c


    
India's mobile telecom sector is one of the fastest growing sectors. Unlike in the 1990s when the
mobile phone was an elitist product, mobile operators now tap a mass market with mass
marketing techniques. "Unified licensing" rules allow basic and mobile operators into each
other's territory, and have ushered in perhaps the final phase of industry consolidation.

It seems that only companies with deep pockets can effectively compete as primary operators
mobile markets. Economies of scale, scope, and end-to-end presence in long-distance as well as
local telecom, are desirable.

There are, besides, new challenges. Operators are having to find new growth drivers for the wire
line business. There are problems of getting broadband to take off, of technology choice, of when
to introduce new technologies, and of developing a viable business model in an era of
convergence.

This report analyses the changing features, opportunities and challenges facing the basic and
mobile telecom services business. It covers the regulatory environment, markets, new services
and revenue sources, tariff structures, economics of the industry, investment and technology
issues, and the current and emerging competitive environment.

Growth of mobile technology

India has become one of the fastest growing mobile markets in the world. The mobile services
were commercially launched in August 1995 in India. In the initial 5-6 years the average
monthly subscribers additions were around 0.05 to 0.1 million only and the total mobile
subscribers base in December 2002 stood at 10.5 millions. However, after the number of
proactive initiatives taken by regulator and licensor, the monthly mobile subscriber additions
increased to around 2 million per month in the year 2003-04 and 2004-05.
Although mobile telephones followed the New Telecom Policy 1994, growth was tardy in the
early years because of the high price of hand sets as well as the high tariff structure of mobile
telephones.

The New Telecom Policy in 1999, the industry heralded several pro consumer initiatives. Mobile
subscriber additions started picking up. The number of mobile phonesadded throughout the
country in 2003 was 16 million, followed by 22 millions in 2004, 32 million in 2005 and 65
million in 2006. The only countries with more mobile phones than India with 156.31 million
mobile phones are China ± 408 million and USA ± 170 million.

India has opted for the use of both the GSM (global system for mobile communications) and
CDMA ( code-division multiple access) technologies in the mobile sector.

The mobile tariffs in India have also become lowest in the world. A new mobile connection can
be activated with a monthly commitment of US$ 5 only. In 2005 alone 32 million handsets were
sold in India. The data reveals the real potential for growth of the Indian mobile market.

_   
  

In the Next Generation Networks, multiple access networks can connect customers to a core
network based on IP (internet protocol) technology. These access networks include fibre optics
or coaxial cable networks connected to fixed locations or customers connected through wi-fi as
well as to 3G networks connected to mobile users. As a result, in the future, it would be
impossible to identify whether the next generation network is a fixed or mobile network and the
broadband wireless access would be used both for fixed and mobile services. It would then be
futile to differentiate between fixed and mobile networks ± both fixed and mobile users will
access services through a single core network. Indian telecom networks are not so intensive as
developed country¶s telecom networks and India's teledensity is low only in rural areas. 670,000
route kilometers of optical fibres has been laid in India by the major operators, even in remote
areas and the process continues.
A rural network based on the extensive optical fibre network, using Internet Protocol and
offering a variety of services and the availability of open platforms for service development, viz.
the Next Generation Network, appears to be an attractive proposition. Fibre network can be
easily converted to Next Generation network and then used for delivering multiple services at
cheap cost.

( 
     
As on Apr 2007 India has 167 million mobile phone subscribers. Out of this 125 million are
GSM users and 41 million CDMA users.
BSNL, Bharti Airtel, Hutch, Idea, Aircel, Spice and MTL are the main GSM providers in
India. Reliance Communications and Tata Indicom are the main CDMA providers in India.


   

Airtel is providing cellular services in Delhi, Mumbai, Kolkata, Chennai, Andhra Pradesh,
Gujarat, Haryana, Himachal Pradesh, Jammu and Kashmir, Karnataka, Kerala, Madhya Pradesh,
Maharashtra, Goa, Orissa, Punjab, Rajasthan, Tamil Nadu, UP and West Bengal. Airtel is the
No.1 cellular service provider in India using GSM technology. Airtel has 23% market share in
India with a total subscriber base of 38 million.

c 
 (  
 

Reliance has both CDMA and GSM networks and total subscriber base of 29 million or 17%
market share. It has GSM network in Assam, Bihar, Himachal Pradesh, Kolkata, North East,
Madhya Pradesh, Orissa and West Bengal. Reliance has CDMA networks in other states and
cities.





_ 
  _
BSNL is a state owned telecom company which has GSM presence in almost every cities and
towns. BSNL has 27 million subscribers with a market share of 16%.


Hutch is another emerging GSM provider in India with coverage in Kerala, Mumbai, Delhi,
Kolkata, Chennai, Gujarat, Andhra Pradesh, Karnataka and Punjab with a total subscriber base of
27 million.


  
Tata Indicom is a main CDMA provider in India with 16 million subscribers all over India.
Tata Indicom has presence in almost every states and cities in India.
 !"#( "

GSM and CDMA are the two main competing network technologies deployed by cellular service providers

world over. Understanding the pros and cons of both the technologies will help you make right decision

according to your requirement.

GSM (Global System for Mobile Communications) originated in Europe in 1990. The GSM Association is an

international organization founded in 1987, dedicated to developing, providing and overseeing the worldwide

wireless standard of GSM.

While CDMA (Code Division Multiple Access) is a proprietary standard designed by Qualcomm Inc in United

States and has been the dominant network standard for North America and parts of Asia. It became an

international standard in 1995.

However now, GSM networks have penetrated the United States and the CDMA networks have spread in other

parts of the world. People of both the camps claim that their architecture is superior to the other.

The Technology:

Mobile personal communication systems use microwave frequencies above 800 MHz for transmission and

reception. All service providers operate in some pre allocated frequency bands according to international

standards. For operating in these microwave frequencies there are following access methods:

ÔY Ë " (Frequency Division Multiple Access) - FDMA puts each call on a separate
frequency.


ÔY " (Time Division Multiple Access) - TDMA assigns each call a certain portion
of time on a designated frequency.



ÔY ( " ( Code Division Multiple Access) - CDMA gives a unique code to each call
and spears it over available frequencies

GSM is a global standard based on TDMA. It is very popular in entire Europe, Middle East
and Asia while CDMA is the dominant technology in United States and some parts of Asia.
But how does it effects the ultimate consumer ? For understanding further considerations may
be helpful.
!"

1.In case of GSM you can choose a handset seperately from a wide variety available in the
market. It should be GSM 900/1800 compatible for use in India.

Then buy a pre-paid or post-paid SIM card (Subscriber Identity Module that contains user
account information) from any of the GSM Service Providers like Airtel, Hutch, Idea, MTNL,
BSNL, Aircel, Spice etc. Just insert this SIM into your handset and start talking.

2. A very large range of handsets to choose from as the big handset companies like Nokia,
Motorola, SonyEricsson, LG, Samsung etc. are marketing their products through independent
distribution and retail network.

3. You can easily change the service provider

and continue with the same handset.

4.In GSM different frequencies are used across different cells but that does not mean that voice
clarity is necessarily compromised. Actually it depends upon the location and network traffic
too.

5. EDGE (Enhanced Data Rates for GSM Evolution) enabled GSM networks are comparable in
terms of download speed. Please note an EDGE enabled handset is also required

6. GSM service providers are better networked globally to offer international roaming. But you
must check for roaming call rates and coverage in the regions or countries where you visit
frequently.

7. If you travel to other countries you can even use your same GSM cell phone abroad if it is a
quad-band phone (850/900/1800/1900 MHz). By purchasing a local SIM card with call value and
a local number in the country you are visiting, you can make calls against the card to save
yourself international roaming charges from your home service provider.
( "

1.Y Handset is network locked. You buy a package from the Service Provider like Reliance
or Tata Indicom that includes a handset and a pre-paid or post-paid plan.

Earlier it was difficult to change the handset and keep the same number but now to
change a Reliance handset in future, you just need a handset change card costing a nominal
amount.T-SIM enabled handsets of Tata Indicom can be changed easily.

2.Y Choice of handsets is limited to the models offered by the Service Provider. Although
both Reliance and Tata have now a range of entry level, mid-segment and features rich
advance handsets available with them.

3.Y You can't change service provider and continue with the same handset. It could be
technically possible but not easy.
4.Y Voice clarity is supposed to be better in CDMA network as it uses same frequency
across all cells.

5.Y Data Transfer Speed is traditionally more in case of CDMA. BREW(Binary Runtime
Environment for Wireless) technology which is exclusive to CDMA networks enables
faster data downloads

6.Y Check for International roaming tie ups if you travel abroad frequently. Also check for
the coverage in the region where you intend to use your cellphone within India. Tata is
soon launching T-SIM to enable international roaming with one world one number
concept.

    $      

     

1. First of all you must check which Service Providers are providing services in the areas
where you will be using your phone.
2. If you want National or International Roaming then also check whether the Service
Provider you have chosen facilitates roaming in the regions or countries where you visit
frequently.
3. Cost of owning a handset
4. Cost of having a connection
5. Fixed monthly expenses
6. Usage charges.

7. Also it is helpful to check with the people using mobile in your area for the quality of
service

 
  
   
  
  $  % $
% % 

      _#$( "% %  _#$!"% % 
c 
 
&#'( )*#'+


  ,#-' 

    )#)'

" _  &.#/*



0 (  &#..


  ,#)

(
  &(#(+


  ,-#+&


c(
  .*


Bharti Airtel has the largest customer base with 31% market share, followed by Hutch and
BSNL with each holding 22% market share.
The 2007 budget has brought further relief to the customers with the reduction in the tariffs, both
local and long distance, and with slashing down the roaming rentals. This is likely to lead to even
more people going for cellular services and more and more use of the value added services.
However, landline telephony is likely to remain popular, too, in the foreseeable future. MTNL,
the largest landline service provider, has recently taken some bold initiatives to retain its market
share and, if possible, expand it.

Revenue and growth

The total revenue in the telecom service sector was Rs. 86,720 crore in 2005-06 as against Rs.
71, 674 crore in 2004-2005, registering a growth of 21%. The total investment in the telecom
services sector reached Rs. 200,660 crore in 2005-06, up from Rs. 178,831 crore in the previous
fiscal.

Telecommunication is the lifeline of the rapidly growing Information Technology industry.

Internet subscriber base has risen to 6.94 million in 2005- 2006. Out of this 1.35 million
werebroadband connections. More than a billion people use the internet globally.

The value added services (VAS) market within the mobile industry in India has the potential to
grow from $500 million in 2006 to a whopping $10 billion by 2009 (Music, games to drive
mobile VAS growth).

!  c 
 


  c 
 $
 c

The entry of private service providers brought with it the inevitable need for independent
regulation. The Telecom Regulatory Authority of India (TRAI) was, thus, established with effect
from 20th February 1997 by an Act of Parliament, called the Telecom Regulatory Authority of
India Act, 1997, to regulate telecom services, including fixation/revision of tariffs for telecom
services which were earlier vested in the Central Government.
TRAI¶s mission is to create and nurture conditions for growth of telecommunications in the
country in manner and at a pace, which will enable India to play a leading role in emerging
global information society. One of the main objectives of TRAI is to provide a fair and
transparent policy environment, which promotes a level playing field and facilitates fair
competition. In pursuance of above objective TRAI has issued from time to time a large number
of regulations, orders and directives to deal with issues coming before it and provided the
required direction to the evolution of Indian telecom market from a Government owned
monopoly to a multi operator multi service open competitive market. The directions, orders and
regulations issued cover a wide range of subjects including tariff, interconnection and quality of
service as well as governance of the Authority.
The TRAI Act was amended by an ordinance, effective from 24 January 2000, establishing a
Telecommunications Dispute Settlement and Appellate Tribunal (TDSAT) to take over the
adjudicatory and disputes functions from TRAI. TDSAT was set up to adjudicate any dispute
between a licensor and a licensee, between two or more service providers, between a service
provider and a group of consumers, and to hear and dispose of appeals against any direction,
decision or order of TRAI.

1

  
India offers an unprecedented opportunity for telecom service operators, infrastructure vendors,
manufacturers and associated services companies. A host of factors are contributing to enlarged
opportunities for growth and investment in telecom sector:

· An expanding Indian economy with increased focus on the services sector

· Population mix moving favorably towards a younger age profile

· Urbanization with increasing incomes

Investors can look to capture the gains of the Indian telecom boom and diversify their operations
outside developed economies that are marked by saturated telecom markets and lower GDP
growth rates.

Inflow of FDI into India¶s telecom sector during April 2000 to Feb. 2010 was about Rs 405,460
million. Also, more than 8 per cent of the approved FDI in the country is related to the telecom
sector.


"%  _ % 
%  "_

Mobile Number Portability (MNP) allows subscribers to retain their existing telephone number
when they switch from one access service provider to another irrespective of mobile technology
or from one technology to another of the same or any other access service provider. The
Government has announced the guidelines for Mobile Number Portability (MNP) Service
Licence in the country on 1st August 2008 and has issued a separate Licence for MNP service
w.e.f. 20.03.2009. The Department of Telecommunication (DoT) has already issued licences to
two global companies (M/s Syniverse Technologies Pvt. Ltd. and M/s MNP Interconnection
Telecom Solutions India Pvt. Ltd.) for implementing the service. MNP is to be implemented in
whole country in one go by 31.10.2010

   !  

,#_  

 

· 800 million connections by the year 2012.

&#c
 


. 200 million rural subscribers by 2012

· Reduce urban-rural digital divide from present 25:1 to 5:1 by 2010.

)#
%


. 20 million Broadband connections by 2010

· Broadband with minimum speed of 1 mbps.

· Broadband coverage for all secondary & higher secondary schools and public health
care centres by the end of year 2010.

· Broadband coverage for all Grampanchayats by the year 2010

. Broadband on demand is every village by 2012

.#"
$
 

· Making India a hub for telecom manufacturing by facilitating more and more telecom
specific SEZs.
 · Quadrupling production in 2010.

· Achieving exports of 10 billion during 11th Five year plan.

(#c 
2  


· Pre-eminence of India as a technology solution provider.

· Comprehensive security infrastructure for telecom network.

· Tested infrastructure for enabling interoperability in Next Generation Network.

*# 
 

 

· Facilitating availability of adequate international bandwidth at competitive prices to

drive ITES sector at faster growth.



    
 


 

As on 31st March 2010)

Rank in world in network size )

Tele±density (per hundred populations) (&#'.
=
hon conn ction (In mi

ion)
Fixed )+#/(
Mobile (.*#)&
Total +&,#&*
Village Public Telephones inhabited (Out of (3+/3)*(
5,93,601 uncovered villages)
Foreign Direct Investment (in million) (from April .-'-
2000 till March 2010)
( 

India is huge market and none of service providers can dare to ignore its potential. That¶s why
Indian mobile service provider industry is growing leap and bounce for the last decade. This
journery of 1 million to 50 million will keep it pace until each citizen in india will have his own
mobile. Industry has many phases in its growth. Now mobile doesn¶t mean a only a medium of
communication. Services providers are now willing to provide varies facilities like entertailment
(music, video etc.) and even banking also. We can say that business is transforming in e-
commerce to m-commerce (mobile-commerce). In short we can say drastic change has came in
the industry along with expanding its base in subscribers, they are keeping eye not only to offer
new facilities but also to be the first to provide .

45

NEERAJ BHATI

ROLL NO.- 2204/09

(MKT-FIN)