Journal of Scientific & Industrial ResearchVol. 65, March 2006. pp. 195-212

Global telecom revolution: Spatial - Temporal aspectsD K Nauriyal and Sanjeev Bhalla

Department of Humanities & Social Sciences, Indian Institute of Technology, Roorkee, Roorkee 247 667

Received 08 April 2005; revised 19November 2005; accepted 29 December 2005

Current global telecommunication landscape is undergoing a paradigm change in terms of technologies and usage.Global System for Mobile (GSM) communications has emerged as the preferred technology followed by the fast growingCode Division Multiple Access (COMA) technology. Developed countries (without the transition countries) lead the worldin number of landline and cellular connections, followed by high-income developing countries, which show the maximumgrowth. Paper also presents an analysis based on Digital Access Index (DAI) of the countries. India has emerged as anoteworthy participant in telecommunication market. Paper discusses techno-commercial and regulatory mechanismprevalent in the country.

Keywords: Code Division Multiple Access, Digital Access Index, Mobile telecommunication

IntroductionTelecommunications play a key role in the rapid

growth and modernisation of a nation's economy.Interest in telecommunications now extends beyondengineers to include government officials,economists, lawyers, banks, users and the press'.Today's communications industry is being shaped byrapid growth in mobile communications, explosivegrowth in the Internet. stagnating revenues from coretelephone services, falling prices and intensifyingcompetition, liberalisation and privatisatiorr'.Ushering in telecommunications liberalisation is acomplex and relatively new process, especially fordeveloping countries). In 1980, almost every countryexcept those in North America had a state ownedmonopoly service provider. By 1999,90 countries hadat least partially privatised their telecommunicationsfirms and 95 had put separate regulatory authorities inplace" (Table 1). After privatisation and liberalisation,about two-thirds of the new investment in thedeveloping countries has come from outside the homecountry of the privatised operator and in most cases,through the sale of a minority share of a publictelecommunication operator (PTO) to a foreignstrategic partner. The mobile communication markethas proved particularly fruitful, as countries havelicensed additional operators and introduced new

. 5services.

*Author for correspondenceTel:+91-1332-285387; Fax: +91-1332-273560E-mail: dknarfhs@iitr.ernetin

Critical DevelopmentsThe growth of Information and Communication

Technology (lCT) has been shaped by a large numberof changes in the global economic and politicalenvironment. Some of the most pertinent factorscontributing to the growth of this sector are asfollows:

Increasingly Crucial Role of International PolicyOrganizations

ITU, WTO, IMP and WB played a major role inthe development of global telecommunications andICT policies. The General Agreement on Trade inServices (GATS) brought about a major thrust to thedevelopment of telecom sector. Post-Uruguay roundnegotiations on trade in basic telecommunicationswere actively held from 1994 to 1997 and resulted ina successful agreement on a protocol and annexeddocuments that outlined the members' commitmentsto telecom services. The creation of an adequateregulatory framework was also addressed with theadoption of "the reference paper" which sets theprinciples for competition safeguards,interconnection, universal service, transparentlicensing processes and the independence ofregulators", WTO commitments ontelecommunications, especially the BasicTelecommunications Agreement (BTA) in 1997, arethe driving force for telecom reform in WTO membercountries, and an additional incentive for non-members wishing to enter the accession process". ByOctober 2003, 105 WTO governments have made

196 J SCIIND RES VOL 65 MARCH 2006

Table 1-Privatisation of the telecom sector and establishment of separate regulator in various countries'

When was privatisation done

Before 1981

Seychelles, United ArabEmirates, Barbados*.Canada* Philippines*and US*

Canada (1976),Philippines (1979) US(1934)

*Always privatized

1981-1990 1991-1995

Argentina, Central, AfricanRepublic, Chile, EquatorialGuinea, Grenada, Guinea-Bissau, Israel, Jamaica,Japan, Kiribati Malaysia,Maldives. Mexico, NewZealand. Solomon Islands.Trinidad and Tobago,United Kingdom andVanuatu

Bolivia. Cape Verde. Cuba,Czech Republic. Denmark,Estonia, Georgia. Guyana.Hungary, Indonesia,Kazakhstan, Latvia.Madagascar. Mongolia,Netherlands, Peru, Portugal.Singapore. South Korea. Spain,Sudan and Venezuela

When was separate regulator establishedBelize, Finland, Australia, Belgium, Bolivia,

Hungary, Cape Verde, Colombia, CzechNorway, Republic, Denmark, Ecuador,

Greece, Guinea, Ivory Coast,Jamaica, Jordan, Latvia,Mozambique, Namibia,Nicaragua, Nigeria, Paraguay.Peru, Singapore, Slovakia. SriLanka, Sweden, Switzerland,Tanzania, Venezuela andZambia

Argentina,Guyana,Mauritius,Portugal and UK

1996-2000

omcotimIlUI

issArmenia, Australia, Austria, Belgium,Belize, Brazil. Croatia, El Salvador,Finland, France. Germany. Ghana.Greece, Guatemala. Guinea, Ireland,Italy. Ivory Coast. Jordan, Lithuania,Malta, Pakistan, Panama. Poland,Qatar, Serbia, Slovakia, Slovenia,South Africa, Sri Lanka, Sweden,Switzerland and Uganda

.tec

.Mtt.,ClIp!(SI

Albania, Angola, Austria, Bahrain,Bhutan, Botswana. Brazil, Bulgaria,Burkina Faso, Burundi, Cameroon.Central African Republic. Costa Rica,Croatia. Egypt, El Salvador, Eritrea.Estonia. Ethiopia. France. Gabon,Germany. Ghana, Guatemala. Iceland.Iceland. India. Ireland, Italy. Kenya.Kyrgyzstan. Luxembourg. Madagascar.Malawi, Malaysia. Mali. Malta.Mauritania, Mexico, Mongolia.Morocco, Nepal. Netherlands, Pakistan,Panama, Papua New Guinea. SouthAfrica, Sudan. Togo. Turkey andUganda

specific commitments in some or all aspects of thetelecommunication sector, In basic tele-communications, commitments on some or allservices have been made by 98 governments (accountfor over 95% of the world's telecommunicationsrevenues), These commitments lay the foundation forimproved market access and liberalisation ofinvestment, both foreign and domestic, They serve tolock in the phasing out of telecom carrier monopolies,providing investors with an assurance ofpredictability", Furthermore, WTO tele-communications commitments in the overall GATScontext have provided greater certainty and security toprospective investors, increasing the sector'sattractiveness,

Contemporary Flux of Technological Changes AcrossTelecommunications Industry

The digitisation of ICT applications and transitionsfrom circuit-switching to packet-switching, fromanalogue to digital and from fixed to wirelesstechnologies have revolutionised developments in thissector, The telecommunications sector hascontinuously witnessed a glut of technological

devices, whereby selection is logically based on theeconomics and adaptability of technologies to variousregions of the world. Following three forces arefuelling this change':Technology

Telecom equipment is digital and is sharing thebenefits of computing technology improvements. Thisis further aided by declining satellite channel costsand better cable technologies. The development ofnew technologies has facilitated liberalisation byreducing entry costs, creating new services (mobilephone, paging, Internet), and undermining servicesegmentation". Wireless transmission improvementsand higher productivity in installing undersea fiberoptic cables have lowered the cost per circuit. Digitaltechnologies make it possible by multiplexing todistribute voice, data, and video on the samecommunications channel, thus transmitting moreinformation per cable and per portion of the spectrum.Such developments enable providers such astelephone and cable television companies to expandtheir capabilities to become generic multi-facetedinformation providers, and compete in many markets

NAURIY AL & BHALLA: GLOBAL TELECOM REVOLUTION: SPATIAL- TEMPORAL ASPECTS

once considered to be monopolistic. Technologicalconvergence and globalisation also encourageinvestors to expand to regional as well as internationalmarkets. In fact, following four major technological. ib h i h I 10Issues contn ute to growt In tete ecom sector :

Revolution in Transmission Capacity- Newtechnologies such as the Asynchronous TransferMode (ATM) has enormous capacity to carry manysigrials of different capacities through a synchronous

.optical hierarchy. Synchronous Optical Network(SONET), a high-speed transmission standard, can beused from entertainment and distance education to thetransmission of highly detailed images for remotemedical diagnosis. Satellites also offer a tremendousamount of bandwidth. A fibre-optic connection isfaster than wireless by many orders of magnitude. A'single optical fibre can carry about 3 trillion bits persecond (bps). The fastest wireless service (fixedwireless access) approaches 2 million bps. So, fibreoptics can be more than a million times faster.

Digitisation -The transmission of information ischaracterised by digitisation wherein any type ofinformation, including voice and video, may be sentas a stream of bits in a compressed form andreconstructed for use at the receiving end.Compressed digital video can be used to transmitmotion video over as little as two telephone lines(128 kbps) for teleconferencing and to deliverhundreds of digitised television channels via satellites.

Ubiquity-Advances in wireless technology suchas cellular radio, Personal Communications Services(PCS), and Low Earth Orbiting (LEO) satellites haveprovided anywhere, anytime access to mobile andpersonal communications. These technologies alsomake it possible to serve rural as well as remote andinaccessible communities without the need to laycable.

Convergence--High bandwidth availability allowssimultaneous transmission of voice, data, picture andother multimedia and interactive media over a singlecarrier like fibre or satellite. Convergence betweencommunications, computing, information andentertainment, along with digitisation, is in fact givingrise to a global ICT situation where computers can beused to make phone calls, TV s can access the WorldWide Web, mobile phones can download share prices,and simple net terminals can download CDs and takecustomers on worldwide shopping sprees. Forsuppliers, software companies may find themselvesoffering communications services, entertainment

197

companies may dominate the Internet, and telecomcompanies may find themselves allying with banks orretailers"

CompetitionBetween 1990 and 2000, more than 350 private

operators (many of them of foreign origin) started toprovide mobile services on a standalone basis oralong with basic services in more than 100 developingcountries. By 2003, among all 164 countries withdata, 130 had three or more competing digital mobileoperators II. Many of these countries have encouragedcompetition for the market by using competitivebidding to award mobile phone licenses.

A study of 30 developing countries in Africa andLatin America emphasizes competition as the mostimportant element of reform with positive effects onmainline penetration, payphones, connection capacity,and prices'", The implication is that the granting ofexclusivity periods for incumbents is not a desirablepolicy since it delays the benefits from competition.Latin countries that privati sed by granting monopolyadvantages have seen connections grow at 1.5 timesthe rate under state monopolies but only half as fast asthe rate of growth in Chile, where government couldstill issue competing licenses':'. In an analysis of thebenefits of competition in the US context and acrossindustries, deregulation in telecommunications,airlines, trucking, and railroads led to annual gains of$45 biJIion14 and accrued benefits (90%) toconsumers", Pre- and post-privatization studies offinancial and operating performance of 61 companies(in 32 industries, including telecommunications) from18 countries showed an increase in the sales, profit,investments, and employment following

. . . 15pnvausation .The degree of competition is lowest in the basic

services where government sector, by and large, hasmaintained monopoly. It is highest in cable TVclosely followed by ISPs. Regarding cellular services,while degree of competition is relatively higher inEurope and Americas with Asia-Pacific following thetrend, it is almost insignificant in Africa and MiddleEast. In these kinds of services, the extent ofcompetition is highest in local calls with long distanceand international calls picking up and showing thesign of rising competition in near future. In 1990, only35 percent of the outgoing international traffic wasopen to competition, it went up (78%) in 1998 and isprojected to be around 85 percent in 2005.Nevertheless, the presence of government sector is

198 J SCI IND RES VOL 65 MARCH 2006

50enQj 40en::l'0 30Qj 20.c5 10z

0

~DCs without TCs

_TCs

Developing Country Total

--.-HI

--Me

-t-Lo

-Le

Year

1995 1996 1997 1998 1999 2000 2001 2002

Fig. I-Total number of Internet users in the world'"

strong in these services and rise in competition to alarge extent implies competition among the various

. 16government agencies .

InternetThe ever-increasing demand for the Internet for

communication, business, academic and informationpurposes gave further boost to the spectacular growthof the telecommunication sector. In 1988, only 8countries were connected to the Internet, the numberwent up to 209 by the end of 2003. Higher incomegroups (top 16%) had been using the maximumInternet facility (70%). As compared to just 34million Internet users in 1995, their number swelled to149 million in 1999, and 498 million in 2001. Internettransaction is densest between North America andEurope (162 Gbps), distantly followed by NorthAmerica and Asia-Pacific (41.8162 Gbps), and NorthAmerica and Latin America (14 Gbps). African andArab links to both North America and Europe are at avery low level I. The situation may not show anydrastic change in the immediate future as the heavyconcentration of Internet users in North America(32%), Western Europe (25%) and Asia-Pacific(33%), would also keep the business most profitablefor the firms in these regions. (Fig. 1)

Most distinguishing feature of Internet users indeveloping countries in sharp contrast to the developedworld is that each computer with an Internet or E-mailconnection usually supports more than one user.Mexico's relatively low Internet subscription penetration(2%), disguises the fact that almost 70 per cent of thepopulation has access to the Internet through private orgovernment-sponsored Internet cafes 17. In developingcountries, the shared/public access and the use ofcorporate networks will continue to grow at greater ratesthan the number of dialup users. This can be seen in thedeployment of international Internet bandwidth in

.,

Africa, which is expanding substantially - up (> 100%),from just over 700 Mbps of available outgoingbandwidth in 2001 to 1500 Mbps in 2002 (although thisis still slower than the rest of the world, which averaged174% growth in 2001,.,with Latin America at 479%)18.There are a variety of reasons for greater increase ininternational bandwidth, most notably: i) The increasinguse by Internet Service Providers (ISPs) of low-costbandwidth via satellite to augment their existing links; ii)The greater demand for more bandwidth (includingVoIP (Voice-Over-Internet protocol)) by a maturinguser-base, and iii) Growth in the use of public accessfacilities (cyber cafes, business centres). This growth,nevertheless, is off a very low base - even LatinAmerica has 10 times as much international bandwidth(16132.5 Mbps) and the average North Americanresident has access to around 570 times moreinternational bandwidth than the average African citizen.

ReformsThe impetus in telecommunication liberalisation

has largely come from the changing paradigms of theinternational work environment, which emphasisestransnational business, export development and theneed to have access to the vital commercial, non-commercial and academic information. The openingof the markets to the global players also necessitatedthe evolution of legislative and policy frameworks inrespective countries as the basis of regulation of theemerging and fast developing sector, in order toprovide an enabling environment to encourageinvestment and provision of new and innovativeservices 19.All over the world, the reasons for reformsvary: i) The desire to improve service delivery; ii) Fortapping into the advantages that modern technologyoffers through foreign investment into the localtelecom infrastructure; iii) Fiscal crisis or a lack ofadequate capital to improve infrastructure; and iv) A

n

NAURIYAL & BHALLA: GLOBAL TELECOM REVOLUTION: SPATIAL-TEMPORAL ASPECTS

: ~ombination of the above factors ", Other factors thataccelerated the privatisation and liberalisation as areform package are decline in the role of public sectoras a priority goal, increased business demand foradvanced services at lower rates due to expansion ofinternational business communication requirements(particularly Internet-based services), education, andthe powerful combined effects of WTO agreementson basic telecom services and informationtechnologies setting a global benchmark. One of thecritical components needed for promoting competitionis the need of establishing a proper institutionalframework before the process of privatisation isinitiated. This fact is corroborated by a panel datacovering 200 countries during 1985-199912. Forinstance, it was found in a sample of 33 countries for. whom the data were available, investors were willingto pay a premium for telecom firms in countrieswhere regulatory reform took place prior toprivatisation. Prominent reasons attributed to thepositive perception of a regulatory presence in thedecision criteria of the investors are: a) Need to applypolicies other than the competition-related policiesthat are perceived important by national governments(e.g. universal service policies, national security andcontrol policies), b) Need for ongoing supervision anddecisions on issues such as interconnection and thequality of service, and c) Establishment andenforcement of licence conditions particularly fordominant operators. To protect interests of theconsumer, regulators also deploy universal service,. create new infrastructure, reduce tariffs, conductproper monitoring and moderate the negative effectsof competition. There has been a fast rise in thenumber of regulatory agencies over the last decadefrom 13 in 1990 to 112 in 200121•One of the main reasons for significant increase in

the tele-density and telecom productivity is theincrease in the degree of competition boosted up bythe privatisation of government-ownedenterprises22•23. The number of international telecomoperators increased sharply (> 700%) and close to5,000 companies offer international services by theend of 2002. The world-wide telecom consultingmarket was worth an estimated US$7.1 billion in2002 and is forecasted to reach US$8.6 billion by theend of 2006, translating into a CAGR of 5%24.

Trends in TelecommunicationEurope has predominantly opted for Global System

for Mobile (GSM) communications technology in the

gsti)ggsI,

1

1

199

late 1980s. Code Division Multiple Access (CDMA)technology, developed by Qualcomm of the USA andcurrently the second most successful wirelesstechnology in terms of global market share, istechnically more advanced than the technologyemployed in GSM as it offers outstanding voicequality, strong signal hand-offs, position locationabilities, fewer cell sites, more privacy, and longertalk time25. But following the logic of Metcalfe's Law(which states that the usefulness, or utility, of anetwork equals the square of the number of users), theAmerican wireless market is inherently limited in itsapplication potential as a result of incompatibility ofnetworks and market fragmentation. Data services areonly slowly emerging on US markets and manyEuropean states have surpassed the US in wirelessnetwork penetration'", The most dominant technologyin the USA right now is the CDMA. Asian countrieslike China, India, Indonesia and Malaysia have optedfor GSM, whereas Hong Kong, Korea, thePhilippines, Singapore and Thailand have opted forCDMA. However, several countries are now optingfor more than one standard. In USA, companies likeAT&T and Cingular are increasingly moving to GSM.China and India, on the other hand, are now seeing anincrease in the use of the CDMA technology as well.India is using CDMA in Wireless in Local Loop(WLL). In 2006, projected number of GSMsubscribers and CDMA users would be 1400 millionand 400 million respectively". Even though CDMA ismaking steady progress, growth rate of GSMsubscribers is faster. Given the current trends, GSMmay remain on top. However, as industry playersmove towards third-generation mobile telephony, theneed to harmonize standards towards a universal normbecomes more pressing. At the moment, differentstandards employed in different parts of the worldmake it impossible for the same phone to be used in'all the countries. Putting such a harmonization inplace will enable the users to communicate anywhereat anytime with universal standards andinternetworking agreements. Harmonizationeventually may lead to a quasi world standard, whichwould allow economical advantages for customers,network operators, and manufacturers. Indeed,convergence entails a wide array of benefits" such as:i) By reducing the total research and developmentcosts, convergence ultimately results in lower pricesfor the end-consumers; ii) Convergence may renderbackward compatibility easier, which fastens new

200 J SCI IND RES VOL 65 MARCH 2006

Table 2-Global growth of mobile calls versus fixed phonecalls'"

Year Fixed tofixed, %

Mobile tomobile, %

Mobile tofixed, %

Fixed tomobile, %

19932003

525

0.326.6

89.723.4

525

technology adoption and also reduces initial costs;and iii) Convergence allows global roaming, whichinvolves positive network effects. But even though atotal global network is technically possible, still it isvery unlikely with different companies holding vestedinterests in keeping the systems as they are unlessthere are strong economic reasons to move towardsconvergence.

Traffic TrendsThere is an increasing shift towards data traffic as

compared to voice traffic over communicationnetworks. This shift may lead to complete re-structuring of telecom tariff, which would raiserevenue mainly from data traffic. Both wireless andwireline traffics are registering an increasing trendover the past 15 years and are expected to do so in thenear future.". Wireline mode is still the mostpreferable mode as compared to wireless mode. Therehas been a marked trend towards Internet accessthrough mobile phones. IP telephony is graduallyreplacing traditional Public Switched TelephoneNetwork (PSTN). Primary driver of consumeradoption of IP telephony has historically been lowprices. Price benefit is derived from avoidance ofcharges on long distance and international calls. SomeVoIP services do charge a monthly fee, but it istypically far less than what the telecom companiescharge. IP telephony, with the given level oftechnology has its own problems", some of which arehighlighted below:

Initial Set-up CostAlthough there are low cost and even no-cost ways

to transmit voice over IP, an enterprise level companyserious about VolP will have to invest heavily in oneor more VolP devices.

Quality IssuesAlthough it is getting better all the time, the quality

of most VolP services and products can't yet matchthat of PSTN. There are inherent challenges insending a voice stream over a packet network.

Incompatibility IssuesSome services require that both the caller and the

called party be subscribers to their service, and some

software programs require that both parties have the:same software installed. :

Hardware TrendsThe telecommunications sector includes both the].

production and distribution of equipment and the idelivery of services. In view of the increasingcompetition and need for product differentiation, agrowing amount of telecom revenue is coming fromthe sale of equipment. Share of equipment in the totalrevenues in 1990 (25%) has grown up in 2001(40%)31. ,

In 2001, there were 948 million mobile phone ~users32 comprising: Asia-pacific, 38; Europe, 31;Americas, 28; and Africa, 3%. The substitution offixed phones by mobile phones is expected toincrease, as the price differential between thesubscriftion prices of t~e two services continues todecline 3 (Table 2). It implies that while in 1993, onlylO percent of the calls involved mobile phones, in!

34 .2003 more than 75 percent of the calls did so .!Tremendous competition in mobile market has forced!the prices to follow a downward trend. This has.coupled with the unmatchable convenience of mobile:technology to signal higher numbers of mobile users, ,which may register a higher growth rate as comparedto the fixed lines. In fact, a major part of the growthof mobile users is likely to come from a steep declinein the fixed line users. This observation is alsosupported by a tremendous appreciation in the numberof mobile subscribers especially in burgeoningmarkets like India, China, and Latin America; by2002, there were 98.7 million mobile subscribers inLatin America. The number is expected to grow at acompound annual growth rate (13.3%) over the next 6years. By implication in 2008, number of subscribersis expected to rise to 209 million35. In this regard, itwould be appropriate to have an idea of initial trendsin some of the Asia-Pacific countries (Table 3).

On global scale, world cellular figure is estimatedto grow to about 2.2 billion by 2006 at a cumulativeannual growth rate (CAGR) of about 20 percent. Thisgrowth could be fuelled by rate of rise in per capitareal incomes and the volume ot demand. The latterparameter has gained ascendancy that in acompetitive-intensive market where cost-effectivenessremains fundamental to the growth and survival,volume becomes extremely important.

InvestmentUnlike regions (Latin America and Eastern Europe)

where private investment was largely attracted by

-rs,'edvthneISO

ierngbyina6

Hong Kong, Chinaand Korea (Rep.)

Brunei, Malaysia, Mongolia,Philippines, Singapore and Taiwan(China)

NAURIYAL & BHALLA: GLOBAL TELECOM REVOLUTION: SPATIAL· TEMPORAL ASPECTS 201

1999 2000

Table 3--Years when mobile subscribers overtook fixed-line subscribers (Asia-Pacificj "

2002

e the

I thethe

isingIn, a'romtotal~001

divestment of fixed-line state-ownedtelecommunications enterprises, in the Asia Pacific, ithas been mostly driven by the market entry and rapidexpansion of competitive mobile cellular telephonecompanies. By implication, divestiture of state-ownedtelecommunications enterprises in the Asia Pacificregion has been a more varied process. The pathsadopted to achieve growth varied, but each was drivenby a policy recognition that the sector warranted'promotion and facilitation' and its rapid developmentis prerequisite to efficient networking that has becomeso important in the emerging scenario ofglobalisation. In certain cases, governments had topush through constitutional reforms to permit theliberalisation of their telecom sectors, and adoptedinterim measures. The basic methods through whichpublic and private capital may stand simultaneously inthe market are: Employee and Management Buyouts,Auctions [selling state-owned telecommunicationsenterprises (SaTE) to domestic and foreign bidderswhere the state wants to raise large stakes and alsowants to ensure, through vetting and pre-selection,that the bidders are competent investors withtelecommunications management skills], Voucher andCertificate Based Transfers (used in Eastern Europeto allocate shares to local citizens) and TheConcession Method such as Build-Operate-Transfer(BOT) contract [used in 1981 when Macau awarded a20-year contract to Companhia deTelecommunications (CTM), a joint venturemvolving CPRM of Portugal and led by the Cable &Wireless company] and Build- Transfer-Operate(BTO; used by Thailand in 1992), Liquidation, Joint,Ventures (JVs) between foreign-ownedtelecommunications companies and local state-ownedtelecommunications enterprises (SaTEs; as done inIndonesia), Near Joint Ventures (as done by Vietnamin 1988 where operating revenues are shared with the. foreign partners in exchange for management,technology and network consultancy services), PublicOffer and Closed Subscriptions (the state will retainpart or the majority of shares, releasing them intrenches according to the market price and the abilityof the market to absorb them), and Outsourcing etc.

Lone31;I oftothe; tomlyIII34o .cedhasiile

2001

Australia, French Polynesia,Macau (China), New Caledonia,New Zealand and Thailand

Bangladesh, China, Fiji,Indonesia, Japan, Lao PDR,Maldives and Sri Lanka

As a result of investment facilitation in the telecomsector, there has been a steady flow of investment tothese economies. According to data from theInternational Telecommunications Union (ITU),annual investment in the telecommunication servicessector in the Asia Pacific region rose from aroundUS$45 billion in 1993 to over US$80 billion by 2001,reaching over US$600 billion for the entire period,just under 40 percent of world investment in thetelecommunication services sector. The trend wasupwards to 1996 when it reached about US$74billion, fell to US$65 billion during and after the 1997Asian economic crisis in 1998, then recovered duringthe dotcom boom before beginning a slide in 200 1 asthe bubble burst. The scenario in the south Asia,nevertheless, was stronger. While India's growth wasfairly flat with a slow decline from 1995 to 1998 butwithout any sharp falls, growth picked up stronglythereafter. Nepal showed strong growth to 1996,followed by a sharp decline just prior to 1997,followed by a slight recovery from 1997 onwards.Defying all the trends, Sri Lanka showed stronggrowth throughout the crisis period, but then from1999 investment fell off rapidly. Bangladeshexperienced a long decline in annual investment from1994 and then a sharp pick-up from 1998. This againseems to suggest that South Asia was relativelyunscathed by the Asian economic crisis in this sector,and this may be indicating that where foreign directinvestment plays a small role, the sector is lessvulnerable to external shocks".In Latin America, a number of European

telecommunications companies have recognised themarket potential and are beginning to implementaggressive investment plans. Telecom Italia, forexample, is already taking advantage of thederegulated telecommunications markets and hasestablished a presence in Brazil, Argentina, Chile,Bolivia, Peru and Venezuela. Telecom Italia isexpected to invest over $15 billion euros between2002 and 2004 as part of its expansion plan in theregion, of which $7 billion will be set aside forinvestments in wireless services. The World Bank'sInternational Finance Corporation is reported to have

202 J SCI IND RES VOL 65 MARCH 2006

160III•..~ 120

:::>-0 80•..Q).0

40 I" • • • .-E ......-.:l • • •z

01989 1991 1993 1995 1997 1999 2001

Year

~ DCs without TCs_ Transition Countries

Developing Total_Hi-'--Me

--Lo--+-Le

Fig. 2-Telephone lines and cellular subscribers per 100 population'"

Table 4--Total telephone subscribers (main telephone lines and mobile subscribers) per 100 inhabitants, in J 992 and 2002. indeveloping regions:"

Years Country Groups

Middle-East and NorthAfrica

Sub-Saharan Pacific SouthAfrica Asia

1.0 2.0 0.65.2 4.7 4.5

Europe Caribbean Latin America East Asia

19902002

12.5770

0.827.4

3.818.1

Table 5--Telecommunication Investment in 200031

7.652.4

6.135.4

funnelled some $1 billion into telecom infrastructurein Latin America since 199037.

MessagingAnother emerging feature in the telecom landscape

is mobile messaging. SMS revenues will reach a totalof $11.3 billion in 2006. SMS, meanwhile, willgenerate $12.6 billion in 200638. SMS is nowbecoming a major revenue generator for the telecomcompanies as its social popularity rises "

Global Trend Analysis in the Spatial andTemporal domain

Global telecommunication market has followed anupward trajectory over the last 20 years. Especiallysince 1980, growth in the number of new telephonesubscribers has far exceeded the growth in the globaleconomy. It peaked in 1998 and after that showed adecline4o. Fixed and mobile telephone networks (totaltele-density) of all the developing sub-regions of theworld have grown to a greater extent since 1990, thanin the entire period before that date (Table 4). In theexceptional case of East Asia (which includes China),the total tele-density in 2002 was more than 35 timeshigher than 10 years earlier, and in all cases, exceptthe developing Pacific nations, total tele-density wasat least 5 times higher in 2002 than it was in 199211•In other markets, in particular the markets of the

AfricaAmericasAsiaEuropeOceaniaWorld total

Total, million US $

3476.253972.888163.853056.94113.2

202771.8

6.268.325.166.6137.735.7

Per inhabitant, US$

developed world, telecommunication sectors largelysuffer from over-investment and high debt burdens. Inthese high-tech markets, replacement of old products,in particular the telecommunications hardware, hasthe largest potential of spurring the growth.High-spending consumers (14%) generate 53

percent revenue and low-spending customers (40%)generate 3 percent of the revenue worldwide. High-income countries have the heaviest concentration oftelecommunication networks (Table 5). While theabsolute volume of telephone lines and cellularsubscribers is just picking up in medium incomedeveloping nations, fastest developing economies arerecording an expeditious expansion and., in fact, aremoving for convergence towards the levels shown bydeveloped nations (Fig. 2). The developed countries,on the other hand, are reaching a saturation level andtelecom companies in these countries are expandingto tap the higher growth areas of fast growi ngdeveloping countries and transition economies

NAURIYAL & BHALLA: GLOBAL TELECOM REVOLUTION: SPATJAL-TEMPORAL ASPECTS 203

20

15-:E 10'0

5

01989 1991

_DCs without TCs

~ Transition Countries

Developing Total

_Hi

_Me

_Lo-+-Le

1993 1995Year

1997 1999 2001

Fig. 3---Growth trends in telecom and cellular subscribers per 100 population'"

-------- -- -- ---------------- ----

e 50Q)

~ U) 40Q)

'0 (5 30Q) C3 20.0 s:::E :.:- 10~ 0

Internet users

I ~ DCs Without TC~ I___ TCs

Developing

I-*-Hi---.-Me-+-Lol:-+-Le _ ~ JL 1995 1996 1997 1998 1999 2000 2001

Year

2002

Fig. 4--lnternet users per 100 population?'

~-~-l8

7

6

5

o

~ DCs without TCs II___ TCs

Developing Country Total-*-HI---.-Me-+-Lo-4-Le'----- -- ------

-;g 43

2

1995 1996 1997 1998 1999 2000 2001 2002

Year----- -- ---- ----

Fig. 5--Growth trends in Internet users per 100 population'"

(Fig. 3). Expansion in Internet users is fastest indeveloped countries followed by high incomedeveloping countries (Fig. 4).

Growth potential is very high in middle/lowincome developing countries (Fig. 5). Fastest growingregion would be Africa (CAGR, 39%)21. In all

204 J SCT IND RES VOL 65 MARCH 2006

probability, projections have been made on the basisof existing tele-density and potential of future demandincrements. Currently, tele-density per 100 populationin Africa is lowest (4.54) as compared to Asia(16.52), Americas (56.10), Oceania (75.13) andEurope (76.58). In fact, given a very high level oftele-density in Europe, especially in the better-populated and fast growing economies, there is littlescope for any significant increase in demand fortelecom services. The same could be held valid forNorth America, more particularly for US and Canada.Therefore, though incomes in these countries are veryhigh, there is not much scope for further expansion inthe telecom services due to market saturation and avery low population growth rate. Hence the majorgrowth areas are likely to be the countries where percapita incomes are rising fast and which also ensure agood business volume to telecom service providers.Now considering that the countries with largerpopulations may not necessarily be recording a highergrowth rate and vice-versa, there is a need to considerwhat would be the most important decision criteria forinvestment decisions by investing firms.

What Holds for the Future?Any business will thrive on three factors: i) The

potential for business volume determined by thepopulation density and the extent of urbanisation; ii)The growth rate of the economy and in particular theincome growth rate; and iii) The risk factor, largelydetermined by the economic policies (which at timescould be discriminatory against the foreign players),and political stability in the country concerned.

However, the absence of a high to moderate andconsistent growth rate and the assurance of the safetyof investment would be the overriding concern even ifthere were a high potential of business volume. Theinvestment in such countries, which lacked on the firsttwo criteria, had always been the last option and itwas exercised only when the circumstances such aserosion in the competitive strength due to theemergence of new innovative players and excessivecompetition compelled the firms to venture into suchterritories. However, there is no dearth of cases wherea country low in terms of per capita income has hightele-density. For instance, in 2000, Bolivia had percapita income of US$ 2380 compared to US$ 2390for India. Bolivia's tele-density was 6.05 in that yearagainst 3.20 for India. Moldova had a tele-density of13.33 with a per capita income of US$ 2240. Georgia,

with a per capita income of US$ 2470 had a muchhigher tele-density of 13.86. Though Ecuador had alittle higher per capita income of US$ 2920 comparedto India, tele-density was significantly higher at10.00. It was also noted that these countries had eithermore equitable income distribution than India(measured in terms of percentage of population livingon less than $2 a day) or had a higher weightage ofvalue added by the service sector in the GrossDomestic product (GDP) or both'".

ITU's Digital Access Index (DAI) measures overallability of individuals in a country to access and usenew ICTs. DAI overcomes limitations of earlierindices in terms of its specific focus, wide countrycoverage and choice of variables. DAI is built aroundfour fundamental factors: i) Infrastructure (fixedtelephone subscribers, mobile cellular subscribers); ii)Affordability (Internet access price); iii) Knowledge(literacy, school enrolment); and iv) Quality(broadband subscribers, International Internetbandwidth). A fifth factor, actual usage of ICTs, isimportant for matching theory of the index with thereality in a country (Table 6). Countries at higheraccess level of DAI were featured by high and.consistent growth, safety of investment and conduciveeconomic policies. Fast growth of telecom business inUS and Canada, Western Europe and East Asia andlow growth in other parts of America (Central &South), European (Central & East) and Asian (South& Central) corroborate this inference.

The situation, nevertheless, has drastically changedafter the conclusion of telecom agreement underWTO, which has assured that the safety of investmentand predictability of the economic policies, are nolonger big worries of the telecom players. Now, thegrowth rate of the economy and the potential forbusiness, have become decisive factors in shaping thetelecom business in any country. The telecombusiness, however, will vary in terms of content andquality in various countries according to the level oftelecom services at present. For instance, in thecountries, which are at the higher level of DAI, theremay not be much of the scope for further expansion inservices. The quality and the content of the servicewill gain ascendancy over further networking in suchcountries. This may also promote rapid innovations inthe telecom hardware, which may make it possible forthe telecom firms to pack up their services with novelutility features. The situation may also hold in case ofthe countries, which are at the upper access of the

NAURIYAL & BHALLA: GLOBAL TELECOM REVOLUTION: SPATIAL-TEMPORAL ASPECTS 205

Table 6a-Digital Access Index Value (DAlY) by access level, 200z17

High accessDAIV, 0.70-100

DEVELOPED COUNTRIES

Western. Europe

AmericaAsiaOceaniaCentral andEasternEurope

AmericaSouthAmericaOtherAmerica

Asia

West Asia

Central Asia

Sweden, Denmark, Iceland,Norway, Netherlands,Finland, UK, Switzerland,Luxembourg, Austria,Germany, Belgium, FranceUS, CanadaJapan, IsraelAustralia, New Zealand

Other Asia Korea (Rep.), Hong Kong,Taiwan, Singapore

AfricaNorth Africa

Other Africa

OCEANIA

Upper accessDAIV, 0.50-0.69

Ireland, Spain. Malta, Greece,Cyprus, Portugal

Estonia, Czech Republic,Poland, Slovak Rep., Croatia,Lithuania, Hungary, Latvia,Bulgaria, Russia

Developing economies

Chile, Uruguay, Argentina,BrazilSt. Kitts & Nevis, Bahamas,Antigua & Barbuda, Barbados,Dominica, Trinidad & Tobago,Jamaica, Costa Rica, St. Lucia,Grenada, Mexico

Cyprus, UAE. Bahrain, Qatar,Kuwait

Macao (China), Malaysia

Seychelles, Mauritius

Middle accessDAIV,0.30-0.49

Belarus, Romania, TFYR Macedonia,Bosnia, Serbia & Mont, Ukraine,Albania, Moldova

Venezuela, Colombia, Peru, Guyana,Ecuador, Paraguay, BoliviaSt. Vincent, Panama, Belize, ElSalvador, Guatemala, Cuba

Turkey, Lebanon, Jordan, SaudiArabia, Iran (I.R.), Oman, PalestineKazakhstan, Turkmenistan, Georgia.Uzbekistan, ArmeniaThailand, China, Philippines.Maldives, Sri Lanka, Mongolia,Indonesia, India, Viet Nam

Libya, Tunisia, Egypt, Algeria,MoroccoSouth Africa, Botswana, DominicanRep, Cape Verde, Namibia,Swaziland, Gabon

Brunei Dar, Fiji, Samoa

Low accessDAIV, <0.30

Honduras, Nicaragua,Haiti

Syria, Yemen

Azerbaijan, Tajikistan

Pakistan, Nepal,Bangladesh,Myanmar, Cambodia,Lao PDR, Bhutan

Sudan

Zimbabwe, EquatorialGuinea, Lesotho.Kenya, Togo, Congo,Zambia, Uganda,Cameroon, Ghana,Madagascar, Nigeria,Malawi, Tanzania.Rwanda, Djibouti,Mauritania, Senegal.Comoros, Eritrea,Cote d'lvoire, Gambia,Benin, Mozambique.D.R. Congo, Angola,Guinea-Bissau,Burundi, Guinea,Sierra Leone, Chad,Central African Rep,Ethiopia, Mali,Burkina Faso, NigerPapua New Guinea,Vanuatu, SolomonIslands

206 J SCI (NO RES VOL 65 MARCH 2006

Table 6b -Digital Access Index Value (DAIV) by access level, 2002 (Countrywise list)"

Country/level of access DAIV Country/level of access DAlY Country/level of access DAIV

High access

Sweden 0.85 Kuwait 0.51 India 0.32Denmark 0.83 Grenada 0.51 Kyrgyzstan 0.32Iceland 0.82 Mauritius 0.5 Uzbekistan 0.31Korea (Rep.) 0.82 Russia 0.5 Viet Nam 0.31Norway 0.79 Mexico 0.5 Armenia 0.3Netherlands 0.79 Brazil 0.5 Low accessHong Kong 0.79 Zimbabwe 0.29Finland 0.79 Middle access Honduras 0.29Taiwan 0.79 Belarus 0.49 Syria 028Canada 0.78 Lebanon 0.48 Papua New Guinea 0.26US 0.78 Thailand 0.48 Vanuatu 0.24UK 0.77 Romania 0.48 Pakistan 0.24Switzerland 0.76 Turkey 0.48 Azerbaijan 0.24Singapore 0.75 TFYR Macedonia 0.48 S. Tome & Principe 0.23Japan 0.75 Panama 0.47 .' Tajikistan 0.21Luxembourg 0.75 Venezuela 0.47 Equatorial Guinea 0.2Austria 0.75 Belize 0.47 Kenya 0.19Germany 0.74 St. Vincent 0.46 Nicaragua 0.19Australia 0.74 Bosnia 0.46 Lesotho 0.19Belgium 0.74 Suriname 0.46 Nepal 0.19New Zealand 0.72 South Africa 0.45 Bangladesh 0.18Italy 0.72 Colombia 0.45 Yemen 0.18France 0.72 Jordan 0.45 Togo 0.18Slovenia 0.72 Serbia & Mont 0.45 Solomon Islands 0.17Israel 0.7 Saudi Arabia 0.44 Uganda 0.17

Peru 0.44 Zambia 0.17Upper access China 0.43 Myanmar 0.17Ireland 0.69 Fiji 0.43 Congo 0.17Cyprus 0.68 Botswana 0.43 Cameroon 0.16Estonia 0.67 Iran (I.R.) 0.43 Cambodia 0.16

Spain 0.67 Ukraine 0.43 Lao P.D.R 0.15Malta 0.67 Guyana 0.43 Ghana 0.15Czech Republic 0.66 Philippines 0.43 Malawi 015Greece 0.66 Oman 0.43 Tanzania 0.15Portugal 0.65 Maldives 0.43 Haiti 0.15UAE 0.64 Libya 0.42 Nigeria 0.15Macao, China 0.64 Dominican Rep 0.42 Djibouti 0.15Hungary 0.63 Tunisia 0.41 Rwanda 0.15Bahamas 0.62 Ecuador 0.41 Madagascar 0.15St. Kitts & Nevis 0.6 Kazakhstan 0.41 Mauritania 0.14Poland 0.59 Egypt 0.4 Senegal 0.14Slovak Rep 0.59 Cape Verde 0.39 Gambia 0.13Croatia 0.59 Albania 0.39 Bhutan 0.13Bahrain 0.58 Paraguay 0.39 Sudan 0.13Chile 0.58 Namibia 0.39 Comoros 0.13Antigua & Barbuda 0.57 Guatemala 0.38 Cote d'Ivoire 0.13Barbados 0.57 El Salvador 0.38 Eritrea 0.13Malaysia 0.57 Palestine 0.38 D.R. Congo 0.12Lithuania 0.56 Sri Lanka 0.38 Benin 0.12Qatar 0.55 Bolivia 0.38 Mozambique 0.12Brunei Oar 0.55 Cuba 0.38 Angola 0.11Latvia 0.54 Samoa 0.37 Burundi 0.1Uruguay 0.54 Algeria 0.37 Guinea 0.1Seychelles 0.54 Turkmenistan 0.37 Sierra Leone 0.1

. (contd.i

NAURIYAL & BHALLA: GLOBAL TELECOM REVOLUTION: SPATIAL-TEMPORAL ASPECTS 207

Table 6b -Digital Access Index Value (DAIV) by access level, 2002 (Countrywise list)!' (contd.)

Country/level of access DAIV Countryllevel of access DAIV Country/level of access DAIV

Dominica 0.54 Georgia 0.37 Central African Rep 0.1Argentina 0.53 Swaziland 0.37 Ethiopia 0.1Trinidad & Tobago 0.53 Moldova 0.37 Guinea- Bissau 0.1Bulgaria 0.53 Mongolia 0.35 Chad 0.1Jamaica 0.53 Indonesia 0.34 Mali 0.09Costa Rica 0.52 Gabon 0.34 Burkina Faso 0.08St. Lucia 0.52 Morocco 0.33 Niger 0.04

DAI. In fact, one could expect a kind of convergencewith regard to the telecom business among the high DAIscore and upper DAI score countries. In regard of thewest European countries (Ireland, Spain, Malta, Greeceand Portugal) with upper level DAI score, there is highlikelihood of fast expansion in their telecom sector so asto improve their connectivity with rest of theglobe.Some of the fast developing countries, whichalready have high DAI score, are Republic of Korea,Taiwan and Singapore that offer little scope for furtherexpansion. The major expansion may be experienced inthe countries, which, at present, have upper DAI score.Most prominent among the developing countries havingan upper DAI score accounting for a substantial share oftelecom investment are likely to be the Brazil, Mexico,Argentina and Chile in South America (Table 7). In EastEurope, most important destinations for the telecominvestment are likely to be Russia, Poland, CzechRepublic, Hungary and Bulgaria because of the potentialof large business volume and consistent growth trackrecord for past 5 years (Table 8). In Asia, Malaysia maybe one such country (Table 9). These inferences,however, are heavily biased by the business volume(size of population acting as a proxy for the businessvolume), which remains valid as long as theseeconomies keep on growing at the current rate. Anychange would have significant impact on the investmentin their economies in general. For instance, in 2002,following Argentina's default, Uruguay and Paraguaywere hit hard through financial and trade linkages.Political uncertainty in Venezuela triggered capitalflight, and debt dynamics worsened in several othercountries as a result of a combination of domesticproblems and increased risk aversion in internationalcapital markets. Nevertheless, the countries havingupper level DAI are fast growing developing economiesand, therefore, may have a natural tendency to movetowards the developed countries in terms of theirtechnological and service-use needs.

For countries having middle DAI score, the businessvolume and the pace at which the disposable incomes

grow would by and large determine the levels ofinvestment. However, in regard of Central and EasternEurope, one can expect a revolution in the expansion oftelecom services for the following reasons: i) Contiguityto the developed West European countries; ii)Expectation of the high safety of capital; and iii) politicalstability and predictability of policies. The expansion oftelecom business is likely to be faster in Albania,Belarus and Moldova due to consistent growth andavailability of a relatively larger business volume.Nevertheless, there may also be significant expansion oftelecom services in Romania, Macedonia, Bosnia, Serbia& Montenegro and Ukraine.

In South America, telecom business may expandfaster in Colombia, Paraguay, El Salvador andGuatemala as they exhibit relatively higher economicgrowth rates and also ensure a sizeable business volume.In Asia, the region comprising Other Asia (Table 6) islikely to experience massive investment in the telecombusiness because of the potential of huge businessvolume, coupled with the consistent economic growthprofile (Table 9). The impressive growth track record ofThailand, China, India, Philippines, Maldives, SriLanka, Mongolia, Indonesia, and Vietnam which, arecurrently in the range of middle DAI score, may result inunprecedented growth of telecom services. In WestAsia, Turkey, Lebanon, Jordan, Saudi Arabia, and Iranex.hibit a large growth potential. In Central Asia, a fastgrowth can be expected in countries such as Kazakhstan,Turkmenistan, Georgia, Uzbekistan and Armenia. Notmuch of the global telecom investment in telecominvestment is ex.pected to flow in Africa (Table 10),except for the few pockets such as Libya, Tunisia,Egypt, Algeria and Morocco (in North Africa) and SouthAfrica, Botswana, Dominican Rep, Cape Verde,Namibia, Swaziland and Gabon (in Other Africa).

The Indian Scenario

India introduced private compention in value-added services in 1992 followed by the opening up of

208 J SCI INO RES VOL 65 MARCH 2006

Table 7-Per capita real GDP growth rate and telephone subscribers in Americas (excluding US and Canada) in descending order byDigital Access Index Value (DAlY), by access level 200245

Country Population Density Per capita real GDP growth rate Telephone subscribers, DAI2000

1970-79 80-89 90-95 96-2000 Total ('000) Per 100

Chile 15.05 20 6.69 6.77 8.96 3.72 9912.7 65.86 0.58Uruguay 3.38 18 8.61 5.2 5.56 3.65 1598.5 47.22 0.54Jamaica 2.62 229 7.46 6.37 3.58 -1.38 1844.4 70.45 053Argentina 36.6 13 7.61 2.05 7.79 3.27 14509.4 39.64 0.53Trinidad & Tobago 1.3 254 14.57 3.31 3.27 9.59 687 52.78 0.53Costa Rica 4.14 81 9.82 3.67 4.67 1.83 1497.7 3615 052Brazil 173.88 20 12.67 5.86 2.92 3.06 73691 42.38 0.5Mexico 101.88 52 9.84 4.51 2.89 6.75 40869.9 40.12 0.5Panama 3.01 38 7.8 5.98 5.47 4.06 936.4 31.15 0.47Belize 0.25 II 4.06 5.31 3.22 83 3282 0.47Venezuela 25.2 28 1\.89 3.55 2.33 2.17 9305.3 36.92 0.47

Colombia 43.29 38 9.82 3.67 4.86 1.75 12362.6 28.56 0.45Peru 26.75 21 7.56 1.83 5.62 1.92 40731 15.23 0.44Guyana 0.88 4 6.8 1.66 7.39 8.27 167.7 19.08 0.43Dominican Rep 8.23 170 10.76 6.14 4.99 9.15 2609.6 31.71 0.42

Ecuador 12.94 28 13.7 2.74 2.88 0.47 2987 2308 0.41

Paraguay 5.78 14 10.36 7.19 6.59 -1.65 1940.2 33.56 0.39Guatemala 12 110 8.93 3.52 4.38 2.84 2423.1 20.2 0.38Bolivia 8.34 8 8.69 2.58 3.32 2.88 1436.6 17.22 0.38EI Salvador 6.46 302 8.68 1.37 6.83 2.22 1556.5 24.1 038Honduras 6.7 60 8.72 4.4 2.12 0.82 649 9.69 0.29Nicaragua 5.37 44 4.69 -0.11 1.72 \.51 374.4 6.97 019Haiti 8.3 299 7.29 3.41 13.02 10.32 270 3.25 0.15

Table 8--Per capita real GDP growth rate and telephone subscribers in Europe (Central and Eastern) in descending order hy DigitalAccess Index Value (DAlY), by access level 200245

Country Population Density Per capita real GOP growth rate Telephone OAIsubscribers, 2000

1970-79 80-89 90-95 96-2000 Total Per('000) 100

Malta 0.39 1234 318.6 81.7 0.87Estonia 1.44 32 8.76 1079.8 7503 0.67Czech Republic 10.27 130 3.43 8217.7 79.99 066Hungary 10.01 108 10.61 6.89 0.55 5.34 6874.5 68.71 0.63Poland 3864 124 14.05 4.55 2.96 6.05 17692.6 45.78 0.59Croatia 4.47 79 7.23 2754.1 61.57 0.59Slovak Rep. 5.4 110 -1.69 5.49 2807.9 51.98 0.59Lithuania 3.69 57 6.95 1711.7 46.35 0.56Latvia 2.42 38 -8.04 6.87 1136 46.86 0.54Bulgaria 8.15 73 -0.6 3619.8 44.42 053Russia 14693 9 -4.59 7.61 35333.2 24.05 0.5Belarus 9.99 48 -6.94 10.29 2801.3 28.04 0.49Turkey 65.29 84 8.61 6.84 5.32 4.12 34528.6 52.88 0.48Macedonia 2.02 79 4.4 2.02 79 0.48Romania 22.43 94 14.91 6.28 1.26 1.4 6398.2 28.53 0.48Bosnia 3.78 74 873.4 23.1 0.46Serbia and Montenegro 10.64 104 3709.8 34.87 0.45Ukraine 50.46 84 -9.83 1.85 11235.5 22.27 043Alhania 3.09 108 NA NA 15.36 5.97 182.5 5.9 039Moldova 4.38 130 8.24 722.8 16.5 0.37

NAURIYAL & BHALLA: GLOBAL TELECOM REYOLUTION: SPATIAL-TEMPORAL ASPECTS 209

Table 9--Per capita real GDP growth rate and telephone subscribers in selected countries in Asia in descending order by DigitalAccess Index Yalue (DAlY), by access level 200245

Population Density Per capita real GDP growth rate Telephone subscribers, 20001970-79 80-89 90-95 96-2000 Total ('000) Per 100

DAICountry

0.820.790790.750.750.640.570.480.430.430.430.410.380.340.320.320.30.240.240.190.180.160.700.480.450.280.18

48748305169373.24693.9141128317.99756.18647.12300899515.710448.92031.51197.610331.9385.136013.2550.93402.91221.6277.1750.8161.4737413191002.91705.2378.7

106.01136.99140.63116.83111.1972.2541.9314.2717.7612.4416.4112.526.495.017.8935614.492.4515.581.240.581.23117.6240.1319.910.532.06

11.9311.8911.3410.368.29

9.198.226.19.254.226.799.1310.1111.992.797.9166.718.012.55.781274.26914.966.577.26.3416.954.744.27-6.41

2.17.362.554.292.47-0.132.590.386.876.526.978.355.23.133.226.66.712.8212.635.084.264.234.136.511.802.6113.43

45.9922.286.674.02126.920.4423.2760.611295.3376.563.6616.2218.472064.881012.43.8138.997.8422.28129.2513.16.273.295.0416.1918.35

467619627658853361848770118135255396281107253201271739115889872283316528797

14.1314.7713.2614.6710.16

Korea. Rep. orTaiwanHong KongSingaporeJapanMacaoMalaysiaThailandChinaPhilippinesIranKazakhstanSri LankaIndonesiaKyrgyzstanlndiaArmeniaPakistanAzerbaijanNepalBangladeshCambodiaIsraelLebanonJordanSyriaYemen

12.610.49.389.0212.45

7.359.8410.094.370.53

7.9314.77

8.369.98

6.68 9.17

8.367.65

6.586.936.23

8.115.8610.22

6.463.78

10.2514.13

Table IO--Per capita real GDP growth rate and telephone subscribers in selected African countries in descending order by DigitalAccess Index Yalue (DAlY), by access level 200245

Population Density Per capita real GDP growth rate1970-79 80-89 90-95 96-2000

Telephone subscribersTotal ('000) Per 100

DArCountry

9.271.173.294954.476.19-1.532.793.426.625.17-0.59-3.16-4.280.916.54

4.865.452SI4.945.952.754.348.025.181.494.775.177.314.819.456.320.19

55.4538.6130.4520.4411231.6810.786.0813.121.461.090.910.83.130.730.390.93

0.540.50.450.430.410.410.40.370.330.190.170.150.120.120.110.10.1

SeychellesMauritiusSouth AfricaBotswanaTunisiaBeninEgyptAlgeriaMoroccoKenyaUgandaMalawiMozambiqueCongo. Rep. ofAngolaEthiopiaGuinea-Bissau

0.081.1943'~591.649.5663763.4830.3929.730.672310.3417.12.9413.1363.491.2

20164037358576313435395110229II5233

15.6513.478.9816.5311.395.378.1414.749.599.063.387.832.38.292.956.472.8

5.638.734.8911.295.73.996.735.166.614.4310.023.25-0.2410.675.564.495.15

45460.913307335.91074.2107.16843.51847.33767448.9250.294136.89295.5249.7n.t

international long distance (ILD) telephony at the startof the current decade. The subscriber base of cellularservices has increased by about 35 times from amodest 0.469 million subscribers in June 1997 towhopping 16.299 million in July 2003. By February

cellular and basic services for local area to privatecompetition. The Telecom Regulatory Authority ofIndia (TRAI) was constituted In 1997 as anindependent regulator in this sector. Competition wasalso introduced in national long distance (NLD) and

210 J SCI IND RES VOL 65 MARCH 2006

Table II-Telephones per 100 population-/overall urban/rural(tele-density)* (BSNL, MTNL & private) in December 200246

States/Union Territories Overall Urban Rural

Slates with overall tete-density above lO per 100 population

Punjab

Kerala

11.08

10.5

22.6

19.5

4.43

7.43

States with overall tele-density less than lO but above 5per lOapopulation

Himachal Pradesh

Gujarat

Karnataka

Tamil Nadu

Haryana

Maharashtra

Andhra Pradesh

8.12

7.19

6.32

5.96

5.8

5.77

5.44

34.28 5.24

153 2.3

13.96 2.33

12.26 1.9

14.4 2.16

13.97 2.02

14.86 1.94

Slates with overall tete-density less than 5 but above 2 per 100population

Uttaranchal

Rajasthan

Madhya Pradesh

North-east

Jammu & Kashmir

Orissa

Uttar Pradesh

3.88

3.29

2.84

2.64

2.41

2.11

2.02

11.48 1.23

10.02 1.23

9.11 0.54

9.13 0.02

8.16 0.49

9.27 0.83

7.64 0.54

States with overall tele-density less than 2 per 100 population

Assam 1.89 11.43 0.47

West Bengal 1.7 7.11 0.83

Jharkhand 1.52 5.53 0.36

Bihar 1.25 8.07 0.45

Tete-density in the major metropolis

Delhi 26.92 28.84 0.00

Mumbai 23.52 23.52 0.00

Chennai 22.75 22.75 0.00

Kolkaia 13.22 13.22 0/00

All India 4.89 13.71 1.41

*Including Public DELs, Pvt DELs, CMPs and WLL (Fixed &Limited)#Based on the projected population of March'2002

2004, India had about 31.6 million telephonesubscribers [cellular subscribers, 24.65 million;WLL(M) subscribers, 7.02 millionj'". India'stelephone network including mobile is the fifth largestin the world and the second largest among emergingeconomies after China. Although one of the world'slargest telecom markets, with a fixed-line phone

network of about 48 million lines, India's telephonedensity of four phone lines per one hundred persons isa quarter that of China. More than 970 million Indiansdo not have access to a telephone. India's mobilephone industry has basically been developed andnurtured by the private sector, which has invested $6billion in capital equipment in recent years. As aresult, India today has a world-class cell phonesystem, although other aspects of the telecominfrastructure are sti II sub-standard. By mid 2003,India had 16 million cell phone subscribers, withnumbers expected to surpass 50 million before 2006.India is adding one million mobile connections everymonth, and industry experts foresee a 40 percentcompound annual growth rate till 200743

In terms of total tele-density, India's comparativeranking in the world improved from 160 in 1990 to145 in 2000, an improvement by 15 positions.Nevertheless, closing digital divide in terms of tele-density remains a daunting task", Though tele-densityfor India as whole is less at 4.89 per 100 populations,there exists a wide variation across states / unionterritories as well as the urban and rural areas(Table 11). For instance, while tele-density in ruralareas (all India average) was at 1.41 per hundredpopulations, it was at 13.71 for the urban areas inDecember 2002. The digital gap amongst variousstates and within the states specifically those havinglarge geographical areas and huge populations arequite visible. While, southern states includingMaharashtra have tele-density more than the nationalaverage of 4.90, the western region except forGujarat, Central and NE regions have a tele-densitylower than the national average. Tele-density in ruraland urban areas also displayed a similar pattern. Thisdivide needs to be bridged by taking appropriatemeasures. Studies on the extent and implications ofdigital divide, socio-economic profile of theconsumers and their expectations are in progress.

Foreign Direct Investment (FDI) in the Indian Telecom SectorDuring August 1991 to December 2002, 858

proposals of FDI of Rs 56,279 crore were approvedand the actual flow of FDI during the above periodwas Rs 9,562 crore (Table 12). In terms of approvalof FDI, telecom sector is the second largest afterPower & Oil Refinery sector. During 2002, actualFDI inflow was of the order of Rs 1081 crore. Thehighest FDI has resulted in the creation of holdingcompanies followed by Cellular Mobile TelephoneServices (CMTS). This implies the entry of foreign

AURIYAL & BHALLA: GLOBAL TELECOM REVOLUTION: SPATIAL-TEMPORAL ASPECTS

Table 12-Foreign Direct Investment in the Indian telecomsector during August 1991 to December 200247

Service/Item FDIRs, in millions

%Share

393723328910688281160248171

1578448133106299

95621

4.1224.410.950.720.721680.500.0716.5150.340.110.31

Basic telephone serviceCellular mobile telephone serviceRadio paging serviceE-Mail serviceVSA T serviceCahle TV network + InternetSatellite telephone serviceRadio trunking serviceManufacturing & consultancyHolding companiesOther value added servicesAutomatic routeTotal

8000070000

c 60000 -Q

50000Es 40000V> 30000a::

2000010000

0Mauritius

-------~_.-:._-- 1

UK USA Nelherlands Thailand

Country

Fig. 6--Top five contributors in the telecorn sector during August1991 to August 200348

players in the domestic market and intensification ofcompetition in the telecom market in general and inCMTS in particular. Another notable area ofinvestment was the manufacturing and consultancy. Infuture, more investment is likely to come in thecellular services, manufacturing and cable networkand Internet. In fact, manufacturing may not increasefaster than other two areas as most of themanufacturing investment at the moment is divertingtowards China where, because of cheap labour andhigher labour productivity, manufacturing cost islower than what it costs in India.Mauritius has emerged as the leader in FDI

investment in India followed by UK and USA(Fig. 6). The factor favouring Mauritius the leader isthat FDI is routed through Mauritian companies andMauritius resident Foreign Institutional Investors(FIls). This enables investors to take advantage of theDouble Tax and Investment Protection Treatiesbetween the two countries, keeping in view the lowrates of taxation in Mauritius.

In India, revenues from telecommunicationsservices are estimated to have increased (CAGR,

211

19.3 %), from Rs. 135 billion in 1995-96 to Rs. 325billion in 2000-01. In 2000-0133, basic servicesaccounted higher (83%) of telecom revenues thancellular services (11 %). In future, companies can beseen digging deep into their areas of operation oncethey have established basic network. Customersegmentation would also be a key part of marketingstrategy. Among frequent talkers, there could befurther market segmentation, for instance businessclass, school/college going youths, school boardersetc.

ConclusionsThe global telecom landscape is rapidly changing

characterized by innovation in communicationtechnology and associated hardware, and increasedacceptance and deployment of established technology.The social implications of the telecom revolution aretremendous especially for the developing and leastdeveloped countries, which will get empowered interms of information access and investment potential.Unlike in the past, it is the developing world, whichwill fuel the telecom revolution for the next decade.The developed world will continue to remain thecenter for technology upgradation and innovation.

Mobile technology would continue to make inroadsinto the communication fabric of nations, while datatransmission would increasingly become more dominantas compared to voice traffic. Telecom would become theplatform on which ICT would diffuse across countriesacross all economic strata and would spur innovationand growth. There would be continued efforts to makethe Internet, a platform for real time communication dueto the favorable cost-benefit opportunity it presents.

Government regulation will continue to play animportant role in shaping the direction of telecomrevolution. Governments that encourage privateparticipation in the telecommunication landscape wouldget access to the global best practices and technologyadvances in this arena. But the process of reform wouldhave to be in harmony with national economic andpolitical equations. The need of the hour is to create arobust framework, which is in sync with the globaldynamics as well as the nation's socio-economic milieu.India holds a lot of potential both as an investmentdestination as well as an R&D powerhouse. It isimperative that the state and the pri vate playerssynergise their efforts; the former by ways of legislationand economic incentives and the latter by adopting thebest practices in global techno-commercial trends. This

212 J SCI INO RES VOL 65 MARCH 2006

effort has to leverage the nation's strengths in areaswhere India already enjoys a competitive advantage aswell as develop competencies in areas that need a furtherboost. Moreover, the policies have to dynamicallyinteract with contemporary global demands in order tomaintain as well as increase the interest in the Indiantelecom story.

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