GROWTH OF COMMUNICATION SECTOR

Growth of Communication Sector

The Communication sector is amongst the fastest growing in the country. It work in all major
markets around the world. Communication technology’s products and solutions are accepted
globally. The first year of the new millennium has been a year of turbulence, tragedy, terrorism and
slow-down in the world economy. The Indian Communication industry has weathered this storm
well. It is indeed creditable that the industry and services in India has reasonably continued its
robust growth in the year 2003-04
This sector has emerged as one of the fastest growing sectors in the economy
History of communication in India
A major reorganisation of the department took place in April, 1925. The accounts of the Indian
Posts and Telegraphs were reconstituted to examine the true fiscal profile of the department. The
attempt was to find out the extent to which the department was imposing a burden on the taxpayers
or bringing in revenue to the Exchequer, how far each of the four constituent branches of the
department, the postal, telegraph, telephone and wireless were contributing towards this result. It
was further examined whether the rates charged from the public for the various services were
inadequate or excessive.The Posts and Telegraphs, like all public and private undertakings, was a
victim of the universal financial and economic depression which crashed on the world in 1930.
During 1931, numerous economy measures had to be introduced according to the advice of the
Posts and Telegraphs Sub-Committee to the Retrenchment Committee presided over by Sir
Cowasjee Jehangir Jr. Naturally, the adoption of the various measures of retrenchment could not
but have an adverse effect on the emoluments and interests of the personnel of the Department.
From the beginning, P&T set up was run on welfare lines. Profit was not the motto. The annual
report of the department for 1931 said "It is the accepted policy of the Government that the
department should be so administered that there should be neither any substantial profit nor any
substantial loss on its working under normal conditions. As has already been indicated, the
achievement of this ideal has not proved possible owing mainly to the exceptional economic and
trade conditions of recent years. One of the main contributory causes was the revision and
improvement of pay of the great bulk of the employees of the department in recent years. This was
undertaken with the approval of and indeed under pressure by the Legislative Assembly. While the
department is commonly spoken of as a 'commercial' one and though as far as possible it is guided
by the commercial considerations in the regulation of its business, it must be realised that in many
directions it is debarred from observing strict business principles. Many of the purposes which it is
required to serve are unremunerative and notably, in matters relating to the employment and
control of staff, the department is bound by a large volume of statutory and other rules, doubtless
necessary for the regulation of a public service, but which in the aggregate involve many
restrictions of a kind unknown to private commercial concerns.
After the implementation of the Federal Financial Integration Scheme of 1st April, 1950, the
administration of the entire network of telegraph and telephone systems of the nation, including
those that previously existing in the former princely states became a major adventure. In 1950 the
number of Telephone Exchanges absorbed from princely states was 196. These systems which
were working with different degrees of efficiency could fit into the general telecommunication
network. The installed capacity of these 196 exchanges was 13,362 lines with 11,296 working
connections. Soon after the absorption an attempt was made to improve their technical efficiency
by replacing obsolete and unserviceable equipment and lending well-qualified and experienced
staff. Simultaneously, isolated exchanges were integrated with the general pool. The more
complicated task was acquisition of the staff. Their final absorption into the different cadres of
service in Posts and Telegraphs was a major step.

FROM P&T TO DoT

Till 31st December, 1984, the postal, telegraph and telephone services were managed by the Posts
and Telegraphs Department. In January 1985, two separate Departments for the Posts and the
Telecommunications were created. The accounts of the department, initially, were maintained by
the Accountant General of the P&T. However, by April 1972, the telecommunications accounts
were separated. Simultaneously the department also started preparing the balance sheet annually.
With the takeover of the accounts from the audit and delegation of larger financial powers to the
field units, internal Financial Advisers were posted to all the circles and units.

Bharat Sanchar Nigam Limited (BSNL) is India's leading telecommunications provider and the
country's largest public-sector firm. BSNL provides local-exchange access and domestic long-
distance services through a network of more than 45 million access lines covering most of India. It
also offers wireless communications, data and Internet services, as well as business voice and data
services. The company is still controlled by the government, as is India's other dominant phone
company Mahanagar Telephone Nigam Limited (MTNL). Plans to merge the two companies are in
the works.

Company Type Private

Fiscal Year-End March
2004 Sales (mil.) $5,200.0
1-Year Sales Growth (4.3%)
Chairman, Managing Director, and Director, Planning and New Services V. P. Sinha
(Subscribers see complete biographies -- view sample)

Director, Finance S. D. Saxena

Director, Operations S. D. Choudhary

Top competitors
• Mahanagar Telephone Nigam Limited
• Sify
• VSNL

GSM / GPRS NETWORK EXPANSION

Bharat Sanchar Nigam Ltd (BSNL) is one of the largest telecommunications companies in India
covering both mobile communications and fixed infrastructure. The company was formed in
October 2000 when the Indian Government Department of Telecom Operations was floated as a
company. The success of the company shows in that it has over 38 million fixed line subscribers,
6.9 million GSM / GPRS subscribers and 1 million CDMA subscribers.
The company's Cell One network (GSM/GPRS) was launched in late 2002 and within six months
had attracted 2.4 million subscribers. BSNL then decided to halt further network capacity
expansion, as it believed it could not sustain the rate of growth. Subscriber numbers did not fall
off, but neither did they increase at the same rate.
The BSNL board later realised its mistake and in November 2003 authorised capacity
enhancement for their cash cow Cell One network (the company has also been affected by SIM
card and GSM handset shortages). The expansion process is currently ongoing, increasing the
capacity to accept 15 million more subscribers. The network expansion includes the biggest ever
GSM tender for 11 million lines, worth $863 million (although the total investment may eventually
reach $2.18 billion). This is scheduled to be in place by March 2005, giving BSNL capacity for
31.25 million subscribers. The company target is to reach a total of 25 million GSM subscribers
(21.46% of the mobile market in India) by December 2005 from just 6.9 million subscribers in
November 2004. BSNL has three major rivals in Bharti, Reliance Infocomm and Hutchinson.

Leading a revolution
Bharat Sanchar Nigam Ltd. can rightly claim to be leading India's information revolution and is
expected to play a stellar role in the future as well.

BSNL Chairman and Managing Director V.P. Sinha conducts a video-conference between
Bangalore and Chennai in the presence of Som Mittal, managing director, Digital Global Soft Ltd.,
left, and K. Padmanabhan, CGM (Telecom), Karnataka Circle.

On October 1, 2000, the Department of Telecom Operations, Government of India, became a

corporation and was christened Bharat Sanchar Nigam Limited (BSNL). Today, BSNL is the
number one telecommunications company and the largest public sector undertaking in the country,
with an authorised share capital of $3,600 million and net worth of $13.85 billion. It has a network
of over 45 million lines covering 5,000 towns with over 35 million telephone connections. With
the latest digital switching technology and an extensive transmission network, including
synchronous digital hierarchy (SDH) systems up to 2.5 gbps, dense wavelength division
multiplexing (DWDM) systems up to 80 gbps, web telephony, direct Internet access systems
(DIAS), virtual private networks (VPN), broadband and more than 400,000 data customers, BSNL
is geared to play a stellar role in the information revolution in the country.
Its responsibilities include the improvement of the quality of telecom services, the expansion of the
telecom network, the introduction of new telecom services in all villages and increasing customer
confidence. BSNL has managed to shoulder these responsibilities deftly.

A WLL phone comes in handy at the Pushkar ghat in Bhadrachalam.

Today, with a line capacity of over 45 million, a nationwide network management and surveillance
system (NMSS) to control telecom traffic and over 4,00,000 route kilometres of optical fibre cable
(OFC) network, and with 99.9 per cent of its exchanges being digital, BSNL is a name to reckon
with in the world of telecommunications. Like its customer base, BSNL's financial and asset bases
too are vast and strong. Consider these figures:
The telephone infrastructure alone is worth about Rs.1,00,000 crores ($21.2 billion) and the
turnover is Rs.25,000 crores ($5.2 billion). Add to this BSNL's nationwide coverage and reach and
comprehensive range of telecom services.
A CellOne network tower in Chennai.
The turnover of the company for the year 2001-02 was Rs.24,299.8 crores, which on an annualised
basis implies a 5 per cent growth over the previous year. This growth took place in spite of a 62 per
cent reduction in long-distance tariff during the last quarter of the year. The profit after tax was at a
comfortable level of Rs.6,312 crores. In terms of extension of coverage, the percentage growth of
telephone lines during that year (53 lakhs) was the highest ever in the history of
telecommunication in the country. Another remarkable achievement was that this phenomenal
growth was financed solely through the internal resources of the company, without having to resort
to any market borrowing. After making adequate provision for a higher wage bill for the
employees absorbed from the erstwhile Department of Telecom Services, the wage bill as a
percentage of the turnover is still at a manageable level of 15.84. The net asset value has risen to
Rs.58,922 crores. The capital outlay for the expansion and development of rural telephony was
Rs.7,946 crores, which is approximately 50 per cent of the total capital expenditure of the
company. The debt equity ratio also improved from that of the previous year, from 0.25 to 0.20.
The strong fundamentals of the company will enable it to grow from strength to strength. The
company plans to expand further its value-added services by introducing new technologies.
CellOne, its cellular service, is the biggest in India and covers the entire country.
THE formation of BSNL was one of the landmark events in the history of telecommunications in
India. Today, it has an awesome task of improving the quality of telecom services, expanding the
telecom network, taking telecom services to all villages and instilling confidence in its customers.
A mobile tele shop in Tamil Nadu
Driven by the best of telecom technology from chosen global leaders, BSNL connects every part of
the nation to different corners of the globe. "Connecting India", BSNL's slogan, is no empty claim.
The company says it is communicating hopes, happiness, aspirations, dreams and much more.
Here is an overview of the world class services offered by BSNL:
Basic telephone services: The plain old countrywide telephone service through 32,000 electronic
exchanges and the digitalised Public Switched Telephone Network (PSTN), with a host of Phone
Plus value additions.
Internet: Accessing the global network of networks, the countrywide Internet services of BSNL
under the brand name Sanchar Net, includes Internet dial-up/leased access service for web
browsing and e-mail applications. An Internet telephony service was launched under the brand
name Webfone recently. ISDN (Integrated Service Digital Network Service) of BSNL utilises a
unique digital network providing high-speed and high-quality voice, data and image transfer over
the same line. It can also facilitate both desktop video and high-quality video conferencing.
Intelligent Network Service (In Service) offers value-added services, such as Free Phone Service
(FPH), India Telephone Card (pre-paid card) Account Card Calling (ACC), VPN, tele-voting
Premium Rate Service (PRM), Universal Access Number (UAN) and more.
An advertisement on the move.
I-Net: India's x.25 based packet Switched Public Data Network is operational in 104 cities of the
country.
Leased lines and datacom: BSNL provides leased lines for voice and data communication for
various applications on a point-to-point basis. It offers a choice of high-, medium- and low-speed
leased data circuits as well as dial-up lines. Bandwidth is available on demand in most cities.
Managed Leased Line Network (MLLN) offers flexibility of providing circuits with speeds of
nx64 kbps up to 2 mbps, useful for Internet-leased lines and International Principle Leased Circuits
(IPLCs).
Countrywide cellular service, pre-paid card: BSNL's project of GSM cellular mobile service
envisages a customer base of over four million and supports applications like voice mail, e-mail,
short message service (SMS), cell broadcast service, international roaming, IN Services like pre-
paid card, premium rate, free phone, UAN, split charging and VPN.