Introduction: India has always been an attractive destination for international companies across the world.

With its rapidly growing economy, India is making developments in all the sectors including the telecom. The telecom sector is gaining momentum with the advent of private players like Airtel, Reliance, Tata etc. in the field. Previously, telecom sector was monopolized by government-controlled BSNL (Bhartiya Sanchar Nigam Limited). The telecom sector has registered tremendous growth over the years. As a result, India has become the third largest telecommunication network in the world. The subscriber base is increasing manifold and the country has emerged as the fastest growing telecom market in the world. Few decades ago having a telephone was a status symbol and owning a cell phone made one wealthy, but now, the prices of cell phones have come so down that even a rickshaw-puller can easily afford it. After the Indian economy was liberalized, privatized and globalized, many private companies flooded the Indian market. The private operators not only provide cellular services but also landline. Some of the companies also provide WLL (Wireless Local Loop) services. Landline telephones have also changed their traditional nature; they are not only used for making calls but one can also send SMS or musical greetings by it. India appeals to international market because of the low penetration levels of telecom services. Though, the number of subscribers is increasing day by day, it is still low compared to other countries. Strong economic growth has resulted in increase in the average income of the consumers thereby increasing their purchasing power is also one of the major factor behind the development of telecom sector in India. Another major reason is the easy availability of cheap and skilled labor which is beneficial for its expansion. BSNL is the largest telecom company in India. BSNL and MTNL leads in the landline services while Bharati Airtel is the most important player in the cellular services. Telecom companies are facing stiff competition entering of the new players. This has led to sharp decline in the call rates and price of mobile handsets has also become cheaper. One can buy a branded handset at Rs. 1000. Companies such as Reliance, Airtel, Tata and Idea are offering several schemes to attract consumers. Some of the schemes are call rates being Re.1 per second, making calls on the same network has become free or very nominal rate is charged. The monthly rentals have also

decreased. Their ads are also very innovative and creative. Who can forget the Vodafones Zoozoo ads or Ideas social message ads endorsed by Abhishek Bachchan? Mobile companies are also providing best offers on musical ring tones downloading wallpapers etc. However, Indian market has still not reached to its saturation point. The telecom sector has to still make inroads in the rural areas. Companies should divert their attention to the rural areas to cater to the rural market. Government should also provide the companies secure environment so that they invest in India. This will ultimately benefit the consumers. History of telecom in India Telecom in the real sense means transfer of information between two distant points in space. The popular meaning of telecom always involves electrical signals and nowadays people exclude postal or any other raw telecommunication methods from its meaning. Therefore, the history of Indian telecom can be started with the introduction of telegraph. Introduction of telegraph in Indian market: The postal and telecom sectors had a slow and uneasy start in India. In 1850, the first experimental electric telegraph Line was started between Kolkata and Diamond Harbor. In 1851, it was opened for the British East India Company. The Posts and Telegraphs department occupied a small corner of the Public Works Department, at that time. Construction of 4,000 miles (6,400 km) of telegraph lines connecting Kolkata (Calcutta) and Peshawar in the north along with Agra, Mumbai (Bombay) through Sindwa Ghats, and Chennai in the south, as well as Ootacamund and Bangalore was started in November 1853. Dr. William O'Shaughnessy, who pioneered telegraph and telephone in India, belonged to the Public Works Department. He worked towards the development of telecom throughout this period. A separate department was opened in 1854 when telegraph facilities were opened to the public.

Introduction of the telephone in Indian market: In 1880, two telephone companies namely The Oriental Telephone Company Ltd. and The Anglo-Indian Telephone Company Ltd. approached the Government of India to establish telephone exchanges in India. The permission was refused on the grounds that the establishment of telephones was a Government monopoly and that the Government itself would undertake the work. In 1881, the Government later reversed its earlier decision and a licence was granted to the Oriental Telephone Company Limited of England for opening telephone

exchanges at Kolkata, Mumbai, Chennai (Madras) and Ahmedabad and the first formal telephone service was established in the country.[14] 28 January 1882, is a Red Letter Day in the history of telephone in India. On this day Major E. Baring, Member of the Governor General of India's Council declared open the Telephone Exchange in Kolkata, Chennai and Mumbai. The exchange at Kolkata named "Central Exchange" was opened at third floor of the building at 7, Council House Street. The Central Telephone Exchange had 93 number of subscribers. Bombay also witnessed the opening of Telephone Exchange in 1882. Further developments in India: BSNL Microwave Tower Mangalore. 1902 - First wireless telegraph station established between Sagar Islands and Sandheads. 1907 - First Central Battery of telephones introduced in Kanpur. 1913-1914 - First Automatic Exchange installed in Shimla. 23 July 1927 - Radio-telegraph system between the UK and India, with beam stations at Khadki and Daund, inaugurated by Lord Irwin by exchanging greetings with the King of England. 1933 - Radiotelephone system inaugurated between the UK and India. 1953 - 12 channel carrier system introduced. 1960 - First subscriber trunk dialing route commissioned between Lucknow and Kanpur. 1975 - First PCM system commissioned between Mumbai City and Andheri telephone exchanges. 1976 - First digital microwave junction introduced. 1979 - First optical fibre system for local junction commissioned at Pune. 1980 - First satellite earth station for domestic communications established at Secunderabad, 1983 - First analog Stored Program Control exchange for trunk lines commissioned at Mumbai. 1984 - C-DOT established for indigenous development and production of digital exchanges. 1985 - First mobile telephone service started on non-commercial basis in Delhi. While all the major cities and towns in the country were linked with telephones during the British period, the total number of telephones in 1948 was only around 80,000. Even after independence, growth was extremely slow. The telephone was a status symbol rather than being an instrument of utility. The number of telephones grew leisurely to 980,000 in 1971, 2.15 million in 1981 and 5.07 million in 1991, the year economic reforms were initiated in the country.

While certain innovative steps were taken from time to time, as for example introduction of the telex service in Mumbai in 1953 and commissioning of the first [subscriber trunk dialing] route between Delhi and Kanpur and between Lucknow and Kanpur in 1960, the first waves of change were set going by Sam Pitroda in the eighties. He brought in a whiff of fresh air. The real transformation in scenario came with the announcement of the National Telecom Policy in 1994. Emergence as a major player: In 1975, the Department of Telecom (DoT) was separated from P&T. DoT was responsible for telecom services in entire country until 1985 when Mahanagar Telephone Nigam Limited (MTNL) was carved out of DoT to run the telecom services of Delhi and Mumbai. In 1990s the telecom sector was opened up by the Government for private investment as a part of Liberalization-Privatization-Globalization policy. Therefore, it became necessary to separate the Government's policy wing from its operations wing. The Government of India corporatised the operations wing of DoT on 1 October 2000 and named it as Bharat Sanchar Nigam Limited (BSNL). Many private operators, such as Reliance Communications, Tata Indicom, Vodafone, Loop Mobile, Airtel, Idea etc., successfully entered the high potential Indian telecom market. Privatization of telecommunications in India The Indian government was composed of many factions (parties) which had different ideologies. Some of them were willing to throw open the market to foreign players (the centrists) and others wanted the government to regulate infrastructure and restrict the involvement of foreign players. Due to this political background it was very difficult to bring about liberalization in telecommunications. When a bill was in parliament a majority vote had to be passed, and such a majority was difficult to obtain, given to the number of parties having different ideologies. Liberalization started in 1981 when Prime Minister Indira Gandhi signed contracts with Alcatel CIT of France to merge with the state owned Telecom Company (ITI), in an effort to set up 5,000,000 lines per year. But soon the policy was let down because of political opposition. She invited Sam Pitroda a US based NRI to set up a Center for Development of Telematics(CDOT), however the plan failed due to political reasons. During this period, after the assassination of Indira Gandhi, under the leadership of Rajiv Gandhi, many public sector organizations were set up like the Department of Telecommunications (DoT) , VSNL and

MTNL. Many technological developments took place in this regime but still foreign players were not allowed to participate in the telecommunications business. The demand for telephones was ever increasing. It was during this period that the P.N Rao led government introduced the national telecommunications policy [NTP] in 1994 which brought changes in the following areas: ownership, service and regulation of telecommunications infrastructure. They were also successful in establishing joint ventures between state owned telecom companies and international players. But still complete ownership of facilities was restricted only to the government owned organizations. Foreign firms were eligible to 49% of the total stake. The multi-nationals were just involved in technology transfer, and not policy making. During this period, the World Bank and ITU had advised the Indian Government to liberalize long distance services in order to release the monopoly of the state owned DoT and VSNL; and to enable competition in the long distance carrier business which would help reduce tariff's and better the economy of the country. The Rao run government instead liberalized the local services, taking the opposite political parties into confidence and assuring foreign involvement in the long distance business after 5 years. The country was divided into 20 telecommunication circles for basic telephony and 18 circles for mobile services. These circles were divided into category A, B and C depending on the value of the revenue in each circle. The government threw open the bids to one private company per circle along with government owned DoT per circle. For cellular service two service providers were allowed per circle and a 15 years license was given to each provider. During all these improvements, the government did face oppositions from ITI, DoT, MTNL, VSNL and other labor unions, but they managed to keep away from all the hurdles. After 1995 the government set up TRAI (Telecom Regulatory Authority of India) which reduced the interference of Government in deciding tariffs and policy making. The DoT opposed this. The political powers changed in 1999 and the new government under the leadership of Atal Bihari Vajpayee was more pro-reforms and introduced better liberalization policies. They split DoT in two- one policy maker and the other service provider (DTS) which was later renamed as BSNL. The proposal of raising the stake of foreign investors from 49% to 74% was rejected by the opposite political party and leftist thinkers. Domestic business groups wanted the government to privatize VSNL. Finally in April 2002, the government decided to

cut its stake of 53% to 26% in VSNL and to throw it open for sale to private enterprises. TATA finally took 25% stake in VSNL. This was a gateway to many foreign investors to get entry into the Indian Telecom Markets. After March 2000, the government became more liberal in making policies and issuing licenses to private operators. The government further reduced license fees for cellular service providers and increased the allowable stake to 74% for foreign companies. Because of all these factors, the service fees finally reduced and the call costs were cut greatly enabling every common middle class family in India to afford a cell phone. Nearly 32 million handsets were sold in India. The data reveals the real potential for growth of the Indian mobile market. In March 2008 the total GSM and CDMA mobile subscriber base in the country was 375 million, which represented a nearly 50% growth when compared with previous year.[19] As the unbranded Chinese cell phones which do not have International Mobile Equipment Identity (IMEI) numbers pose a serious security risk to the country, Mobile network operators therefore planned to suspend the usage of around 30 million mobile phones (about 8 % of all mobiles in the country) by 30 April. 56 years the average monthly subscribers additions were around 0.05 to 0.1 million only and the total mobile subscribers base in December 2002 stood at 10.5 millions. However, after a number of proactive initiatives were taken by regulators and licensors, the total number of mobile subscribers has increased greatly to 617 million subscribers as of May 2010. India has opted for the use of both the GSM (global system for mobile communications) and CDMA (code-division multiple access) technologies in the mobile sector. In addition to landline and mobile phones, some of the companies also provide the WLL service. The mobile tariffs in India have also become lowest in the world. A new mobile connection can be activated with a monthly commitment of US$0.15 only. In 2005 alone additions increased to around 2 million per month in the year 2003-04 and 2004-05. In June 2009, the Government of India banned the import of several mobile phones manufactured in China citing concerns over quality and the lack of IMEI's which make it difficult for authorities in India to track the sale and use of such phones. In April 2010, the Government was also reported to be blocking Indian service providers from purchasing Chinese mobile technology citing concerns that Chinese hackers could compromise the Indian telecommunications network during times of national emergency. A series of attacks on Indian

government websites and computer networks by suspected Chinese hackers has also made Indian regulators suspicious with regards to the import of potentially sensitive equipment from China. The companies reported to be affected by this are Huawei Technologies and ZTE. Telecommunications Regulatory Environment in India: Telecommunications Regulatory Environment (TRE) index, which summarizes stakeholders perception on certain TRE dimensions, provides insight into how conducive the environment is for further development and progress. The most recent survey was conducted in July 2008 in eight Asian countries, including Bangladesh, India, Indonesia, Sri Lanka, Maldives, Pakistan, Thailand, and the Philippines. The tool measured seven dimensions: i) market entry; ii) access to scarce resources; iii) interconnection; iv) tariff regulation; v) anti-competitive practices; and vi) universal services; vii) quality of service, for the fixed, mobile and broadband sectors. The results for India, point out to the fact that the stakeholders perceive the TRE to be most conducive for the mobile sector followed by fixed and then broadband. Other than for Access to Scarce Resources the fixed sector lags behind the mobile sector. The fixed and mobile sectors have the highest scores for Tariff Regulation. Market entry also scores well for the mobile sector as competition is well entrenched with most of the circles with 4-5 mobile service providers. The broadband sector has the lowest score in the aggregate. The low penetration of broadband of mere 3.87 against the policy objective of 9 million at then end of 2007 clearly indicates that the regulatory environment is not very conducive. Revenue and growth of telecom sector: The total revenue in the telecom service sector was 86,720 crore (US$19.7 billion) in 2005-06 as against 71,674 crore (US$16.3 billion) in 2004-2005, registering a growth of 21%. The total investment in the telecom services sector reached 200,660 crore (US$45.5 billion) in 2005-06, up from 178,831 crore (US$40.6 billion) in the previous fiscal. Telecommunication is the lifeline of the rapidly growing Information Technology industry. Internet subscriber base has risen to 6.94 million in 2005-2006. Out of this 1.35 million were broadband connections. More than a billion people use the internet globally. Under the Bharat Nirman Programme, the Government of India will ensure that 66,822 revenue villages in the country, which have not yet been provided with a Village Public Telephone (VPT), will be connected. However doubts have been raised about what it would mean for the poor in the country.

It is difficult to ascertain fully the employment potential of the telecom sector but the enormity of the opportunities can be gauged from the fact that there were 3.7 million Public Call Offices in December 2005 up from 2.3 million in December 2004. The value added services (VAS) market within the mobile industry in India has the potential to grow from US$500 million in 2006 to a whopping US$10 billion by 2009. Telephone in Indian Market: On landlines, intra-circle calls are considered local calls while inter-circle are considered long distance calls. Currently Government is working to integrate the whole country in one telecom circle. For long distance calls, the area code prefixed with a zero is dialed first which is then followed by the number (i.e. To call Delhi, 011 would be dialed first followed by the phone number). For international calls, "00" must be dialed first followed by the country code, area code and local phone number. The country code for India is 91. Telephone Subscribers (Wireless and Landline): 688.38 million (July 2010) Land Lines: 35.96 million (July 2010) Cell phones: 652.42 million (July 2010) Yearly Cell phone Addition: 178.25 million (Jan-Dec 2009) Monthly Cell phone Addition: 16.92 million (July 2010) Teledensity: 58.17% (July 2010) Projected Teledensity: 1 billion, 84% of population by 2012 Mobile telephones With a subscriber base of more than 650 million, the Mobile telecommunications system in India is the second largest in the world and it was thrown open to private players in the 1990s. The country is divided into multiple zones, called circles (roughly along state boundaries). Government and several private players run local and long distance telephone services. Competition has caused prices to drop and calls across India are one of the cheapest in the

world.[34] The rates are supposed to go down further with new measures to be taken by the Information Ministry.[35] In September 2004, the number of mobile phone connections crossed the number of fixed-line connections and presently dwarfs the wireline segment by a ratio of around 20:1 The mobile subscriber base has grown by a factor of over a hundred and thirty, from 5 million subscribers in 2001 to over 650 million subscribers as of July 2010 (a period of less than 9 years) . India primarily follows the GSM mobile system, in the 900 MHz band. Recent operators also operate in the 1800 MHz band. The dominant players are Airtel, Reliance Infocomm, Vodafone, Idea cellular and BSNL/MTNL. There are many smaller players, with operations in only a few states. International roaming agreements exist between most operators and many foreign carriers. The following table gives details regarding the subscriber base of each Mobile Service Provider in India as of 31 July 2010 Operator Bharti Airtel MTNL BSNL Subscriber base Market Share 139,220,882 5,255,444 73,781,448 21.34% 0.81% 11.31% 17.37% 6.64% 0.86% 0.45% 1.05% 10.84% 11.47% 0.13% 17.08% 100%

Reliance Communications 113,315,831 Aircel Sistema Loop Unitech Idea Tata Teleservices HFCL Infotel Vodafone All India 43,296,659 5,582,683 2,947,288 6,873,798 70,748,936 74,850,220 851,887 111,465,260 652,420,798

A list of ten states (including the metros Mumbai, Kolkata and Chennai in their respective states) with the largest subscriber base as of July 2010 is given below Subscriber base 85,185,307 78,020,851 59,709,708 Population (01/08/2010) 199,415,992 110,351,688 67,773,611 84,241,069 90,524,849 97,560,027 58,969,294 58,388,625 67,449,102 72,362,313 1,188,783,351 Mobile population 427 707 881 600 520 430 709 618 535 489 549 phones per 1000

State Uttar Pradesh Maharashtra Tamil Nadu

Andhra Pradesh 50,507,427 West Bengal Bihar Karnataka Gujarat Rajasthan Madhya Pradesh India 47,088,259 41,898,468 41,804,172 36,097,163 36,083,720 35,391,441 652,420,798

Landlines in India Until recently, only the Government-owned BSNL and MTNL were allowed to provide landline phone services through copper wire in India with MTNL operating in Delhi and Mumbai and BSNL servicing all other areas of the country. Private operators such as Touchtel and Tata Teleservices have entered the market however, the primary focus of their business is on the mobile-phone sector. Due to the rapid growth of the cellular phone industry in India, landlines are facing stiff competition from cellular operators. This has forced landline service providers to become more efficient and improve their quality of service. Landline connections are now also available on demand, even in high density urban areas. The breakup of wireline subscriber base in India as of September 2009 is given below:

Operator BSNL MTNL Bharti Airtel

Subscriber base 28,446,969 3,514,454 2,928,254

Reliance Communications 1,152,237 Tata Teleservices HFCL Infotel Teleservices Ltd All India 1,003,261 165,978 95,181 37,306,334

The total subscriber base for internet users in India is 81 million as of 2009. Internet penetration in India is one of the lowest in the world which is about 7.0% of the population, compared to other nations like United States, Japan or South Korea where internet penetration is significantly higher than in India. The number of broadband connections in India have seen a continuous growth since the beginning of 2006. At the end of January 2010, total broadband connections in the country have reached 8.03 million. Broadband in India is more expensive as compared to Western Europe/United Kingdom and United States. After economic liberalization in 1992, many

private ISPs have entered the market, many with their own local loop and gateway infrastructures. The telecom services market is regulated by the TRAI and the DoT, which has been known to impose censorship on some websites. Opportunities and Challenges of Telecom industry in India: Opportunities India offers an unprecedented opportunity for telecom service operators, infrastructure vendors, manufacturers and associated services companies. A host of factors are contributing to enlarged opportunities for growth and investment in telecom sector: An expanding Indian economy with increased focus on the services sector Population mix moving favorably towards a younger age profile Urbanization with increasing incomes

Investors can look to capture the gains of the Indian telecom boom and diversify their operations outside developed economies that are marked by saturated telecom markets and lower GDP growth rates. Inflow of FDI into Indias telecom sector during April 2000 to Feb. 2010 was about Rs 405,460 million. Also, more than 8 per cent of the approved FDI in the country is related to the telecom sector. New technologies: 3G Technology International Mobile Telecommunications-2000 (IMT2000), better known as 3G or 3rd Generation, is a generation of standards for mobile phones and mobile telecommunications services fulfilling specifications by the International Telecommunication Union. Application services include wide-area wireless voice telephone, mobile Internet access, video calls and mobile TV, all in a mobile environment. Compared to the older 2G and 2.5G standards, a 3G system must allow simultaneous use of speech and data services, and provide peak data rates of at least 200 kbit/s according to the IMT-2000 specification. Recent 3G releases often denoted 3.5G and 3.75G, also provide mobile broadband access of several Mbit/s to laptop computers and smart phones. The bandwidth and location information available to 3G devices gives rise to applications not previously available to mobile phone users. Some of the applications are: y Mobile TV a provider redirects a TV channel directly to the subscriber's phone where it can be watched. y y y Video on demand a provider sends a movie to the subscriber's phone. Video conferencing subscribers can see as well as talk to each other. Tele-medicine a medical provider monitors or provides advice to the potentially isolated subscriber. y Location-based services a provider sends localized weather or traffic conditions to the phone, or the phone allows the subscriber to find nearby businesses or friends. 3G in India In 2008, India entered into the 3G arena with the launch of 3G enabled Mobile and Data services by Bharat Sanchar Nigam Ltd. (BSNL) in Bihar (Patna). BSNL is the first Mobile operator in India to launch 3G services. Later, MTNL launched 3G in Mumbai & Delhi. Government owned Bharat Sanchar Nigam Ltd (BSNL) has already been provided with a 3G

license and has been operating its services in 380 cities by the end of March 2010. Nation wide auction of 3G wireless spectrum in April 2010 was announced. The auction fetched huge sums of money for the Government of India, estimated to be around Rs 35,000/- Crore ($7.6 billion). The total revenue collected by the Government was nearly Rs 1,06,000 Crore ($23 billion). Private provider Tata Docomo has announced the services to be launched during Diwali Season in November 2010. Airtel and Vodafone expected to provide its 3G service from January 2011. 4G Technology 4G refers to the fourth generation of cellular wireless standards. It is a successor to 3G and 2G families of standards. The nomenclature of the generations generally refers to a change in the fundamental nature of the service, non-backwards compatible transmission technology, and new frequency bands. The first was the move from 1981 analog (1G) to digital (2G) transmission in 1992. This was followed, in 2002, by 3G multi-media support, spread spectrum transmission and at least 200 kbit/s, soon expected to be followed by 4G, which refers to all-IP packet-switched networks, mobile ultra-broadband (gigabit speed) access and multi-carrier transmission. Pre-4G technologies such as mobile WiMAX and first-release 3G Long term evolution (LTE) have been available on the market since 2006 and 2009 respectively. Semi Closed Wallet-The service The service called a Semi Closed Wallet will for now allow only the subscribers to exchange physical cash for virtual money. A user can store his phone with prepaid cash and pay for goods and services but only for transactions of value Rs 5,000 or less. Also, the service would work with only a specified number of merchant locations. Users would not be able to withdraw cash or redeem it through the service.

Hazards of mobile phones: Mobile phones use electromagnetic radiation in the microwave range, and some believe this may be harmful to human health. Radiation absorption: Radio waves emitted by a mobile telephone handset are absorbed by the human head, during talking. However there are standards towards how much power output a cellphone can emit. For example: in Europe the limit is 2 watts per kg. Studies suggest radiation could cause benign brain tumours

Ear tumors: Using cell phones for more than ten years increases the possibility of ear tumours. . Example: A 750-people study by Sweden's Karolinska Institute found the risk of acoustic neuroma (A type of tumor) rose by 3.9 times on the side of the head the phone is used. Thermal risks: For a person using a cell phone, most of the heating effect will occur at the surface of the head due to the release of microwave radiation which heats up the living tissue. This is less exposure than the sun but it has been proved that more than 3 hours of this exposure has caused catarats to develop in rabbits, however cell phones do not emit enough radiation to cause this in such a limited number of hours. Blood-brain barrier effects: From the study of the effects of radio waves on rats, it has been proven to have the effect of causing a leakage of a toxic Albumin into the neuron cells which can cause permanent damage Mobile phones and cancer: A Swedish scientific team at the Karolinska Institute conducted a study in 2004 that suggested regular use of a mobile phone over a decade was associated with an increased risk of benign brain tumors. Dr Vini Khurana (Cancer expert)-using handsets for 10 years or more can double the risk of brain cancer. Opposition: Mobile Operators Association dismissed Khurana's study as "a selective discussion of scientific literature by one individual". It believes he "does not present a balanced analysis" of the published science, and "reaches opposite conclusions to the WHO and more than 30 other independent expert scientific reviews". Other effects: Studies have proven that the lack of sleep develops since people choose to use their time to sleep to either text or to talk on the phone. Example: At Katholieke University it was found that almost 60% of students used their cell phones either to talk or text message after turning their lights out at bedtime.

In the study of 361 men it was proven that more hours spent on cell phones are known to lower a mans sperm count and increase abnormal sperms.

Challenges: No. of operators are increasing per circle: Because of which the competition is increasing day by day. The existing players must spend huge amount of money in R&D and in advertisements just to survive in the market. Infrastructure readiness in rural market: There is a need to create infrastructure in rural market. Which calls for lakhs of investments. So there is a big challenge for the players to create a infrastructure for the rural market. PC prices are very high Availability of Contents in local language Availability of Contents for Rural Population Telecom Manufacturing in India.