TELECOM INDUSTRY IN INDIA

GROUP NO. O4 YAWAR HUSAIN DEWAK PATHAK VIKAS MISHRA ALOK KR. SINGH ASHISH TRIPATHI ROHIT SHRIVASTAVA

Introduction
India's telecommunication network is the third largest in the world on the basis of its customer base and it has one of the lowest tariffs in the world enabled by the hyper-competition in its market. Major sectors of the Indian telecommunication industry are telephony, internet and broadcasting. Telephonic network in the country which is in an ongoing process of converging to Next Generation Network, employs an extensive system of network elements such as digital telephone exchanges, Mobile Switching Centers, Media gateways and Signalling gateways at the core, interconnected by a wide variety of transmission systems using media such as Optical fiber or Microwave radio relay. The access network which connects the subscriber to the core is highly diversified with different copper-pair, optic-fibre and wireless technologies. DTH, a relatively new broadcasting technology has attained significant popularity in the Television segment. Introduction to private FM has given a fillip to the radio broadcasting in India . Telecommunication in India is assisted by the INSAT system of the country, one of the largest domestic satellite systems in the world. India possesses a diversified communications system that link all parts of the country by telephone, Internet, radio, television and satellite. Indian telecom industry underwent a high pace of market liberalization and growth since 1990s and now has become the world's most competitive and one of the fastest growing telecom markets. India has the world's second-largest mobile phone user base with over 929.37 million users as of May 2012. It has the world's third-largest Internet user-base with over 121 million as of December 2011. The industry is expected to reach a size of 344,921 crore (US$62.43 billion) by 2012 at a growth rate of over 26 per cent, and generate employment opportunities for about 10 million people during the same period. According to analysts, the sector would create direct employment for 2.8 million people and for 7 million indirectly. The total revenue of the Indian telecom sector grew by 7% to 283,207 crore (US$51.26 billion) for 201011 financial year, while revenues from telecom equipment segment stood at 117,039 crore (US$21.18 billion). Telecommunication has supported the socioeconomic development of India and has played a significant role to narrow down the rural-urban digital divide to some extent.

It also has helped to increase the transparency of governance with the introduction of Egovernance in India. Government has significantly used the popularity of radio and television among rural people for many mass education programmes.

HISTORY OF TELECOM INDUSTRY

The history of Indian telecom can be started with the introduction of telegraph. The Indian postal and telecom sectors are one of the worlds oldest. In 1850, the first experimental electric telegraph line was started between Kolkata and Diamond Harbour. In 1851, it was opened for the use of the British East India Company. The Posts and Telegraphs department occupied a small corner of the Public Works Department at that time. Subsequently, the construction of 4,000 miles (6,400 km) of telegraph lines connecting Kolkata (then Calcutta) and Peshawar in the north along with Agra, Mumbai (then Bombay) through Sindwa Ghats, and Chennai (then Madras) in the south, as well as Ootacamund and Bangalore was started in November 1853. William O'Shaughnessy, who pioneered the telegraph and telephone in India, belonged to the Public Works Department, and worked towards the development of telecom throughout this period. A separate department was opened in 1854 when telegraph facilities were opened to the public. 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 and Ahmedabad and the first formal telephone service was established in the country. On 28 January 1882, Major E. Baring, Member of the Governor General of India's Council declared open the Telephone Exchanges in Kolkata, Bombay and Chennai. The exchange in Kolkata named the "Central Exchange" had a total of 93 subscribers in its early stage. Later that year, Mumbai also witnessed the opening of a telephone exchange.

Further developments and milestones Pre-1902 Cable telegraph 1902 First wireless telegraph station established between Sagar Island and Sandhead. 1907 First Central Battery of telephones introduced in Kanpur. 19131914 First Automatic Exchange installed in Shimla. 1927 Radio-telegraph system between the UK and India, with Imperial Wireless Chain beam stations at Khadki and Daund. Inaugurated by Lord Irwin on 23 July by exchanging greetings with King George V. 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. 1979 First optical fiber system for local junction commissioned at Pune. 1980 First satellite earth station for domestic communications established at Sikandarabad, U.P.. 1983 First analogue Stored Program Control exchange for trunk lines commissioned at Mumbai. 1984 C-DOT established for indigenous development and production of digital exchanges. 1995 First mobile telephone service started on non-commercial basis on 15 August 1995 in Delhi. 1995 Internet Introduced in India starting with Mumbai, Delhi, Calcutta, Chennai and Pune on 15 August 1995

Sectors Major sectors of telecommunication industry in India are telephony, internet and broadcasting. The primary regulator of telecommunications in India is the Telecom Regulatory Authority of India (TRAI). It regulates all of the segments mentioned below. Telephony

Market share of major operators in India as on 29 February 2012

Market share of major operators in India as on 29 February 2012 The telephony segment is dominated by private-sector and two state-run businesses. Most companies were formed by a recent revolution and restructuring launched within a decade, directed by Ministry of Communications and IT, Department of Telecommunications and Minister of Finance. Since then, most companies gained 2G, 3G and 4G licenses and engaged

fixed-line, mobile and internet business in India. On landlines, intra-circle calls are considered local calls while inter-circle are considered long distance calls. Foreign Direct Investment policy which increased the foreign ownership cap from 49% to 74%. 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 dialled first followed by the country code, area code and local phone number. The country code for India is 91. Several international fiber-optic links include those to Japan, South Korea, Hong Kong, Russia, and Germany. Some major telecom operators in India include Airtel, Vodafone, Idea, Aircel, BSNL, MTNL, Reliance Communications, TATA Teleservices, Infotel, MTS, Uninor, TATA DoCoMo, Videocon, Augere, Tikona Digital. Fixed Telephony Until the New Telecom Policy was announced in 1999, only the Government-owned BSNL and MTNL were allowed to provide land-line phone services through copper wire in India with MTNLoperating in Delhi and Mumbai and BSNL servicing all other areas of the country. Due to the rapid growth of the cellular phone industry in India, landlines are facing stiff competition from cellular operators. This has forced land-line service providers to become more efficient and improve their quality of service. Land-line connections are now also available on demand, even in high density urban areas. India has over 31 million main line customers. Mobile Telephony See also: List of mobile network operators of India, List of countries by number of mobile phones in use, and List of mobile network operators Cellular phone tower atop the roof of a building

Typical signboards of STD booths (kiosks from where STD calls can be made) and internet kiosks in India

AIR Radio Tower

In August 1995, Chief Minister of West Bengal, Shri Jyoti Basu ushered in the cell phone revolution in India by making the first call to Union Telecom Minister Sukhram. Sixteen years later 4th generation services were launched in Kolkata.[24] With a subscriber base of more than 929 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. GSM was comfortably maintaining its position as the dominant mobile technology with 80% of the mobile subscriber market, but CDMA seemed to have stabilized its market share at 20% for the time being. By May 2012 the country had 929 million mobile subscribers, up from 350 million just 40 months earlier. The mobile market was continuing to expand at an annual rate in excess of 40% coming into 2010. 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. The rates are supposed to go down further with new measures to be taken by the Information Ministry. In September 2004, the number of mobile phone connections crossed the number of fixed-line connections and presently dwarfs the wire line 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 929 million subscribers as of May 2012. 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 government allowed Mobile number portability (MNP) which enables mobile telephone users to retain their mobile telephone numbers when changing from one mobile network operator to another. India is divided into 22 telecom circles

Wireline Wireless subscriber subscriber Teledensity (May Telecom circle base in base in 2012) million(May million(May 2012) 2012) Andhra Pradesh 2.33 66.6 80.46 Assam 0.20 14.6 47.7 Bihar & 0.56 62.97 48.37 Jharkhand Delhi 2.9 42.95 239.91 Gujarat & 1.82 54.32 92.56 Daman & Diu Haryana 0.59 23.00 90.86 Himachal 0.30 7.41 112.29 Pradesh Jammu and 0.20 6.57 56.92 Kashmir Karnataka 2.48 56.63 98.22 Kerala & 3.18 34.51 107.85 Lakshadweep Kolkata 1.18 25.25 Not available* Madhya Pradesh 1.13 53.30 55.38 & Chhattisgarh Maharashtra & Goa (excluding 2.64 71.00 96.71 * Mumbai ) Mumbai* 3.0 35.93 Not available * North East ^** 0.25 8.76 64.74 Orissa 0.40 26.27 64.73 Punjab 1.44 31.17 110.22 Rajastan 1.14 49.52 73.26 Tamil Nadu(including 3.16 78.96 118.29 Chennai since [29] 2005) Uttar 1.20 77.74 62.65(Combined)* Pradesh(East) Uttar Pradesh(West) & 0.79 55.12 62.65(Combined)* Uttarakhand West Bengal(excluding 0.62 46.79 80.56 * Kolkata)***

^* Population statistics are available state-wise only. ^** North east circle includes Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, & Tripura ^*** West Bengal circle includes Andaman-Nicobar and Sikkim Internet Main articles: List of Internet users by country and List of countries by number of broadband Internet subscriptions The history of internet in India started with launch of internet services by VSNL on 15 August 1995, the 48th anniversary of Indian independence. They were able to add about 10,000 internet users with in 6 months. However for the next 10 years internet experience in the country remained less attractive with narrow-band connections having speed less than 56 Kbit/s (Dial-Up). In 2004, Government formulated it's Broadband policy which defined the broadband as an always-on internet connection with download speed of 256 Kbit/s or above. From 2005 onward the growth of broadband sector in the country attained acceleration, but remained below the growth estimates of government and related agencies due to the resource issues in last-mile access which depended on wired-line technologies predominantly. This bottleneck was removed in 2010 when government auctioned the 3G spectrum followed by an equally high profile auction of 4G spectrum that set the scene for a competitive and invigorated wireless broadband market. Now internet access in India is provided by both public and private companies using a variety of technologies and media including Dial-Up(PSTN), xDSL, Coaxial Cables, Ethernet, FTTH, ISDN, HSDPA (3G), Wi-Fi, WiMAX etc. at a wide range of speeds and costs. The country has the world's third largest Internet users with over 121 million users (of whom 59% who only access the internet via mobile devices) as of December 2011. As of December 2011, total Internet connections stood at 22.39 million with estimated users exceeding 121 million. The number of broadband users has increased from 0.18 million in March 2005 to 13.54 million in February 2012.Cumulative Annual Growth rate(CAGR) of the broadband during the five year period between 2005 and 2010 was about 117 per cent. Among the technologies, DSL, whilst holding slightly more than 75% of the local broadband market, was steadily losing market share to other non-DSL broadband platforms, especially to wireless broadband platforms.

There are 155 Internet Service Providers (ISPs) as of February 2012, which offer broadband services in India. Public sector companies BSNL and MTNL dominates the market with a share of 64.8 and 7.6 percent respectively while from the private sector Bharti leads with a share of 10 per cent. Cyber Cafe remains as the major source of internet access. In 2009, about 37 per cent of the users access from Cyber cafe, 30 per cent from office and 23 per cent from home. However, the number of mobile internet users found acceleration from 2009 onward and there were about 274 million such users at the end of September 2010, though majority belonged to 2G mobile networks.[31] Mobile internet subscriptions as reported by India's TRAI in Mar 2011 increased to 381 million. One of the major issue, the internet segment facing is the lower average bandwidth of broadband connections compared to that of developed countries. According to 2007 statistics, the average download speed in India hovered at about 256 kbit/s, the minimum speed set by TRAI, whereas the international average was 5.6 Mbit/s during the same period. In order to attend this infrastructure issue the government declared 2007 as "the year of broadband". To compete with international standards of defining broadband speed the Indian Government has taken aggressive step of proposing the $13 billion national broadband network to connect all cities, towns and villages with a population of more than 500 in two phases targeted for completion by 2012 and 2013. The network is estimated to handle speed up to 10 Mbit/s in 63 metropolitan areas and 4 Mbit/s in additional 352 cities. Also, the Internet penetration in India is one of the lowest in the world and only accounts for 8.4% of the population compared to OECD counties, where average penetration rate is over 50%.

Another issue reported from this sector is the digital divide of the growth story biased in favour of urban areas; according to 2010 statistics, more than 75 per cent of the broadband connections in the country are in top 30 cities. Regulators have tried to boost the growth of broadband in in rural areas by promoting higher investment in rural infrastructure and subsidized tariff for rural subscribers under Universal service obligation scheme of the Indian government.

competitors
Bharti Airtel is one of the most valued company of India. It is also the leading telecom provider in India. Reliance Communications follows Airtel in market capitalization. Interestingly the same order holds good for the total number of subscribers these telecom companies has.

Bharti has a subscriber base of 91.1 million and added 2.7 million subscribers in Feb 2009. Reliance added 3.3 million new subscribers in FEB 2009 to take the total to 69.6 million. Reliance rolled out its GSM operations late last year following which there was a surge in the number of new subscribers. It also added more subscribers than Airtel in a month.contact game Following MTNL is the list of other telecom providers in infrastructure, equipment and value added services. Vodafone-Essar which has 66 million subscribers is not listed on the Indian Bourses. BSNL is also not listed and that is the reason why it is not in the list. If listed it could be one of the top companies. There is a lot of things happening around BSNLs IPO even before the recession started. Now, that the recession has started the IPO plans were postponed. But, BSNL will dilute 10% stake sooner than later. *Market valuations as on 20 MAR 2009. Source (ETIG) List of top 30 Telecom companies in India : Company Name Bharti Airtel Reliance Communications Idea Cellular Tata Communications Tata Teleservices Spice Communications MTNL GTL GTL Infrastructure OnMobile Global HFCL Infotel ITI Him.Fut.Comm Astra Microwave Market Cap in Crores 108066.23 32683.44 14368.92 13181.25 4393.06 4136.13 4044.6 2475.12 2210.49 1403.52 457.73 413.28 386.99 241.88

Gemini Communications Avaya Global Shyam Telecom Nelco XL Telecom & Energy Limited Goldstone Infratech Ltd Nu Tek Kavveri Telecom Krone Communications Mobile Telecommunications Ltd Valiant Communications Pun.Communi. Nettlinx Aishwarya Telecom Ltd Interg.Digit Vital Communications

125.71 118.54 64.58 63.55 55.96 52.6 48.16 26.51 24.52 17.37 16.58 16.19 12.68 9.86 3.15 2.81

SUPPLY CHAIN MANAGEMENT

Conclusion
India's teledensity has improved from under 4% in March 2001 to around 71% by the end of March 2011. Cellular telephony has emerged as the fastest growing segment in the Indian telecom industry. The mobile subscriber base (GSM and CDMA combined) has grown from under 2 m at the end of FY00 to touch 812 m at the end of March 2011 (average annual growth of nearly 73% during this eleven year period). Tariff reduction and decline in handset costs has helped the segment to gain in scale. The cellular segment is playing an important role in the industry by making itself available in the rural and semi urban areas where teledensity is the lowest. The fixed line segment has actually seen a decline in the subscriber base. It has declined to 34.73 m subscribers in March 2011 from 36.96 m in March 2010. The decline was mainly due to substitution of landlines with mobile phones. As far as broadband connections (>=256 kbps) are concerned, India currently has a subscriber base of 11.9 m. It has grown at an average annual growth rate of 45% since 2008. The auction for broadband wireless license and spectrum was carried out last year. Once the operators complete their network rollouts, this will further boost the broadband penetration in the country. New players like Virgin Mobile, which already has an international presence in close to 17 countries are entering India. It is doing so in collaboration with Tata Teleservices. The target market for Virgin Mobile is the youth, which in India is around 54% of its population. Key Points Supply Intense competition has resulted in prompt service to the subscribers. Demand Given the low tariff environment and relatively low rural and semi urban penetration levels, demand will continue to remain higher in the foreseeable future across all the segments.

Barriers to High capital investments, well-established players who have a nationwide entry network, license fee, continuously evolving technology and lowest tariffs in the world. Bargaining power of suppliers Bargaining power of customers Improved competitive scenario and commoditisation of telecom services has led to reduced bargaining power for services providers. A wide variety of choices available to customers both in fixed as well as mobile telephony has resulted in increased bargaining power for the customers.

Competitio n Financial Year '11 FY11 saw the continuance of strong growth for the Indian telecom market, which witnessed a 39% YoY increase in its subscriber base during the 12-month period. At the end of March 2011, the country's total telecom subscriber base (fixed plus mobile) stood at about 846 m. The tele-density level stood at about 71% by the end of the fiscal.

Data source: Trai, Company Data Data source: Trai, Company Data

Growth remained robust in the GSM mobile space. GSM added 220 m

subscribers during the year. After a good 22% YoY increase in subscriptions during FY10, the GSM industry clocked another robust performance during FY11, growing subscriber base by 46% YoY to about 698 m.

During FY11, India's mobile subscriber base grew by 39% YoY, from 584 m to 812 m, while the fixed subscriber base declined by about 1%, from 36.96 m to about 34.73 m.

As far as the fixed line business goes, the low penetration levels in the country and the increasing demand for data based services such as the Internet will act as major catalysts in the growth of this segment. The PSUs will however continue to retain their dominant position. This is on account of high capital investments required in setting up a nationwide network. As a result, the private sector players will have to rely on key business centers and pockets of high urbanisation for their growth. Increasing choice and one of the lowest tariffs in the world have made the cellular services in India an attractive proposition for the average consumer. The segment's subscriber base has grown by over 39% YoY in FY11. As per Pricewaterhouse Coopers, India's mobile subscriber base is expected to exceed 1 bn by 2014 and will be driven by additions in the rural areas. India's rural tele-density for mobile subscribers currently stands at 32.75%. During FY11, a number of things were carried out. The government finally implemented mobile number portability (MNP). The 3G spectrum was allotted to the operators who had been successful in the bidding process. The telecom scam was unearthed that highlighted the need for the new telecom policy. The MNP was not as big a game changer as it was made out to be. As reported by TRAI, only 1% of the total subscriber base has opted for MNP. The other key development during the year was the rollout of the 3G

services. Most operators have rolled out services in the circles for which they were granted the spectrum and license. And most of them are either in the process of or have already signed roaming agreements with other operators to provide 3G services in the circles for which they do not have the license. While it is still very early to judge the impact of 3G services, nevertheless, operators expect it to be the game changer in the future. During the current fiscal year a lot of focus will be given to new policy initiatives in the industry. The new telecom policy is expected to address several key issues that include guidelines for charging spectrum fee and for mergers and acquisitions in the sector. The operators are hopeful that these guidelines would be conducive for the growth of the sector as a whole. The telecom minister has promised that the new telecom policy would be drafted by the middle of this fiscal year. He has also assured the industry that the policy would keep in mind the interest of the industry as well as that of the consumers. In a latest move, some operators have raised their tariffs. The reason given by them is that such a move is essential to cover the increasing costs of servicing the existing as well as the new customers. However, they have rolled out these price increases only in select circles to view its impact on subscriber additions as well as on minutes of usage (MOU). Indian consumers are known to be highly sensitive to price increases. Therefore, there are fears that net additions and/or MOUs may come under pressure through such increases. Another fear that operators have is what if other operators do not follow suit? This would lead to a loss of market share. While tariff increase will have to happen eventually, it remains to be seen if all operators would make this move in the current fiscal or not.

Future growth of industry

The telecom industry may be one bright spot in a troubled world economy. While global growth is forecast by The Conference Board to grow at about 3% annually from 2012 to 2016, worldwide telecommunications services revenue is projected to increase from $2.1 trillion in 2012 to $2.7 trillion in 2017 at a combined average growth rate of 5.3%, according to a news release announcing a new market research report by The Insight Research Corporation. Demand from consumers and businesses for wireless services is reportedly fueling that industry revenue growth. Geographically, Asia and other emerging markets will boost wireless revenues by 64%, while wireline revenues are expected to show only modest growth. Most of the growth in both the wireless and wireline sectors is expected to come from broadband services, with wireless 3G and 4G broadband services forecast to grow at a compounded rate of 24% from 2012 to 2017. Over the same period, wireline broadband services are predicted to grow at a compounded rate of 13%. Congruent with the reports information that Asia and emerging markets will be important for telecom growth, The Conference Board projects that overall gross domestic product (GDP) growth between 2012 and 2016 will be 7% in China, 6.4% in India, and 4.1% in other developing Asia. Despite global economic uncertainty, the telecommunications industry is showing strong revenue growth, which is being driven by consumer Internet usage and business mobility solutions. These are enabling new applications, said Fran Caulfield, Research Director for Insight Research. As the telecom services sector projects growth, so too are mobile phone manufacturers readying next-generation products to drive sales. At this years CES, Verizon Wireless (a joint venture of Verizon Communications and Vodafone) added six new 4G long term evolution (LTE) devices to its expanding list. Sprint Nextel announced plans to launch about 15 4G LTE devices including handsets, tablets, and data cards in 2012. AT&T, meanwhile, plans to launch the Xperia ion, a 4G LTE smartphone made by Sony, in the second quarter of 2012. It will be the first smartphone to be sold in the US under the Sony brand. Additionally, Morgan Stanley reports that Nokia stands to sell up to 37 million Windows phone handsets in 2012 and another 64 million in 2013. Microsoft and Nokia will spend $20 million to promote that product

The Indian telecom industry has been a torchbearer on the possibilities that the Indian market presents to the firms willing to invest in addressing the needs of the customers. The Indian telecom industry has proved to the world that a country with legacy infrastructure can and will jump technology curves. In 2003, the US had more wireline and wireless telecom subscribers than India. Today India is home to one of the largest telecom subscriber bases in the world. So how does one make such a monumental shift happen? It requires innovation, persistence, and the right product market fit. Everyone has heard and talked enough about how telecom service providers in India have successfully co-invented the managed services model with the IT industry to rapidly scale their businesses. In addition to this, the Indian telecom industry has gone an extra mile to understand and leverage the retail market in India to provide telecom services to the market. However, the key contributor to this substantial growth has been the ability of the telecom industry to achieve the right product/market fit. They have got their service offerings right as well as their pricing and the rapid scale as an outcome, has been phenomenal. However, the telecom industry today is on the crossroads. Though there has been a steady increase in subscriber base, there has been an equally steady decrease in the ARPU. The true future of the telecom industry might just lie with the enterprise customers and the SMBs. The 3 major technology trends impacting global businesses are cloud computing, mobility, and social computing. These 3 technology trends are going to impact the way every business will run in the next century. Telecom is the key underlying industry vertical for the delivery of these services. The telecom industry in India will have to transform from being consumer oriented to enterprise services oriented. Telecom firms will need to look at getting into partnerships with large system integrations and ISVs to start delivering enterprise class applications and enterprise mobility solutions.

REFERENCES
www.google.com www.dot.gov.in www.trai.gov.in