Evolution of GSM in IndiaEvolution of GSM in India

T V Ramachandran, Director GeneralT V Ramachandran, Director General

September 13, 2005September 13, 2005

Status of GSM IndustryStatus of GSM Industry

Cellular services started in India in 1995; GSM was the mandated standard.

Above Government decision proved to be beneficial for India as GSM has been established as the dominant standard.

As of August 2005, there were nearly 50 million GSM subscribers which constitutes 80% of the total cellular subs.

The month of July and August witnessed record growth in GSM subscriber addition of about 2 million.

75% of the new mobile subscribers in India choose GSM.

There are 83 state-of-the art Networks of GSM.

Roll out of services in more than 4,000 town & cities and more than 60,000 villages.

Total Private GSM Investments are over Rs 50,000 crores.

GSM-Fixed Crossover achieved in April 2005.GSM-Fixed Crossover achieved in April 2005.

GSM Growth Through the YearsGSM Growth Through the Years

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Several points of inflexion in the past, have given Several points of inflexion in the past, have given kick-start to improved cellular growthkick-start to improved cellular growth

NTP’99

3rd & 4th Cellular

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Steeply falling tariffs have ensured affordable Steeply falling tariffs have ensured affordable services to a large subs baseservices to a large subs base

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Effective charge (in Rs. Per min) Subscriber Base (in mn)

3 rd  & 4 t h C ellular  Op erat or

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revenueNTP ' 9 9

Rates per minute have fallen by over 90% in the last seven years.

Source: TRAI Study paper No 2/2005

Introduction of CDMA

GSM - the dominant standard in IndiaGSM - the dominant standard in India

GSM constitutes around 80% of the cellular market in India.

Market share of GSM continues to rise steadilyMarket share of GSM continues to rise steadily

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GSM CDMA

GSM Increasing its Market Share GloballyGSM Increasing its Market Share Globally

Indian GSM industry is in sync with the worldwide standards; worldwide GSM constitutes 75% of the

subs base and 80% of the monthly additions.

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GSM CDMAGSM

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GSM AdvantagesGSM Advantages

GSM advantages over other cellular technologies are:GSM advantages over other cellular technologies are:

Dominant global market share of GSM gives benefits: Large number of infrastructure and handset vendor’s giving

advantage in terms of price and other commercial terms. Innovations ahead of CDMA e.g. single chip handsets.

Widest choice of handsets with widespread sales and service distribution network.

Handset availability in all price segments and ongoing introduction of wide variety to meet customer requirements.

Easy subscription process (SIM based)

Widespread prepaid solutions

Seamless interoperability between networks and handsets.

Global footprint for international roaming including SMS, data and other value added services.

GSM Overall EfficiencyGSM Overall Efficiency

For OperatorsFor Operators

Economies of scale due to dominant market share: worldwide and India

Choice of multiple vendors Capex optimisation Lower subscriber

acquisition cost Seamless interoperability

For SubscribersFor Subscribers

Low cost entry handsets

Wide choice and availability of handsets

International roaming

Easy subscription

Affordable Services for Common ManAffordable Services for Common Man

Mobile has fast moved from a class service to a mass service for the common man – fuelled by continuously

falling tariffs and increased coverage.

Connectivity for the farmers

Better prices for the

produce

Affordable Services for Common ManAffordable Services for Common Man

Affordability has made mobile services the key plank for economic development.

Mandi Prices on the Move

Kerala Fishermen

Call in their Catch

NEW REVENUE OPPORTUNITIES – VASNEW REVENUE OPPORTUNITIES – VAS

Airtel Live portal with games, music, cricket, stock, news, easy charge facility, logos, range of voice activated services, games, missed call alerts, Airtel Live, Hello Tunes etc.

HutchOnline Yahoo & MSN Messenger, Java based games, missed call alerts, logos, games, news, stock, range of voice activated services, Caller Tunes, etc.

IdeaDaily horoscopes, cellular jockey to send musical greeting cards, voice activated services, music, logos, news, stock, movies, cricket, games, jokes, Dialer Tones, etc.

BPLRingtones, logos, picture messages, send-a-song, mobile gaming, etc.

SpiceRingtones, logos, picture messages,SMS Chat, mobile gaming, etc.

AircelRingtones, logos, picture messages, games, music, etc.

health tips

ringtones

mobile gaming

Revenues Form Value Added ServicesRevenues Form Value Added Services

9%

3%

7%

10% 8%9%

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1%

2%

3%

4%

5%

6%

7%

8%

9%

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2003 2004

Postpaid Prepaid Total

VAS Revenue as % to Net Service Revenue

SMS Clip Others

VAS Revenue composition for 2004 (in %)

8%

65%27%

VAS shows promising trends, share in total net service

revenue increasing continuously

Source: PWC Indian GSM Cellular Benchmarking Study 2004

Potential of the SectorPotential of the Sector

Private GSM subscriber base has the potential to reach 103 million subscribers by Dec’07 from the present level of 36 million in August’05.

Projected growth of private GSM sector is as given below:

103 65 42 3628 Private GSM

Dec. 2007 (Projected)

Dec. 2006 (Projected)

Dec 2005 (Projected)

August 2005 (Actual)

Dec. 2004 (Actual)

Year ending

In Million

This will contribute in a substantial manner to overall This will contribute in a substantial manner to overall target of 250 mn telephone subs (fixed+mobile) by target of 250 mn telephone subs (fixed+mobile) by

2007 set by the Government2007 set by the Government

Push Towards Next GenerationPush Towards Next Generation

India represents one of the most exciting opportunities for mobile services in the coming decade.

We are already providing 2G and 2.75G services.

The next big push would be the introduction of 3G services.

Early and expeditious introduction of 3G services in Early and expeditious introduction of 3G services in India will hold the key to India’s mobile success India will hold the key to India’s mobile success and its future dominance in mobile telephonyand its future dominance in mobile telephony

3G in India3G in India

3G will be introduced in India by 2006.

3G upgradation for GSM is 3GSM (WCDMA).

In India GSM constitutes 80% of the total cellular market; this will form a ripe base for 3GSM (WCDMA).

Worldwide also 3GSM (WCDMA) drives the 3G growth.

GSM - Predominant Global Mobile Standard GSM - Predominant Global Mobile Standard for 3Gfor 3G

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3GSM (WCDMA)

CDMA 2000 1xEVDO

As of date, As of date, 3GSM subscribers have crossed 30 million3GSM subscribers have crossed 30 million, , accounting for around accounting for around 70% of the 3G market70% of the 3G market. . GSM share GSM share

continues to risecontinues to rise month after month month after month

Benefits of 3G for IndiaBenefits of 3G for India

3G has a 4-5 times higher voice capacity than present 2G services.

An ideal platform to deliver low cost voice telephony to Indian consumers.

3G has hi-speed data capabilities It will fulfill the content rich mobility experience for

urban Indians.

3G will help in enhancing India’s competitiveness in the ITES / BPO segment.

Extremely effective tool in driving penetration of the huge addressable market in the rural areas.

3G will also enable achieving the broadband objectives of the Government.

3G will integrate India and Indian consumer with the far 3G will integrate India and Indian consumer with the far reaching developments taking place across the world.reaching developments taking place across the world.

Mobile Broadband – The Next FrontierMobile Broadband – The Next Frontier

Mobile phone is fast becoming the dominant technology for voice communications.

Mobile phone is becoming less & less of a narrowband device as it evolves through 2G to 2.5G to 2.75G to 3G.

“the mobile phone has moved beyond being a mere device to become a key “social object” present in every aspect of our daily lives”.

Lara Srivastava, ITU

3G probably provides the best ubiquity3G probably provides the best ubiquity in broadband in broadband connectivity – always on, fast enough….connectivity – always on, fast enough….

India’s Path to Mobile BroadbandIndia’s Path to Mobile Broadband

India’s path to Mobile Broadband must be through 3G in the WARC-92 identified Core Band of 1920-1980 MHz p/w 2110-2170 MHz because :

Only band globally harmonized for interference free co-existence of both GSM & CDMA

Equipment available for both technologies in this band Majority of countries have opted for 3G in the Core Band Japan & Korea live examples where GSM & CDMA are co-

existing in the Core Band

India by choosing this globally adopted spectrum band will be able to avail of

Economies of scale – lower tariffs Seamless roaming Inter-operability Interference free operations

India being a country where both GSM & CDMA co-exist must choose a 3G path which allows for the co-existence as well as future growth & development of both technologies

GSM has been the prime growth driver GSM has been the prime growth driver of Telecom services in India and would of Telecom services in India and would

continue to be the same for new continue to be the same for new evolving technologies and innovations.evolving technologies and innovations.

THANK YOUTHANK YOUtvram@coai.intvram@coai.in