INDIAN TELECOM INDUSTRY

Introduction
Until 1985, the Indian Telegraph Act of 1885 and the Wireless Telegraph Act of 1932 made the telecom sector a monopoly managed by central government. In the late 1970s and early 1980s protests against poor service by subscribers, politicians, industrialists, and business leaders coincided with global and national pressure for liberalization. The national telecom policy of 1994 provided the basis for liberalizing the telecommunication market. On May 13, 1994, the government opened local basic and value-added telecommunications services to competition. Mobile services were introduced on a commercial basis in November 1994. India was thus divided into 21 "Telecom Circles". As the Indian market is growing at an accelerated rate, the economy is witnessing new players entering the market, with more trying to get a leg in. The market has turned from a monopolistic market held by BSNL and MTNL, to a market close to perfect competition where the customer is the King where prices and other factors are decided by competitive forces in the market. Even though the growth of the Telecom industry is exponential, the growing number of players, their size and consolidation among existing players show that they can in fact satisfy the evergrowing demand of Indian consumers, providing not just competitive prices, but more value for money and value-added services to the customer. Indian Telecom Subscription Highlights ( As On May 2012) 8.35 mln new subscribers added taking total tally to 929.37 mln Rural India (5.81 mln) added more than double the subscribers as compared to Urban India (2.53 mln). Rural monthly growth rate was 1.78% as compared to 0.43% of Urban India. Urban Teledensity stands at 162.57 as compared to rural density of 39.35 Rural mobile subscriber share was 64.24%

On the basis of concentration ratio ( i.e market share as a percentage of the four largest firms )in the telecom industry,market firms are listed in the ascending order of firm size as follows, Perfect competition, with a very low concentration ratio, Monopolistic competition, below 40% for the four-firm measurement, Oligopoly, above 40% for the four-firm measurement, (Example automobile manufacturers) Monopoly, with a near-100% four-firm measurement The market shares of four top companies are as follows, 1.Bharti airtel 19.94 2.Reliance communication -16.58 3.Vodafone essar 16.41 4.Idea 12.48 Total = 65.41 Since the total market share is above 40% ,the market structure of the telecom industry is oligopoly ,in which the top four companies constitute almost 65.41% market share thus showing a high concentration ratio.

Features of oligopolistic market

Few Sellers The Products are either differentiated or homogeneous No legal entry barriers Interdependent Decision-Making

Telecom Operator wise Market Share [May 2012]

While Bharti is way ahead with close to 20% market share in India, Reliance (16.58%) and Vodafone (16.41) are having a close battle. Reliance currently has 154 million subscribers as compared to 152.5 million of Vodafone. Uninor, which is one of the late entrants in Indian Telecom market now has over 45 million subscribers and accounts for close to 5 percent of Indian mobile market share. Other market players include Tata, Aircel, Uninor, Systema, Videocon, MTNL, Loop, HFCL, Stel. SOURCE 1. http://www.scribd.com/doc/21056204/Indian-Telecom-Industry 2. Regulation, market structure and performance in telecommunications, OECD Economic Studies,