Market Research India - VoIP Market in India 2009


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Market Research India - VoIP Market in India 2009

  1. 1. VoIP Market ‐VoIP Market IndiaAugust 2009
  2. 2. Executive Summary  Legal VoIP service providers generated revenues worth INR 114.1 mn till March 2009 Market  ILD outgoing calls accounted for 5.5 bn minutes in 2009 from wireless phones alone  Internet Telephony MoU account to less than 1/10th of the ILD outgoing calls  The Department of Telecom (DoT) recently gave green signal to Internet telephony within the  country, but the guidelines are yet to be notifiedRegulations in   An entry fee of INR 430 mn has been proposed by DoT for the Internet Service Providers (ISPs)  India wanting to offer VoIP based telephony services on a pan India basis wanting to offer VoIP based telephony services on a pan‐India basis  ISPs that obtain a license for VoIP based services within the country might be asked to share 9% of  their annual service revenues with the government  Low‐cost call‐rates are the biggest driver of VoIP services Factors  Factors  High speed & good connectivity Internet are a prerequisite affecting   Increasing Internet subscriber base offers immense growth potential growth  Low spending power of an average Indian make the initial infrastructure unaffordable  Developing nature of the country promotes cross border businesses  Since 2002, when DoT opened up the Indian market to Internet Telephony, 169 VoIP licences have  been issued; only 34 licence holders are reporting Internet Telephony ServicesCompetition  The under‐development of legal Internet Telephony services in India has led to unlicensed service  providers exploiting the large consumer base VoIP MARKET – INDIA.PPT 2
  3. 3. •Introduction•Regulations on VoIP in India g•Market Overview gg•Factors affecting growth•Competition Appendix•Appendix VoIP MARKET – INDIA.PPT 3
  4. 4. VoIP uses the Internet to transmit voice, which has its advantages as well as disadvantages Introduction Connectivity through the Internet Cloud • Internet Telephony or VoIP (Voice‐over Internet Protocol) is a term for the technologies that use the Computer IP Phone Internet P t l packet‐switched connections t I t t Protocols k t it h d ti to exchange voice• It uses the more efficient route of Internet to transmit voice after breaking them into numerous digital packets unlike Public Switched Telephone Network (PSTN) which use a dedicated line• This technology allows numerous users to send information over the same line, providing a more efficient utilization of the telecommunications Internet  infrastructure• Due to its effective line capacity and use of the Cloud Internet, additional features like call conferencing and roaming do not cost extra to the consumer Mobile Phone Fixed Phone• Q lit of service (Q S) th Quality f i (QoS) through V IP d h VoIP depends d primarily on the quality of Internet connection used• Good bandwidth provides comparable quality but slowing down of the connection might result in loss of quality and call drops• Power failures result in non‐functioning of VoIP VoIP MARKET – INDIA.PPT 4
  5. 5. PCs, Mobile Phones, Fixed Phones and IP Phones can be used as terminals to access VoIP services Terminations allowed in Classification – by terminals used India (for ISPs) currently Domestic International Net  Net Packets connected    • Voice packets are transmitted Instrument to  Internet Net  over the Internet connected  Instrument Packets PSTN signals • Voice packets travel to a gateway Net    over the Internet connected  Gateway • Converted into PSTN signalsInstrument to Conventional  • Transmitted by the local Phone telephone infrastructure to the Packets receiver’s telephone PSTN signals PSTN signals • PSTN signals from the phone g p travel to the gateway via the local  Conventional  telephone infrastructure Phone to Conventional  Gateway Gateway • Converted into packets which Phone travel over the Internet • Follow the reverse process to Packets Internet Packets reach the receiver VoIP MARKET – INDIA.PPT 5
  6. 6. Internet service providers, gateways and access service providers  are the major revenue generators from VoIP‐based services  Business ModelNet connected PC to Net connected PC Internet Service  Internet Service Provider Net connected  Consumer pays only for the Internet connection. No extra charge is incurred for the communication Net connected  PC PCNet connected Instrument to Conventional Phone Internet Service  Access Service  Provider Provider* Gateway y Net connected  Consumer generally pays a monthly flat‐rate. Pulse‐rate plans also exist for services to various countries Conventional  Instrument PhoneConventional Phone to Conventional PhoneConventional Phone to Conventional Phone Access Service  Internet Service  Access Service  Provider Provider Provider* Gateway Gateway Conventional  Biggest challenger to PSTN services. Revenues are split among various parties as per the revenue model Conventional  Phone Phone* Foreign Service Provider, in case of International Calls VoIP MARKET – INDIA.PPT 6
  7. 7. Call‐rates in India can witness significant positive changes with the usage of VoIP‐based services Proposed Revenue Model for Phone‐Phone through VoIP‐based servicesLocal‐call for INR 0.1 Access Service  Access Service Internet Service  Internet Service Access Service  Access Service Provider Provider Provider Gateway Gateway INR 0.0 INR 0.0 INR 0.0Conventional  Conventional Phone Bandwidth cost: INR 0.1 PhoneSTD call (NLD) for INR 0.5 Access Service  Internet Service  Access Service  Provider Provider Provider Gateway y Gateway y INR 0.3 INR 0.1 INR 0.0Conventional  Conventional Phone Bandwidth cost: INR 0.1 PhoneISD call (ILD) for INR 1.0ISD call (ILD) for INR 1.0 Access Service  Internet Service  Foreign Service  Provider Provider Provider Gateway Gateway INR 0.3 INR 0.2 INR 0.4Conventional Conventional Conventional  ConventionalPhone Bandwidth cost: INR 0.1 Phone VoIP MARKET – INDIA.PPT 7
  8. 8. •Introduction•Regulations on VoIP in India g•Market Overview gg•Factors affecting growth•Competition Appendix•Appendix VoIP MARKET – INDIA.PPT 8
  9. 9. VoIP services in India have gone through drastic regulatory measures, directly impacting the future of the marketVoIP – History1999• DoT bans any form of Internet Telephony in India (only allowed within closed user group)2002• On TRAI’s recommendation DoT opened up the telecom sector to VoIP in a limited manner On TRAI s recommendation,  DoT opened up the telecom sector to VoIP in a limited manner2005• DoT permits unrestricted Internet Telephony to only access providers in India2006• DoT introduced unrestricted telephony to access providers and restricted approach for Internet Service Providers• ISPs offering IP telephony   asked to pay 6% of revenues as licence fee  cannot provide termination in India nor offer carriage in India2008 In August 2008, TRAI, in order to open up the Internet telephony market in India, proposed unrestricted VoIP‐based  g , , p p p y ,p p services approach for the ISPs as well VoIP MARKET – INDIA.PPT 9
  10. 10. Current proposal offers the much needed boost to the VoIP‐ based services in the country Salient features of the recommendations • Level Playing Field: Internet telephony may be permitted to Internet Service Providers (ISPs) with permission to provide Internet telephony calls to PSTN and vice‐versa within country and necessary amendments made in the license provisions • Interconnection: National Long Distance (NLD) Operators shall be permitted to connect to ISPs through public Internet to facilitate termination of Internet telephony calls on PSTN and vice‐versa; including among ISPs, both within telecom circle as well as across the telecom circles • NLD shall make suitable commercial and technical arrangements with access providers (PSTN/PLMN) for unrestricted Internet telephony • Numbering: TEC shall identify distinct number resources for Internet Telephony subscribers •EEmergency calling number: I lli b Internet telephony service providers may b encouraged to f ili l h i id be d facilitate access to emergency number calls; b ll however they may not be mandated to provide such services at present • Lawful Interception and Monitoring: Each Service provider intended to provide Internet telephony service within country shall install Lawful Interception (LI) equipment fulfilling all the requirements stipulated by the security agencies • Quality of Service: QoS on Internet telephony may be left to market forces at present DoT’s Current Ruling• The Department of Telecom (DoT) has recently given the green light to Internet telephony within the country, but the guidelines are yet Current Scenario Proposed Scenario to be notified• Licence Fee: An entry fee of INR 430 million has been proposed by Unrestricted  Service Regulation Limited Services Services DoT for the ISPs wanting to offer VoIP based telephony services on a pan‐India basis. Regional services would incur a lesser fee Licence Fees max of INR 2 mn 430 mn• Sharing of Annual Revenues: ISPs that obtain a licence for VoIP % of AGR 6% 9% based b d services within the country might b asked to share 9% of i i hi h i h be k d h f their annual service revenues with the government VoIP MARKET – INDIA.PPT 10
  11. 11. •Introduction•Regulations on VoIP in India g•Market Overview gg•Factors affecting growth•Competition Appendix•Appendix VoIP MARKET – INDIA.PPT 11
  12. 12. VoIP market in India is yet to take‐off, although numbers  indicate immense growth potential Overview ILD Outgoing Calls MoU (Wireless only)* • Current call‐rates in India promote intra‐nation In mn calling but act as a barrier to International Long 6,000 5,534 +68% Distance (ILD) calling Di t lli • Still, ILD outgoing calls accounted for 5.5 bn minutes 4,000 3,226 in 2009 from wireless phones alone, witnessing a 1,962 2,000 68% growth between 2007‐2009 • Inspite of the fact that VoIP offers low cost ILD 0 service, Minutes of Usage (MoU) account to less than 2007 2008 2009 1/10th of the ILD outgoing calls VoIP ‐ Minutes of Usage (MoU) • These figures indicate the impact of government regulation on the VoIP services market in India but g In mn Quarterly y In mn also exemplify its future prospects once the market is 150 Yearly 600 opened up 129 133 133 132 121 • At the end of March 2009, ISPs reporting the 112 115 112 450 services, generated INR 114.1 mn worth revenues 102 from I t f Internet T l h t Telephony 100 89 78 78 478 509 • The reported MoU have 300  Grown 21% year‐on‐year between 2007‐2009 347  Increased considerably ever since the recommendations by 50 150 TRAI were published in August, 2008 Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar ’06 ’06 ’06 ’07 ’07 ’07 ’07 ’08 ’08 ’08 ’08 ’09* Approximate figures VoIP MARKET – INDIA.PPT 12
  13. 13. •Introduction•Regulations on VoIP in India g•Market Overview gg•Factors affecting growth•Competition Appendix•Appendix VoIP MARKET – INDIA.PPT 13
  14. 14. Factors affecting growth Low call‐rates • Low‐cost call‐rates are the biggest driver  of VoIP services • PSTN ll t PSTN call‐rates expected to be slashed by  t dt b l h db atleast 50% with advent of unrestricted  VoIP servicesEnd user segment ‐ EE d Enterprise i Internet penetration I i• Target group ranges from large MNCs to  • High speed & good connectivity Internet  Factors  SMEs are a prerequisite• Developing nature of the country  affecting  • Increasing Internet subscriber base offers  promotes cross border businesses b d b i growth immense growth potential i h i l End user segment ‐ End user segment Consumer • India has more than 400 mn telecom  subscribers • Low spending power of an average Indian  make the initial infrastructure  make the initial infrastructure unaffordable VoIP MARKET – INDIA.PPT 14
  15. 15. Effective infrastructure usage in VoIP cuts down call‐rates drasticallyCall‐Rates Comparison Regular v/s VoIP Call‐Rates Comparison ‐ ILD•Low‐cost call‐rates are the biggest driver of Wireline  Wireless VoIP Internet Telephony in any economy INR/min. (BSNL) (Vodafone) (MTNL)•In the current Indian scenario, International USA 7.2 6.4 1 callers are the biggest gainers from VoIP‐based Middle East 9.6 11 6 services Singapore 9.6 6.4 1•Call‐rates from Internet Telephony to USA and Call rates Europe 9.6 6.4 1 Europe are priced equivalent to a local call (through PSTN) in India•Current VoIP providers in India offer service VoIP Tariff plans ‐ by providers packages which allow unlimited calls to locations like USA & Canada, UK, with a flat World Phone Tariff* monthly fee Unlimited calls to USA & Canada INR 1995•Opening up of the Indian markets to Unlimited calls to UK, USA & Canada INR 2995 unrestricted t l h t i t d telephony would d i d ld drive down call ll Swiftfone Tariff* rates to minimal, promoting stiff competition 6000 minutes to UK, US & Canada INR 4000 among service providers 500 minutes to UK, US & Canada INR 600 * One‐time costs not included VoIP MARKET – INDIA.PPT 15
  16. 16. Although Internet penetration is increasing rapidly, the current numbers reflect the lack of broadband infrastructureInternet – a prerequisite Internet subscribers• High speed & good connectivity Internet is a Dial‐up Subscribers prerequisite for VoIP, which becomes a major barrier Broadband Subscribers for the Indian markets where Internet penetration is Broadband to Dial‐up Ratio at just 4.3% In mn +5% 14 12.9 13.5 1.0• The high installation charges for a Broadband 11.7 12.2 10.4 11.1 connection deters the common Indian’s interest of 9.3 9.2 9.6 0.85 0.8 personally owning the service 0.6 06 7 0.4• But, the increasing Internet subscriber numbers, 6.2 0.34 3.9 4.4 4.9 5.5 0.2 which have risen from 11.1 mn in March 2008 to 13.5 2.3 2.4 2.7 3.1 0 0.0 mn in March 2009, offer healthy future prospects Mar Jun Sep Dec Mar Jun Sep Dec Mar• The growth rate of 5% Q‐o‐Q in Internet subscriber ’07 ’07 ’07 ’07 ’08 ’08 ’08 ’08 ’09 base has been dominated by the increase in Number of PCOs in India Broadband Internet subscribers rather than Dial‐up In mn users, which is favorable for VoIP 7• Cyber Café‐cum‐PCOs could act as the bridge for VoIP 6.2 6.2 6.3 6.0 6.2 5.9 services to penetrate rural markets, as a single 6 5.6 5.6 5.8 5.1 5.3 broadband connection can connect multiple phones 5 4.5 4.2 offering low‐cost calls 4 Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar ’06 ’06 ’06 ’06 ’07 ’07 ’07 ’07 ’08 ’08 ’08 ’08 ’09 VoIP MARKET – INDIA.PPT 16
  17. 17. The consumer segment offers quantity, but the revenues would be hard to come by from this segmentEnd User Segment ‐ Consumer Statistics ‐ Telecom subscribers• India has 429.72 mn telecom subscribers, out of Total Subscribers  429.72 mn which 91% are wireless subscribers Wireline Subscribers Wireline Subscribers 391.76 mn 391 76 mn• Although, this indicates immense potential for Wireless Subscribers 37.96 mn services like Mobile‐VoIP, the requirement of a smartphone, a data connection and good Urban Subscribers 72% connectivity to access these services act as a huge Rural Subscribers 28% barrier• Phones supporting high‐end services like 3G are costly and not so easily affordable by the average Indian 28% Rural• Numbers indicate that 52% of the wireless Wireline subscribers possess mobile phones which are capable 9% of accessing only basic services• But, the introduction of low‐cost VoIP services, 3G and WiMAX (to be auctioned by end of year 2009‐10) would drive smartphone usage bringing about 72% Urban 91% commendable changes in the Indian telecom industry Wireless VoIP MARKET – INDIA.PPT 17
  18. 18. Enterprises offer the biggest growth prospects for VoIP services in IndiaEnd User Segment ‐ Enterprise Indian Export – Year‐wise • The target users in the enterprise segment range INR bn Revenues from Export from large MNCs operating in the country to the 8000 Small Medium E t S ll & M di Enterprises (SME ) i (SMEs) 6402 +22%• The primary reasons which drive VoIP usage in the 6000 5718 enterprise segment are a need to have an integrated 4564 3753 phone system across multiple locations, scalability, 4000 2934 operational cost savings and to converge voice and data networks 2000• India has been a major hub for outsourced work; 0 developing nature of the country has attracted large 2004 2005 2006 2007 2008 MNCs to setup their offices in the country Revenues – IT Industry Revenues – IT Industry• The domestic market on the other hand, is primarily SME driven, who operate region‐wise or on a pan‐ USD bn India basis 80 Exports 72 Domestic 64• Captive networks or close user groups (CUGs) in 60 India, have b I di h been allowed t use V IP services ever ll d to VoIP i 48 37 47 since 1999, promoting acceptability of the service 40 41 28 32 across enterprises 22 24• These factors coupled with a healthy GDP growth 20 18 13 23 24 rate might fuel sustainable increase in VoIP usage 8 10 13 16 0 across enterprises 2004 2005 2006 2007 2008 2009 VoIP MARKET – INDIA.PPT 18
  19. 19. •Introduction•Regulations on VoIP in India g•Market Overview gg•Factors affecting growth•Competition Appendix•Appendix VoIP MARKET – INDIA.PPT 19
  20. 20. VoIP market in India is currently fragmented, but is expected to be organized once the ISPs are allowed unrestricted services Competition Year‐wise addition of VoIP Licenses • Since 2002, when DoT opened up the Indian market to 200 Additions 169 Internet Telephony, 169* VoIP licences have been issued 1 Total • Th V IP li The VoIP licences saw a d ti i drastic increase i 2008 i th wake of in in the k f 150 43 TRAI’s recommendations for unrestricted Internet Telephony 14 10 0 • Only 34 licence holders are reporting Internet Telephony 100 12 22 168 Services (see appendix), as of March 2009 • At present all telecom operators (offering wireline and p p ( g 50 67 wireless services) have the licence to provide “unrestricted” Internet Telephony in India 0 • But, even after lapse of approximately 3 years, these services 2002 2003 2004 2005 2006 2007 2008 2009* have not been started by the operators Market Share of major ISPs •P Presently, BSNL h ld th l tl holds the largest market share i t t k t h in terms of f Internet Telephony is  BSNL customer base for Internet related services in India provided by ISPs holding  54% MTNL • MTNL, Data Infosys and YOU Telecom are the large market a cumulative of more  share holders who report Internet Telephony services to TRAI than three‐fourth of the  Bharti market share • Under‐development of legal Internet Telephony services in p g p y Reliance India has led to unlicensed service providers exploiting the Sify 1% large consumer base 4% Tata Giants like Bharti  3% • The grey market for Internet Telephony in India has evolved and Reliance have  2% 3% 16% Hathway considerably leading to a DoT’s notice to all ISPs, to block the not yet forayed  3% Data Infosys into providing  7% 8% websites of around 39 foreign firms offering unlicensed VoIP‐based services You Telecom Internet Telephony services in India Others* As of 31st January, 2009 VoIP MARKET – INDIA.PPT 20
  21. 21. Services offered by few Internet Telephony licence holders in India Pulse  Trak Online  City Online Data Infosys Opto Network Swiftmail YOU Telecom World Phone Telesystems NetPlans forResidential n/a       SME n/a       Corporate   n/a     Call Center   n/a     Monthly Flat‐Rate Plans to INR 5100 for  INR 2499 for USA    INR 2500 11000 min 3000 min  INR 1995 INR 5100 for  INR 2499 for Canada    INR 2500 11000 min 3000 min  INR 1995 INR 5100 for  INR 5100 for INR 2999 for  INR 2999 forUK    INR 3000 11000 min 3000 min  INR 2995Australia    INR 3500    INR 3495Asia Pacific        Middle East        Services ProvidedInstallation n/a n/a n/a n/a n/a n/a n/a INR 1000Soft Phone        IP Phone        Adapter         VoIP MARKET – INDIA.PPT 21
  22. 22. •Introduction•Regulations on VoIP in India g•Market Overview gg•Factors affecting growth•Competition Appendix•Appendix VoIP MARKET – INDIA.PPT 22
  23. 23. Appendix 1: Internet Service Providers reporting VoIP Services • Apna Telelink Ltd. • Opto Network Pvt. Ltd. • Asianet Satellite Communications Ltd. • Narmada Cyberzone Pvt Ltd • Blazenet Ltd • Pulse Telesystems Pvt. Ltd. • Broadband Pacenet (I) Pvt. Ltd. () • Sify Ltd. • City Online Services Ltd. • Southern Online Bio Technologies Ltd. • CJ Online Pvt. Ltd. • Swiftmail Communications Ltd • Data Infosys Ltd. • Swastik Netvision Telecom P. Ltd. • DelDSL Internet Pvt. Ltd. • Trak Online Net India Pvt.Ltd • Digital2Virtual ISP Pvt. Ltd. • Trikon Electronics Pvt. Ltd. • Dishnet Wireless Ltd. • Tata Communications Ltd (Videsh Sanchar Nigam Ltd.) • Karuturi Telecom Pvt Ltd(Estel Communications Pvt Ltd ) Karuturi Telecom Pvt Ltd(Estel Communications Pvt. Ltd.) • Tata Communications Internet Services Ltd Tata Communications Internet Services Ltd • Mahanagar Telephone Nigam Ltd. • YOU Telecom India Pvt. Ltd. • Manipal Ecommerce Ltd. • World Phone Internet Services Pvt Ltd • My Own Infotech Pvt. Ltd. • Cordia L T Communications Private Ltd • Mylai Karpagambal Information Systems (P) Ltd. • IOL Netcom Ltd • NetMagic Solutions (P) Ltd. • Tata Teleservices (Maharashtra) limited • Nettlinx Ltd. • IKF Technologies Ltd VoIP MARKET – INDIA.PPT 23
  24. 24. Thank you for your timeFor an updated report or any customized research requirements, please contact:Gaurav KumarE‐Mail:; sales@netscribes.comPhone: +91 33 4064 6214; +91 983 030 9715Netscribes’ Services:RESEARCH & ANALYTICSRESEARCH & ANALYTICS MARKET INTELLIGENCE MARKET INTELLIGENCE CONTENT SOLUTIONS CONTENT SOLUTIONSInvestment Research Market Monitoring & Competitive  Social Media MarketingEnterprise Market Research Intelligence Marcom Support ServicesPatent Research Sales & Prospect Intelligence Content Management ServicesSyndicated Market ResearchS di t d M k t R h Listening & Media Monitoring Li t i & M di M it i Book Packaging Services B kP k i S i Brand SurveillanceFor further details, visit us at: www.netscribes.comAbout NetscribesNetscribes supports the organic and inorganic growth objectives of global corporations through a combination of Enterprise Market, Investment & Patent Research, Market & Sales Intelligence, Social Media Monitoring & Management and Custom Publishing solution.Disclaimer: This report is published for general information only. High standards have been used for preparing this market research report; Disclaimer: This report is published for general information only High standards have been used for preparing this market research report;however, Netscribes, Inc. or “Netscribes” is not responsible for any loss or damage arising from use of this document. This document is the sole property of Netscribes and prior permission is required for guidelines on reproduction. VoIP MARKET – INDIA.PPT 24