Telecom indusTry in india since 1991 By: umar Farooq a 16 ll firstname.lastname@example.org
INTRODUCTION Postal means of communication was the only mean communication until the year 1850. In 1850 experimental electric telegraph started for first time in India between Calcutta (Kolkata). In 1851, it was opened for the use of the British East India Company. Subsequently construction of telegraph started throughout India. A separate department was opened to the public in 1854. Dr.William O’Shaughnessy, was the one who pioneered the telegraph and telephone in India. In 1980 when the private sector was allowed in telecommunications equipment manufacturing the first wind of reforms in telecommunications sector began to flow.
cont…Today India has the second largest number of telephone subscribers with 941.81 mn ( July 2012) in the world accounting 12%.Telecom is the third major sector attracting FDI inflows after services and computer software sector.FDI in telecom sector during April-June 2012 stood at US$ 8 million. GSM continues to be the dominant technology for wireless phones with an 87.90 % share.Mobile phones accounts for nearly 96.60 % of the total telecom subscriptions.Mobile tariffs in India are the second lowest in the world after Bangladesh.Telecom sector contributes 3.7% to the total GDP of India.
Reforms in Telecom sector since early 1990s1991-92: On 24th July 1991, Government announced the New Economic Policy. Telecom Manufacturing Equipment license was delicensed in 1991. 1992-93:Value added services were opened for private and foreign players on franchise or license basis.1994-95: The Government announced a National Telecom Policy in September 1994
1996-97: TRAI was set up as an autonomous body to separate the regulatory functions from policy formulations and operational functions. Internet Policy was finalized.1998-99:FDI up to 49 per cent of total equity, subject to license, permitted in companies providing Global Mobile Personal Communication (GMPC) by satellite services.1999-001. National Telecom Policy 1999 was announced which allowed multiple fixed Services operators and opened long distance services to private operators.DOT/MTNL was permitted to start cellular mobile
2000-01:TRAI Act was amended. The Amendment clarified and strengthened the recommendatory power of TRAI.Department of Telecom creating Bharat Sanchar Nigam Limited.Reduction in STD & ISD rates.2001-02:1. Communication Convergence Bill, was introduced in August 2001.Wireless in Local Loop (WLL) was introduced for providing telephone connection in urban, semi-urban and rural areas.2002-031. International long distance business opened for unrestricted entry. Telephony on internet permitted in April 2002
2004-05:Broadband Policy announced on 14th October 2004.BSNL and MTNL launched broadband services on 14th January 2005.TRAI announced the reduction by 41 per cent on ISD calls and by 61 per cent on STD calls.2005-20061. Budget 2005-2006 cleared a hike in FDI ceiling to 74 per cent from the earlier limit of 49 per cent.BSNL and MTNL launched the One-India Plan‘.BSNL announced 33 per cent reduction in call charges for all the countries for international calls.
2007-10 3G guidelines issued spectrum allocation through auction, foreign players allowed to bid.TRAI announces rules & regulations to be followed for mobile number portability in 2009.BSNL 1st one to launch WIMAX service in 2010.2011-2012Airtel launches 4G service in April 2012.
Major players of telecom industry & year of establishment1) Bhar t i air t el-19852) Tat a communicat ions-19863) MTNL-19864) I dea cellular -19955) Tat a t eleser vices-19966) TTML-19987) Air cel-19998) Reliance communicat ions-19999) BSNL-200010) Vodaf one Essar -200711) Uninor 2009
Market LeaderThere are four major companies in telecom industry. Airtel, Reliance,Vodafone,Idea and BSNL.Airtel lead with 28.09% market share. Vodafone on the 2nd place with
Key Drivers Mobile value added services like: Mobile banking, Mobile education, Health information services, Agriculture and Entertainment, Internet services. Growth of e-business. Low cost hand sets. Rural population is the key growth driver of Indias telecom industry. Market-driven factors such as planned expansion of networks Increasing use of 3G, Wimax(wireless network) and 4G Increase of Mobile users.(rose to 944.81 million in July 2012) Digitization of Television Broadcast Network Free Market system . ( e.g. Airtel Rwanda) Mergers and Acquisitions (M&A) Increase in IT users. Growth of Manufacturing and Service Industries.
Challenges FACED BY TELECOMINDUSTRY Limited spectrum availability and interconnection charges between the private and state operators. Telecom manufacturing in India is not in pace. With only a few equipment manufacturers currently operating in the country, most of the telecom equipment is imported as the country lags behind in terms of telecom R&D. Lack of infrastructure in semi-rural and rural areas, which makes it difficult to make inroads into this market segment as service providers have to incur a huge initial fixed cost. One of the major challenge is the absence of a uniform approval process across the country for setting up telecom towers and other infrastructure. Inadequate utilization of existing towers. Multiple levies and high taxes on the set up of mobile towers. lack of reliable power for telecom towers and higher tariffs on telecom sites. This increases the dependence on diesel- fuelled power sources, which is considered expensive and more harmful to the environment.
Impact of global crisisAs we know world economy is fighting with economic slow down.It seems something special about the telecom industry which renders it partially immune to the worst effect of the down turn.Total base of connection in world is 3.2 bln.There was less impact of global crisis on Indian telecom industry as India became the 1st country in the world new connections in a month.
Conclusions and Recommendations A fair and transparent Spectrum Policy should be ensured by the Government. Equal Access should be ensured to provide support for the achievement of Universal Service, an appropriate financing mechanism be evolved. Provision of right of way could be given by State Governments on simple commercial terms without any special conditions Tax laws should be amended to permit efficiency with respect to consolidation and restructuring of the business of telecom operators. Foreign Investment Thresholds should be encouraged. GOI to increase rural infrastructure (Mainly Power)