Chapter 1

INTRODUCTIO
N
HISTORY OF TELECOMMUNICATION
INDUSTRY

The history of telecommunication industry started with the first

public demonstration of Morse’s electric telegraph, Baltimore
to Washington in 1844. In 1876 Alexander Graham Bell filed his
patent application and the first telephone patent was issued to
him on 7th of March.

In 1913, telegraph was popular way of communication. AT&T

commits to dispose its telegraph stocks and agreed to provide
long distance connection to independence telephone system.

In 1956, the final judgment limited the Bell System to Common

Carrier Communications and Government projects but
preserving the long-standing relationships between the
manufacturing, researches and operating arms of the Bell
System. In this judgment AT&T retained bell laboratories and
Western Electric Company. This final judgment brought to a
close the justice departments seven –year-old antitrust suit
against AT&T and Western Electric which sought separation of
the Bell Systems Manufacturing from its operating and
research functions. AT&T was still controlling the
telecommunication industry.

In 1982 , AT&T was requested to divestiture its stock

ownership in Western Electric; termination of exclusive
relationship between AT&T and Western Electric; divestiture by
Western Electric of its fifty percent interest in Bell Telephone
Laboratories, AT&T ‘s telecommunication research and
development facility, is a jointly owned subsidiary in which
AT&T and Western Electric each own 50% of the stock;
separation of telephone manufacturing from provision of
telephone service and the compulsory licensing of patents
owned by AT&T on a non-discriminatory basis.

It was telecommunication act of 1996 that true competition

was allowed. The act of 1996 opened the market to all
competitors. AT&T being the first telecommunication company
paved the road for the telecommunication industry as well as
set the policy and standards for others to follow.

Beginning of telecommunication in India

➢ 1851 First operational land lines were laid by the

government near Calcutta

➢ 1881Telephone services introduced in India

➢ 1883  Merger with postal system

➢ 1923 Formation of Indian radio Telegraph Company

➢ 1932 Merger of ETC and IRT into Indian Radio and Cable
Communication Company

➢ 1947 Nationalization of all foreign telecommunication

companies to form the posts, telephone and telegraph, a
monopoly run by the government’s ministry of
communications

➢ 1985Department of telecommunication established , an

exclusive provider of domestic and long-distance
services that would be its own regulator

➢ 1986 Conversion of dot into two wholly government –

owned companies the VSNL for international
telecommunication and MTNL for services in
metropolitan areas
 ➢ 1997 Telecom regulatory authority created

Telecommunication is important not only because of its role in

bringing the benefits of communication to every corner of India
but also in serving the new policy objectives of improving the
global competitiveness of the Indian economy and stimulating
and attracting foreign direct investment.

Indian Telecom industry is one of the fastest growing telecom

markets in the world. In telecom industry, service providers are
the main drivers; whereas equipment manufacturers are
witnessing growth and decline in successive quarters as sales
is dependent on order undertaken by the companies.
INTRODUCTION OF INDIAN
TELECOMMUNICATION
Today the Indian telecommunications network with over 375
Million subscribers is second largest network in the world
after China. India is also the fastest growing telecom market
in the world with an addition of 9- 10 million monthly
subscribers. The tele-density of the Country has increased
from 18% in 2006 to 33% in December 2008, showing a
stupendous annual growth of about 50%, one of the highest
in any sector of the Indian Economy. The Department of
Telecommunications has been able to provide state of the
art world-class infrastructure at globally competitive tariffs
and reduce the digital divide by extending connectivity to
the unconnected areas. India has emerged as a major base
for the telecom industry worldwide. Thus Indian telecom
sector has come a long way in achieving its dream of
providing affordable and effective communication facilities
to Indian citizens. As a result common man today has access
to this most needed facility. The reform measures coupled
with the proactive policies of the Department of
Telecommunications have resulted in an unprecedented
growth of the telecom sector.

The thrust areas presently are:

1. Building a modern and efficient infrastructure ensuring

greater competitive environment
2. With equal opportunities and level playing field for all
stakeholders.
3. Strengthening research and development for
manufacturing, value added services.
 4. Efficient and transparent spectrum management
5. To accelerate broadband penetration
6. Universal service to all uncovered areas including rural
areas.
7. Enabling Indian telecom companies to become global
players.

Recent things to watch in Indian telecom sector are:

1. 3G and BWA auctions
2. MVNO
3. Mobile Number Portability
4. New Policy for Value Added Services
5. Market dynamics once the recently licensed new
telecom operators start rolling out
6. Services.
7. Increased thrust on telecom equipment manufacturing
and exports.
8. Reduction in Mobile Termination Charges as the cost
per line has substantially reduced
9. Due to technological advancement and increase in
traffic.

India's telecom sector has shown massive upsurge in the

recent years in all respects of industrial growth. From the
status of state monopoly with very limited growth, it has
grown in to the level of an industry. Telephone, whether
fixed landline or mobile, is an essential necessity for the
people of India. This changing phase was possible with the
economic development that followed the process of
structuring the economy in the capitalistic pattern. Removal
of restrictions on foreign capital investment and industrial
de-licensing resulted in fast growth of this sector. At present
the country's telecom industry has achieved a growth rate of
14 per cent. Till 2000, though cellular phone companies were
present, fixed landlines were popular in most parts of the
country, with government of India setting up the Telecom
Regulatory Authority of India, and measures to allow new
players country, the featured products in the segment came
in to prominence. Today the industry offers services such as
fixed landlines, WLL, GSM mobiles, CDMA and IP services to
customers. Increasing competition among players allowed
the prices drastically down by making the mobile facility
accessible to the urban middle class population, and to a
great extend in the rural areas. Even for small shopkeepers
and factory workers a phone connection is not an
unreachable luxury. Major players in the sector are BSNL,
MTNL, Bharti Teleservices, Hutchison Essar, BPL, Tata, Idea,
etc. With the growth of telecom services, telecom equipment
and accessories manufacturing has also grown in a big way.

Indian Telecom sector, like any other industrial sector in the

country, has gone through many phases of growth and
diversification. Starting from telegraphic and telephonic
systems in the 19th century, the field of telephonic
communication has now expanded to make use of advanced
technologies like GSM, CDMA, and WLL to the great 3G
Technology in mobile phones. Day by day, both the Public
Players and the Private Players are putting in their resources
and efforts to improve the telecommunication technology so
as to give the maximum to their customers.

TELECOM SUBSCRIBER BASE IN INDIA

Indian telecommunication Industry is one of the fastest
growing telecom market in the world. The mobile sector
has grown from around 10 million subscribers in 2002
to reach 150 million by early 2007 registering an
average growth of over 90%. The two major reasons that
have fuelled this growth are low tariffs coupled with falling
handset prices.

Surprisingly, CDMA market has increased its market share

up to 30% thanks to Reliance Communication. However,
across the globe, CDMA has been losing out numbers to
popular GSM technology, contrary to the scenario in India.

The other reason that has tremendously helped the telecom

Industry is the regulatory changes and reforms that have
been pushed for last 10 years by successive Indian
governments. According to Telecom Regulatory Authority of
India (TRAI) the rate of market expansion would increase
with further regulatory and structural reforms.
Even though the fixed line market share has been dropping
consistently, the overall (fixed and mobile) subscribers
have risen to more than 200 million by first quarter of
2007. The telecom reforms have allowed the foreign
telecommunication companies to enter Indian market which
has still got huge potential. International telecom companies
like Vodafone have made entry into Indian market in a big
way.

Currently the Indian Telecommunication market is valued at

around $100 billion (Rupees 400,000 crore). Two telecom
players dominate this market - Bharti Airtel with 27% market
share and Reliance Communication with 20% along with
other players like BSNL (Bharat Sanchar Nigam Limited) and
AT&T. One segment of the market that has been puzzling is
broadband Internet. Despite the manner in which the
country’s Internet market has been booming, India’s move
into high-speed broadband Internet access has been
distinctly slow. And, while there appears to be considerable
enthusiasm amongst the population for the Internet itself,
this has not been reflected in broadband subscription
numbers. In 2006 India witnessed a good surge in broadband
users with the total subscriber base in the country
expanding by almost 200% to just over 2 million by
years end. Despite this surge, broadband penetration in
India still remains around only 0.2%; broadband
services still account for only 25% of the total Internet
subscriber base, still in itself comparatively low. So, if 70% of
total population is rural, the scope for growth in this Industry
is unprecedented

The Ministry of Communications and Information Technology

(MCIT) is has very aggressive plans to increase the pace of
growth, targeting 250 million telephone subscribers by end-
2007 and 500 million by 2010. Most of the expansion in
subscribers is set to occur in rural India. India’s rural
telephone density has been languishing at around 1.9%. The
subscriber addition rate has been strong in the last 12
months but the regulatory developments will increase
competition and thus curtail the long-term growth rates of
individual companies. The savings through the setting of
tower companies will partly go towards the higher capex and
opex costs from more stringent spectrum allocation norms
for the incumbents.

The Telecommunications sector has been consistently

adding more than 7 million subscribers for the last 6 months,
a very healthy net addition rate infact. All the private
operators GSM as well as the CDMA operators have been
very consistent in their performance. The sector provides
very strong revenue as well as earnings visibility over the
next 12 months. However the recent regulatory
developments are seem to be negative for the telecom
companies as it will increase the number operators per circle
which will intensify competition.

Chapter 2
 Review of
basic
services

Review of basic services

As on 31st March 2008, wireline connections are being
provided by 5 licensed private operator groups in addition to
the incumbent BSNL and MTNL. The list of Service Providers
providing wireline services along with their area of operation
is given in the table below. The subscriber base of basic
services (Wireline) recorded a decrease of 3.28% in 2007-08
over the previous year. In comparison, the private BSOs,
recorded an annual increase of 43.14% in the subscriber
base during the year 2007-08. As on 31st March 2008, the
incumbents BSNL and MTNL had 80% and 9% market share
respectively in the subscriber base, while all the five private
BSOs had only 11% of the total subscriber base. During the
previous year, at the end of March 2007, the market share of
the BSNL and MTNL was 83% and 9% respectively, while the
share of all the private operators taken together was 8%.
Thus the market share in terms of subscriber base of the
incumbents BSNL and MTNL has slightly decreased, whereas
the market share of private BSOs has increased by 3%. The
5 private BSOs have added 8.96 lakhs new Direct Exchange
Lines (DELs). However, BSNL has recorded a reduction of
21.86 lakhs DELs, whereas MTNL has also registered an
annual decline of 0.47 Lakhs DELs. Thus Private operators
have contributed to provide most of the new additions in
DELs. The total subscriber base however has been recorded
an annual decline of 13.37 lakhs DELs in comparison to
previous year.

Companies and No. of Circles covered

BSNL 21 Circles (Except Delhi &
Mumbai)
MTNL 2 Circles (Delhi & Mumbai only)
Bharti Airtel Ltd. 17 Circles – Except Assam, Orissa,
Jammu & Kashmir, Bihar, North
East and Himachal Pradesh
 Tata 2 Circles – Only Maharashtra &
Teleservices Mumbai
(Maharashtra)
Ltd.
Tata 20 Circles – Except Assam,
Teleservices Jammu & Kashmir and North East
Ltd.
HFCL Infotel Ltd. 1 Circles (Punjab Circle only)
Shyam Telelink 1 Circles (Rajasthan Circle only)
Ltd.
Relience 21 Circles – Except Assam and
Communication North East
Ltd.

Review of Wireless (GSM and CDMA)

Services
The Wireless Industry crossed 261 million-subscribers mark
at the end of the financial year 2007-08. This total
subscribers base of 261.07 million comprise of 192.7 million
GSM and 68.37 million CDMA subscribers. During the
financial year 2007-08 around 95.96 million subscribers were
added with a growth rate of 58.12% as compared to 67.17%
growth during the year 2006-07. In the wireless segment,
GSM services has reached the 192.70 million subscriber
mark at the end of financial year 2007-08, as compared to
120.47 million during the previous year. It added around
72.23 million subscribers during the year, registering an
annual growth of 59.96%. In terms of subscriber base and
market share of GSM services, M/s Bharti with 61.98 million
subscriber base remains the largest GSM operator followed
by M/s Vodafone, M/s BSNL, and M/s Idea with subscriber
base of 44.13 million, 36.21 million and 24.00 million
respectively. The market share of different GSM operators as
on March 2008 is displayed in Figure 1.12. In Cellular CDMA
services, in terms of subscriber base and market share, M/s
Reliance Infocom with 38.78 million subscriber base remains
the largest CDMA operator followed by M/s Tata and M/s
BSNL with subscriber base of 24.33 million, and 4.58 million
respectively.
 Market share of wireless service providers (as on 31st March 2008)

Subscriber growth of wireless services (GSM and CDMA)

Public and Private Sector

Contribution in the Growth of Fixed
and Mobile Services
Before opening up of the Telecom Sector for the private
players, growth in telecom services was primarily driven by
public sector monopoly, showing very marginal growth, as
the incremental tele-density between 1948 and 1998, a 50
year period, was only 1.92%. Cost-oriented Telecom tariffs
were also introduced by TRAI in 1999.

During the period 1998-2008, the absolute growth in

subscriber base of PSU operators was 61.7 million
comprising of 19.5 million fixed subscribers and 42.2 million
mobile subscribers. The PSU (Public Sector Undertakings)
Operators have shown remarkable growth in the competitive
environment, while in the pre-reform non-competitive
environment, their performance was slow. Private operators
have also shown remarkable growth in a highly competitive
environment. The overall growth in the subscriber base of
private operators during 1998-2008 was 220.94 million
comprising of 9.81 million fixed subscribers and 211.13
million mobile subscribers. Private operators have
contributed very largely to post 1998 growth primarily in
mobile services due to the obvious cost and fast deployment
advantages.
 PSU Operators Subscriber Base

Private Operators Subscribers Base

Public Mobile Radio Trunked Services
Public Mobile Radio Trunked Service (PMRTS) was opened for
private sector in the year 1995. As on 31st March 2007,
PMRTS is being provided by 12 operators. The subscriber
base of PMRTS has recorded a growth rate of 15.04% during
2007-08 over the previous year. Its subscriber base
increased from 31501 at the end of March 2007 to 36240
at the end of March 2008.

Internet Services
TRAI is constantly monitoring the growth of the Internet and
Broadband services in the country by way of Performance
Monitoring Reports being submitted by Internet Service
Providers (ISP). Issues raised by ISPs, from time to time,
were successfully resolved by TRAI to create conducive
environment and to encourage the growth of the service
during the financial year. Total 138 ISPs reported data to
TRAI, which indicates 11.09 million Internet Subscribers at
the end of 31st March 2008. There was an increase of
19.63% in the subscriber’s base as compared to March 2007.

The distribution of Internet Subscribers among Govt. ISPs &

Private ISPs as on 31st March 2008 is as below. The BSNL
has maximum of 50.82% of total internet subscriber base.
Among PSUs owned ISPs, M/s BSNL and M/s MTNL have
reported a subscriber base of 5.64 Million and 1.89 Million
respectively. Amongst the Private Sector ISPs M/s Bharti
Airtel Limited has a subscriber base of 0.81 Million and stood
third overall.
 Share of public and private sector ISP (in lakhs)

Broadband
The number of Broadband subscribers (with a download speed
of 256 kbps or more) was 3.87 Million on 31st March 2008 as
compared to 2.34 Million subscribers on 31st March 2007
registering an annual growth of 65.38%. The distribution of
Broadband subscribers among Government ISPs and Private
ISPs as on 31st March 2008 is as below:
Internet Telephony
On the recommendation of TRAI (Telecommunications
Regulatory Authority of India), Government issued the
guidelines on 24th August 2007 for further opening of
Internet Telephony by permitting all ISPs signing new ISP
License to provide Internet Telephony. The restrictions on
devices being used for Internet Telephony have also been
removed. As on 29th February 2008, DOT has given
permission to 149 ISPs (Category ‘A’ – 56; Category ‘B’ – 64;
and Category ‘C’ – 29) to offer Internet Telephony services.
At the end of 31st March 2008 30 ISPs have reported the
provisioning of Internet Telephony Services. The total
minutes of usage of internet telephony are 115 million at the
end of 31st March 2008.

Broadband Casting and Cable TV

Services
In order to regulate the ‘carriage’ of Broadcasting and Cable
Services, the Government of India issued a Notification dated
9th January, 2004 by which broadcasting and cable services
have been brought within the purview of TRAI in terms of
section 2(k) of the Telecom Regulatory Authority of India Act,
1997. The Government also issued an order dated 9th
January, 2004 under section 11(d) of the TRAI Act, which
mandated TRAI to make recommendations regarding terms
and conditions on which the “Addressable Systems” shall be
provided to the customers and the parameters for regulating
maximum time for advertisements in pay channels as well as
other channels. The order also entrusted to TRAI, the
function of specifying the standard norms for, and periodicity
of revision of rates of pay channels, including interim
measures.

(a) Cable TV Service

At present, as per latest estimates there are 127 million

households in India having television sets. Out of this, there
are 71 million household subscribers of cable television
services. The maximum number of Free-to-Air (FTA)
Channels, pay channels and local channels being carried by
MSOs in their networks across the country as on Quarter
ending 31st March 2008 was 133, 95 and 8 respectively.
These figures are based on the reports received from some
of the major service providers regarding the number of
channels being carried by them in their Networks, analog
and / or in digital form. These channels have been reported
across different networks of the service providers having
different combinations of pay, FTA and local. As on 31st
March 2008, the total number of set-top box installed in the
CAS notified areas of Delhi, Mumbai, Kolkata and Chennai
was 6,07,883. A break-up of the set top boxes in the four
metropolitan cities has been depicted in the graph below:

Set top boxes in CAS notified area

(b) Satellite TV Channel

At the end of March 2008, there are reportedly 114 pay

channels in existence and these channels are being
broadcasted / distributed by 17 broadcasters or their
distributors

(c) DTH Services

Apart from Free-to-Air DTH service of Doordarshan, there

were six private DTH licensees and out of these six
licensees, only three licensees are offering paid DTH Service
to customers as on 31st March 2008. The following are the
six private DTH licensees:

1. Dish TV
2. Tata Sky Limited
3. Sun Direct TV Private Limited
4. Reliance Blue Magic Limited
5. Bharati Telemedia Limited
6. Bharat Business Channel Limited

(d) FM Radio / Community Radio Service

Apart from FM Radio Stations of All India Radio (AIR), there

are 205 private FM Radio Stations in operation across the
country as on 31st March 2008. For the quarter ending
March 2008 out of 49 licensees of Community Radio
Stations, 35 Stations are in operation

Foreign direct investment FDI

Ever since the government opened up its gates for foreign
direct investment (FDI) in 1991, telecom sector has emerged
as the clear winner in attracting foreign capital.
For starters, Indian telecom sector ranks first in terms of
actual FDI inflow since August 1991 till February 2003,
pipping to post many developed as well as developing
countries including the South East Asian countries. More, it
stands second only to petrochemicals in attracting FDI,
beating other sectors in the manufacturing as well as
services.

FDI Inflows into India’s Telecom Industry (1991-2007, in Rs million)

According to the numbers published by Investindiatelecom,

an on-line agency which tracks developments in the Indian
telecom sector, Indian telecom has grossed actual FDI worth
Rs 9,576.40 crore during the period starting from late 1991
to early 2003. In absolute terms, this is the highest inflow of
FDI into the telecom sector in the world. Mauritius, which
houses a number of holding and investment companies,
emerges as a distant second with FDI grossing Rs 6,855.83
crore during the period.
“The Mauritius numbers may be deceptive as it is one of the
last tax havens in the region and may include money
actually invested elsewhere. Though data for several
important countries are not included, the FDI inflow into
India telecom sector is impressive,” a senior analyst who
tracks the telecom sector says.
Of the total FDI inflow into Indian telecom sector, the lion’s
share has gone into investment in holding companies
followed by cellular network and manufacturing and
consultancy. The total foreign money invested in the holding
companies stood at Rs 4,813.3 crore or 50.26 per cent of the
total inflow, cellular telephony attracted Rs 2,332.8 crore
accounting for 24.36 per cent during the period.
The foreign capital inflow into the manufacturing and
consultancy segment stood at Rs 1,578.4 crore or 16.48 per
cent of the total inflow.
On an inter-sectoral comparison, telecom sector is the
second largest recipient of FDI with 19.79 per cent of total
inflow.
“The numbers are a clear indication of the foreign
companies’ perception about the prospects in Indian telecom
sector. So far, the investment is mainly confined to cellular
telephony. However, with recent changes, basic telephony
too will start attracting foreign capital in a big way,”

Chapter 3
PERFORMANCE
& TARGET,

PERFORMANCE OF TELECOM
EQUIPMENT MANUFACTURING
SECTOR
As a result of Government policy, progress has been
achieved in the manufacturing of telecom equipment in the
country. There is a significant telecom equipment-
manufacturing base in the country and there has been
steady growth of the manufacturing sector during the past
few years. The figures for production and export of telecom
equipment are shown in table given below:

Year wise production and export of telecom equipment-manufacturing sector

(Rs. in crore)

Year Production Export

2002-03 14400 402

2003-04 14000 250

2004-05 16090 400

2005-06 17833 1500

2006-07 23656 1898

(Source: www.dot.gov.in)

Rising demand for a wide range of telecom equipment,

particularly in the area of mobile telecommunication, has
provided excellent opportunities to domestic and foreign
investors in the manufacturing sector. The last two years
saw many renowned telecom companies setting up their
manufacturing base in India. Ericsson set up GSM Radio Base
Station Manufacturing facility in Jaipur. Elcoteq set up
handset manufacturing facilities in Bangalore. Nokia and
Nokia Siemens Networks have set up their manufacturing
plant in Chennai. LG Electronics set up plant of
manufacturing GSM mobile phones near Pune.
Ericsson launched their R&D Centre in Chennai. Flextronics
set up an SEZ in Chennai. Other major companies like
Foxconn, Aspcom, Solectron etc have decided to set up their
manufacturing bases in India.
The Government has already set up Telecom Equipment and
Services Export Promotion Council and Telecom Testing and
Security Certification Centre (TETC). A large number of
companies like Alcatel, Cisco have also shown interest in
setting up their R&D centers in India. With above initiatives
India is expected to be a manufacturing hub for the telecom
equipment.

TARGETS SET BY THE GOVERNMENT

1. Network expansion
a. 500 million connections by the year 2010
b. Provision of mobile coverage of 90% geographical
area by 2010
2. Rural telephony
a. One phone per two rural households by 2010
(about 80 million rural connections)
b. Reduce urban-rural digital divide from present
25:1 to 5:1 by 2010
3. Broadband
a. Broadband with minimum speed of 1 mbps
b. Broadband coverage for all secondary & higher
secondary schools and public health care centres
by the end of year 2008
c. Broadband coverage for all Grampanchayats by
the year 2010
4. Infrastructure Sharing
a. USO subsidy support scheme for shared wireless
infrastructure in rural areas with about 18,000
towers by 2010
b. Increase sharing in urban areas to 70% by 2010
5. Introduction of Spread of IPTV and Mobile TV
 a. IPTV in 600 towns by 2010
6. Manufacturing
a. Making India a hub for telecom manufacturing by
facilitating more and more telecom specific SEZs
b. Quadrupling production in 2010
c. Achieving exports of 6 times from present level of
0.5 billion in 2010
7. Research & Development
a. Pre-eminence of India as a technology solution
provider
b. Comprehensive security infrastructure for telecom
network
c. Tested infrastructure for enabling interoperability
in Next Generation Network
d. Doubling the telecom equipment R&D by 2010
from present level of 15%
8. 8.International Bandwidth
a. Facilitating availability of adequate international
bandwidth at competitive prices to drive ITES
sector at faster growth
 Indian Telecommunications at a glance

(As on 30th September 2008)

Rank in world in network size 3rd

Tele–density (per hundred populations) 30.64
Telephone connection (In millions)
Fixed 38.35
Mobile 315.31
Total 353.66
Village Public Telephones 5.6 lakh
Foreign Direct Investment (in millions) (from 182042 million
January 2000 till August 2008)
Licenses issued
Basic 2
CMTS 60
UAS 224
Infrastructure Provider I 177
ISP (Internet) 382
ISP with Telephony (Broadband) 125
National Long distance 24
International Long Distance 19

REVENUE AND GROWTH

The total revenue in the telecom service sector was Rs.
86,720 crore in 2005-06 as against Rs. 71, 674 crore in
2004-2005, registering a growth of 21%. The total
investment in the telecom services sector reached Rs.
200,660 crore in 2005-06, up from Rs. 178,831 crore 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 $500 million
in 2006 to a whopping $10 billion by 2009.

Rural Telephony
Telecom development in rural areas assumes special
significance as more than 70% of India's population lives in
villages. There is a strong two-way co-relation between
telecom development and overall economic development of
a region. Telecom services are important drivers for
development, delivery of public services such as education,
health etc. and integration of rural areas with the rest of the
country. Recognizing this, Government had announced the
Universal Service Support Policy on 27th March 2002 under
which a separate fund for providing access to telegraph
services to people in the rural and remote areas was set up.
The resources for implementation of USO are raised through
a Universal Service Levy (USL) which is part of the License
Fee being paid by service providers. The USL has presently
been fixed at 5% of the Adjusted Gross Revenue (AGR) of all
telecom service providers except the pure value added
service provider like Internet, Voice Mail, email service
providers etc. The activities being undertaken by
Department of Telecom under USO are geared towards
augmenting the infrastructure and increasing telecom
coverage in the rural and remote areas.

Public Access
Initially the emphasis was on provision of access to public
telephones through installation of Village Public Telephones,
Rural Community Phones and replacement of MARR
telephones. The VPT component is covered under the
flagship Bharat _irman Programme of Government of India
66822 uncovered villages had been identified for provision of
VPTs. By 31st of March, 2009, VPTs have been provided in
57181 uncovered villages.

Individual Access
The scheme covers installation of Rural Household Direct
Exchange Lines (RDELs) during the period 1.4.2005 to
31.3.2007. The cut-off date of installation of RDELs has been
extended upto 31.3.2010. Under the scheme, about 63 lakh
RDELs have been installed upto 31st of March, 2009. Subsidy
support is also being provided towards18.6 lakh RDELs
installed between 1.4.2002 and 31.3.2005.

Other USOF activities

Mobile telephony has brought about a revolution in the
urban areas. This has resulted in a rapid growth in the
teledensity in the urban areas. The difficult topography and
the high expenses involved in laying landlines encouraged
USOF to consider the mobile option for the rural areas. The
Indian Telegraph Act, 1885 has been amended in December,
2006 to enable USOF to support mobile telephony in the
rural and remote areas. Agreements for setting up and
managing infrastructure sites and provision of mobile
services in rural and remote areas have already been
entered into and the scheme has been launched on
01/06/2007. The original scheme envisaged setting up of
7871 towers in rural and remote areas in 81 clusters spread
over 500 districts all over the country. The number of towers
to be set up has now been restricted to 7440. Each tower will
be shared by a maximum of 3 telecom service providers. By
31st of March 2009, 4755 towers have been set up under the
scheme.

TELEPHONY SERVICES (MOBILE AND

BASIC) AND INTERNET SERVICES
DOMINATE THE INDIAN TELECOM
SERVICES
The Indian telecom market generated revenues of
approximately USD 32 billion in 2007–08. It registered a
CAGR of approximately 32 percent from 2002–03 to 2007–
08. The CAGR from 2008–08 to 2011–12 is expected to
stabilize at 21 percent. Apart from mobile telephony
services, there value-added services are also gaining
importance.

Revenues of Indian Telecom Industry: 2002–08 (USD billion)

TELECOM SERVICES IN INDIA
India's 21.59 million-line telephone network is the largest in
Asia, 3rd largest among emerging economies (after China
and Republic of Korea) and the 12th largest in the world.
India's telecom network comprises of 27,753 telephone
exchanges, with a total equipped capacity of 272.17 Lakh
lines and 226.3 Lakh working telephones.

In the field of inter-national communications, India's

overseas service carrier Videsh Sanchar Nigam Ltd. (VSNL)
has made tremendous progress by using extensive
infrastructure of satellite earth stations, state-of-the-art
digital gateways, Optical Fiber Multi Media submarine Cables
and Multi Media Data Switches.

1.Cellular and Paging Services

Cellular and paging services though not a very old means of
communication in India has very rapidly caught the
imagination of the people. The revolution that started with
pagers soon gave way to Mobile phones. Pagers being one
way and with limited application have almost disappeared,
as mobiles became the favorite. With more and more
innovative offers like prepaid cards from telecom service
operators, the mobile culture is growing. With more players
entering the market, the competition has grown stronger,
catering to the demands of consumers. Hutch, Airtel, Idea
and Reliance are doing very well and are always coming up
with new schemes and plans.SMS is a raging favorite among
both the young and the old. A shift towards mobile telephony
is apparent from the fact that the share of cellular
connections in new connections is steadily going up and had
reached 63% in December 2002.
Cell phones now come cheaper and so does the monthly bill.
As a result one can still hear some grudges from service
providers as they claim lack of use of enough airtime to
make it a profitable business.
Today, India has more than 22 private companies providing
cellular services in 18 telecom circles and 4 metro cities
(Delhi, Mumbai, Chennai and Calcutta). Ever since their
introduction, cellular services have shown a fair growth with
the subscriber base crossing the 1 million mark by the first
quarter of 1999.India has adopted the Global System of
Mobile Communication (GSM) for provision of cellular
services.

2.Letters and Telegrams

Letters have been written from ages and the Indian Postal
service is one of the biggest and most experienced services.
About 90% of the postal outlets are in rural India. On an
average a post office covers an area of about 21 sq. km and
a population of about 6,600 people. The Indian postal system
currently provides 38 services which can be categorized as
• Communication: letters, postcards, newspapers
• Transportation: parcels, money orders etc.
• Other services: resource mobilization, postal life
insurance
For providing postal services, the whole country has been
divided into twenty-two postal circles. Each Circle is
coterminous with a State except for some. Besides these
twenty-two circles, there is another circle, called Base Circle,
to cater to the postal communication needs of the Armed
Forces.
Telecommunication infrastructure was established in India in
1856. They were telegraphic data communication links
principally for government and military use. Telegrams being
the fastest means of communication in areas where phone
lines did not reach, led to its use by the common man. Even
now phone lines do not connect many interior regions of
India and the telegram is used to fill in the gap. However it is
a fast disappearing means of communication, as connectivity
in India both in terms of telephone lines and wireless
communication has rapidly grown.

1.Courier Services
Time was when one had to wait for weeks together to see
the other person receive important document. The common
man had no access to fax machines nor was he aware of its
utility. Then came along the speed post, which too took
about a week to deliver. The start of private courier services
however changed all that. Documents could now reach
within the day or by the next day. Moreover they are more
reliable as chances of misplacement are minimal. Today
businesses as well as individuals are increasingly dependent
on the courier service.

2.Internet
Once the Internet market space was opened up to private
Internet Service Providers (ISPs) in 1998, the market has
witnessed phenomenal growth. In certain states there has
been a high percentage in penetration, but in others it has
been slow due to low telecom penetration, low bandwidth
and above all illiteracy.
All tourist spots however are more or less connected to the
net. Cyber cafes are as common a sight as telephone booths
and connectivity in India has arrived for the common man.
One need no longer invest in a computer, which is still a
costly commodity. Though email and Internet browsing
remain the favorite purposes e-commerce and e-business
have put their foot in. Banks have now facilitated Internet
banking. The Indian Railways offers a computerized
reservation system which enables a person to book his
tickets online and from anywhere. It also provides other
services like railway timetables and ticket availability.
Airlines bookings, Movie ticket bookings, hospital
appointments and even consultations are widely available.
Connectivity is fast spreading in all areas and the Internet is
becoming more and more user friendly. Facilities in
connectivity are easily available even though not a very high
percentage of Indians use these facilities.

Chapter 4
 SCOPE OF
TELECOM
INDUSTRY

SCOPE OF TELECOM INDUSTRY

The telecom industry is growing at a great pace and the
growth rate is expected to double with every passing year.
There are many new developments in the telecomm sector,
including the ingress of 3G technology that the Indian
market is witnessing at present.
Public and Private Players
MTNL, BSNL, VSNL are the major Public Players, whereas
Airtel, Idea, Hutch, Tata, Reliance, BPL are the leading
Private Players in the country. Some of them are entering
foreign markets as well. The Bharti Telecom will be
launching its services for the NRIs in the US with the help of
Airtel CALLHOME service.

(The market shares of the leading public and Private Players)

INVESTMENT AND GROWTH
In 2005-2006, the telecom industry witnessed a growth of 21%
with a total revenue of Rs. 86,720 crores, and the total
investment rising to Rs. 2,00,660 crores. It is projected that the
telecom industry will be enjoying over 150% growth in the next
4-6 years. The growth also requires a huge investment by the
players in the sector. Bharti Airtel is planning to invest about
$8 billion by the year 2010.

Liberalization policy and some socio-economic factors are

mainly responsible for the immense growth in the sales
volumes. The lifestyle of the people has changed. They need to
be connected to the other people all the time. With the
lowering down of the tariffs the affordability of the mobile
phones has increased. The finance sector has also come up
with loans for handsets on 0% interest. Mobile services
providers are also expanding their coverage area by installing
more and more antennas and other equipments.

The telecom sector in the country has already adopted the

latest technological advancements to cater to the demands of
the growing market. Telecom Expo India, Convergence India,
VAS India and IPTV India being organized year to year are all
efforts in this direction.

Budget 2007 has brought disappointment to the telecom

sector. Mobile service providers have been asked to cut down
their roaming rentals as well as their long distance and
international call tariffs. This has led to discontent on the part
of the service providers. However, Telecom Regulatory
Authority of India (TRAI) is of the opinion that this will lead to
increased use of roaming, which will ultimately lead to more
revenue generation. Moreover, with cheaper handsets and
lesser tariffs, it is expected that by the year 2010 there will be
over 500 million subscribers in the Indian telecom market.

Also, the telecom industry this year will be focusing more on

rural areas to connect them with the urban areas so that the
farmers and the small-scale industries can have faster access
to information related to weather and market conditions.
 GROWING NETWORK COVERAGE IS
TRIGGERING FURTHER MARKET
EXPANSION
Segment Cellular reach (2003-04) Cellular reach (End 2006
- Est.)

Locations Population Locations Populati

on

Urban ~ 1700 of 200 million ~ 4900 towns 300

5200 towns out of nearly million
5200 towns

Rural Negligible Negligible ~ 350,000 out 450

of 607,000 million
villages

EMPLOYMENT STATUS
With the coming of more and more projects, the telecom
industry is going for high scale recruitments. There is a huge
demand for software engineers, mobile analysts, and
hardware engineers for mobile handsets. Besides, there are
ample opportunities for marketing people whose services are
required to capture more and more customer base.

The new projects, setting up of new service bases, expansion

of coverage areas, network installations, maintenance, etc
are providing more and more employment opportunities in
the telecom sector.
Human Resource Development by
Centre for Development of Telematics
(C-DOT)
1.Women Empowerment
C-DOT’s management has always been sensitive to
gender issues and has consistently worked towards
creating organizational culture reflecting gender equality.
Presently, about 33 % of staff in C-DOT is women.
2.Existing Policies
• All female staff members are allowed to avail up to 135
days maternity leave for delivery and up to 270 days
leave subsequent to that (inclusive of 135 days maternity
leave). For miscarriage/abortion, leave of a total of 45
days in the entire service is permissible.

• C-DOT offers accommodation and transport benefits to all

its women employees with different options that maybe
availed as per individual suitability. This ensures the
safety and security of all women employees in the
company.

• Career growth opportunities for women are available to

women employees in CDOT. In the last financial year, of
the total employees promoted to higher grades, 40% of
them were women. In management cadres (Team
 Leaders, Group Leaders, Technical Experts and Sr.
Technical Experts) about 30% are women.

1.Library
The collection of C-DOT Library consists of more than 20,
000 books which includes Reference Books, Conference
Proceedings, Hindi Books and over 100 periodicals,
magazines and leading English & Hindi Newspapers. The
entire collection of Library is accessible through OPAC
(Online Public Access Catalogue) with the help of Library
Intranet site. Digital information resources & services are
available on server as well as online.

Chapter - 5
 OVERVIEW OF
TELECOM
INDUSTRY

OVERVIEW OF TELECOM INDUSTRY

Indian Telecom sector, like any other industrial sector in the
country, has gone through many phases of growth and
diversification. Starting from telegraphic and telephonic
systems in the 19th century, the field of telephonic
communication has now expanded to make use of advanced
technologies like GSM, CDMA, and WLL to the great 3G
Technology in mobile phones. Day by day, both the Public
Players and the Private Players are putting in their resources
and efforts to improve the telecommunication technology so
as to give the maximum to their customers.

Investment
The Indian telecom sector can be broadly classified into
Fixed Line Telephony and mobile telephony. The major
players of the telecom sector are experiencing a fierce
competition in both the segments. The major players like
BSNL, MTNL, VSNL in the fixed line and Airtel, Hutch, Idea,
Tata, Reliance in the mobile segment are coming up with
new tariffs and discount schemes to gain the competitive
advantage. The Public Players and the Private Players share
the fixed line and the mobile segments. Currently the Public
Players have more than 60% of the market share.

Market shares of public and Private

Players

Both fixed line and mobile segments serve the basic needs
of local calls, long distance calls and the international calls,
with the provision of broadband services in the fixed line
segment and GPRS in the mobile arena. Traditional
telephones have been replaced by the codeless and the
wireless instruments. Mobile phone providers have also
come up with GPRS-enabled multimedia messaging, Internet
surfing, and mobile-commerce. The much-awaited 3G mobile
technology is soon going to enter the Indian telecom market.
The GSM, CDMA, WLL service providers are all upgrading
them to provide 3G mobile services.
The leading cellular service providers have the following number of
subscribers:

Service Provider No. of CDMA Subscribers No. of GSM Subscribers

Reliance 2.75 crores 38.76 lakhs

 Tata 1.07 crores

Airtel 3.37 crores

MTNL 5 lakh 24.98 lakhs

BSNL 2.25 lakh 2.44 crores

Hutch (vodafone) 94.5 million 2.44 crores

Idea 1.3 crores

Spice 25.56 lakhs

BPL 10.62 lakhs

Aircel 48 lakhs

Bharti Airtel has the largest customer base with 31% market
share, followed by Hutch and BSNL with each holding 22%
market share.

The 2007 budget has brought further relief to the customers

with the reduction in the tariffs, both local and long distance,
and with slashing down the roaming rentals. This is likely to
lead to even more people going for cellular services and
more and more use of the value added services. However,
landline telephony is likely to remain popular, too, in the
foreseeable future. MTNL, the largest landline service
provider, has recently taken some bold initiatives to retain
its market share and, if possible, expand it.

Vibrant and competitive telecom

market
 Subscriber
s Jul 06 Share (%)
Compan (mn)
Presence
y
Fix Mobi Fixe Mobil
ed le d e

Government owned.
Has ramped up GSM
37. 74.7 19.6
BSNL services. National 17.7
4 % %
presence (except
Mumbai and Delhi)

Government owned.
7.7
MTNL Operates in Delhi and 3.8 2.0 2.3%
%
Mumbai.

Integrated operator,
with presence in all 2.7 21.7
Bharti 1.4 19.6
sectors. Largest mobile % %
services provider.

Integrated operator.
Plans expansion of
GSM network apart 6.0 19.2
Reliance 3.0 17.3
from being the largest % %
private CDMA
operators.

Pure play GSM operator 17.0

Hutch 15.4
in 11 circles. %

Pure play GSM operator

IDEA 7.4 8.2%
in 6 circles
 Integrated operator
(along with VSNL) with
Tata
presence in all 8.0
Teleserv 4.0 4.9 5.4%
segments. Provides %
ices
CDMA services in 20
circles

Operates in 2 circles.
Announced Plans to
Aircel 2.6 2.9%
expand GSM footprint
in North and North east

Pure play GSM player

Spice 1.9 2.1%
in 2 circles

Others 0.4 1.4

Total 50 90

Fixed Line Telephony

Fixed Line Telephony can be further categorized as fixed
wire line telephony and fixed wireless telephony (known as
WLL (F)). Fixed Line Telephony provides services such as
local calls and long distance calls- national and international.
The Government of India is now taking actions to convert all
national long distance calls to local calls. In this regard,
Public Players have already started their 1Rs. call service. In
India at present, fixed line telephone numbers are of 8 digits,
(initially 5 and 7 digits). The sector is in the process of
converting all fixed line numbers to 10 digits. Both Public
Players and Private Players are competing hard to capture
more and more market share. MTNL and BSNL are the
leading public sector players, whereas Reliance Infocomm,
Tata Teleservices and Touchtel are the leading private sector
players.

Market shares of public and Private Players

During financial year 2005-06, Fixed Line Telephonysegment

in Indian telecom sector witnessed a growth of 8.64%. The
total subscriber base of fixed lines including WLL(F) touched
the figure of 50.2 million and was showing an upward trend.

 PUBLIC PLAYERS
The Government of India has played a major role in the
development of telecommunication sector. Established in
1985, Department of Telecommunications (DOT) was the
first government division to provide domestic and long-
distance telephone service in India. In 1986, DOT created
Mahanagar Telephone Nigam Limited (MTNL) for telephone
services in metropolitan cities and Videsh Sanchar Nigam
Limited (VSNL) for international telecommunications as its
wholly owned subsidiaries. Later on, in 1997 Telecom
Regulatory Authority of India was formed. DOT has now
become a corporation named BSNL.
Along with Fixed Line Telephony, Public Players also provide
Internet Services like broadband, Tri Band service, dial up,
pre paid and post paid Internet, Wi-Fi, etc.

Growth of Public Players in Fixed Line

Telephony
In India, Public Players in Fixed Line Telephony are
dominating the telecom market with 82% market share.
MTNL (providing services in Delhi and Mumbai) and BSNL
(providing services in the rest of India) are the two Public
Players in the country.

Growth trend of Public Players of Indian fixed line telephones

Financial Year Subscriber Base Growth

(in millions) (over preceding FY)

2001-02 37.83 1.66%

2002-03 40.53 7.13%

2003-04 40.47 -0.14%

2004-05 41.10 1.55%

2005-06 41.38 0.68%

Public Players Subscribers

The two Public Players, Mahanagar Telephone Nigam Limited
(MTNL) and Bharat Sanchar Nigam Limited (BSNL), are
providing services to the whole of India. The companies are
serving both urban and rural areas. MTNL is providing
services to two metropolitan cities, Delhi and Mumbai,
whereas BSNL provides services to the rest of India.
 Market shares of Public Players in Indian Fixed Line Telephony

Since, Private Players entered Indian Fixed Line Telephony,

market shares of Public Players started declining. This can
be easily seen by the trend of number of subscribers
(increasing or decreasing) of Public Players. MTNL has
showed a declining trend in the last three years. BSNL is
adding new customers but with a declining growth rate.

Subscriber trend of MTNL in Fixed Line Telephony

 Subscriber trend of BSNL in Fixed Line Telephony

 PRIVATE PLAYERS
Many Private Players have entered Fixed Line Telephony.
Private Players have brought WLL (F) Fixed Line Telephonyto
Indian telecom sector. They are also providing Internet
Services like broadband, dial-up, pre paid and post paid
Internet, Wi-Fi, etc.

Touchtel, Reliance Infocomm, Tata Teleservices, Shyam

Telelink Ltd (Rajasthan), HFCL Infotel Ltd. (Punjab), etc. are
leading Private Players in Indian Fixed Line Telephony.

Growth of Private Players

Private Players have shown a high growth rate, adding more

and more customers every year, taking the total subscriber
base to 8.79 million.
 Growth trend of Private Players of Indian fixed line telephones

Subscriber Base Growth

Financial Year
(in millions) (over preceding FY)

2001-02 0.58 1.32%

2002-03 0.95 63%

2003-04 2.36 148.4%

2004-05 5.09 115.6%

2005-06 8.79 72.6%

Private Players are expanding their networks providing more

coverage areas. They are offering special rentals and tariff
plans to capture a larger customer base

Private Players Subscribers

Private Players are providing services to the whole of India.
The companies are serving both urban and rural areas. Tata
Teleservices, HFCL, Shyam, Reliance, Touchtel are the
leading Private Players in fixed line segment.
With more than 80% share with Public Players, Private
Players are now striving hard to capture more and more
customers. Since 1997, the year they entered Fixed Line
Telephony, they have been increasing their market share
every year.
 Market shares of Private Players (18%) in Fixed Line Telephony

Subscriber base of Private Players in Fixed Line Telephony

Mobile telephony
Mobile telephony was introduced in Indian markets in mid-
1990s. In the last few years, the sector has witnessed
tremendous growth. The subscriber base is adding more and
more customers every year. Mobile telephony recorded more
than 52.2 million users in FY 2004-05, exceeding fixed line
telephone subscriber base. Also, mobile segment has
welcomed more and more players every year. Liberalized
policies have ensured lower tariffs and reduced roaming
rentals. This will lead to increased usage of mobile phones.
Mobile telephony can be further categorized into WLL, CDMA
and GSM. The much-awaited 3G mobile technology is going
to enter soon in Indian telecom sector.

Mobile telephony provides services such as messaging- text

and multimedia- mobile commerce through GPRS enabled
mobile Internet, with local calls and long distance calls-
national and international.

Not only service providers but also equipment manufacturers

are contributing towards the growth of the sector. Mobile
telephony started up with bulky handsets and has now
reached to smart phones with cameras, radio facility and lots
of other multimedia applications. Also, PDAs have entered
Indian markets with operating systems that make it a pocket
PC.

Both Public Players and Private Players are competing hard

to capture more and more market share. Leaders in Fixed
Line Telephonyhave now started providing mobile services,
such as MTNL's Garuda and Dolphin. Private Players capture
most of the market share in Indian mobile segment.
 Market shares of Private Players and Public Players in mobile telephony

During financial year 2005-06, mobile telephony segment in

Indian telecom sector witnessed a growth of 72%. The total
subscriber base of mobile phones touched a figure of 90.14
million in 2006.

Subscriber trend of mobile telephony in Indian market

PUBLIC PLAYERS
The Government of India has played a major role in the
development of telecommunication sector. Established in
1985, Department of Telecommunications (DOT) was the
first government division to provide domestic and long-
distance telephone service in India. In 1986, DOT created
Mahanagar Telephone Nigam Limited (MTNL) for telephone
services in metropolitan cities and Videsh Sanchar Nigam
Limited (VSNL) for international telecommunications as its
wholly owned subsidiaries. Later on, in 1997 Telecom
Regulatory Authority of India was formed. DOT has now
become a corporation named BSNL.

Growth of Public Players in Mobile

Telephony
In India, Public Players in mobile telephony have 22% market
share. MTNL started its mobile services in 2000, with its
Garuda telecom service. It now owns three brands i.e.
Garuda, Trump and Dolphin in mobile segment. BSNL
entered mobile segment in 2001 with Cellone and Excel
mobile services.

Growth trend of Public Players of Indian mobile telephony

Subscriber Base Growth

Financial Year
(in millions) (over preceding FY)

2001-02 0.26 12%

2002-03 2.64 915.38%

2003-04 5.99 126.89%

2004-05 10.98 83.30%

2005-06 19.7 79.41%

Public Players are in the process of expanding their networks
to provide more coverage. They are focusing on providing
services to the innermost parts of the country.

Public Players- Subscribers

The two Public Players, Mahanagar Telephone Nigam Limited
(MTNL) and Bharat Sanchar Nigam Limited (BSNL), are
providing mobile services in India. MTNL's Garuda, Trump
and Dolphin and BSNL's Cellone and Excel are running
successfully on CDMA, WLL and GSM technologies.
Market shares of Public Players in Indian mobile telephony

Since, Private Players entered Indian Fixed Line Telephony,

market shares of Public Players started declining. This can
be easily seen by the trend of number of subscribers
(increasing or decreasing) of Public Players. MTNL has
showed a declining trend in the last three years. BSNL is
adding new customers but with a declining growth rate.
 Subscriber trend of

MTNL in mobile telephony BSNL in mobile telephony

PRIVATE PLAYERS
Private Players are dominating the mobile segment with 78%
market share. With technological advancements, Private
Players have brought in WLL, CDMA, and GSM mobile
telephony in Indian telecom sector. They are now in the
process of launching 3G technology in India.

Bharti Airtel, Reliance Infocomm, Tata Teleservices, Idea

Cellular, Hutchison Essar, etc, are the leading Private Players
in Indian mobile telephony. They are capturing more and
more customers with their special discount schemes and
lower tariffs. They are also offering many value added
services in special rental schemes.
Growth of Private Players
Private Players have shown a high growth rate, adding more
and more customers every year, taking the total subscriber
base to 70.44 million.

Growth trend of Private Players of Indian fixed line telephones

Subscriber Base Growth

Financial Year
(in millions) (over preceding FY)

2001-02 6.158 120.71%

2002-03 8.948 45.30%

2003-04 27.36 205.76%

2004-05 41.24 50.73%

2005-06 70.44 70.80%

Private Players are expanding their networks providing more

coverage areas. They are offering special rentals and tariff
plans for value added services and outgoing calls to widen
their customer base.

Private Players' Subscriber Base

Private Players are providing services to the whole of India.
Tata Teleservices, Reliance Communications, Bharti Airtel,
Idea cellular, Hutch, etc are the leading Private Players in
cellular services. They are providing cellular services through
CDMA, GSM and WLL networks.
With more than 70% share in market, Private Players are
introducing more and more discount schemes and tariff
plans and call rentals to capture more and more customer
base. Even the handset manufacturers are coming up with
advanced multimedia applications to attract customers.
Market shares of Private Players (78%) in mobile telephony
 Subscriber base of Private Players in mobile telephony

Internet services
There are Public Players and Private Players providing the
Internet Services such as broadband, dial-up, pre paid and
post paid Internet, Wi-Fi, etc. Subscriber base of Internet
Services provided by Public Players is showing an upward
trend.

Internet subscriber base of Public Players

Private Players are also adding more and more customers
every year showing an upward trend.
Internet subscriber base of Private Players

Investment in Telecom Sector

Both Public Players and Private Players are investing huge
sums to expand their network and provide more coverage in
Fixed Line Telephonyas well as mobile telephony.
Facing stiff competition from private sector, Public Players are
taking up measures to increase their customer base of fixed
lines and Internet Services. MTNL and BSNL are investing in
Internet infrastructure to provide much reliable network.
Capital investment of Public Players in Fixed Line Telephony
Private Players are striving hard to capture more and more
customers. They are introducing low-cost tariff plans and
discount schemes in Fixed Line Telephonyand Internet Services
to increase their customer base. They are also in the process of
enlarging their network area providing more coverage in urban
as well as rural areas.
Annual investment of major Private Players in Indian telecom sector

Chapter 6
COMPETITION
AMONG
SERVICE
PROVIDER
 PAY PER SECOND PLAN: AIRTEL VS
TATA DOCOMO
The equal competitors are coming up with their new tariffs,
plans ,special packs and their varying services to prove
themselves to be much competitive and trying to anchor
them firmly in thismobile sector. Still many new operators
are yet to launch their services in days to come but existing
ones don’t seem to leave a bit of it.

They convinced the people by their VAS plans and tariffs too.
Currently the Tata Docomo came up with its services with an
all new tariff scheme of pay per second which has brought
out a massive revolution in the market. DOT’s mandatory
urged every operator to go with pay per second scheme.

On 30th Oct the leading mobile service provider Bharti Airtel

launched their much awaited “Pay Per Second” tariff all
throughout India.The tariff comparison with Airtel and TATA
Docomo is as follows,

* Airtel with its inception on 2001 renders number of

customers but their tariff, call rates to different network
makes confusion and remains unstable. But Docomo’s
1p/sec throughout India makes consumers to keep track of
their account and controls expenses.

* Airtel has kept different SMS charges even in their Pay Per
Second plan with local sms being charged at Re.1 and
National sms at Rs.1.50, whereas Docomo introduced SMS
charges based on the number of characters. No recharges
are needed to opt for per second calling after one year.

* Package activation of Airtel ranges from Rs.64 to Rs.99 and

varies from circle to circle. Docomo’s does not charge
anything extra for activating the per second pack since the
tariff plan by default is on per second basis.

* The Airtel tariff calculation is hard ranging from 1p/sec to

1.2p/sec, but 20% higher to other operators whereas A2A
calls are kept at 1p/sec and that to other operators are
charged at 1.2p/sec. But Tata Docomo is offering a limited
period offer of STD calls at 1p/sec.

* Post paid customers are abandoned from VAS, IVR calling,

etc .Docomo is quite opposite to this post paid subscribers
enjoy those services.
* But Airtel is older than Docomo so it has compact network
links than Docomo , so this is the place where Docomo has
to establish itself.
Meanwhile it is found that Docomo with both GSM and CDMA
network added over ‘4 million’ subscribers in September,
beating market leader Bharti Airtel yet again. Airtel had 2.5
million new users in September.

BSNL and MTNL fail to attract 3G

subscribers
Bharat Sanchar Nigam (BSNL) and Mahanagar Telecom
Nigam (MTNL), the state run telecom operators managed to
attract just 11,000 customers for 3G in six months of their
operations. BSNL and MTNL, who were pre-awarded 3G
licenses, rolled out 3G services in 70 (BSNL) and two (MTNL)
cities nationwide respectively. The private telecom operators
are in the process of planning their 3G network
infrastructure and awaiting final approval from the
Department of Telecommunication (DoT) auction to start
rolling out their networks.
"Despite the hype around 3G, MTNL and BSNL have
attracted only a few thousand subscribers for these
services," said Dilip R Mehta, Mentor and Advisor, N S
Raghavan Centre for Entrepreneurial Learning (NSRCEL), IIM
Bangalore, in the panel discussion organized by Mobile
Monday in IIM Bangalore. MTNL managed to attract just
1,000 subscribers in six months of its operations, whereas
BSNL could muster only 10,000 3G subscribers in six
months. Due to the failure of these two state owned
companies in attracting customers to use 3G services,
analysts feel that Indian government is not yet ready for 3G
phones. Prabha Aithal, CTO, CanvasM Technologies said,
"When 3G was launched in Europe, similar type of questions
was raised."
Both these operators have been underperforming in the
market despite the fact that what they offer is not much
different from the offerings of the private mobile operators.
BSNL was able to add only 26 percent more mobile
subscribers in 2008 while MTNL grew its base by 32 percent,
the two lowest growth rates in an industry, where almost all
others grew their base by 50 percent or more. There is more
pressure on the average revenue per user (ARPU) of BSNL
and MTNL than those of the private operators. Private
operators have 14-15 percent higher ARPU than the two
government companies. Given all that, will 3G help the two
to fast track their growth and bring in more subscribers?
After all, private operators are still months away from
launching their own 3G services. Mehta says, "The
subscribers of these two operators are at the extreme end of
the society and it is highly unlikely that these companies can
make any significant gains in market share with their 3G
services, unless they position and market their services
right. They can definitely use the next few months of no
competition (in 3G from private operators) to create demand
and develop a market for their newest offering."
However, Chandrasekhar, General Manager for Mobility,
Marketing and Sales, BSNL says, "Market is growing slowly.
The customer base has grown by a good rate in the month of
May and June. We are also collaborating with many handset
providers to avail the 3G mobile phones in market at the
affordable price." BSNL tied up with Nokia, Sony and
Samsung for handset bundling, the cheapest of which is
priced at Rs.7000. In the first year of 3G operations, the
operators are expecting 3G subscribers to pay about five
times of the current 2G or 2.5G tariffs. This is a steep
increase and will target only niche demographics. Voice tariff
schemes begin from a fixed monthly charge of Rs.350 for
prepaid, and Rs.500 for postpaid. "90 percent of mobile
users in India use prepaid service," said Ashish Sinha, Chief
Catalyst, Pluged.in.
On the application of 3G, Sujai Karampuri, CEO, Sloka said,
"3G makes possible video streaming applications such as
Live TV, movie downloads, high speed data download on
mobile phones. With 3G services enabled, callers can also
see each other on their mobile phone screens." But analysts
feel that more than all these applications, the challenge for
operators will be to offer wide coverage (including roaming),
high quality service and attractive content in the initial years
to sustain high-paying subscribers long enough to reach the
tipping point of growth. Operators can easily provide the
services in metro regions but the biggest challenge is to
make these services available in rural India. Aithal said, "The
consumers in rural market are waiting for 3G services." It
would be really interesting to see as how these 3G
applications help farmers in forecasting weather for crop
protection and educating their children. "Currently, we are
mainly focusing on community connection to individual
connection in rural areas. Once the price range of 3G mobile
comes down to Rs.2000-3000, we will start focusing on
individual connections."

Price war hots up: MTNL calls at

half a paise
The government-owned Mahanagar Telephone Nigam Ltd
(MTNL) on Tuesday, December 01, 2009 took the ongoing
tariff war in telecom sector to the next level. The company
reduced its tariff to half a paise per second for calls made
within its own network and 1 paise per second for calls made
to other networks.
MTNL has a subscriber base of around 8 million, out of which
4.4 million are mobile subscribers. The rest are landline
subscribers. A subscriber based in Delhi can call to another
MTNL subscriber in Mumbai at half a paise per second. The
billing will be on per second basis.
“We are committed to providing our customers the best
services at the most competitive rates,” said R.S.P. Sinha,
chairman and managing director of MTNL. “Our pay per plan
is the most affordable in the industry and directly benefits
our 4.4 million GSM subscribers and another 1.4 lakh
subscribers of 3G services.”
MTNL’s new tariff plans are valid for both its subscribers of
2G and 3G services.

Chapter 6
RESEARCH
ANALYSES

Research analyses
A market survey on
How people select Telecom Company?

1. Do you select the telecom service provider just because

of its Brand Name?

 Yes  No

2. Are you influence by the presence of celebrity in an

advertisement of Telecom Company?
 Yes No
 3. Do you see the tariff plan before selecting the telecom
company?
 Yes No I might

4. Will you compromise on your current preference if the

competitor gives better tariff plan, compare to your
service provider?
Might be  No

5. Do you leave your service provider if competitor gives

better plan?
Definitely yes. Will not I might

6. What are the reasons you prefer a particular telecom

company.

1.______________________________________________________
________________________________________________________
___________________

2.______________________________________________________
________________________________________________________
____________________

1.Do you select the telecom service

provider just because of its Brand
Name?

It is found that most of the people

see the service, feature, call rate
(tariff plan) etc before selecting
particular brand. These people
firstly find out the cheapest plan
provided by different company than select the product they
want. Whereas some people use brand name for selecting
service provider.
It is found that 85% people give importance to products
feature and 15% people prefer due to brand name.

2.Are you influence by the presence of

celebrity in an advertisement of
Telecom Company?

Interpretation.

From the curved conducted it is

evident that almost 60 percent do
not blindly believe or get totally
influenced by the presence of a
celebrity. However 30 percent are
of the view that the presence of a
celebrity will get them to go and ask for the product. This is
an aspect due to which celebrities are used by telecom
companies in advertising.

For example
Airtel--- Shahrukh khan
Aircel--- M S Dhoni

3.Do you see the tariff plan before

selecting the telecom company?

Most of the people select the

telecom operator on the
basis of tariff plan. The
operators who provide
cheep call rate become more successful in Indian market.
Some time people see the other promotional strategy rather
than call rate of particular network operator. Like in
Vodafone: - Customer prefer it because it gives one free
movie ticket on purchase of one movie ticket.
But in case of Tata Docomo: - Customer prefer it because of
its plan “Pay per Second”
It is shows that 66% people see the tariff plan. 28% people
see other features and 6% purchase due to Brand loyalty.

4.Will you compromise on your current

preference if the competitor gives
better tariff plan, compare to your
service provider?

When such situation comes in market

than large number of customer
migrate from one service provider to
other. But there are many customer
who are continuously use service of
same operator, may be because of
Brand loyalty or if they don’t want to
change their number.
The collected data shows that 58% people agree with this
question and 42% people are not.

5.Do you leave your service provider if

competitor gives better plan?

Basically people say Yes

if they select the
service operator on the
basis of cheep call rate. Such people are not stable with one
service provider. They change quickly their service provider.
In other hand there are some loyal and honest customers
who will use only particular service provider at a time.
In this case 35% people are change their service provider.
Such people include “College Students, Teenager etc”.
whereas most of the people remain with same service
provider. There are 55% people who remain with their
service provider.

WEAKNESSES
MARKET SWOT ANALYSIS
• Lowest call tariffs in the
world
STRENGTHS • Market strongly regulated
by Govrenment body
• Huge wireless subscriber
Governing both ISP and
potential
Telecom sectors
• Fastest growing mobile
• Too many authorities ruling
market in the world
the sector
• Consumers are ready to
• Huge potential for low end
pay for cutting edge
and cheap handsets
services
• Wide scale Consumer churn
• Government proposes to
in Telecom and ISP
hike FDI limit in Telecom
• Wide spread VAS
to 74%
deployment is restricted
• Unified license regime
due to language and
literacy problems
• Primarily a voice based
market
 OPPORTUNITIES
• To offer value added services
on GSM, CDMA and IP
• Language independent
services
• Mobile Marketing concepts
• Content influenced by local
culture and Global success
stories
• M-Commerce
• Unified messaging platforms
• Foreign investment in form of
equity or technology
THREATS
• Low cost service providers – no
possibility of Breaking even in
short term
• Weak IPR protection
• Software and digital content
Piracy
• Political instability
• Regulatory interference
CONCLUSION
Indian telecommunication Industry is one of the fastest
growing telecom markets in the world. The mobile sector
has grown from around 10 million subscribers in 2002
to reach 150 million by early 2007 registering an
average growth of over 90% y-o-y. The two major reasons
that have fuelled this growth are low tariffs coupled with falling
handset-prices
Surprisingly, CDMA market has increased it market share upto
30% thanks to Reliance Communication. However, across the
globe, CDMA has been losing out numbers to popular GSM
technology, contrary to the scenario in India. The other reason
that has tremendously helped the telecom Industry is the
regulatory changes and reforms that have been pushed for last
10 years by successive Indian governments. According to
Telecom Regulatory Authority of India (TRAI) the rate of market
expansion would increase with further regulatory and
structural reforms. Even though the fixed line market share has
been dropping consistently, the overall (fixed and mobile)
subscribers have risen to more than 200 million by first
quarter of 2007. The telecom reforms have allowed the
foreign telecommunication companies to enter Indian market
which has still got huge potential.
International telecom companies like Vodafone have made
entry into Indian market in a big way. Currently the Indian
Telecommunication market is valued at around $100 billion
(Rupees 400,000 crore). Two telecom players dominate this
market - Bharti Airtel with 27% market share and Reliance
Communication with 20% along with other players like BSNL
(Bharat Sanchar Nigam Limited) and AT&T. One segment of the
market that has been puzzling is broadband Internet. Despite
the manner in which the country’s Internet market has been
booming, India’s move into high-speed broadband Internet
access has been distinctly slow. And, while there appears to be
considerable enthusiasm amongst the population for the
Internet itself, this has not been reflected in broadband
subscription numbers. In 2006 India witnessed a good surge in
broadband users with the total subscriber base in the
country expanding by almost 200% to just over 2 million
by year’s end. Despite this surge, broadband penetration
in India still remains around only 0.2%; broadband
services still account for only 25% of the total Internet
subscriber base, still in itself comparatively low.
The Ministry of Communications and Information Technology
(MCIT) is has very aggressive plans to increase the pace of
growth, targeting 250 million telephone subscribers by end-
2007 and 500 million by 2010. Most of the expansion in
subscribers is set to occur in rural India. India’s rural telephone
density has been languishing at around 1.9%; So, if 70% of
total population is rural, the scope for growth in this Industry is
unprecedented.
 Bibliography
Web site’s :-
1. www.dot.gov.in
2. www.naukriblog.com
3. www.indiatelecom.org

Book for reference :-

1. Business Communication