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Telecommunication
Group 9
Mayank Kapur (25)
Parisha Dalmiya (32)
Sankalp Sharma (44)
Varun Gupta (55)
Vibhuti Sharma (57)
Overview:
In d ia n T e le c o m
In d u s try
Overview Facts
Fastest growing telecom market;
To become second largest telecom market in
world by 2010;
Total subscriber base: 479.07 million;
Last month additions: 14.38 million;
Tele density: 41.08%;
CAGR: more than 50% (since 2003);
Wireless subscriber base: 441.66 million;
Wire line subscriber base: 37.41 million.
Source: trai
Overview Facts
Total broadband subscriber base: 6.80 million;
Monthly broadband growth rate: 2.7%;
Urban region teledensity: 88%;
Rural region teledensity: 16.54% (by May 2009);
Expected mobile subscriber base by 2012: 690 to
700 million;
ARPU per month: INR 205 (by Mar 2009)
Source: trai
Overview Facts
Divided into 23
circles
4 metros
19 circles
Further
divided into A, B
and C category
based on
METRO Circles
Gujarat
Rajasthan
Maharashtra
Orissa
Andhra Pradesh
Karnataka
Tamil Nadu
Kerala
Madhya Pradesh
Uttar Pradesh E
Bihar
West Bengal
Punjab
Himachal Pradesh
Haryana
Jammu & Kashmir
Uttar
Pradesh
W
CHENNAI
MUMBAI
DELHI
KOLKATA
C Circles
B Circles
A Circles
Success story
The subscriber base grew to
464.82 millions on June 2009,
registering a growth of
approximately 43% over last year.
On Jun 09, Indian teledensity
stood at 41.08% as compared
to 28.33% last year.
Source: trai
Paradigm Shift in Telecom
s c e n a r io
Traditionally, a government owned monopoly :
BSNL incumbent monopoly operator till 1992
Characteristics of monopoly:
A single seller
Unique product
Blockaded entry and exit
Price makers instead of takers
Duopoly existed with bharti and BSNL being the
two players.
Contd
Bharti: cellular service
BSNL: fixed line service
NTP 94 allowed one private service provider to compete
in basic services with DoT . It allowed duopoly in cellular
mobile services in each circle.
Oligopoly -> Open competition
Majors players include BSNL, MTNL, bharti, vodafone,
reliance, Tata indicom, Idea.
Handful of competitors sheltered by significant barriers
to entry
Price/output relationship of firms are interrelated
Sellers have homogenous or unique products.
Tariffs
USD
Local call charges decreased from Rs. 18 in 1999
to Rs. 0.5 now.
N a tio n a l c a ll c h a rg e s d e c re a s e d fro m
Rs. 35 pm
t o
Market share
Currently 12 major players.
Bharti occupies approx. 24% of the total wireless market.
Source: trai
Internet Services
India currently has only 13.54 million Internet subscribers, which includes
broadband.

There were 13.54 million Internet subscribers at the end of March 2009 as
compared to 12.85 million Internet subscribers at the end of December 2008
registering a growth of 5.30%.
The number of Broadband subscribers (with a download speed of 256 Kbps or
more) was 6.22 million at the end of March 2009 .
Source: trai
Regulating Bodies and policies
Regulating Bodies
Indian Telecom
Industry
Framework
Licensing and
Frequency
Management
Regulates the sector
and fix tariffs
Adjudicates over
disputes in telecom
sector
Regulatory Framework Policy
New Telecom Policy 1994
provision of world class services at reasonable prices;
ensuring India s emergence as major
manufacturing/export base of telecom equipment;
Availability of basic telecom services to all villages;
1 PCO per 500 urban population and coverage of all 6
lac villages;
License distribution to private players.
The private sector entry has been slower than what was
envisaged in the NTP 1994;
Actual revenue lesser than the projections;
U n a b le to fu lfill s o m e o f th e o b je c tiv e s .
Regulatory Framework Policy
New Telecom Policy 1999
Strengthening of Regulator;
Strengthen research and development efforts in the
country and provide an impetus to build world-class
manufacturing capabilities;
Encourage development of telecommunication facilities
in remote, hilly and tribal areas of the country;
Enable Indian Telecom Companies to become truly
global players;
Achieve efficiency and transparency in spectrum
management;
Provide Internet access to all district headquarters by
2 0 0 0 ;
Regulatory Framework Policy
Universal Services Obligation
implemented along with NTP 99 to widen the reach of telephony
services in rural India.
All telecom operators are bound to contribute five per cent of their
revenues to this fund.
Bridge the wide gap between urban and rural teledensity.
Unified Access Licensing Regime (UALR 2003)
Eliminated the need for separate licences for different services;
Allows players to offer both mobile and fixed-line services under a
single licence after paying an additional entry fee;
does not take into account the national and international
long-distance services and Internet access services.
Integrated Operators
Integrated Operators
Provide services in all categories i.e. local calling,
national calling, international calling, broadband
as well as landline.
Example: Airtel, Reliance, BSNL etc.
T
he typical services of an integrated operator like
Reliance would include:
Reliance mobile
Reliance global call- between 4 continents
Reliance passport- U.K , U.S.A and Canada
Reliance PCO
Reliance Netconnect broadband
Reliance Hello landline service
R e lia n c e in t e r n a t io n a l c a llin g
Example..
Advantages:
Better, cost effective services;
Improves market share through presence in all
areas;
High costumer retention through integrating his all
telecom related requirements;
En
j
o
y
internal economies of scale
Competition
Degree of Competition
Indian mobile market much more competitive than many other
countries.
HHI Index for few countries (for fiscal year ending mar 2009):
Tax benefits
DoT is considering a proposal so that the bidders of the 3G
spectrum can enjoy tax benefits;
Proposal:
100% tax benefit on the profits to 3G spectrum bidder
telcos for initial 5 years;
30% tax benefit on the profits for the subsequent 5 years;
Will India skip
3G?
4G
US Motorola is planning to next level that is the 4G in
India;
Motorola is all set to start trial services of technology
called Long Term Evolution(LTE) that can offer speeds up
to 70Mbps;
Motorola and other telecom vendors are planning to meet
DoT for trial spectrum;
Number Portability
Local number portability (LNP) for Fixed
lines,
Full mobile number portability (FMNP) for
mobile phone lines,
refers to the ability to transfer either an existing
fixed-line or mobile telephone number assigned
by a local exchange carrier (LEC) and reassign it
to another carrier.
Facts about MNP
United Kingdom is yet to switch to centralized solution ( as
of Jan2008).
The time taken to port a subscriber between the service
providers should not be greater than the time taken to
activate a new subscriber.
It takes only 3 minutes in Australia to port a subscriber
successfully.
The first MNP implementation was made in 1990
Singapore.
MNP
Mobile Number Portability Details :
Delhi, Mumbai, Maharashtra and Gujarat Service comprise Zone I
MNP to be implemented by Sep 20, 2009.
Kolkata, Tamil Nadu, Chennai, Andhra and Karnataka comprise
Zone 2 and details will be finalized by Sep, 2009.
Rest of the country by March 20, 2010.
Syniverse Technologies (Zone 1) and MNP Interconnection (Zone 2)
are the two companies who have been licensed by the DoT to carry
out the MNP exercise.
The charges are likely to be less than Rs. 300/ and
operators will take maximum 2 days to change the
provider.
Analysis:
S w itc h in g c o s t m o re th a n th e a v g . m o n th ly re n t.
Costs for telecom operators
Increase in churn rate directly affects the revenues of the service
provider.
Increases price competition.
It may put pressure on margins, as product innovation costs and
marketing costs may increase.
Increased investments in back-end services.
Benefits to phone subscribers
Free mobility from one service provider to another without changing
mobile number
Price competition it the market is competitive
Competition among force service providers will lead to improvement
in quality of
service and product innovation
In o rd e r to re ta in a n d e x p a n d th e c u s to m e r b a s e m a n y v
a lu e -a d d e d
MNP
80:20 Rule
80% of the total revenue comes from 20% of the total
customer base.
Pay Per
Pay Per
C a ll
C a ll
Pay Per Call ( just in)
Tata Indicom launched it on Tuesday (1st
sept. 09)
Only for Prepaid subscribers;
Fixed charge on a per-call basis regardless
of the call duration;
Re 1 per local call;
Re 3 per STD call;
Thank You
Telecommunication
Indian telecom industry... evolution and growth.
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