|
TELECOMMUNICATIONS
Indian Telecom industry has emerged as the fastest
growing telecom market in the world. The opening
of the telecom sector to the foreign investors
has not only led to rapid growth in subscriber
base but also helped a great deal towards maximization
of consumer benefits, particularly in terms of
price discovery following the moderate approach
in tariffs. The success of the Indian telecommunications
sector has become the cynosure of the world and
has made the country a truly attractive investment
destination.
India's Position in Telecom
Sector
- Presently India has one of the lowest tariffs
in the world
- One of the fastest growing teIecom markets
in the world
- Third largest telecom network
- With 525.1 million wireless connections, Indian
telecom has become the second largest wireless
network in the world.
Overview of Telecom Sector
From only 54.6 million telephone subscribers
in 2003, the number increased to 429.7 million
at the end of March 2009 and further to 562 million
as on October 31, 2009 showing addition of 2.49
million during the period from March to December
2009.This increase has been entirely due to the
spectacular increase in wireless connections at
a compound annual growth rate (CAGR) of 60 per
cent per annum since 2004.
Major trends in telecom Sector
- The share of the private sector in total telephone
connections has increased to 82.3 per cent in
December 2009 as against a meagre 5 per cent
in 1999.
- Teledensity:Teledensity is an important
indicator of telecom penetration; it increased
from 12.7 per cent in March 2006 to 37.0 per
cent in March 2009 and 47.9 per cent in December
2009.
- Rural teledensity: was above 1.2 per
cent in March 2002, increased to 9.5 per cent
in March 2008 and further to 15.1 per cent in
March 2009 and 21.2 per cent at the end of December
2009.
- Urban teledensity:Urban teledensity
increased from 66.4 per cent in March 2008 to
88.8 per cent in March 2009 and stands at 110.7
per cent in end- December 2009.
- Rural telephony: With the penetration
of mobile services and flourishing of private
service providers, rural telephone connections
have gone up from 12.3 million in March 2004
to 123.5 million in March 2009 and further to
174.6 million in December 2009. Their share
in total telephone connections has steadily
increased from around 14 per cent in 2005 to
31 per cent as on December 31, 2009. During
2008-09, the growth rate of rural telephones
was 61.5 per cent as against a 36.7 per cent
growth of urban telephones. The private sector
has contributed crucially to the growth of rural
telephones by providing about 81.5 per cent
of rural telephones as on December 31, 2009.
- Internet / Broadband: With supportive
policies, broadband subscribers grew from 0.2
million in 2005 to 6.2 million by end-April
2009 and about to 7.98 million by end-December
2009t.The government has issued guidelines for
Broadband Wireless Access (BWA) Services; the
introduction of which will enhance broadband
penetration. Wi-Max has been making headway
in wireless broadband connectivity.
Recent Initiatives in Telecom
sector
- 3G Telecom services: The volatile growth
of the telecom industry has kindled the urge
to move towards better technology. One of the
key frontiers is the launch of 3G technology.
Government has recently announced guidelines
for penetration of 3G telecom services providing
a good opportunity for existing operators as
also foreign players to make an entry into the
Indian market and bring in new technology and
innovations.
- Mobile Number Portability: this service
allows any subscriber to change his service
provider without changing his mobile phone number.
With the announcement of its guidelines, telecom
service providers have improved the quality
of service to avoid losing subscribers.
- Value added Services (VASs): Mobile
VASs include text or SMS, menu-based services,
downloading of music or ring tones, mobile TV,
videos, streaming, and sophisticated m-commerce
applications. VASs other than SMS are gaining
importance. It is expected that over the next
few years, non-SMS services would become a dominant
contributor to VAS revenue.
- Manufacturing:The Indian telecom industry
manufactures a vast range of telecom equipment
using state-of-the-art technology. Many renowned
telecom companies are setting up manufacturing
bases in India. The production of telecom equipment
have increased from US$ 9.09 billion during
2007-08 to US$ 10.75 billion during 2008-09.Favourable
factors such as facilitative policies, large
talent pool in R&D and low labour cost can
provide an impetus to the telecom manufacturing
industry in the country. Exports increased from
US$ 88.61 million in 2002-03 to US$ 2.42 billion
in 2008-09 accounting for 21 per cent of the
equipment produced in the country.
Major Policy Initiatives
- No cap on the number of access providers in
any service area. In 2008, 122 new Unified Access
Service (UAS) licences were granted to 17 companies
in 22 service areas of the country.
- Permission for use of dual technology spectrum
under the same UAS/Cable Modern Termination
System (CMTS) licence was granted to eight companies
including Bharat Sanchar Nigam Limited (BSNL)
and Mahanagar Telephone Nigam Limited (MTNL).
- In 2008, provision of mobile service within
500 meters of the international boarder within
Indian territory has been permitted.
- With a view to regulating unsolicited calls
from telemarketers, a regulation has been implemented
whereby a National Do Not Call Registry (NDNC)
has been put in place. With this, there has
been substantial reduction in the number of
unsolicited calls
.
- It has been decided to introduce the National
Integrated Directory Service (NIDQS). This facility
would be useful to subscribers/users.
- Revised subscriber based criteria for allocation
of Global System for Mobile Communications (GSM)
and Code Division Multiple Access (CDMA) spectra
were issued in January 2008.
- Foreign direct investment (FDI) ceilings have
been raised from 49 per cent to 74 per cent.
In the area of telecom equipment manufacturing
and provision of IT-enabled services, 100 per
cent FDI is permitted. This has made telecom
one of major sectors attracting FDI inflows.
- Allocation of spectrum for 3G and BWA services
to be through a controlled, simultaneous, ascending
e-auction process.
FDI Policy for Telecom Sector
- Telecom Sector is considered to be one of
the most attractive sectors for foreign direct
investment. Present FDI Policy for the Telecom
sector is as under:
- Basic and cellular, Unified Access Services,
National International Long Distance, V-Sat,
Public Mobile Radio Trunked Services (PMRTS),
Global Mobile Personal Communications Services
(GMPCS) and other value added telecom services.
- Foreign Direct Investment (FDI) upto 74% (including
FDI, FII, NRI, FCCBs, ADRs, GDRs, convertible
preference shares and proportionate foreign
equity in Indian promoters/ investing Company)
is permitted. FDI upto 49% is permitted under
automatic route, beyond 49% by FIPB as per the
conditions of Press Note 3 (2007 series).
- ISP (with gateways), end-to-end bandwidth
and Radio Paging Service .
- FDI upto 74% is permitted subject to licensing
and security requirements.
- Upto 49% is permitted under automatic route
and beyond 49% by FIPB.
- Infrastructure providers providing dark fibre,
right of way, duct space, tower (Category-l),
Electronic Mail and Voice Mail.
- FDI upto 100% is allowed subject to the conditions
that such companies would divest 26% of their
equity in favour of Indian public in 5 years,
if these companies are listed in other parts
of the world. Proposals for FDI beyond 49% shall
be considered by FIPB on case-to-case basis.
- The total FDI equity inflows in telecom sector
have been US$ 2447 million during 2008-09 (April-February
2008-09).
Major Policy Initiatives
- No cap on the number of access providers in
any service area.
- Permission to use of dual technology spectrum
under the same UAS/CMTS licence were granted
to eight companies including BSNL & MTNL.
These two companies were exempted from the prescribed
fee for such usages.
- Detailed guidelines for 3G and BWA services
and e-auction process for spectrum for 3G and
BWA service were announced. It is expected that
the allocation of spectrum for 3G and BWA services
will give a boost to the development of telecom
sector.
- Revised subscriber based criteria for allocation
of GSM and CDMA spectrum were issued in 2008.
- In the year 2008, provision of mobile service
within 500 meters of international boarder within
Indian Territory has been permitted.
- Government released new guidelines for 3G
spectrum that provide a reserve price for availing
of radio frequency. The guidelines also provides
for entry of foreign players.
- Introduction of Mobile Number Portability
(MNP). This will provide the consumer the facility
to retain the same number while switching over
from one operator to another within the same
service area.
- With a view to regulate the unsolicited calls
from the telemarketers; a regulation has been
implemented whereby "National DO Not Call
Registry (NDNC)" has been put into place.
Consequent upon its implementation, there has
been a substantial reduction in the number of
unsolicited calls.
Key Players
- Reliance Communications Limited
- Bharti Airtel Limited
- Bharat Sanchar Nigam Ltd. (BSNL)
- Mahanagar Telephone Nigam Ltd.
- Hutchison Essar
- Ericsson
- Nokia
- Siemens Communications
- Idea Cellular Limited
- Tata Teleservices
Policy Framework:
Useful Web links
Ministry of Communication and Information Technology:
www.dot.gov.in
Telecom Regulatory Authority of India (TRAI):www.trai.gov.in
Telecommunications Consultants India Ltd. :www.tcil-india.com
|
