Post on 06-May-2015
Telecom industry in India Since 1991
By: Umar Farooq
A 16lloloneumar89@gmail.com
INTRODUCTION Postal means of communication was the only mean
communication until the year 1850. In 1850 experimental electric telegraph started for first time in India between Calcutta (Kolkata).
In 1851, it was opened for the use of the British East India Company.
Subsequently construction of telegraph started throughout India. A separate department was opened to the public in 1854.
Dr.William O’Shaughnessy, was the one who pioneered the telegraph and telephone in India.
In 1980 when the private sector was allowed in telecommunications equipment manufacturing the first wind of reforms in telecommunications sector began to flow.
cont…Today India has the second largest number of telephone
subscribers with 941.81 mn ( July 2012) in the world accounting 12%.
Telecom is the third major sector attracting FDI inflows after services and computer software sector.
FDI in telecom sector during April-June 2012 stood at US$ 8 million.
GSM continues to be the dominant technology for wireless phones with an 87.90 % share.
Mobile phones accounts for nearly 96.60 % of the total telecom subscriptions.
Mobile tariffs in India are the second lowest in the world after Bangladesh.
Telecom sector contributes 3.7% to the total GDP of India.
Reforms in Telecom sector since early 1990's
1991-92: On 24th July 1991, Government announced
the New Economic Policy. Telecom Manufacturing Equipment license
was delicensed in 1991.1992-93:
Value added services were opened for private and foreign players on franchise or license basis.
1994-95: The Government announced a National
Telecom Policy in September 1994
1996-97: TRAI was set up as an autonomous body to
separate the regulatory functions from policy formulations and operational functions.
Internet Policy was finalized.1998-99:FDI up to 49 per cent of total equity, subject to
license, permitted in companies providing Global Mobile Personal Communication (GMPC) by satellite services.
1999-001. National Telecom Policy 1999 was
announced which allowed multiple fixed Services operators and opened long distance services to private operators.
DOT/MTNL was permitted to start cellular mobile telephone service
2000-01:TRAI Act was amended. The Amendment clarified
and strengthened the recommendatory power of TRAI.
Department of Telecom creating Bharat Sanchar Nigam Limited.
Reduction in STD & ISD rates.2001-02:1. Communication Convergence Bill, was
introduced in August 2001. Wireless in Local Loop (WLL) was introduced for
providing telephone connection in urban, semi-urban and rural areas.
2002-031. International long distance business opened
for unrestricted entry. Telephony on internet permitted in April 2002
2004-05:Broadband Policy announced on 14th October
2004.BSNL and MTNL launched broadband services
on 14th January 2005.TRAI announced the reduction by 41 per cent on
ISD calls and by 61 per cent on STD calls.2005-20061. Budget 2005-2006 cleared a hike in FDI ceiling
to 74 per cent from the earlier limit of 49 per cent.
BSNL and MTNL launched the 'One-India Plan‘.BSNL announced 33 per cent reduction in call
charges for all the countries for international calls.
2007-10 3G guidelines issued spectrum allocation through auction,
foreign players allowed to bid.TRAI announces rules & regulations to be followed for mobile
number portability in 2009.BSNL 1st one to launch WIMAX service in 2010.
2011-2012Airtel launches 4G service in April 2012.
Major players of telecom industry & year of establishment
1) Bharti airtel-19852) Tata communications-19863) MTNL-19864) Idea cellular-19955) Tata teleservices-19966) TTML-19987) Aircel-19998) Reliance communications-19999) BSNL-200010)Vodafone Essar-200711)Uninor 2009
Source: Telecom Regulatory Authority of India
Market LeaderThere are four major companies in telecom industry.
Airtel, Reliance, Vodafone, Idea and BSNL. Airtel lead with 28.09% market share. Vodafone on the 2nd place with 23.56% market share.
Mobile value added services like: Mobile banking, Mobile education, Health information services, Agriculture
and Entertainment, Internet services. Growth of e-business. Low cost hand sets. Rural population is the key growth driver of India's telecom industry. Market-driven factors such as planned expansion of networks Increasing use of 3G, Wimax(wireless network) and 4G Increase of Mobile users.(rose to 944.81 million in July 2012) Digitization of Television Broadcast Network Free Market system . ( e.g. Airtel Rwanda) Mergers and Acquisitions (M&A) Increase in IT users. Growth of Manufacturing and Service Industries.
Key Drivers
Challenges FACED BY TELECOM INDUSTRY Limited spectrum availability and interconnection charges between the
private and state operators. Telecom manufacturing in India is not in pace. With only a few
equipment manufacturers currently operating in the country, most of the telecom equipment is imported as the country lags behind in terms of telecom R&D.
Lack of infrastructure in semi-rural and rural areas, which makes it difficult to make inroads into this market segment as service providers have to incur a huge initial fixed cost.
One of the major challenge is the absence of a uniform approval process across the country for setting up telecom towers and other infrastructure.
Inadequate utilization of existing towers. Multiple levies and high taxes on the set up of mobile towers. lack of reliable power for telecom towers and higher tariffs on telecom
sites. This increases the dependence on diesel- fuelled power sources, which is considered expensive and more harmful to the environment.
Impact of global crisisAs we know world economy is fighting with
economic slow down.It seems something special about the telecom
industry which renders it partially immune to the worst effect of the down turn.
Total base of connection in world is 3.2 bln.There was less impact of global crisis on Indian
telecom industry as India became the 1st country in the world new connections in a month.
A fair and transparent Spectrum Policy should be ensured by the Government.
Equal Access should be ensured to provide support for the achievement of Universal Service, an appropriate financing mechanism be evolved.
Provision of right of way could be given by State Governments on simple commercial terms without any special conditions
Tax laws should be amended to permit efficiency with respect to consolidation and restructuring of the business of telecom operators.
Foreign Investment Thresholds should be encouraged.GOI to increase rural infrastructure (Mainly Power)
Conclusions and Recommendations
Reference:
http://www.dot.gov.in/http://www.trai.gov.in/http://timesofindia.indiatimes.com/ Articles,Jul
5, 2012http://www.businessreviewindia.in/technology/
software/-telecom-industry--indias- success-story•
http://voicendata.ciol.com/content/news/110 112601.asp•
http://www.coai.com/statistics.php
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