business models for advertising Time shifted TV: Legal framework to support content storage.42 Convergence network requirements Typically to provide such converged services of voice and data on the same network. The need for a converged regulatory framework is highlighted by the following illustrations. neither category is completely satisfactory because VoIP has elements of both. © 2010 KPMG. true convergence would require signiﬁcant upgrade of existing infrastructure and deployment of affordable wired and wireless broadband. including voice and video. NGN convergence implies migration of constant bit rate voice to CableLabs PacketCable standards that provide VoIP and SIP services. Next Generation Networks (NGN) have been deﬁned by ITU as a packet-based network that can provide services including Telecommunication Services and able to make use of multiple broadband. better telecom infrastructure is needed towards achieving the wide availability of converged services in the country. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). Regulatory challenges Some of the potential regulatory issues facing converged services are: • Single Regulator . Quality of Service-enabled transport technologies and in which service-related functions are independent from underlying transport-related technologies. as well as upgrading infrastructure such as analogue cable networks. The use of multiple communication modes in a single network offers convenience and ﬂexibility which is not possible with separate infrastructures. However. However. it would require transition from separate circuit-switched voice networks and packetswitched data networks. packet networks are becoming the norm for voice as well as video. analog and digitalbased circuit switching waste as much as 75 percent of the bandwidth due to one person listening and pauses in speech. arguably. redistribution and super-distribution (for example. or create a different category speciﬁc for VoIP . For voice conversations especially. Voice over Internet Protocol (VoIP). a policy report on regulatory considerations for new and emerging regulatory frameworks for converged services. we reviewed the successful rollout of converged services in Europe. For example. packet switching was designed for data. Regulators have had to interpret VoIP to ﬁt within one of these categories. In the cable access network. Broadcasting. using the IP protocol. It offers unrestricted access by users to different service providers. Towards incorporating the requirements of converged services. Both services ride over DOCSIS (as explained in the previous section) as the cable data layer standard. Today. In Australia. as well as different priorities whilst providing required quality of service (QoS) attributes. Packet switching has always excelled at handling messages of different lengths. a Swiss entity. In India too.Establishment of a single Regulatory authority to oversee converged services spanning Telecom. In this chapter. to a single packet-switched network. including already available infrastructure such as cable networks with optimum policy and regulatory oversight and interventions. supporting both voice and data protocols.
Even so. broadcast mediums and distribution platforms. In India. a variety of other factors have become critical for VAS service providers to become successful. with MNOs frantically trying to garner customer base through nation wide advertising campaigns of potentially attractive plans and freebees. the value chain at an industry level may need to transcend towards content. value chain supremacy. elements of this trend manifested in ways such as in-sourcing of VAS by operators not just to drive EBITDA. but also to differentiate themselves as a service provider of choice. raising hopes for an increase in demand of data and content based services. The entry of a number of new 2G telecom license holders in 2008 and 2009 took tariff wars to a whole new level. scale. in the long run. © 2010 KPMG.43 Value added services in India The importance of VAS as a part of the telecom ecosystem may by measured from the trend that the largest global device manufacturers have tweaked their business models to address the diverse and growing need for a variety of content. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). In addition. . As the mobile subscriber base has grown by over 50 percent over last year. VAS service providers may need to evaluate their strategy in terms of higher focus either on platform or on content. key among which include innovation. a Swiss entity. insight into the evolving VAS user base and creating real pull factors. the growth opportunity for the VAS industry in India has remained relatively intact in 2010. In a post convergence paradigm. This aggressive increase in the subscriber base is one of the signiﬁcant reasons that helped maintain the momentum in mobile VAS revenues. All rights reserved. in order to remain sustainable and ahead of the competition. In addition to the above success factors. This year also saw a strong interest in 3G and BWA auctions by both domestic and global investors. VAS operators in particular have faced the growing challenge of reducing revenue shares as a direct fall out of pressure wielded by telecom operators.
a Swiss entity.44 © 2010 KPMG. . an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). All rights reserved.
For instance few players are focusing on services based around music and entertainment content. © 2010 KPMG. Most VAS players focus on a niche set of technology or content to provide services to MNO’s. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). the mobile would need to become one of the numerous channels on which they have the capability of streaming content Illustrative: Content agnostic value chain Presently. All rights reserved. . A content agnostic value chain is a resemblance of what some industry protagonists have termed a “managed services model” Such a scenario is relevant if companies in the VAS . businesses may need to become proﬁcient in delivering all forms of content under each VAS mode of delivery i. In order for VAS companies to create relevance. thus a signiﬁcant share of revenue is retained by telecom Operators (55-75% of revenue). space intend to continue to restrict themselves to the mobile delivery platform. mobile VAS businesses would focus on developing and aggregating content which can be streamed across a multiplicity of platforms. whether it be Music delivered through IVR or SMS or Games and Data delivered via GPRS or 3G or BWA.45 Illustrative: Platform agnostic value chain The Mobile VAS business is more B2B in nature.advertising or enterprise VAS etc. purchase of application / content through platforms such as internet or device tends to be more B2C in nature. Under this circumstance. These businesses would also undertake requisite technology platform development so as to be able to deploy the content. while others may be focusing on m. In a platform agnostic scenario. thus the VAS provider is able to garner a greater share of revenue (9095% of revenue). On the other hand. each facet must fall under the same umbrella thereby making VAS players a one-stop-shop for MNOs.e. a Swiss entity.
Thus the addressable market for Mobile VAS players remained relatively stable at around INR 16 billion between 2009 and 2010. revenue shares of VAS service providers have continued to decline. In the wake of continued tariff pressures and falling margins. tougher road ahead” JP Morgan Research. Non voice revenues as % of telecom revenues Non voice revenues break-up Source: “Indian Telecoms – Positives Priced in.46 Market size and growth The overall non voice services revenue has grown over the last year primarily fueled by increase in subscriber base and a greater share of non voice services in the overall telecom revenues. In addition. While the subscribed base has increased signiﬁcantly over the last one year. 16. 17 May 2010 . however the addressable market for Mobile VAS players came under pressure. August 2010 . the share of Non SMS VAS of the overall telecom revenues has continued to remain stable at around 50 percent. a Swiss entity. All rights reserved. The industry as a whole may have gained impetus. a signiﬁcant portion of new subscribers are from semi-urban / rural areas with relatively lower ARPUs. . the growth in overall non voice services has been offset by decline in revenue shares for non SMS based VAS providers. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). Despite of lower ARPUs and lower revenue shares. Comparison of average revenue per minute Mobile tariff’s across incumbents have declined signiﬁcantly over the last couple of years as a result of price wars thus putting pressure on revenues and proﬁtability Source: “India Wireless Sector” Macquarie Equities Research. © 2010 KPMG.
an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). there is a signiﬁcant opportunity for businesses to use this medium as a mode to increase awareness around their brand and product portfolio. signiﬁcantly greater research is required so as to generate a greater customer pull for VAS. with 41 per cent of the surveyed population saying they had used their mobiles to buy a product/service. outside of mobile banking transactions. As the enduser base for Mobile VAS companies continues to expand. 1 KPMG Consumers and Convergence IV 2010 . from 10 percent in 2008 to 28 percent in 2010. Source: “OnMobile Global” IIFL. 4 Aug 2010 . the non-SMS VAS market in India continues to be dominated by Music – Ring-tones (RT) and Caller Ring Back Tones (CRBT). the telecom operators lack the information on customer preferences. . Together. Source: Press Release. RT and CRBT continue to account for over 40 per cent of non-SMS VAS. Although relatively stable.global survey ﬁndings © 2010 KPMG. however. Given the growing penetration of mobile devices. These trends may perhaps auger signiﬁcant service innovation thereby enabling players to address the market opportunity. the addressable population and thus product penetrations may beneﬁt. Growth drivers A number of factors are expected to provide a ﬁllip to the sector in the coming months. Subscriber additions have followed an exponential trend over the last ﬁve quarters and recently the subscriber base has crossed the 650 million mark. younger consumers in all parts of the globe readily engage with retailers through their mobile phones. Importance of m-commerce and m-advertising Mobile commerce. This coupled with poor understanding of customer preferences leads to generic VAS products instead of targeted products for different customer groups. a Swiss entity. TRAI . – Global Markets Research . If global experiences are anything to go by. some of which include: • Buoyancy in subscriber additions • Importance of m-commerce and m-advertising • Service innovation driven by consumer preferences.e. then India does possess the necessary characteristics for these services to succeed. 4 Aug 2010 . KPMG’s global Consumers and Convergence 2010 survey noted that the percentage of consumers surveyed that say they used an online retailer’s site from their mobile phone jumped 18 percentage points. 26 Feb 2009 “OnMobile Global” IIFL. and mobile advertising continue to represent growth opportunities in the Indian market. Certain independent research bodies have put signiﬁcant effort to assess the same. consumers are beginning to transition towards using their mobile devices for retail purposes i. m-commerce. Subscriber additions India continues to remain one of the fastest growing mobile markets globally. World over. It has also been noted that consumers in BRIC economies are far more amenable to getting mobile ads in exchange for a wide range of cheaper or free mobile content or services1. September 2010 Service innovation driven by consumer preferences One of the biggest challenges being faced by the industry today revolves around understanding customer preferences in terms of the type of VAS they would be most likely to consume. Presently. Another key ﬁnding of the survey was that age plays a signiﬁcant role in outlining the success of m-commerce.47 Revenue share of mobile VAS players Revenue shares for Mobile VAS players have also continued to decline as a result of pressure on MNO’s Source: “OnMobile – Market leader now spreading its wings abroad” Deutsche Bank . All rights reserved. The Asia Paciﬁc region emerged a leader.
Thus new geographies may provide a larger addressable market for MVAS providers. the onus of creating relevance from a customer perspective lies with the aggregator/developer and technology enabler community in the value chain. Given the above. VAS service providers may reap beneﬁts by deploying them in other markets as well. Non voice revenue mixes of Indian operators remain low in comparison with global peer. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). All rights reserved. It would be fair to assume that in a walled-garden MNO led VAS scenario a certain degree of this research may be commissioned by them. For the VAS industry to develop targeted products for end user there is a need for partnering between MNOs and MVAS providers to conduct research/ maintain database on consumer preferences for gaining an insight on the customers preferences. These businesses may need to set-up innovation cells and invest in adequate customer research so as to produce products and services which can create stickiness of the customer for the MNO’s. A constant need to sustain and grow business in this space is forcing VAS service providers to think innovatively to stay ahead of the curve. April 2010 . MNO’s may also be willing to put more advertising dollars behind relevant services. . As their platforms have matured in India. Some incumbents have set-up their own developer networks whereby they provide the seed capital for niche product centric businesses thereby allowing them to grow and eventually leverage the incumbent’s operator relationships to make products/services successful. However. Source: “Indian Telecom Services” Motilal Oswal. Africa and the Middle East are among the geographies that are being examined closely by Indian business houses.48 Agents of change The larger challenge lies in identifying the players in the value chain who would deal with this particular issue. These strategies are interesting because they are seemingly aimed at de-risking the fundamental business issues. a Swiss entity. Targeting the Indian diaspora with local content is another strategy that these players are examining to achieve an immediate footprint in the new geographies. In this respect. In such a scenario not only could revenue shares improve. A number of incumbents have also started to explore geographies outside India as an avenue for growth. given the tariff war and a race to add incremental subscribers MNO’s may rather initiate marketing spend in garnering additional subscribers as against trying to understand what type of VAS will sell. Although nascent from an India perspective. this business model shift does auger well for the creation of intellectual property that may bring in the necessary balance in the revenue sharing regime. © 2010 KPMG.
Therefore whilst. 3G is expected to enrich media experience.150 subscribers per site).49 Service led innovation strategies Globally. 17 May 2010 © 2010 KPMG. enable video calls and high-speed data transfer. Source: KPMG Consumers and Convergence IV 2010 Some of the aforesaid trends have already started to play out in India as well – social networking and the increased bundling of applications on mobile phones is becoming more and more “standard” The advent of instant messaging services . enhanced bandwidth may also simply lead to increased usage of existing mobile VAS services and a consequent augmentation of voice capacity. Video on demand and other live streaming services may gain prominence amongst the high ARPU customers. Incumbents however. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). 13 Oct 2010 .g. Skype) Accessing maps/Directions Reading a book Playing games Accessing news and information Social networking E-mailing Banking/personal ﬁnance Browsing the web Watching TV/Movies/ Video’s Shopping 2007 6% 6% 1% 3% 7% 1% 2008 5% 4% 7% 2% 1% 2% 5% 2% 2010 29% 29% 23% 21% 17% 13% 11% 10% 8% 6% 5% 5% Impact of 3G With 3G mobile services expected to make their presence felt in India. potentially giving birth to a whole new set of revenue streams. MOU’s in India currently stand at an average of about 385 minutes per subscriber per month2. operate at MOUs of over 400 minutes per subscriber per month3. a Swiss entity. Rollout of 3G and BWA based services in India may also witness the increase in VAS services such as video streaming as well as increased usage of GPS based applications. 3 “ India Wireless Sector. Usage of mobile devices Activity Chatting or instant messaging Talking (e. Macquarie Equities Research. the mobile data service market is set to grow. 2 “Quarterly Performance Indicator”TRAI. On the other hand. by handset manufacturers especially in smart phones segment is revolutionizing the types of VAS that individuals are consuming. such as. consumers are increasingly turning to their mobile devices for a number of activities and perhaps this trend shall be repeated in one of the world’s largest markets especially with the advent of 3G and BWA. this strain on the networks may directly result in poor Quality of Service (QoS). . All rights reserved. Taking into account that a typical cell site at full capacity may support up to 350 minutes per subscriber per month (working on the industry average of 1.
a Swiss entity. All rights reserved. . an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”).50 © 2010 KPMG.
The government has set a target for 40 percent teledensity by May 2014 for this market5. 2010 ‘India Market Strategy’. 70 percent of the population still lives in rural areas. Government’s Bharat Nirman programme is aimed at intensifying rural infrastructure development. rural India contributes close to 45 percent of India’s total GDP2. In terms of telecom connectivity. .51 Connecting rural India As one of the world’s fastest growing economies. All rights reserved.Positives priced in. ‘The Indian Telecom Services Performance Indicators’. TRAI. tougher road ahead’. India has been growing at a consistently high rate over the past decade. the government allotted close to INR 401 billion for the Mahatma Gandhi National Rural Employment Guarantee Scheme. August 16. spanning 590. Thus the signiﬁcance of development of rural India cannot be underestimated in the pursuit of the achievement of socio-economic growth targets for India. April . 1 2 3 4 5 ‘India Telecoms . a Swiss entity. ‘Monthly Telecom Scenario – August 2010’. the urban teledensity across all metros has crossed 100 percent3 and the market for voice services is tending towards saturation. This necessitates increased government focus to enhance rural development. DoT A © 2010 KPMG. This rural teledensity target seems achievable but a lot more needs to be done to reduce the widening urban-rural telecom divide. Further.June 2010 ‘ nnual Report 2009 – 10’. A number of initiatives have been undertaken by the government to improve the telecom penetration in rural India. JP Morgan. However.000 villages. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). The subsidy support for mobile towers in the rural areas through the Universal Service Obligation Fund (USOF) is another example of the Indian government’s commitment to rural telecom. DoT October 2010 . the rural teledensity is still below 30 percent4 and the rural market is expected to drive the next round of aggressive growth. The government also set aside INR 480 billion to enhance rural infrastructure under the Bharat Nirman Program. In the union budget for 2010-11. June 17 2009 . Inspite of the rapid industrialization and aggressively growing services industry. Another INR 100 billion was set aside under the Indira Awas Yojana to create rural employment. Credit Suisse. and is predominantly dependent on agriculture for survival1.
a Swiss entity.52 © 2010 KPMG. . All rights reserved. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”).
70% 32. 51 percent of the villages in India are covered by three operators and 31 percent of the villages are covered by four operators8. 7 ‘ nnual Report 2009 – 10’.21 percent in March 2002 to 27 percent as on August 31. August 16. 2010 Rural .02 millions 828. Overall.35% 95. The operators have been constantly reducing tariffs to enhance penetration which has resulted in multiple connections being held by a single customer to take advantage of the various innovative pricing schemes offered by operators. 2010) Total population Urban population Rural population Total subscribers Urban subscribers Rural subscribers Total teledensity Urban teledensity Rural teledensity Rural subscribers Rural wireline Rural wireless 4.00% 67 .76 230. tougher road ahead’. KPMG Analysis. JP Morgan. DoT. The urban market in India is tending towards saturation in terms of voice based services.00% 70.76 Despite this growth. . Urban Population Rural vs. Urban (Private Consumption) Source: ‘The Indian Telecom Services Performance Indicators’. April – June 2010. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”).183. The rural market too.Positives priced in. the rural market still remains largely under-penetrated7. All rights reserved. Presently.17 millions 230.20 millions 10. .38 millions 706.95% 30. tougher road ahead’. 91 percent of the villages in India are covered by at least one operator. October 2010 6 ‘Monthly Telecom Scenario – August 2010’.19 millions Source: TRAI. 2010 © 2010 KPMG. 20106.63 percent 134. Rural vs Urban Market – Key Indicators (As of August. DoT October 2010 .urban telecom divide The Indian telecom sector has seen aggressive growth over the past decade. a Swiss entity.39 millions 355.Positives priced in. ‘India Telecoms .08 percent 27 percent . JP Morgan. DoT A 8 ‘India Telecoms . August 16.01 millions 220.37 millions 476.30% 1. According to TRAI. the operators are awaiting the launch of 3G and WiMAX to ensure sustainable growth in the urban markets through data services. Monthly Telecom Scenario – August 2010 Rural vs Urban teledensity Source: Monthly Telecom Scenario – August 2010’. TRAI.20 millions 59.53 Rural vs. DoT. has shown tremendous growth over the past decade with rural teledensity going up from 1.
000 144. which may not be as well connected as the metros and tier-1 cities. Most operators have already begun to cater to regional needs through caller ringback tones. making it less viable for the telcos to setup infrastructure across the sparsely populated areas.km Greater than 500 person per sq. There is also difﬁculty in laying down the ﬁbre cable network due to ‘right of way’ issues. with innovative graphics to overcome the limitations of illiteracy. tougher road ahead’. Setting up the infrastructure requires acquisition of land.000 Between 500 . Wide variation in population density The population density across India is extremely speckled. hence.1. JP Morgan.000 Between 0 . Population density across villages India Village Density Between 1. devotional messages and other vernacular content. 2009 10 ‘India Telecoms . Operators have to incur higher costs to set up infrastructure which tends to decrease the ﬁnancial attractiveness of this segment. The table below gives a snapshot of the population density across this country. Lack of education and awareness The uptake of data services is relatively slow in rural areas because of the illiteracy that prevails amongst the majority. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). The return on the infrastructure might not be feasible in terms of the APRUs generated through the customers in these areas. the lack of infrastructure and delays in regulatory approvals has been the key reasons for the sluggish growth of this network. km Source: Census India Report 2001 No.000 . India’. 2006 No. .500 Source: IMA India Report. of States 5 4 21 5 Lack of vernacular and customized content India’s diversity in terms of culture and language creates a need for regional content in order to ensure penetration of telecom services among the masses. there is a critical requirement for a well designed distribution network to penetrate into the market segment which holds the maximum potential in the future. Lack of distribution network India is the seventh largest nation in the world9 and has a population base which is large enough to be spread across the entire expanse.2.54 Key challenges in rural penetration In spite of the rural market being a key growth segment for the telecom industry. important to develop content in vernacular language and design the application software such that it is user-friendly and menu driven.000 9 ‘Presentation by Ministry of Environment and Forests. Further.km Greater than 100 person per sq. September 02.Positives priced in. Operators are also looking to offer regional and national news. which is a slow process as most of the land is owned by the government or gram panchayats.km Less than 100 person per sq.000 person per sq. weather forecasts and market prices for crops in regional languages to help improve mobile uptake in rural areas. of Villages 129. August 16. However. there are several challenges that operators need to overcome to leverage the potential of this segment.000 219. Inadequate telecom infrastructure One reason for the relatively low rural penetration has been the lack of telecom infrastructure in these areas. 2010 © 2010 KPMG. Considering that 70 percent of India still lives in rural areas10. Lack of availability of skilled labor is an additional challenge in supervising these sites effectively. it is important to develop applications which are easy to understand and operate by a local user based in a remote village of India. Currently. Population density across states in India Density Greater than 1. a Swiss entity. The literacy rate in India is relatively low. which at times may not feasible in terms of the revenue generated per user. All rights reserved. The government and private sectors’ efforts will have maximum impact once the rural communities can understand and effectively use all the information available through their mobile phone. It is therefore. the government has been concentrating efforts for rural upliftment and is making considerable contributions from the union budget every year for the same. Having a battery backup to overcome the problem of power shortage further increases the cost of providing the connection per user. lack of amenities such as water and electricity tends to increase the cost of maintenance for the tower sites in these areas.
302 as on December 31. There are several other reasons which are adding to the scarcity of communications infrastructure in such areas. Operators need to create and implement business models capable of driving proﬁtable growth through a rural expansion strategy. has been instrumental in setting up the Telecom Equipment and Services Export Promotion Council. 2010. rural India accounted for 230. acceptability and awareness. there were 2. few ﬁxed-line telephones and low income levels are some of the key factors. The ultimate intent is to offer basic telegraph services to all.000 uncovered VPTs (Village Public Telephone) were setup by June. as discussed later in the report. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). Business models will therefore have to focus on providing various packages of voice/VAS-services that are user-friendly for the rural consumer. Rural telecom snapshot • • • Target of 80 million rural connections by 2010 was achieved in 2008 As on August 31.772 GSSs covering 12. to aggressively promote the export of telecom equipment and services from India. DoT © 2010 KPMG. The council will be involved with organizing seminars and facilitate the participation of India exporters in various overseas exhibitions.705 villages having more than 2. to allow people in the rural and remote areas to access telegraph services at affordable/reasonable prices. 2010 covering 96 percent of the Indian villages More than 3 lakh PCOs have also been installed in rural areas 40.55 Sustained government efforts to enhance rural connectivity The government has been making conscious efforts to connect rural India to the world at large. 2009 Infrastructure sharing scheme is required to set up 7 . affordability. The fund has already extended tremendous support towards the growth of telecommunication in India.436 towers spread over 500 district across 27 states in India • • • • • • Source:‘India Telecom Sector Brochure’. It also makes necessary recommendation to the government to make necessary changes in various policies and procedures for promotion of Exports and Services. The Ministry of Commerce & Industry along with the Ministry of Communications & IT.70. . However.337 existing blocks in the country Under the Bharat Nirman Programme. 2010. Mobile operators will have to focus on exploring options of satisfying the costconscious and value-conscious rural customers looking to reduce their call charges. irregular supply of power.500 block headquarters out of the total 6. a Swiss entity.000 population have been provided rural community phones Mobile Gramin Sanchar Sewak Scheme (GSS) – a mobile PCO service is also being provided at the doorstep for villagers. operators are required to focus on service availability. the limitations of low population density and difﬁcult topographical and climatic conditions have been the key reasons for the slow penetration of telecom services. ‘Annual Report 2009 – 10’.186 villages have been covered out of the remaining 62. While launching wireless technologies in rural India. All rights reserved. 61. While the voice connectivity is important.043 villages across the country Sanchar Dhabas (Internet Kiosks) have been provided in more than 3. the real value addition will be in the form of tailored local solutions like applications and value added services made available in local language. The advent of wireless technologies has made it possible to overcome a part of these difﬁculties.30 million ﬁxed and WLL connections 5. As of March 31.694 villages out of 40. The government also setup the Universal Service Obligation Fund in April 2002. Operators also need to develop innovative ways to provide post-sales support for rural customers. DoT Website.
school syllabi. Provision of mobile as well as broadband services is not only seen as a wealth enabler but also as a step towards creating a revolution in the ﬁeld of education. It allows people to easily disseminate locally-generated and locally-relevant health information to rural masses. All rights reserved. exam result alerts and education for the physically challenged. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). exam tips.000 Community Health Centers available in rural areas11. heath and technology. A Real-Time Bio-surveillance Programme was piloted in the Sivaganga District of Tamil Nadu. Despite these focused efforts. since utilizing mobile phone technology signiﬁcantly lowers transaction costs while expanding outreach to rural areas. whereas a large majority of India’s population still lives in villages. micro payments and informal airtime bartering schemes. Telemedicine can possibly transform the Indian health care sector as India faces a scarcity of both hospitals and medical specialists. Mobile services are also playing phenomenal role in healthcare industry. thus mobile phones can be used as platform to provide a variety of services such as long distance remittances. only 31 percent or little over 20. who are now developing the necessary applications to work towards mobile education (m-education or m-learning). The government looks forward to provide access to services and information which otherwise will be unavailable in rural areas. vocabulary general knowledge tutorials. A combination of scheduled commercial banks. The Ashwini Centers established in each village provide video-conferencing and Internet access for all the villagers IGNOU has started SMS service to send SMS alerts to students about various developments Pilot projects for healthcare • In late 2007 as a part of Gramjyoti project. In rural areas. dial-in tutorials. the wireless network created using smartBridges radios currently connects 12 villages. Mobile banking will likely also help in bringing down costs for other channels. . Financial services India has one of the most expansive banking systems in the world. English Seekho service and Learn English. including live interactive check ups and reporting. surveillance and health strategy planning in Tamil Nadu • • • • Education The importance of mobile medium in education is slowly but steadily being realized by players in the telecom industry. Mobile broadband services could be used to empower more than 50. Some such applications are m-Gurujee. mobile broadband can help expand tertiary education especially among low and middle-income students. With increased 3G network coverage and decreasing cost of mobile broadband access. Additionally. Successful broadband wireless projects • In a pilot project of The Byrraju Foundation. The Bhimavaram network potentially impacts 500. a larger number of people subscribe to mobile services than banking services. regional rural banks and specialized ﬁnancial institutions cover a large section of society in India. ZDNetAsia. Ericsson . These operators usually partner with VAS companies to develop the applications.000 lives in 32 villages in the Bhimavaram district. there by harnessing mobile technology for disease reporting.56 Potential areas that can grow signiﬁcantly through combined wireless and wireline based telecom connectivity in rural sector Telecom and network connectivity have widely been seen as enablers of a nation’s socio-economic growth. Several operators have started offering m-education services such as English lessons. Video conferencing also allows the qualiﬁed teachers based in towns or cities to teach several classrooms simultaneously. question sets.000 of the total bank branches in India are in rural areas. in partnership with Apollo hospitals provided ECG. Access to basic ﬁnancial services remains elusive to millions of Indians in rural areas.000 Primary Health Centers and 6. a Swiss entity. such as microﬁnance. June 2008 © 2010 KPMG. M-health is another promising area that allows organization to treat patients through mobile phones through online chat using mobile phones. blood pressure and heart beat measurements. thereby bringing quality higher education to the village level. The aim of the program is to use sophisticated analytical tools on data sent on mobile phones by village level nurses. teleconsultation and basic medical check ups. tele-education will likely see greater adoption both in rural and semi-urban areas. 75 percent of dispensaries and 60 percent of hospitals in India are situated in urban areas. Healthcare 80 percent of doctors. 11 ‘Telemedicine takes world-class healthcare to rural India’.
credit and savings accounts and money transfer to the poor people. All rights reserved. rapid growth of mobile telephony and the recent introduction of mobile enabled information services provide a means to overcome existing information asymmetry. baggage and commission costs. seed variety. due to which large sections of the country had remained ‘unbanked’. plant protection. weather. lack of support for all handsets. cultivation best practices. mKRISHI. Mobile applications for rural India • A USA-based mobile-payment service provider. Mobile services could help farmers to access real-time information on crop choice. radio and newspapers. problems with availability of agricultural inputs and poor access to agriculture-related information are the major constraints in the growth of agricultural sector in India. M-Pesa and G-Cash are two universally known mobile banking initiatives undertaken in Kenya and Philippines respectively. the cooperative department will provide mobile handsets to farmers at marginal price through its outlets in the rural areas. has entered into an alliance with Bangladesh based Grameen Solutions. demand and logistics. while mobile phone banking has the potential to extend ﬁnancial services through virtual accounts to millions of poor people globally. lower transaction costs and substitute for costly physical transport. the echoupal saves the farmer approximately INR 250270 per ton through reduction in transportation. Agriculture Deﬁcits in physical infrastructure. Successful Rural Projects • • • As per research done by ICRIER. Mobile broadband will further help to widen markets.57 However. These initiatives helped counter the infrastructure. • © 2010 KPMG. New Delhi-based Ekgaon Technologies too has developed a system for tracking transactions made by self-help groups. create better information ﬂows. an initiative that provides personalized information and expert advice to rural farmers by answering unique queries that farmers face and also provides up to date weather and pricing information through text-messaging on cell phones. The project aims at providing affordable ﬁnancial services like cross border remittances. WorldVision and the World Bank to conduct a pilot. which are currently available over limited geography mainly due to lack of wireline infrastructure. The success of rural mobile banking initiatives in other countries also bodes well for India’s aspirations to make it a success in the country’s rural areas. a subsidiary of the Grameen Bank to deliver mobile banking services to the economically marginalized people in Bangladesh and India. by providing the farmers access to information about prices not only in their local mandi but across the region. . These handsets would be loaded with green SIM cards. One of the leading service providers has partnered with Indian Farmers’ Fertilizer Cooperative Limited (IFFCO) to set up IFFCO Kisan Sanchar Limited in Rajasthan. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). ITC’s echoupal led to productivity gains between 10–40 percent primarily due to adoption of hybrid seed varieties and new farming practices by farmers. It helps to provide consistent and reliable information as compared to other information sources such as TV. there are a also number of challenges and risks involved in universal adoption such as reasonable affordability of GPRS based internet cost. regulatory restrictions on limits on transactions and lack of mass adoption. market information such as market prices. banking and technology constraints in these nations. In this initiative. As mobile penetration continues to increase among rural India. Mobile broadband can also facilitate in increasing the penetration of rural internet kiosks based services such as ITC’s e-choupal. In addition. which it plans to extend to 14 Indian states. It has partnered with the likes of CARE. It would help rural regions to integrate with other parts of the country in numerous ways. to bridge the gap between the availability and delivery of agricultural inputs and agriculture infrastructure. IT and other security risks such as Trojans and viruses. It also helps. a Swiss entity. which will ﬂash daily updates on agricultural practices and weather forecast free of cost.
58 Government services Mobile technology can help drastically improve the access to government services in developing countries. The Tata group company. applications as well as content also need to be provisioned in localized language. public access. provides high-speed internet access. application and infrastructure would determine how easily vernacular content would penetrate the masses. Government of India. IP telephony. a Swiss entity. • Media/Entertainment Broadband wireless access (BWA). . Availability of reliable. According to an estimate provided by Department of Information Technology. the government can process Government to Citizen (G2C) transactions such as the ﬁling of tax returns. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). This same job was being handled by more than 1. The centre in Babrala functions as a back ofﬁce logistic support for Tata Indicom customers in Uttar Pradesh. For the vernacular industry to take-off. audio and visual communication is regional and localized in nature. The characteristics and orientation of Indian rural populace towards consuming print. The high speed broadband access will enable value added services tailored to local rural needs and requirements. Research and development efforts are also needed to provide predictive translation initiatives such as context-speciﬁc literal translation as well as advanced solutions such as Optical Character Recognition (OCR) and Text-to-Speech. By leveraging connectivity. 12Launch of mobile broadband will allow citizens to access government services virtually in any place covered by high speed mobile network. land records. Successful Rural Projects • In July. 2008. there is a need for digital content that is designed to serve daily and important informational needs of rural population in their own language. such as kiosks. All rights reserved. 2007 © 2010 KPMG. Infrastructure comprises access points. has also setup two BPOs at Mithapur in Gujarat and Babrala in Uttar Pradesh. The centre employs 550 people who are entrusted the task of data capturing and indexing of customer details. Content. using technologies like WiMAX/LTE. World Bank. Employment The Business Process Outsourcing (BPO) creates employment by allowing rural citizens to participate in the economic growth brought by outsourcing of manufacturing and back-ofﬁce functions to low cost regions which is currently driving the economy of India. approximately 50 to 60 percent of government services in India can be delivered through mobile channels. TV services and other voice and data multimedia services in regions where there is no suitable wireline alternative. as well as receive feedback helping enhance the level of Governance. death and birth registration. To ensure an end-to-end local language delivery. 12 ‘m-Government: The New Frontier in Public Service Delivery’.000 people in Chennai and Mumbai. quality and cheap telecom connectivity is an essential requirement for setting up BPO operations in rural India. Tata Chemicals. HDFC bank setup a BPO centre at Tirupati in Andhra Pradesh through its subsidiary Atlas Documentary Facilitators. mobile phones and enabling devices such as keyboards and peripheral devices.
All rights reserved. The numbers suggest that the home grown manufacturers have registered explosive growth during the past year4.6% last ﬁscal’. it declined to 18.6 percent during 2009. 2010 © 2010 KPMG.6 percent and 9. The recently concluded 3G auctions are likely to further enhance the role of mobile VAS to compliment the growth of the handset market in India. June 30. Many multinational corporations have already or are in the process of setting up a manufacturing facility in India. this was still a positive reﬂection on the sector considering the impact of global recession as well as the loss of incremental growth due to delay in the roll out of 3G services2. respectively1. compared to global peers. 2010 2 ‘India’s telecom equipment industry grew 18. This aggressive growth has laid the path for development of the telecommunication equipment industry in India as well3. The success of the 3G auctions may also encourage international as well as domestic players to start manufacturing 3G mobile communications infrastructure within the country as well. Over the past year India has shown tremendous growth in terms of subscriber numbers. These players at this point in time control close to 14 percent2 of the handset market. June 10. 1 ‘World Telecom Equipment Market and expected USD 370 billion in 2013’. with the infrastructure and handset segment registering a decline of 3. While the equipment market’s growth stood at 20 percent in 2008. July 20.59 Telecom manufacturing The year 2009 was a tough year for telecom equipment manufacturers globally. a Swiss entity. Cellular News. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). 2010 3 TRAI Subscriber Numbers. Several home-grown handset manufacturers have begun to take control of the market and these incumbents have been playing a crucial role in promoting the use of mobile VAS among people in lower income groups. Telecom Yatra. However. . The Economic Times. especially compared to the aggressive subscriber growth that has been observed during the previous year. India too. The government has also made tremendous efforts to establish India as the hub for telecom manufacturing through incentives as well as supporting R&D efforts through low cost labor. has witnessed slower growth in telecommunication equipment.9 percent. KPMG Analysis 4 ‘India: the next mobile manufacturing hub’.
. All rights reserved.60 07 © 2010 KPMG. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). a Swiss entity.
a Swiss entity.98 billion . This implies a growth of 260 percent5. through public private partnership mode for promoting innovation and research in telecom. • 1999: Opening up the industry to private sector participation • 2005: FDI ceiling across telecom services was raised from the existing 49 percent to 74 percent The Union Ministry of Communications and Information Technology initiated the process to promote India as a viable option for setting up manufacturing units. The twenty four percent import duty on components/raw material imported for manufacture of batteries. chargers and other part and accessories was also removed.500. . With multinationals setting up base in India. India is emerging as a manufacturing hub which aims at enhancing its telecom exports each year. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). Source: TEPC - These positive and proactive decisions by the government have set the momentum for the growth of the telecom manufacturing in India. These numbers clearly highlight the signiﬁcant growth potential of this sector.000 million – 5. Telecom equipment production • 2006: Policy reforms and government initiatives such as 100 percent Foreign Direct Investment (FDI) in the sector through the automatic route • 2008: Allowing service providers to share active infrastructure • 2010: The Union Budget decided to eliminate the Special Additional Duty of Customs (SAD) of four percent on parts imported for manufacturing mobile handsets from July 06. This number has swelled up to INR 520 billion as of 2009-10. its talent pool and the success of the Business Process Outsourcing (BPO) industry.000. lately the trend has been initiated to build in-house expertise for indigenous growth within the telecom manufacturing sector. As per DoT estimates it is said telecom equipment worth INR 3. the pace of growth for the telecom manufacturing is expected to further accelerate over the next three years. However. a growth of almost 600 percent5. In 2006-07 India exported equipment worth INR 18. India produced telecom equipment worth INR 144 billion.000 million will be required by 2015. Along with this growth there is growing emphasis on export of telecom equipment from India as well. The government has also setup Telecom Export Promotion Council (TEPC) for promoting the export of telecom equipment and Telecom Centre of Excellence. Considering the aggressive growth of telecom subscribers in India. This was strongly supported by its fast growing telecom market. and as of 2009-10 this number has gone up to INR 135 billion. All rights reserved.61 Key milestones The foundations of developing the telecom equipment manufacturing industry in India were laid in 1999. Telecom equipment exports Source: TEPC 5 TEPC © 2010 KPMG. 2011 The Budget also implemented a tax concession for mobile accessory manufacturing in India. 2010 to March 31. In 2002-03. In the past greater emphasis was being laid upon import of telecom equipment.
It is India’s leading initiative to become a global telecom manufacturing hub. bare PCBs. © 2010 KPMG.000 Crores in 2008-2009” November 20. Large IT service companies doing telecom projects. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). The production and exports of telecom equipment have been on a steady rise in the last few years. auxiliary component manufacturing base (e.. “Telecom Equipment Production to Cross Rs. . shopping malls and entertainment sites. 10 TEMA press release. including hotels. apartments. and private amenities. India is likely to be the fastest growing telecom equipment production market in this region over the next ﬁve years. Friendly government policies – case study Indian government has been taking various initiatives to transform India as a global manufacturing hub. The governments have encouraged a strong R&D infrastructure to facilitate the growth in this sector. 2008 . This is not a small achievement. July 2010 . tooling. The Telecom Equipment and Services Export Promotion Council (TEPC) have set the following milestones to achieve by the year 20148. Policy recommendation to increase domestic telecom growth in exports of telecom equipment and services • Meeting at least 70 percent of Indian domestic telecom demand from Indian manufactured products • At least a few IPR-driven.2010 8 TEPC. strong academic and research labs • Skilled and trained shop ﬂoor workforce for electronics circuit assembly. shelves. After the tax breaks announced on the mobile accessories in budget 2010-11. The government is promoting SEZ units in Sriperumbudur which need to be supported with suitable tax breaks. Approximately 20. Sriperumbudur is reported to be today producing more mobile phones than Shenzhen in southern China. it has been proved that SEZ model has supported manufacturing industry. value chain with EMS companies. This is evident from: • A large and booming domestic telecom equipment market of over INR 450 billion with Indian operators reaching out to the global market providing wider access to Indian telecom companies7 • Anticipated investment of INR 450 billion in telecom infrastructure is needed every year to cater to fast growing telecom subscriber base • High skills and strong management experience in critical functions such as supply chain management. India is expected to gain a third spot by capturing 8. high tech manufacturing systems. As per industry estimates. easy credit.g. testing and integration from Industrial Training Institutes and Polytechnics • Capability to move up the value chain by offering design capabilities and not merely low cost facilities • Cost arbitrage arising from competitive labor costs and lower cost of establishing a manufacturing plant in India • Easy availability of capital from a well established ﬁnancing industry as well as private equity network. . and use of bilateral trade to attract foreign investment and provide boost to the domestic manufacturing industry. Globally. Indian government has been taking initiatives and doing timely policy changes to ensure the achievement of the above ambitious targets. both Indian and international component manufacturers have begun work in Sriperumbudur to make parts and components for the cell phone industry. cabinets.) • Strong talent base of highly experienced technical and R&D experts from various multi-national companies in India as well as abroad.465 billion by 2014 as compared to that of 5. TRAI pushes telecom manufacturing” February 27 2010 . 9 Voice & Data. worldclass public infrastructure such as expressways. “Finally. considering Shenzhen makes one out of eight handsets sold anywhere in the world. A case-in-point is Sriperumbudur in Tamil Nadu. power electronics. They have introduced special ﬁscal measures. All rights reserved. railway links and an airport. 7 TRAI. for cables. • Exports to grow at 25 percent CAGR to reach over INR 450 Billion • Domestic telecom products to grow at 18 percent CAGR • Employment generation (direct and in-direct) of more than 20 million 6 IBEF Telecommunications Report. chargers and other part and accessories in budget 2010-119. billion dollar Indian product companies. operational management. etc. tax breaks and incentives such as subsidies. captive facilities of MNCs (Continuously investing in India). Due to the government’s progressive policy. a Swiss entity.7 percent share of INR 8100 billion in 20096. countervailing duty (CVD) and special additional duty (SAD) of about 24 per cent on components/raw material imported for manufacture of batteries. Presentation .000 people are estimated to be working in the area10.5 percent of Asia-Paciﬁc’s telecom equipment production revenue of INR 12. In order to attract more investment in the country.62 India – progression towards global manufacturing hub India is fast emerging as a hub for global telecom manufacturing. Indian government has recently announced the exemption of basic duty. 50. The long term goal of the government is not only to become a global telecom manufacturing hub but also focus on the inclusive growth for the country by focusing on areas like employment generation.
Moreover.750 million per year over the past decade. . It has increased employee base from 500 to more than 8000 today. telecom sector employs over 1 million directly and is estimated to employ another 4 million people indirectly. Manufacturing units in rural area would help provide employment and income generation opportunities thereby aiding in reducing the dependence of people on agriculture. have decided to set up their manufacturing bases in India Advantage India – emerging as a manufacturing hub India has seen a tremendous growth in the last two decades. • In 2010. EDGE Based GSM Radio Base Station • Many other major companies such as Foxconn.2 million handsets every month • In 2008. Jaipur (Rajasthan). a Swiss entity.000 additional people through its partner ecosystem12. It manufactures products that includes GSM and CDMA mobile devices and networking equipment such as base stations and system controllers • In January 2006.63 Indian government has also been promoting its export sector by establishing special economic zones (SEZs). Australia and New Zealand.13 Telecom manufacturing in India11: some key milestones • In October 2010.000 people. January 2010 13 TEPC. The company employs more than 6. It exports to more than 70 countries now. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). Motorola started manufacturing facility at Sriperumbudur. producing AXE Digital Switching System. LG has set up plant of manufacturing capacity for 20 million GSM mobile phones near Pune. Thus. The current production in this facility caters to the demand of both the domestic market as well as that of countries in the Middle East and Africa. in recent times SEZs has been one of the primary drivers for India’s increasing manufacturing capability11. in order to attain inclusive and balanced growth across the country.2010 12 Press Release . looking at the large geographical diversity and spread of India.500 million state-of-the-art telecom equipment manufacturing facility near Chennai. For instance. Indian government has been facilitating more and more telecom speciﬁc SEZs to promote India as a hub for telecom manufacturing. which led exports grow by 33 percent in 2008-2009 as compared to just 4 percent elsewhere in India. Apart from beneﬁting the rural areas. • In 2005. Though. All rights reserved. it has witnessed faster growth in urban areas.The Economic Times. it has also allowed 100 percent FDI in manufacturing sector under automatic route. For growth to be inclusive it should involve key attributes such as: • Creating new and varied opportunities to earn a livelihood • Provide ways to enhance capabilities to exploit varied opportunities • Providing security against a permanent loss of livelihood Telecom manufacturing is one such industry that could contribute in providing this inclusive growth that India is looking for. Nokia had earlier started manufacturing facility near Chennai. Presentation . It has invested approximately INR 6. Ericsson India established a manufacturing unit at Kukas. Wynn Telecom plans to set-up a facility at Himachal Pradesh. as compared to rural areas. This has resulted in foreign players investing more than INR 450 billion as FDI in Indian telecom sector in last 10 years. Chennai. telecom manufacturing can also bring a lot of positives for the country as a whole. the Indian government had adopted a theme of ‘faster and more inclusive growth’ in its eleventh ﬁve year plan that runs from 2007-2012. Thus. High quality infrastructure at SEZs will further provide the necessary push which the telecom equipment manufacturing majors require. Policy recommendations to increase domestic telecom growth in exports of telecom equipment and services © 2010 KPMG. This would help rural people to access better education facilities for their children and in turn is likely to improve country’s literacy rates and employability. Solectron. It is one of Elcoteq’s three volume manufacturing plants in the Asia-Paciﬁc region and the ﬁrst one in India • In 1994. that will churn out 1. India may adopt the phased and planned expansion strategy. Elcoteq had started manufacturing facility in Bangalore. a hospital can employ telemedicine to assist doctors in rural areas as they analyze and treat patients. etc. Private SEZs in strategic locations will foster an enabling environment for global and domestic manufacturing majors to set up plants. while creating indirect employment for 20. Aspcom. Going forward. Inclusive growth is understood by different people in different ways. Currently. 11 TRAI. besides North America and Europe • In 2005. Better telecom connectivity and other innovative applications can play a vital role in extending health care services to the remotest part of the country. This facility has reached a milestone of production volumes of 350 million handsets in April 2010. Employment generation – Telecom manufacturing industry will enable the ancillary and other related components industries to grow. Asia. Huawei conﬁrmed its plans to set up an INR 22.
Indian players or MNCs based in India have exported telecom equipments to other countries at a CAGR of more than 22 percent over 2008 . The competitive industry will also enable new related industries to emerge and provide employment Conclusion India’s telecom equipment production as well as its exports has been on the steady rise for the last few years. All rights reserved. Self-reliance in Strategic sectors – Increased capabilities in telecom manufacturing will help India to become a self reliant in strategic sectors such as defense and internal security. a Swiss entity.2011. Increased competitiveness – Growing Indian telecom manufacturing industry will not only make telecom services affordable in India but also make this industry competitive across the globe. and others.64 Large export potential – Apart from the strong domestic demand. Various favorable policies and initiatives implemented by the Indian government over the last few years have gone a long way in promoting the country’s indigenous telecom manufacturing sector. e-governance. KPMG Analysis © 2010 KPMG. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). education and research.14 Creation of Intellectual property (IP) – Heavy investment in R&D by players in telecom manufacturing sector creates the opportunity for Indian IP rights which can in turn lead to value additions and innovations in other related industries such as components and semi-conductors. 14 TEPC. telecom equipment industry offers a tremendous potential for increasing India’s exports. Policy recommendations to increase domestic telecom growth in exports of telecom equipment and services. . This will in turn helps in bridging the rural urban divide and reduce the socio-economic barriers of the country.
3G and those having the potential to improve rural connectivity. Pilot projects on the existing and emerging technologies have been undertaken including WiMax. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). reduce rural-urban digital divide to reach out to masses and management of National Information Infrastructure (NII) during disaster. Regulation.65 Telecom research & development Government of India has set an agenda in terms of pre-eminence of India as a technology solutions provider. Moreover. amongst others. Governance. Associate institute IIT Kharagpur S. . Telecom centres of excellence To boost R&D infrastructure in the telecom sector and bridge the digital divide. Planning Commission. top academic institutes and the Government of India together have set up the Telecom Centres of Excellence (COEs). Government of India.1 This includes R&D and installation of comprehensive security infrastructure for telecom networks. December 2002 2 ‘Indian Telecom Sector’. 2010 © 2010 KPMG. design and development platform. No. cellular operators. The seven COEs have been established in a Public Private Partnership (PPP) mode involving leading telecom companies and educational and research institutions across the nation.2 Modern technology inductions are being promoted by the Government of India. Multimedia & Computational Mathematics 5 6 IIT Chennai IIT Mumbai IIM Ahmedabad Reliance Communication Tata Teleservices Idea Cellular Telecom Infrastructure & Energy Rural Applications Policy. The main objectives of the COEs include: secure information infrastructure that is vital for country’s security. Customer care & Marketing 7 1 ‘India Vision 2020’. related services and devices. as India gears up for access to next generation networks. All rights reserved. R&D on advanced testing mechanisms is another focus area to ensure interoperability amongst these networks. India has the potential of converting its strong R&D infrastructure into a global research. a Swiss entity. Department of Telecom (DoT) Targets. 1 Sponsor Vodafone Essar Areas of focus Next Generation Network (NGN) & Network Technology Telecom Technology & Management Information Security & Disaster Management of Infrastructure 2 IIT Delhi Bharti Airtel 3 IISc Bangalore Aircel 4 IIT Kanpur BSNL Technology Integration.
All rights reserved. . an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). a Swiss entity.66 © 2010 KPMG.
associated services and applications. and Motorola have established R&D facilities in India. which has good links to academic research facilities. Moreover. National Semiconductors. For example.67 Apart from application oriented research. Projects currently on across the COEs include use of non-conventional sources of energy and energy efﬁcient power conversion and devices for rural applications. Multinationals are increasingly taking notice of India beyond just its talent pool and viewing it as a key development ground for their R&D efforts. the reliability and ﬂexibility that these solutions bring will help increase a vendor’s success around the globe offering operators the same beneﬁts of scale and adaptability dictated by the India market. innovative telecom business models. make it ideal for innovation and a focus area for global telecom original equipment manufacturer R&D. ST Microelectronics. Many large semiconductor companies. the centres have been designed to assist and offer training to corporate managers for the management of networks and services as well as decision makers of telecommunication entities to manage sector reforms. tablets and net books. This lowers the total cost for the solution. and also the availability of VAS on mobile devices including handsets. and to leverage the expertise available elsewhere. networks and services. Vendors working in India believe that their presence here and relationship with Indian companies will eventually beneﬁt all of their customers globally. This is because of companies looking for more cost effective. in order to achieve cheaper. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). energy efﬁciency. Contract R&D: Laying the foundation There is a rising trend for contract R&D moving out of the headquarters of Telecom Equipment Manufacturers (TEMs). . which makes them a valuable proposition to be deployed in other telecom markets. faster and unique product differentiation. Cadence. The best results for outsourced R&D have been most evident in the technology – VLSI and embedded systems. and mobile device players to effectively target their global markets Within the technology sector. In addition.Advance (IMT-A) proposal for 4G networks. products developed with the Indian market in mind are capable of expanding their capacity fourfold simply by swapping the platform’s line cards. the TCOE at IIT Chennai has been accepted by ITU-R as an evaluator for International Mobile Telecommunication. The availability of quality talent is bolstered by the presence of numerous higher educational technological institutes and a large network of government research labs. and gives them a signiﬁcant edge. and challenging environmental conditions. These outsourced R&D initiatives have enabled TEMs. thus the seven centres cover all aspects of telecom from technology to disaster management of telecom infrastructure to customer care and business model innovation. The Economist Intelligence Unit3 (EIU) global survey in September 2004 has deﬁned India as an R&D hotspot: a place where companies can tap into existing networks of scientiﬁc expertise. Telecom vendors in India are able to increase scalability and add newer functionalities on existing platforms without the need to replace legacy equipments. 3 ‘Contract Research for Global Firms Creates Hotspots for IT Telecom & Biotech’. These companies have begun to solve key issues related to security in telecom equipments. Freescale. and provides an environment where innovation is supported and easy to commercialize. Knowledge Wharton. vendors have begun applying anti-sulphur coating to cards deployed in India to protect them from chemicals in the country’s ambient polluted air. The idea of ‘reverse innovation’ from India has started with vendors starting to believe that the knowledge gained from the Indian market is invaluable. Indian IT companies have considerable number of engineers working in VLSI design and embedded systems as well. In response to India’s harsh environmental and climatic conditions and the resulting local and international standards. the chip packaging for critical components is upgraded to industrial-grade to sustain a wider range of temperature levels ranging from -5 C to 80 C degrees. In addition. and convergence across devices. Intel. a Swiss entity. Hence. India has come out as a favorable R&D destination for many of such companies. wages are modest and western education is available. and it remains a growth area for R&D outsourcing. including Texas Instruments. VAS such as mobile based video conferencing and development work on next generation networks. Each centre has a focused area of excellence. promoting broadband wireless access. improving their product offerings to global customers. VLSI design or design of chips is an area where multinationals came to India a long time ago. . its suppliers. Designed for India The unparalleled growth of the Indian telecom market. The focus of embedded system R&D has shifted from products to end-to-end solutions. rural education and livelihood related applications. faster and innovative models of product development. November 2005 © 2010 KPMG. India is a large country where English is spoken. All rights reserved.
. a Swiss entity.68 © 2010 KPMG. All rights reserved. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”).
it has also made essential services like banking and healthcare available to the remotest parts of the country. Due to the euphoria surrounding the 3G rollout. 2 ‘India Telecom Sector – Overview’. The industry has witnessed an aggressive tariff war in the previous year. 20101. with the urban teledensity already at 134. the time is now ripe to explore and evaluate next generation technologies which will help drive the next phase of growth for the sector. and is eagerly waiting for their introduction in the country.69 Emerging trends and technologies Over the past decade. in a very real way. with the maximum correction happening in Q3. FY 2010. All rights reserved. There has been a 30 percent decline in tariffs and as a result the aggressive growth has not been reﬂective in the proﬁt margins2. DoT October 2010 . to the Government’s agenda of inclusive growth. What has made the Indian telecom sector an incredible growth story is the fact that inclusive growth has been achieved and the growth momentum is being sustained even though urban market is increasingly getting saturated. September 14. the Indian telecommunication sector has witnessed growth at an impressive rate. Coupled with the Government’s vision of providing quality telecom services to the remotest parts of the country and facilitating its social agenda through widespread availability of broadband services. . 1 ‘Monthly Telecom Scenario – August 2010’. operators are experiencing rate erosion and are now ﬁnding it difﬁcult to sustain the proﬁt margins they enjoyed over the last few years. Not only has the sector contributed to the generation of millions of jobs.08 as on August 31. the Indian consumer has awakened to the advantages offered by these advanced technologies in the form of improved quality and reliability at reduced costs. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). a Swiss entity. With the changing landscape of the sector in the form of rural expansion. Centrum. 2010 © 2010 KPMG. FY 2010 and Q4. increasing competition and the ever-declining ARPUs. The sector has contributed.
a Swiss entity. All rights reserved. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). .70 © 2010 KPMG.
The 2. promises a strong latent demand for 3G services in the country5. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). It is also expected to revolutionize the mobile VAS industry in India. 4G will quadruple data speeds for the end consumer. infact. 3G reached the Indian shores with the successful completion of the 3G auctions earlier this year. but also for enhancing the delivery and uptake of value added services. This will further the Government’s vision of providing broadband connectivity to the remotest parts of the country. Gartner. This technology would allow simultaneous ﬂow of data as well as voice services. In other words. a Swiss entity. The development of 3G has also resulted in the inception of LTE and WiMax. However. February 16. commonly known as GPRS. better link and system spectra efﬁciencies in the downlink. peak stationary data rates of 1 gigabits per second and global data rates of 100 megabits per seconds. It was expected to revolutionize the wireless broadband space because of the extremely high data speeds capabilities that it possesses. The inception of wireless telephony was initiated through the introduction of 1G. July 29. 3G handsets from established brands are available in the sub 50 USD categories now. This technology will help the subscribers to access entertainment. 2010 6 Press Search. The constant demand for innovation resulted in launch of 3G technologies across the globe. The 1G standard was replaced by the 2G standard in 1991. map and positioning services and multiplayer gaming services. the rapid growth in sale of 3G-enabled handsets. a handset market leader in India has recently launched the cheapest 3G handset costing INR 4. KPMG Analysis © 2010 KPMG.71 Global technology evolution Globally. The key difference between the two standards was that 2G network allowed digital encryption of the communication. seamless connectivity and high quality of service for bandwidthintensive web applications. operators are increasingly embracing 3G technology as a means to sustaining the current growth trends.3 After some delays. EDGE and GPRS were initially being propagated as 3G technologies but considering the present speed of 3G services they have been earmarked as 2G transitional technologies. a wireless analogue standard that came in as early as 1980.The technological revolution With margins and proﬁtability under strain. efﬁcient bandwidth usage. 2. 3 ‘3G Market Forecast to 2013’. but none of them meet the criteria of International Mobile Telecommunications-Advanced (IMT-A) requirements. government-owned BSNL and MTNL successfully launched their services last year. WiMax and LTE – The key to reducing the digital divide6 The Indian Government has successfully concluded BWA auctions in June 2010 in order to enable operators to offer broadband services in Indian market. In the run-up to transition to 3G technology. 3G rollout is expected to enable operators penetrate rural market and bridge the urban-rural digital divide at a fast pace. better interoperability and smooth handoff between different networks. While some private players have indicated plans to roll out 3G services by the end of the year. 3G uptake and future growth will be driven primarily by the development of innovative. . faster internet access enabling audio and video streaming. It will enable operators to provide high data transfer rates. Press Release. and increased affordability of 3G-handsets. 3G technology is viewed the world over as an efﬁcient enabler for not only reducing costs associated with delivery of voice and data services. 4G will induce ﬂexible and wider bandwidth channels. locally relevant and vernacular content. the 2G standard went through two rounds of development.5G standard. Recognizing the potential of 3G services. February 2010 4 ‘Nokia Launches Nokia 2730 Classic: Cheapest 3G handset in India’. All rights reserved. was introduced mainly for voice services and slow data transmission. Additionally.2010 5 Indian Mobile Handset Sales. mobile technologies have matured signiﬁcantly over last two decades. infotainment and voice communications through a single device.700 only4. which accounted for 16.75G (EDGE) was introduced to ensure faster data transmission speeds. bidding for spectrum was aggressive enough that not a single operator was able to win a pan-India license. 3G . Both WiMax and LTE are now being evaluated as deployment options on the BWA spectrum. RNCOS Industry Research. Mobile phones have evolved from being simply voice call enablers to personal devices providing advanced facilities like internet access on the go and location tracking.7 percent of total handset sales in 2010. These technologies are still within the growth phase and the transition towards 4G has already begun. are often referred to as 4G technologies.9G technology and WiMax is categorized as a 3G transitional technology. with a constant demand for improvement. LTE is a 3. Industry estimates suggest that the growth rate of 3G subscribers worldwide could be greater than 10 percent over the next three years.
May 2009 9 ‘2012 Will Be a Bellwether Year for 4G’. Technology Description 1G networks use analogue signals and is modulated to higher frequency. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). also provide mobile broadband access of several Mbit/s to laptop computers and smartphones. considering it helps overcome the limitations of wireline infrastructure. online ﬁnancial market transactions and other such services. online insurance. The 3GPP Long Term Evolution (LTE) standard does not comply with the ITU 4G requirements called IMT-Advanced. TRAI has already ﬂoated consultation papers regarding 4G and this technology is likely to make headway into India by 2013. LTE is not backwards compatible with 3G.10 3.75G. June 10. and sometimes branded “4G” by the service providers 4G refers to the fourth generation of cellular wireless standards. services. Offers data rates from 56 kbit/s up to 115 kbit/s and can be used for WAP MMS . WiMax (Worldwide Interoperability for Microwave Access) is a telecom protocol providing both ﬁxed and mobile internet access.72 Broadband connectivity will fulﬁll the growing demand for high quality e-Governance services. Wimax is India’s best answer for it to overcome sluggish broadband growth. 2009 8 ‘LTE’s Five-Year Global Forecast: Poised to Grow Faster than 3G’. the Indian government has already started taking proactive steps in terms of testing and competing for newer technologies as compared to many developed nations.5G (GPRS) is a technology between 2G and 3G cellular wireless technologies offering cellular services combined with enhanced data transmission capabilities. Nov 11. 3G 4G – A comprehensive IP solution 4G encompasses a comprehensive IP-based solution providing features like IP telephony. soon after the success of 3G auctions. LTE is expected to grow at a phenomenal rate of 404 percent to reach 136 million by 20148. LTE (Long Term Evolution) is an alternate telecom technology which provides wireless broadband services for voice and data transfers. 5G Technology 5G development is currently at a nascent stage globally..5G offering higher data-rates of up to 236. However. but instead uses a radio platform for transmission. Industry reports estimated that 4G rollout could translate into 150 million subscriptions by 20149. May 13. WiMax can be effectively used to provide last mile broadband connectivity since it is a scalable wireless access technology which can provide high throughput over long distances. LTE does not transmit signals through microwaves. Yankee Group. as well as Internet access 2. ABI Research. All rights reserved.75G (EDGE) is an upgradation of the 2. 2010. video calls and mobile TV. This essentially translates into cost savings while increasing coverage to large areas. This feature of WiMax can be leveraged by countries like India to enhance broadband penetration in rural and sparsely populated inaccessible areas. online banking. the Indian government has proactively started exploring 4G technology. ﬁnance and healthcare in rural areas. mobile Internet access. TRAI. as per industry estimates. Pre-4G systems like LTE and mobile WiMAX have also been introduced across different parts of the globe. typically 150 MHz and up 2G is a digital network built mainly for voice services and slow data transmission 2. mobile ultrabroadband (gigabit speed) access and multi-carrier transmission 4G Source: Wikipedia 7 ‘WiMAX Poised for Portable Broadband Success’ . Application services include wide-area wireless voice telephone. 2010 10 ‘Consultation Paper on National Broadband Plan’. Not resting on their laurels. ultra-broadband Internet access and streamed multimedia at data rates that are higher as compared to previous generations of technology6. KPMG Analysis © 2010 KPMG. but is often referred to as a pre-4G or 3. .8 kbit/s International Mobile Telephonicommunications-2000 (IMT--2000) is better known as 3G or 3rd Generation.9G technology. and offers peak data rates of at least 200 kbit/s as per IMT2000 speciﬁcations 1G 2G WiMax and LTE have the potential means to bridge the urban-rural gap and help in effectively delivering essential services like education. a Swiss entity. Pyramid Research.5G and 3. WiMax reportedly has more than 5 million subscribers worldwide and is expected to reach 92 million subscribers by 20157. 3G allows simultaneous use of speech and data services. online commerce. This technology provides peak download rates of upto 100Mbps and is also considered an effective alternative to cable and DSL networks. It is an all-IP packet-switched networks.
61 billion globally. Alcatel-Lucent.7percent3 of global emissions. The total global carbon footprint of the ICT industry as a whole is in the order of 8003 million ton CO2 which is approximately 2 percent3 of global emissions. Gartner. distributed and used Direct emissions of the mobile industry4 1 2 3 4 Market Trends: Global Telecommunications Market. ﬁxed and communications devices are around 2303 million ton CO2 or approximately 0. when they are manufactured. The Greenhouse Gas (GHG) emissions from the mobile industry arise mainly from sources like: • Energy consumed by the network operation • Emissions of the embedded network equipment. with total revenues in excess of INR 84 trillion1. All rights reserved. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). the contribution from global telecommunication systems . July 2010 GSMA. the energy consumption has also grown signiﬁcantly and poses an environmental challenge in terms of larger carbon footprint of the telecommunication industry. With increase in demand for telecom services. and today it is the backbone of the global economy. .mobile. a Swiss entity. 2009 TRAI Pre-Consultation on. The growth in the industry is led by the increase in wireless subscription expected to continue and cross 82 billion by 2020 from current subscriber base of 4. Of this. GSMS. the Telecommunications industry has played a major role in shaping how we live. 2009 © 2010 KPMG.73 Green telecom Since the late 1900s. 2010 Mobile’s Green Manifesto.Green Telecom Inputs. • Energy consumed by mobile handsets and other devices.
74 © 2010 KPMG. . a Swiss entity. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). All rights reserved.
Additionally the discarded mobile phones are among the fastest growing waste streams worldwide and the rate of increase is about 6505 million units per annum. Mobile phones and the various network devices contain substances that are potentially hazardous which may be released into the environment if they are mismanaged at the end of their life cycle.
industry consumption of c. 1.8 billion litres of diesel every year9. With each liter of diesel used, 2.488 kg of CO2 is emitted and for every KWH of electricity consumed 0.848 kg of CO2 is emitted leading to emissions of around 5 million tons of CO2 due to diesel consumption and around 8 million tons of CO2 due to grid power per annum • Operators spend around 25 percent5 of their network operating costs on energy. The high transportation cost of diesel in remote areas, where the physical infrastructure like roads is underdeveloped, adds to the overall operational expenditure. Also there is signiﬁcant pilferage of fuel in these remote areas • Economic viability of renewable sources of energy is very less especially in remote areas where the ARPU is less than INR 90. For example the initial investment for a solar solution will be around INR 40-455 lakh per site depending on power supply required as compared to the DG set which costs lesser.
Green telecom – India perspective
India is ranked 5th6 amongst the countries in the list of global GHG emission, contributing 4.7 percent6 of the global emissions. In December 2009, the Minister of State for Environment and Forests announced the Indian Governments commitment to reduce 20-25 percent6 of carbon intensity from 2005 levels by 2020. Indian Government is already providing various incentives for the initiatives involving the use of renewable energy resources. Government has also offered the Universal Obligation Services Fund (USOF) support to encourage operators to opt for green energy and Bio- fuel as an alternative for powering base stations. Telecom Regulatory Authority of India (TRAI) has also initiated a consultation process in May 2010, requesting inputs from players across the telecom value chain to provide recommendations on framework and implementation for Green Telecom in India. Besides the governmental efforts, green telecom initiatives in the form of efﬁcient power management is becoming a business necessity for mobile operators in Indian market where margins are nose diving as a result of tariff wars, reducing the proﬁtability of the service providers. At present the energy expenses (opex) is nearly 25 percent5 of the total network operating costs. It is all the more imperative that efﬁcient power management mechanism be adopted to reduce the operating costs.
Current initiatives by the telecom industry
Mobile operators and players across the value chain are working on a number of initiatives to develop energy efﬁcient networks and energy-efﬁcient handsets. Examples of these activities include: • Designing low energy base station sites • Deploying base-stations powered by renewable energy • Implementing infrastructure sharing • Reducing mobile device life cycle emissions through recycling • Other initiatives – Community power and low power handsets.
Challenges in India
Low energy base station sites
The signiﬁcant challenges for the India telecom industry are: • A large part of the country (rural areas) is power-starved, especially regions like Uttar Pradesh, Bihar, Orissa, North East, and Rajasthan. As per GSMA, India has only 56 percent electriﬁcation rate. With increasing coverage of mobile services in off grid areas, the cost of network operations through alternate energy (diesel and battery) is very high • India has over 300,0007 telecom towers with an average power consumption of 5-68 KW and average 88 hrs of diesel generator running to provide back-up during power outages. Each tower currently consumes an average of c. 4,000 litres of diesel every year, implying the telecom
5 Green Telecom – Indian Perspective, COAI, 2010 6 Ministry of Environment and Forest, Government of India 7 Green Telecom Way Forward in ICT Sector, Indus Towers, 2010
Considerable improvements in energy efﬁciency of base stations have been realised in recent years. For example10, Ericsson has reduced the annual direct CO2 emissions per subscriber in the mobile broadband base stations from 31 kg in 2001 to 17 kg in 2005 and eventually to 8 kg in 2007 . Nokia Siemens Networks in 2009 developed a new cabinetbased BTS with a power consumption of 790 W, versus 4,100 W in 2005. Alcatel-Lucent has also developed innovative techniques such as the dynamic power save feature for mobile network, which reduces power consumption when the trafﬁc drops with no impact on service quality. This enhancement reduces average power consumption by 25-30 percent.
8 ACME 9 ‘GIL Annual Report 2010’, GIL Company Website, March 2010 10 Mobile’s Green Manifesto, GSMA, 2009
Cooling systems are an integral part of the telecoms infrastructure and consumes signiﬁcant amount of power. In the past, the operating temperature of the BTS equipments was required to be around 25°C. But now BTS are deployed having passive cooling components as opposed to air conditioning, thereby reducing the power requirement. Examples11 include: • Airtel has also been rolling out its “Green Shelter” concept leading to major savings in energy consumption by its network in India • Ericsson has developed the Ericsson Tower Tube, which uses natural convection cooling, to greatly reduce feeder loss, resulting in a reduction of up to 40 percent in power consumption. Furthermore, the Tower Tube is designed so that backup-batteries can be placed below ground, thus lowering their operating temperature and increasing their lifetime signiﬁcantly • Swisscom has successfully implemented its “MistralMobile” cooling system at 30 of its BTS, leading to a reduction of up to 80 percent in the energy needed for cooling mobile network equipment.
• China Mobile has one of the world’s largest deployments of green technologies to power its base stations. China Mobile had 2,135 base stations powered by alternative energy in 2008. Of these, 1,615 are powered by solar energy, 515 are powered by solar and wind energy and 5 are power by alternative sources • In Vanuatu, an island nation located in the South Paciﬁc Ocean east of northern Australia, Digicel is working with the GSMA Development Fund to assess and develop commercial scale roll outs of green power technology. There are currently 24 live sites in the Digicel Vanuatu network running on green power, including eight missioncritical backbone sites carrying up to 60 percent of Digicel’s trafﬁc • In India, Idea Cellular and Bharti Infratel have started deploying solar and bio-fuel resources on trial basis for their base stations.
Base stations powered by renewable energy
With increase in price of diesel and environmental concern about GHG emissions, operators have begun experimenting with solar and wind powered base stations in both remote offgrid areas and in on-grid areas prone to blackouts. There are various technology options for reducing dependence on diesel generators as an alternative source of energy and thereby reducing the carbon footprint. These include: • Solar Energy - Solar energy can be used to power telecom towers. Solar energy solutions would be the optimal choice for alternative energy in remote sites that are not connected to the power grid directly, thereby reducing the need for prolonged use of diesel generators • Wind Energy – There are solutions under various stages of development which convert wind energy into electrical energy which could power telecom towers • Fuel Cells – One of the widely emerging alternate energy solutions is the use of fuel cells for powering telecom towers. These cells rely on hydrogen and other hydrocarbons and have close to zero emissions • DC Based Generators – DC generators save a signiﬁcant amount of energy by reducing conversion losses. These generators come with a variable speed engine that delivers major fuel and carbon saving options at lower loads Examples11 for use of renewable energy resources include:
11 Mobile’s Green Manifesto, GSMA, 2009
Infrastructure sharing provides excellent opportunity for mobile operators to reduce their costs and their emissions. There are two levels of infrastructure sharing: passive and active. Passive sharing is becoming increasingly common and reduces the environmental footprint of mobile networks by cutting the number of tower sites required by each company. In March 2009, Telefonica and Vodafone announced that they would share network infrastructure in Germany, Spain, Ireland and the UK. Active sharing, which shares the site electronics, can have a much larger impact on the networks’ carbon footprints, but it has only been implemented in a few mature markets to date. Active sharing agreements include T-Mobile and 3 Group in the UK, Telstra and 3 Group, as well as Vodafone and Optus, in Australia, Tele2 and Telia in Sweden. In India the average tenancy for the tower has currently increased to 1.5 tenants per tower from about 1.2 two years back leading to cost saving including the energy cost.
• Vodafone has phone and accessory collection schemes in place across virtually all of its markets, which resulted in collectins of 1.8 million devices in 2008-09. Many of these schemes are linked to charitable donations, including a scheme in Italy where the proceeds from selling refurbished phones funds installation of solar panels for schools • Nokia has launched a recycling initiative in India and many other countries by placing kiosks at public places. The kiosks are used to collect old phones to be recycled and also act as a convenient, automated facility for customers to drop-in phones for service. Nokia plants a tree for every phone dropped and provides the consumer with a unique URL and instructions with which to view their tree through Google Earth.
Other initiatives – community power and low power handsets
As per GSMA estimates, nearly 639,000 off-grid base stations will be rolled out across the developing world including India by 2012. This presents both challenge and opportunity for the mobile operators to sustain their growth in these off grid areas. The opportunity exists for mobile operators to provide electricity beyond the base station to the local communities for small needs like charging up mobile handsets, household batteries and rechargeable lanterns by the excess power generated at the base stations. Implementing handset charging for local communities off-grid areas is not only important for community welfare but it is also strategic to operators. As per the GSMA’s report on ‘Charging Choices’ the availability of off grid charging options can increase mobile operator ARPUs by 10-14 percent. Many operators globally have implemented mobile handsets charging options on their base stations, but very few are running on green power. For example Grameenphone Community Power Site based on biomass at Gazipur, Bangladesh is operated by a third party providing electricity to local community as well as the Grameenphone BTS. Going forward, with increased implementation of renewable resource of energy in remote areas, operators can develop similar operating model leading to better economic viability for the operator and beneﬁt for the local community. India’s rural markets pose unique challenges to handset vendors. Most areas in rural India do not have a continuous supply of electricity. Multiple vendors have recognized this peculiarity with respect to rural India and have taken steps to address them. For instance, all the handsets vendors have developed phones to work around the challenge. The new handsets available in the market especially the low cost handsets are designed to have long battery life requiring less frequent charging and save power thus indirectly contributing to reduction of carbon footprint.
Mobile device life cycle emissions
Mobile Phone Partnership Initiative (MPPI) was created in 2002 under the framework of Basel convention. The MPPI aims to address the issue of environmental impact of the management of end-of-life mobile phones. Several major initiatives through MPPI are underway to reduce emissions from mobile devices. These include a universal charging solution; production of green handsets; and improved industry recycling. The GSMA and 23 leading mobile operators and manufacturers have committed to implementing a crossindustry standard for a universal charging solution for new mobile phones. This will enable the mobile industry to adopt a common format for mobile phone charger connections and energy-efﬁcient chargers, resulting in an estimated 50 percent12 reduction in standby energy consumption, the potential elimination of up to 51,00012 tonnes of duplicate chargers every year, and the enhancement and simpliﬁcation of the end-user experience. A number of mobile operators and vendors have launched initiatives to encourage consumers to increase handset recycling. Examples12 include: • Telenor has teamed up with the Red Cross to recycle mobile phones. For each user returning a mobile phone, the user will receive 50 free SMSs and the Red Cross will plant 25 trees in Asia. Of the phones collected, those damaged will be recycled and those that can be repaired will be sold in Asia with the proceeds going to the Red Cross
12 Mobile’s Green Manifesto, GSMA, 2009
smart logistics and transportation. With high growth of Indian telecom industry and corresponding environmental challenges there is urgent need to tackle the increasing carbon emissions and manage environmental sustainability (e-waste management). teleconferencing. . smart grids. Many players across the telecom value chain already are taking several initiatives including their corporate social responsibility program for green power and e-waste management. As per this report. a Swiss entity. “Carbon Connections” a report released by Vodafone in 2009. assessed initiatives related to dematerialization (teleconferencing. © 2010 KPMG. Potential savings through smart grid using mobile technology can be signiﬁcant. 25 percent of electricity is lost during transmission and distribution. All rights reserved. such existing technologies can be put in use to reduce GHG emissions in multiple sectors of the economy and estimates that 113 million ton CO2 can be saved by 2020 through these set of initiatives. smart logistics.78 Mobile services to enable signiﬁcant GHG emission reductions in other sectors The mobile industry is enabling signiﬁcant reductions in GHG emissions and costs across a range of sectors of the economy. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). However enabling the industry with sustainable frameworks through effective government policy and regulatory interventions will generate a larger interest in stakeholders to move to the next step in achieving carbon reduction and reducing the harmful environmental impacts on a larger scale towards addressing this critical issue. Smart grid opportunities in India could achieve a total potential abatement of more than 80 million ton of CO2 and projected savings of around EUR 6 billion. smart transportation and smart manufacturing. using Machine-to-Machine and other communications to deliver smart solutions like smart grid. As per the report. in India. teleworking). in which existing mobile technologies are abating GHG emissions in Europe.
an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). 2010 – USD 1 = INR 47 KPMG Analysis . Department of Telecommunications. thus bearing out the opportunity for these services in India2.Final Results. India ranks signiﬁcantly low with less than one percent broadband penetration.045 Bharti Airtel 4 705 Aircel Tikona Augere 8 5 1 731 225 27 Source: Press release BWA Auction . The process caught the attention of both Indian and global investors with diverse strategies. mobile network operators (‘MNO’) have historically taken a lead in rolling out BWA networks in order to tap an additional stream of revenues. . . TRAI.08 million broadband customers as against over 650 million mobile subscribers. Company Infotel Broadband Qualcomm Circles 22 Investment (USD Million) 2. almost all incumbent MNOs participated through the stages of the auction process highlighting the need for spectrum and quality of service (‘QoS’) in one of the world’s fastest growing telecom markets. All rights reserved. with the country having only about 10. The growth opportunity in India from a broadband perspective is clearly deﬁned. October 13 2010 © 2010 KPMG. COAI 2 Quarterly Performance Indicator. Worldwide.733 4 1. nearly 25 percent of the country’s wireless subscribers have successfully transitioned to become mobile internet customers. June 12. In the last few years. In India as well. The recently concluded BWA auctions witnessed a signiﬁcant quantum of capital being committed towards furthering the broadband agenda in India.79 Investment opportunities after broadband rollout The Indian broadband landscape of 2010 with a large addressable population and around 10. looking to offer wireless broadband services in the country.000 subscribers1. 1 Subscriber Database. a Swiss entity. In the backdrop of broadband penetration in excess of 25 percent in the developed world and an overall global penetration of around 7 percent.08 million broadband subscribers is quite similar to the Indian cellular market of 1997 with a large addressable population and only 340.
All rights reserved. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). .80 © 2010 KPMG. a Swiss entity.
June 12 2010. Reliance Industries acquired 95 percent equity stake in Infotel Broadband Services for a consideration of approximately INR 45 billion • Earlier this year.8 billion. 3 Estimated based on analyst commentary with respect to RIL BWA network Capex. Qualcomm divested a 26 percent holding to Global Holdings (shareholders in GTL) and Tulip Telecom for around INR 2. device manufacturers as well as value added service providers to build a sustainable ecosystem around technologies. customer acquisition and services. to garner high value customers and gain leadership positions in their respective circles. ‘Qualcomm seals stake sale deal’. thereby implying a consolidated funding requirement of about INR 178 billion across all operators. This transaction is a global ﬁrst wherein a technology developer (Qualcomm) has partnered with telecom infrastructure players (GTL and Tulip Telecom) for kick-starting an operator model. BWA Analyst Presentation. July 31.81 Opportunities for investment Having committed capital to the sector. Credit Suisse.. 2010 © 2010 KPMG. Investments may also be in the form of joint developmental and go-to-market strategies by operators. service providers will now consider rolling out operations relatively quickly. This may translate into an extremely high roll-out cost per circle. Industry analysts peg the cost of a panIndia BWA roll-out at around INR 90 billion3. ’s ’India Telecoms – The night is darkest before dawn’. All rights reserved. Transaction activity4 • Subsequent to the conclusion of the auction. . an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). July 2010 4 RIL – Infotel: Reliance Industries. The Telegraph. a Swiss entity.
• Intends to provide 888. Some of these include subsidy schemes (on active infrastructure components) under the USOF to further the development of rural wireless broadband infrastructure6. DoT © 2010 KPMG. through various agencies.000 villages which have no terrestrial connectivity and is in the process of developing a scheme to connect these villages • The USOF is expected to extend ﬁnancial support to encourage active infrastructure sharing • USOF has also taken the initiative to strengthen the OFC network in rural and remote areas. new content and integration of devices. The India story may however. Whilst 3G and BWA may be key drivers for rapid growth of advanced data services. given the large number of new MNO’s that need to still create sufﬁcient back-haul infrastructure for the rising trafﬁc requirements beyond plain vanilla voice trafﬁc needs • Aligning content providers. pushing voice services may also continue to be a priority for MNOs on 2G and 3G networks • Growth in broadband connections may witness an exponential trend given the availability of BWA spectrum and related services rollout • The extension of ﬁxed BWA to mobile BWA through the manufacture of compatible mobility devices – Partnerships between broadband service providers and device manufacturers may thus become critical to the success of the platform • Launch of services in areas where costs of laying a ﬁber network outweighs returns.832 broadband connections in rural areas by 2014 • Considering subsidized broadband services along with subsidized computing devices to enhance rural broadband penetration • The USOF has identiﬁed 5. All rights reserved. Further.4G Counts. aggregators and platform developers towards the BWA paradigm may also prove important from a proﬁtability perspective. Heightened transaction activity. The market may witness a coming together of tailored devices with speciﬁc content that may be monetized via a BWA platform. Maravedis . a Swiss entity. The Department of Education has also embarked upon an initiative under the National Mission for Education through Information and Communication Technology. the Department of Information Technology intends to setup over 1 million internet enabled Common Service Centres (CSC) across India as per the National e-Governance Plan (NeGP). turn out to be fundamentally different if some of the following factors are considered: • Non-voice services still contribute a much lower share of revenues in India compared to the global average. An environment driven by convergence and backed by a strong government focus may lead to enhanced transaction activity in near future. representing a penetration of approximately one percent5. followed by the advent of WiMax and LTE technologies for high speed mobile data access. the overall subscriber base on these WiMax networks globally is pegged at around 9 million subscribers. while WiMax networks have been launched across 149 countries worldwide. October 2010. it may be expected that BWA will have a decisive competitive edge due to signiﬁcantly high data speeds as compared to 3G networks. For example.82 Critical success factors Unlike the developed world.000 colleges in the country for enabling the use of e-content for education. covering a population of around 621 million. Additionally. the Government. BWA operators may need to tailor value added services and content from a customer-pull perspective in order to generate usage and traction in the urban environment. . rural connectivity through ﬁxed BWA may be appropriate to enhance penetration. India is likely to witness a concurrent roll-out of all these services. Government initiatives In order to fuel the success of new entrants and foster a favorable investment climate. to provide broadband connectivity to 20. immense scope for expansion and a hitherto underdeveloped market coupled with aforesaid Government initiatives would create an environment suitable for development of innovative services. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). where ﬁrst broadband services got introduced as part of 3G technology. From an urban perspective. Wimax Forum. in India. has undertaken a number of initiatives in the broadband space. 5 ‘Monthly Industry Report’. As a result. October 2010 6 Government Initiatives. tariff plans and speed of data download may become integral to deﬁning BWA’s acceptance over traditional cable broadband services already being offered by numerous operators • Effective use of BWA networks as a substitute for telecommunications back-haul may be very relevant in the Indian context.
there is still a wide disparity in the telecom penetration levels. the operator has been able to bring data services to remote villages. 1 Mobile Broadband Case Study. while the rural penetration levels are still single digits in most of the villages with several thousand villages yet to see the connectivity. There have also been a large number of pilot and commercial initiatives globally to deliver the wide spectrum of beneﬁts of mobile based services with green and renewable power resources at the base. educational tools and micro-loans. Through various case studies we would bring up the context and reasons why these initiatives have been successful and its overall impact. marketing support. In India.83 International best practices This chapter will entail key initiatives. the Sri Lankan National Development Bank and Synergy Strategies Group. Sri Lanka’s leading mobile operator has leveraged HSPA mobile broadband technology for bringing affordable internet access to bottom of the pyramid. Users have access to information on jobs. best practices. The Easy Seva partnership also provides loan and lease facilities for the franchisees to help purchase the equipment and pay for the lease on the premises. Operator and its partners provide local entrepreneurs assistance to set up internet cafes. Each Easy Seva centre has multiple PCs. who are the ultimate beneﬁciaries of the project. To address the bottom of the pyramid in the villages where PC penetration is extremely low. Through shared-access Easy Seva centres. Even with thousands of subscribers being added every day in rural areas which are getting connectivity. a router. The low hardware and operational costs ensure that prices for end users. They then receive comprehensive training. the US Agency for International Development. the urban centers and especially metros are approaching over 100 percent penetration levels. The franchisees are selected following an extensive review process to make sure that Easy Seva is the right ﬁt for the local community and businesses. 24/7 help desk and preferred data pricing. . exemplary developments and milestones achieved in telecom sector largely in developing countries for the growth of the telecom services especially among economic backward section of the society and remote areas. Bridging digital divide: Delivering mobile broadband services in semi-urban and rural areas The evolving telecommunication revolution has essentially been an urban phenomenon till now. a Swiss entity. the operator started the Last Mile initiative ‘Easy Seva’1 developed in partnership with Qualcomm. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). All rights reserved. IP handsets. and a 3G modem that utilizes HSPA for fast broadband connectivity. 2008 © 2010 KPMG. GSMA.
an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). All rights reserved. a Swiss entity. .84 © 2010 KPMG.
The program offers text message based multiple choice interactive quizzes which are administered to mobile phone subscribers in the rural region. the teacher were able to just plugs the mobile phone pre-loaded with educational videos to a TV set and plays the video lesson.85 Similarly in South Africa. consult with peers and health professionals about health issues as they arise. an M-commerce system in Kenya with its local partner Safari. The program is spearheaded by a local mobile operator. The initial pilots of Google Trader in banana-producing regions of Western Uganda appealed to small producers. The kiosk belongs to local entrepreneur with support from local operator. M-Commerce In 2007 only one out of ﬁve people in Kenya had access to . Education In the Philippines. which offers the very poor community access to voice telephony services. transfer money to other users and nonusers. European Union Regional Development Fund. a local mobile operator is helping public elementary schools access educational materials through the ‘Text2Teach program’4. pay bills. enabling them to save time and transport costs. banking facilities. One of the largest operators of South Africa founded a community payphone kiosk. A new healthcare awareness program. the community in Alexandra (Sub urban area in Johannesburg) now has access to fast. acquiring just under six million users — one in six Kenyans — since its launch. GSMA. As mobile phones and other mobile devices become part of everyday life. The widespread adoption of the application is expected to lead to lower transaction costs. who felt more conﬁdent about their ability to reach buyers and receive better compensation for their produce. Google Trader is primarily in English but also responds to the primary commands in three local languages. cheap access to the Internet. The second phase. and the GSM Association’s Development Fund. The community Internet cafe enterprise offers convenient access to health and education information as well as job vacancies and advice for ﬁnding employment. All rights reserved. which will result in greater wealth for all involved. mainly due to the high transaction fees and a scarcity of bank branches. and for the ﬁrst time. greater efﬁciencies and higher price transparency across various markets. which features a wealth of valuable. Free airtime is offered to the users to encourage them to participate in the program. This application was developed in response to challenges faced by the Uganda’s rural producers and consumers in reaching out to the markets. boosting education and healthcare and providing a platform for entrepreneurship. which are then delivered via satellite. resulting in increased incomes to small farmers as well as other traders and buyers in the value chain. It is supported by a dedicated online portal developed by local operator. reliable internet access through HSPA network from an innovative Internet cafe concept. and viewed on TV. Text2Teach enables teachers to simply use the mobile phone to order video clips. 2009 4 Mobile Government: 2010 and Beyond. Teaming up with Kenya Commercial Bank and Western Union. This application ensures transparency and enables small producers to realize higher prices when dealing with larger traders. United Nations Foundation. people become better equipped to respond to emergencies. and purchase airtime through a network of agents that includes airtime resellers and retail outlets acting as banking agents. Agriculture Google Trader4 is a marketplace mobile application used in Uganda to buy and sell goods and services using SMS. . stored in the media master. 2008 3 mHealth For Development. January 2010 © 2010 KPMG. most people will agree that individuals around the world are using mobile technologies to access health services and information and that health professionals are formally and informally integrating mobile technologies into public health and clinical activities. due to inefﬁcient transport network and lack of knowledge of market conditions. sponsored by the UN’s Department of Economic and Social Affairs and Uganda’s Ministry of Health. up-to-date local information. the increased use of mobile technology can help reduce health care costs by improving efﬁciencies in the health care system and houses the idea that there exists a powerful potential to advance clinical care and public health services by facilitating health professional practice and reducing health disparities. New videos are accessed by downloading them through the mobile phone. ‘Text to Change’3 (TTC) was recently introduced. The Alexandra Community Payphone2 site is part of a nationwide project. Proliferating citizen and governance services through mobile Healthcare While the health community debates whether a specialized ﬁeld of ‘M-Health’ exists and how to deﬁne it. a Dutch non-proﬁt organization. In the ﬁrst phase. M-PESA has become a market leader. In March 2007 Vodafone launched . thus increasing their incomes. Text2Teach is a project that focuses on the 11 to 13 year old age group. a Swiss entity. this was determined to be a powerful incentive since users were allowed to exchange the airtime with other subscribers as a type of currency. com called M-PESA4. The service enables its users to deposit and withdraw money. Thus. to bring broadband to low-income townships. M-PESA is so popular that more than 10 2 Mobile Broadband Case Study. Government of Uganda spends a substantial amount of the health budget in ﬁnding a cure for diseases like AIDS. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). and access health services that are increasingly being delivered through mobile phone based systems.
These tickets can be ordered by sending a text message and the user is billed through his or her regular mobile phone bill. meter reading for utilities players has typically been an arduous. and considerable carbon reduction through automated meter reading and fault detection. with the automated system. The ticket itself is also delivered to the commuter via SMS. resolutions.mdubai. CSG is now able to track end-users’ electricity usage in real-time.000 and its unregistered user base is thirty times that size. quantity and suppliers on a pay-as-use basis. Following on the success in Kenya. allowing it to accurately bill customers and optimize demand planning. WAP or the internet using their mobile phones. 7 5 m-Governance-Leveraging Mobile Technology to extend the reach of e-Governance. or car. and Hongdian. to inquire about cases. Through the PAYBIR service. Mobile World Congress. These services bypass the need for traditional physical networks for communications and collaboration.86 percent of Kenya’s GDP passes through it. Globe Telecom uses its G-Cash facility to make tax payments on behalf of its subscribers. Huawei. • Philippines – PAYBIR6: The Bureau of Internal Revenue in the Philippines offers a service called “PAYBIR. China Southern Power Grid8 (CSG) has installed an automated meter reading solution from China Mobile. The service is run by the customers: they post items for sale.ae/ 8 Asia Paciﬁc Mobile Observatory. This service also provides regular market information about price. maintenance and troubleshooting costs. All rights reserved. SMS5 tickets can be used for Helsinki’s public transport system. in order to improve efﬁciency in meter reading. M-Governance A part of a broader phenomenon of mobile-enabled development or leveraging the mobile revolution to enable development impact is attributed to M-governance. This SMS integrated service allows clients. M-Governance is a subdomain of e-governance which simply extends the reach of e-governance. delete items after they are sold. improved data accuracy through automation. By connecting the communications module to additional equipment. and post information about their businesses.5 million users and averages 90. lawyers and prosecutors. times of sessions. • In Finland. However. European Union Regional Development Fund. Its registered seller base is 51. In China. Grameenphone users can buy any agricultural product. ﬁsh. The process takes electronic services and makes them available via mobile technologies using mobile phone devices. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). 2009 © 2010 KPMG. Mobile solutions for making enterprises more efﬁcient Leveraging on the developments in Telecommunications Media and technologies (TMTs) and Information and Communication Technologies (ICTs) also emerged as one of the most cost-effective solutions for corporate houses where Collaboration lies at the heart of their business. • Dubai eGovernment’s SMS service : Dubai Public Prosecution has adopted Dubai eGovernment’s SMS service. including the transacting public. CSG is also using mobile technology to monitor other parts of its electricity network. a Swiss entity. land. the M-PESA solution has been replicated in Tanzania through its partnership with Vodacom and was recently launched in Afghanistan as well. taxpayers can now pay their tax of R 10. CellBazaar has grown rapidly over the years. CSG can obtain real-time information to support remote troubleshooting and maintenance. . GSMA. January 2010 7 http://www. easier deployment. This platform allows traders to ﬁnd others.000 hits a day (including page views and SMS messages). such as cameras or monitoring equipment. and consumer goods such as a television or refrigerator. where ” a taxpayer can ﬁle his or her income tax returns by SMS. a more reliable power network. In Bangladesh. adjust prices if items fail to sell. Grameenphone’s CellBazaar9 is one popular success story. which uses 1 million remote monitoring devices. Given its vast infrastructure. as well as large-scale purchases like an apartment. or chicken. inaccurate and expensive process. and do much more besides.000 (USD 281) and below through a text message. The automated solution has provided to CSG signiﬁcant beneﬁts: reduced data collection. 2009 9 Case Study. and the status of proposals and requests drafted by the Public Prosecution. 2009 6 Mobile Government: 2010 and Beyond. it now has 1. it allows users to buy and sell goods and services through SMS. such as rice. The BIR has forged a partnership with Land Bank of the Philippines as the accredited agent bank and Globe Telecom as the taxpayer agent.
All rights reserved. a Swiss entity. Also. network ‘uptime’ is an important Quality of Service parameter from the point of view of consumer choice and it is the single most important factor driving the use of RE applications in both urban and rural India. Operationally. Decentralized and distributed power generation technologies based on renewable energy (RE) resources are considered as emerging alternate power solutions for the telecommunications networks. The Orange solar base station development program is the most iconic part of a wider green strategy committed to achieving 20 percent reduction of CO2 emissions by 2020 and 15 percent reduction of the company’s energy consumption. ﬁnancial services. Orange won a major telecom industry award at the Global Telecoms Business Awards 201010 for its solar base station program in emerging markets. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). June 2010 © 2010 KPMG. targeted particularly at the bottom of the pyramid which have revolutionized the speed and effectiveness of service delivery in the area of healthcare. This program became Orange’s engineering blueprint for the creation of off-grid radio sites in Africa and the Middle East. India can use these excellent examples to deliver government and citizen services. . After successful trials at numerous sites in Senegal. mobile operators and vendors are using new and innovative ways to improve energy efﬁciencies and reduce their carbon foot print. The adoption of various mobile based enterprise applications leading to better services delivery with better efﬁciencies also gives an equal edge to India Inc. 10 Press Release. education. Orange replicated the program in other countries in 2008. The Orange solar deployment program now covers more than 900 base stations across 13 countries. with increased focus on green power. agriculture and overall government administration to bridge the digital divide. Orange.87 Green power for telecom The future growth of the highly competitive Indian telecom sector will come from the relatively untapped and uncovered rural market and the key issue inﬂuencing roll-out in rural areas is power.
an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). All rights reserved. a Swiss entity.88 © 2010 KPMG. .
healthcare. The aggressive growth observed by mobile services is yet to be replicated in case of broadband services. the sector continues to growth from strength to strength.89 Conclusion The Indian telecom sector has proved to be an international success story. the market has been showing signs of maturity. To further this agenda. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). October 05. 1 Telecom Subscription Data as on 31st August 2010. Nearly all major international telecom operators have made signiﬁcant efforts towards making inroads into the Indian market in order to tap the immense potential offered as well as to leverage on the low cost outsourcing model which has been pioneered in India. The urban markets may continue to add more users. 2010 © 2010 KPMG. the government has setup a robust regulatory environment to work towards the development of the sector. particularly for voice-based services. multiple tariff corrections and swelling competition continues to exert immense pressure on the operator margins. considering that there are more than 650 million potential customers waiting to be tapped. especially in case of the uptake of voice-based services. a Swiss entity. With an overall subscriber base of 706.08 million as on August 31. Rural India is the key target market likely to drive the next round of growth.3 million and a teledensity of about 60 percent. the broadband sector can expect tremendous growth in the future. The successfully concluded auction of the BWA and 3G spectrum will enhance the wireless broadband penetration across the country and help connect the remotest locations across India. commerce and banking. 3G and BWA are expected to reinvigorate the maturing urban markets and help the telcos to achieve margin enhancement. However. however. The government appreciates the importance of broadband for India and how this technology can help the rural population across the country to leverage the advantages of modern education. At present there are 15 operators in the market offering the lowest mobile tariffs across the globe. 20101. where the subscriber base currently stands at 10. This proactive regulatory environment will also be the harbinger for the next phase of development for the telecommunications sector. usage of multiple SIMs. . TRAI. The sector has witnessed a commendable growth over the past 2 years.1 With the urban teledensity crossing 100 percent. All rights reserved.
90 © 2010 KPMG. a Swiss entity. . All rights reserved. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”).
We strive to provide rapid. © 2010 KPMG. Chennai. Kochi and Chandigarh. Each KPMG ﬁrm is a legally distinct and separate entity and describes itself as such. industry-focused and technologyenabled services. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). Hyderabad. a Swiss cooperative. Bangalore. Tax and Advisory services.91 About KPMG in India KPMG is a global network of professional ﬁrms providing Audit. many of whom are internationally trained. As members of a cohesive business unit they respond to a client service environment by leveraging the resources of a global network of ﬁrms. Delhi. We provide services to over 2. providing detailed knowledge of local laws.000 people working in member ﬁrms around the world. Kolkata. We operate in 146 countries and have 140. Pune. The Indian member ﬁrms afﬁliated with KPMG International were established in September 1993. in India. a Swiss entity. which reﬂect a shared knowledge of global and local industries and our experience of the Indian business environment. The independent member ﬁrms of the KPMG network are afﬁliated with KPMG International. performance-based. All rights reserved. The ﬁrms in India have access to more than 5000 Indian and expatriate professionals.000 international and national clients. regulations. KPMG has ofﬁces in India in Mumbai. markets and competition. .
All rights reserved. universal service obligation. FICCI maintains the lead as the proactive business solutions provider through research. . standardization and research in the ﬁeld of telecommunications and administration of: • Indian Telegraph Act. With a nationwide membership of over 1500 corporates and over 500 chambers of commerce. an Indian Partnership and a member ﬁrm of the KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”). 1933 • Telecom Regulatory Authority of India Act. promotion of private investments in telecom sector. conferences.92 About Department of Telecommunications (DoT) The Department of Telecommunications of the Government of India is responsible for telecom policy formulation. set up in 1927 is the largest and oldest apex business organization of Indian business. a Swiss entity.000 business units. 1997 About Federation of Indian Chambers of Commerce and Industry (FICCI) FICCI. promotion of International co-operation in telecommunications. interactions at the highest political level and global networking. FICCI organizes a large number of exhibitions. © 2010 KPMG. telecom licensing. seminars and business meets for promoting business.50. wireless spectrum management. FICCI espouses Indian businesses and speaks directly and indirectly for over 2. 1885 • Indian Wireless Telegraphy Act.
Printed in India KPMG network of independent member ﬁrms afﬁliated with KPMG International Cooperative (“KPMG International”).in Centre for Development of Telematics (C-DOT) C-DOT Campus Mandi Road.nic. 2323 3466.com Tel: 91-80-3065 4100 Arpita Pal Agarwal Head .com Website: www.com Website: www. an Indian Partnership and a member ﬁrm of the The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity.Communications and Media seanacollins@kpmg. there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. a Swiss entity. 2373 6190 E-mail: ficcitelecom@ficci. Janpath New Delhi – 110 001 India Tel: 91-11-2371 7138 Website: www.in Telecom Disputes Settlement & Appellate Tribunal Room No.gov.Telecom R&C arpita1@kpmg. Tansen Marg. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative (“KPMG International”). 2322 0534.in The Telecom Regulatory Authority of India Mahanagar Doorsanchar Bhawan Jawaharlal Nehru Marg New Delhi: 110 002 India Tel: 91-11-2321 1934. 2687 6882 Website: www. Kautilya Marg New Delhi .trai. 5 Khurshid Lal Bhavan.tdsat.in Telecommunication Engineering Centre Gate No. 2687 3411.478. Sanchar Bhawan Ashoka Road. .110 021 India Tel: 91-11-2687 6882. 2337 2598 E-mail: ranjan.303.gov. Mehrauli New Delhi-110 030 India Tel: 91-11-2680 2856 Fax: 91-11-2680 3338 Website: www.com Federation of Indian Chambers of Commerce and Industry Sarika Gulyani IT & Telecom Division Federation House.gov. All rights reserved. New Delhi -110 001 Tel: 91-11-2373 8760-70. 2410 2563 Fax: 91-11-2410 5171.dot.cdot.com Tel: 91-65-6213 7302 Romal Shetty National Head . No one should act on such information without appropriate professional advice after a thorough examination of the particular email@example.com & Room No.com KPMG Sean Collins Global Chair .Telecom firstname.lastname@example.org Contact Us Department of Telecommunications Ranjan Khanna Director Room No. a Swiss entity. 2321 3223 Fax: 91-11-2321 3294 Website: www. New Delhi -110 001 Tel: 91-11-2303 6730. Although we endeavor to provide accurate and timely information.tec.com Tel: 91-124-307 4588 © 2010 KPMG. Hotel Samrat Chanakyapuri.
92 This knowledge document has been developed by KPMG and FICCI for providing an overview of the Indian telecommunications sector. directly or indirectly. in any form. It is meant to be used for the limited purpose of ‘India Telecom 2010’ only. It may not be considered. as a policy/legal document of the government. .
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