Telecom Industry Analysis ( IN CONTEXT TO INDIA)

1. Industry Name : Telecom Industry

Meaning of telecom:
The science and technology of communication at a distance by transmission of electrical impulse
s, electromagnetic waves, or optical pulses, as by telephone, radio, television, or computer.

Historical background of the industry:

 The telecom sector in India started in 1851 when the first operation landlines were laid by the
government nearby Calcutta. In 1881 telephone services were introduced in India and telephone
services were merged with the postal system in 1883.
 Early days of the telecom sector in India had 2 wholly-owned government companies – Videsh
Sanchar Nigam Limited (VNSL) for international telecommunications and Mahanagar Telephone
Nigam Limited (MTNL) for metropolitan areas in 1986.
 Post-independence scenario witnessed around 9 System for Mobile Communications (GSM) and
Code Division Multiple Access (CDMA).operators providing mobile services in 10
telecommunication circles and 4 metro cities, covering more than 2000 towns in India.

2. Nature of product provided by industry: service product is provided along with

material products and related services.

3. Raw material: steel tower / antenna , power supply , base tower station shelter , battery bank ,
switches , base tower station, transceivers for signal processing and transmission, etc.

4. Market (users): In telecommunications, a user is a person, organization, or other entity that

employs the services provided by a telecommunication system, or by an information processing
system, for transfer of information. A user may also be the subscriber, i.e. the customer paying
for the service.

5. Market segmentation: The telecom market can be split into three segments – wireless, wire line and
internet services. Total subscriber base in the country stood at 1,163.67 million as of May 31, 2020. The
wireless market segment accounted for 98.28% of the total subscriber base as of March 2020. Rural
subscribers comprised 44.27% of the total telephone subscribers as of March 2020.

6. Demand scenario: India is also the world’s second-largest telecommunications market. It’s
total telephone subscriber base and telephone-density (The number of telephone connections for every
hundred individuals living within an area) reached 1,177.97 million and 87.37%, respectively, in FY20.
 Given the low tariff environment and relatively low rural and semi urban penetration levels,
demand will continue to remain higher in the foreseeable future across all the segments.

7. Policy of government: The regulatory and policy framework encompassing the

communications sector in India comprises a number of statutes, rules,
regulations, guidelines, etc, laid down by the government of India. The primary
statutes regulating the sector include:.

 the Indian Wireless Telegraphy Act 1933 (the Wireless Act);

 the telecoms policy amended from time to time, the latest being the
National Digital Communications Policy 2018 (the NDCP 2018), which
was approved in September 2018;
 the Broadband Policy 2004; and
 The Information Technology Act 2000 (the IT Act).
 the Indian Telegraph Act 1885 (the Telegraph Act); The Telegraph Act
is the primary legislation underlying the telecommunications regulatory
framework for India and prescribing various powers of the government
to operate and regulate telecoms services in the country
 The Telecom Regulatory Authority of India (TRAI) Act 1997 (the TRAI
Act); TRAI has played catalytic role in the development of the telecom, broadcasting
and cable services. It has been its Endeavour to provide an environment, which is fair and
transparent, encourages competition, promotes a level-playing field for all service
providers, protects the interest of consumers and enables technological benefits to one
and all. A number of recommendations on various telecom issues were made by TRAI
during 2017-18.TRAI's mission is to create and nurture conditions for the growth of
telecommunications in India to enable the country to have a leading role in the emerging
global information society.[4]

8. Problems of industry.
 Up gradation in existing infrastructure is required.
 Deploy new access network technologies.
 All that new data traffic needs to be upgraded to meet the new requirements.
 Excessive competition
 High Right-of-Way (ROW) cost: Sometimes, state governments charge a huge amount
for permitting the laying of fiber, etc.
  India has very little penetration of fixed-line in its network whereas most of the developed
countries have a very high penetration of fixed lines
  Huge fluctuations in the duties on Telecom Equipment which contribute to connecting
the whole system from the central server to the consumer.
 Timeframe of policy execution: Government have withdrawn a lot of things to benefit
telecom sector but by the time it gets executed to the market, it becomes too late.
 Lack of Telecom Infrastructure in Semi-rural and Rural areas: Service providers have to
incur huge initial fixed cost to enter semi-rural and rural areas.

9 Competition: The post-independence era (the late 90s – 2000s) witnessed a

number of players entering the market after the government established
various norms and regulations that are vital to run the sector.

 State-owned companies – BSNL & MTNL

 Privately owned Indian companies – Reliance Infocomm & Tata
Teleservices.
 Foreign companies like – Hutchison-Essar, BPL Mobile, Bharti Tele-
Ventures, Idea Cellular, Escotel Spice Communications, Uninor, Aircel, MTS,
Etisalat, Videocon, S-Tel and many more.
From not many sellers in the market, India was flooded with a plethora of
options to choose from. Before Reliance Infocomm disrupted the market, the
telecom sector in India was a monopolistic competition. New entrants had
basically low barriers, all they had to do was to be a deep-pocketed brand and
come up with an offering loaded with offers, discounts, and affordable tariffs
and everything else would follow.

Operators Subscribers in Millions Market Share (Mar’20)

JIO 387.5 33.6%

Airtel 327.8 28.4%
Vodafone-Idea 319.1 27.6%

BSNL 119.7 10.4%

Total 1154.1 100.0%

Gross revenue of the telecom: sector stood at Rs 185,291 crore (US$ 26.51 billion) in FY20
(April-December 2019).Over the next five years, rise in mobile-phone penetration and decline in
data costs will add 500 million new internet users in India, creating opportunities for new
businesses

. 10. Cost comparison : prices offered by BSNL 4G Combo Unlimited Plans is the
best in present mobile internet market with affordable rates at lowest or
cheapest prices which are to be the most comfortable for a common man
for subscription of 4G DATA Services when compared BSNL Vs JIO, Airtel and
Idea Vodafone.

CONCLUSION:

Indian telecom industry underwent a high pace of market liberalization and growth since the
1990s and now has become the world's most competitive and one of the fastest growing telecom
markets. Telecommunication has supported the socioeconomic development of India and has
played a significant role to narrow down the rural-urban digital divide to some extent. It also has
helped to increase the transparency of governance with the introduction of e-governance in India.
The government has pragmatically used modern telecommunication facilities to deliver mass
education programmers’ for the rural folk of India.
According to London-based telecom trade body GSMA, the telecom sector accounted for 6.5%
of India's GDP in 2015, or about ₹9 lakh crore (US$130 billion), and supported direct
employment for 2.2 million people in the country. GSMA estimates that the Indian telecom
sector will contribute ₹14.5 lakh crore (US$200 billion) to the economy and support 3 million
direct jobs and 2 million indirect jobs by 2020.