India StudyTEKES NETS and FENIX Programs            Vipul Chauhan           Country Manager             Finpro India      ...
Table of Contents•   Chapter 1: Market Overview•   Chapter 2: Service Providers•   Chapter 3: Internet Service Providers• ...
Executive Summary•   Lowered call tariffs are a major industry growth driver•   Wireless Subscriber growth will continue a...
Chapter OneMARKET OVERVIEW     VIPUL CHAUHAN
Evolution of Communications in India                                                                                      ...
Evolution of Wireless communications                          in India                                No 3G Licenses have ...
Circle and License Areas Policy  • Entire Nation is    divided into 4 circles    – Metros, A, B & C   Metro circle – Delhi...
Call Tariffs in IndiaCall Specifications                 Tariff Basis                                       TariffsIncomin...
Fixed Line Segment Overview• A monopoly sector controlled by Government until  1996• Today 6 service providers, 2 State Ow...
Wireless Segment Overview•   29 million GSM, 9 million CDMA subscribers (June 2004)•   Both GSM 900 & 1800 present•   CDMA...
Mobile Value Chain Analysis                                                                                     Billing   ...
Road to 3G in India              Digital generations        2G                               2.5G                         ...
ISP Segment Overview            •   Internet Services launched in India in August 1995            •   189 operational ISPs...
Telecom Software Vendors            • Outsourcing gave boost to the Telecom Software              Industry            • In...
Content Business Overview• Indian content market is mainly SMS driven• Almost 1 billion SMS per month• Most of the downloa...
Industry Growth Drivers 1(2)            • Fixed Line Segment                     • Capacity expansion of fixed line exchan...
Industry Growth Drivers 2 of 2            • ISPs                •   Advanced communication options like instant messenger ...
Growth Inhibitors• Cultural misunderstandings• Project management difficulties• Infrastructure failures• Language barriers...
Market Regulations - Telecom            • The industry is governed under National Telecom Policy -              1999      ...
Market Regulations - ISPs            •   Industry governed under Indian Telegraph Act, 1885, Indian Wireless              ...
IPR & DRM Issues            •   Indian Copyright Act 1957 governs the IPR and Copyright issues            •   India recogn...
Market SWOT Analysis Strenghts                                                                    Weaknesses              ...
CHAPTER TWOSERVICE PROVIDERS     Vipul Chauhan
Operators – Fixed, CDMA and GSM FIXED LINE                                                                               W...
Telecommunication Segments       Services                Entry Policy                          Players in operation       ...
Fixed Line Operators
Fixed Line Operators Subscriber Base                            34,862,000  BSNL is a public  sector giant with a  huge ma...
Fixed Line Market Share                                                  Shyam                                            ...
Operators          Operator        Subscribers                                 Range of Services                          ...
Operators    Operator     Subscribers                                Range of Services                              Servic...
Fixed Vs. Mobile - Statistics              45                                                                             ...
GSM Operators
GSM Segment Overview• GSM introduced in 1995• One of the fastest growing mobile markets in the World for  GSM• Subscriber ...
GSM Growth Drivers 1 (2)•   1st wireless communication standard in India•   Nationwide roaming available in Prepaid and Po...
GSM Growth Drivers 2 (2)  Call costs have fallen               0.31  drastically over 90%  Fallen call costs have been a  ...
Wireless Subscribers Growth – GSM    India presently is one of the                                                        ...
Indian GSM Industry Revenues                                                                                            1....
Market Developments since 2001      in 2001                                                                    in 2004    ...
Mobile Operators Subscriber Base -                                            GSM Bharti is the undisputed   6,761,367 lea...
Market Share – GSM operatorsBig private operators like Bharti and Hutch eachhave recently acquired 2 other smaller operato...
Operator ARPU for 2003-04                                                                               9.90    ARPU dropp...
ARPU vs. Subscriber Statistics                                                                                            ...
PrePaid vs. PostPaid Subscribers                                                PostPaid                                  ...
GSM Operators Business Model         Portals                                                       In India, third party b...
VAS Awareness in India                                           Basic VAS                                                ...
GSM OPERATOR- BHARTI            •   Brand Name:                      AIRTEL            •   Network:                       ...
BHARTI  Services                                                        Business Model and Revenue Sources• VOICE BASED   ...
HUTCHISON TELECOM•   Brand Name:                    HUTCH•   Network:                       GSM 900, GSM 1800, GPRS, EDGE•...
HUTCHISON TELECOM  Services                                                              Business Model and Revenue Source...
IDEA•   Brand Name:                                IDEA•   Network:                                   GSM 900, 1800, GPRS,...
IDEA  Services                                                              Business Model and Revenue Sources• VOICE BASE...
BPL Mobile•   Brand Name:                                BPL•   Network:                                   GSM 900, 1800, ...
BPL Mobile   Services                                                               Business Model and Revenue Sources • V...
Expansion Strategy of GSM Operators –                                    d                                             “Ac...
CDMA Operators
Understanding WLL(F) & WLL (M)   WLL (M) = Wireless in Local Loop (Mobile)                             WLL (M) = Wireless ...
CDMA Segment overview• Present Standard: CDMA 2000 1x• Started in March 2003• Offered by 6 operators• LG and Samsung hold ...
CDMA growth drivers                                                                                                 Growth...
CDMA Operator Subscriber Base                             6,414,047                                                       ...
CDMA Operators Market Share                                                                                               ...
CDMA Operator Business Model                                                         Similar to GSM model, third party    ...
CDMA Operators - RELIANCE• Brand Name:                    RIM- Reliance India Mobile• Network:                       CDMA ...
Reliance  Services                                                                 Business Model and Revenue Sources• VOI...
TATA INDICOM• Brand Name:                               TATA or TATA Indicom• Network:                                  CD...
TATA INDICOM  Services                                                                 Business Model and Revenue Sources•...
CHAPTER THREEINTERNET SERVICE   PROVIDERS     Priyanka Kapoor      Vipul Chauhan
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  1. 1. India StudyTEKES NETS and FENIX Programs Vipul Chauhan Country Manager Finpro India 10. July 2004
  2. 2. Table of Contents• Chapter 1: Market Overview• Chapter 2: Service Providers• Chapter 3: Internet Service Providers• Chapter 4: Equipment Manufacturers• Chapter 5: Content Business• Chapter 6: Telecom Software Vendors• Chapter 7: Future Challenges• Chapter 8: Strategies• Chapter 9: Finnish Companies in India• Chapter 10: Conclusions India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 2
  3. 3. Executive Summary• Lowered call tariffs are a major industry growth driver• Wireless Subscriber growth will continue around 10m users/year• India is primarily a low priced handset market (100-150 Euro)• Prepaid will continue to dominate in both GSM and CDMA segments• Operators are experiencing low ARPU because of lowered call tariffs, thus they are focusing upon content aspect• Games and content should to be developed keeping local trends and tastes in mind• GPRS and MMS are here, but fail to gain subscribers as compatible handsets are expensive• SMS based applications, services are most sucessful so far• Internet penetration is low but the industry is growing at a rapid pace• Broadband & Wi-Fi are here, but too expensive for general public• Dial-in is the most preferred mode for internet access• To sell services to Indian companies, you need a local contact India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 3
  4. 4. Chapter OneMARKET OVERVIEW VIPUL CHAUHAN
  5. 5. Evolution of Communications in India EDGE CDMA 2000 1x Wi-Fi GPRS Broadband GSM Internet Cable TV FirstPhone1882 1990 1995 2001-02 2003 2004 - onwards India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 5
  6. 6. Evolution of Wireless communications in India No 3G Licenses have been issued so far W-CDMA CDMA 3G 2000 1x EVDO TD- SCDMA CDMA GPRS 2.5G 2000 1x MMS 2G GSM SMS WAP 1996 1999-00 2001 2002 -03 2003 2004 - onwards India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 6The first GSM call was made in 1996 on Bharti Cellular Netwrok in New Delhi.Dual Band GSM 900 & 1800.SMS service started in the year 2000Present CDMA standard is CDMA 2000 1X
  7. 7. Circle and License Areas Policy • Entire Nation is divided into 4 circles – Metros, A, B & C Metro circle – Delhi, Mumbai, Kolkata & Chennai A Circle: States of Maharshtra, Gujarat, Andhra, Karnataka & Tamilnadu B Circle: States of Kerala, Punjab, Haryana, Uttar Pradesh, Rajasthan & Madhya Pradesh Circle Definition: Areas classified on the basis of C Circle: States of Faded area in the regions shows subscriber and revenue Himachal, Bihar, Orissa, potential, where Metro cellular network coverage Assam, Kashmir and circle has the highest North East States potential and C circle has India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 7 the lowestEach circle requires a different license. As in case of Metro cities, each city license issold separately.Operators can sell their license to any operator in case they are willing to exit fromthe license area.
  8. 8. Call Tariffs in IndiaCall Specifications Tariff Basis TariffsIncoming Calls (fixed to • All incoming calls on • All incoming calls are free in Home Network mobiles are free since (Postpaid & Prepaid)mobile, mobile to mobile, mobile April 1 2002to fixed) • Incoming is not free on roaming, 0,02 Euro – 0,07 • Incoming calls on fixed Euro/minute line are free • Distance specific call • M to M outgoing in home network: 0,04 - 0,04Outgoing Calls tariffs i.e. home network, Euro/minute(all outgoing calls on all 51 - 200 kms, 200- 500 • M to M outgoing Intercity call < 200 km: 0,04 Euro/minutenetworks (roaming, kms, more than 500 kms • M to M outgoing intercity call > 500 km: 0,07 Euro/minuteinterconnected) are priced and Internationalbetween 0,02 – 0,8 • M to Fixed outgoing home network: 0,05 EuroEuro/minute) • Calling Party Pays • M to Fixed outgoing < 200 km: 0,06 Euro – 0,08 Euro • M to Fixed outgoing > 500 km: 0,12 Euro • M to International: 0,80 Euro – 0,35 Euro • SMS Receiving: Free • SMS Sending: 0,03 Euro (domestic) 0,09 Euro (international) India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 8India presently follows a CPP model, whereby calling party pays.Incoming calls were made free since April 1, 2002 and that has substantially boosted the subscriber growth ratein India. However, making incoming calls free also reduced operator ARPU.For outgoing calls there are multi-level tariffs; (applicable to all Mobile and fixed)•Mobile to mobile & Vice Versa•Mobile to fixed & Vice Versa•Mobile to CDMA & Vice Versa•Mobile to International & Vice VersaRoaming is another important aspect when talking about voice revenuesAll Indian operators have bilateral agreements among themselves for providing national roaming facility (GSM+ CDMA operators).For International roaming, Indian operators have tied up with other operators elsewhere in the world toprovide International roaming services.Tariffs in India are set as per the distance between the cities. There are four levels for this tariff structuringbased on distance, i.e.:•Distance upto 51 KM is classified as home network•Distance from 51-200 KM is the first level for determining inter-city calls, followed by•200-500 KM•500 and beyond KMInternational calls are tariffed as per the regions like US and Canada, Europe and Pacific rim etc.
  9. 9. Fixed Line Segment Overview• A monopoly sector controlled by Government until 1996• Today 6 service providers, 2 State Owned, rest private• Subscriber base 43,18 million (May 2004)• Sector growth slowed since mobile tariffs fell• Only 1,83 million subscribers are added over last one year (May 2003-May 2004)• Increased competition from CDMA Services India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 9
  10. 10. Wireless Segment Overview• 29 million GSM, 9 million CDMA subscribers (June 2004)• Both GSM 900 & 1800 present• CDMA operators use 1800 Mhz Band• Number portability is missing• Government is yet to make decision on 3G spectrum• Indias telecom sector is carved into 23 circles or zones, classified as "metro" and "A", "B" and "C" circles, based on subscriber potential• Unified licensing introduced in 2004• As a part of Unified license policy, 15% of operator revenues go to the government• To operate, each circle requires a different license• Lowest call tariffs in the world -- as low as one Euro cent a minute on average India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 10
  11. 11. Mobile Value Chain Analysis Billing MMS, GPRS Application Service Provider (ASP) Hosted Application Instant Messenger Infrastructure Network Equipment Equipment Network Subscription Handset Vendors Vendors Operators resellers Resellers End User Revenue Sharing Model Content Content Provider Content Ringtones, Logos, Developers Aggregators/ Email, Wallpaper Portals Downloads India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 11In GSM segment opeartors do not offer handsets along with their subscription, likein Europe or America. Consumers have to go and buy the handsets of their choiceat numerous handset Kiosks in each city. These Kiosks are multi purpose kiosksand one can buy not only handset but also a GSM connection, phone accessoriesetc.MMS and GPRS are offered via operators, while majority of other content likeLogos, Ringtines, Picture Messages are offered via portals.When speaking of revenues, operators are in dominant position. Major share ofrevenues goes to operators. For example 80% of revenue from a Ringtonedownload goes to operator, rest to the portal.
  12. 12. Road to 3G in India Digital generations 2G 2.5G 3G GPRS, CDMA EDGE W-CDMA? No decision on Nokia, Ericsson, 3G Spectrum yet ! Motorola have delivered GPRS networks India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 12GPRS is widely offered by major operators. BPL was the first operator to LaunchGPRS in India, followed by Airtel, Hutch and Idea.Recently the two GSM operators- Hutch and Idea, unveiled their EDGE NetworksAccording to a submission made to the Telecom Regulatory body “TRAI” by T. V.Ramchandran, director-general of the Cellular Operators Association of India(COAI), “The allocation of the PCS 1900 band would not only result in a majorinterference to the services offered by operators using GSM technology but alsoblock the progress of 30 million subscribers to 3G.”There are two important components in a mobile service: uplinking (a call or datasent from your mobile phone to a base station) and downlinking (receiving a call ordata from base station to mobile phone).While uplinking, the airwaves in the PCS 1900 band clash with those in 1800 band(allotted to operators using GSM technology) that downlink the call and data.While downlinking, the PCS 1900 band interferes with the IMT 2000, which is theuplinking mode for 1920-1980 MHz paired with 2110 to 2170 Mhz (the core bandidentified by the International Telecommunications Union for 3G services).
  13. 13. ISP Segment Overview • Internet Services launched in India in August 1995 • 189 operational ISPs as of Dec. 2003 • Total Licenses issued 540 • Over 8.500 leased line customers, growth rate 9,6% • 8.850 Cyber cafes as of Dec. 2003 • Total Broadband customers: < 150.000 (DSL, ADSL) • 118 ISPs given permission to offer VoIP • Minute usage in Q4 2003 for VoIP was 20,1 million minutes, a growth of 41,5% over last quarter • ARPU: 5 € approx. • PC Penetration in India: 11 per 1.000 people • Internet users: 18 million • Internet penetration: 1,7 % of the population • PC sales in 2003-04: > 3m units, 30% growth India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 13•ISP License is one of the most liberal License, wherein no License Fee has beenlevied on the ISPs till 31st October 2003.Thereafter, a token license fee of Rs. Oneper annum is payable w.e.f. 1st November 2003.•ISPs have been permitted to set up International Gateways by having businessarrangement with Foreign Satellites Providers and Collaborators.•ISPs have been permitted to provide last mile access using Radio and Fiber Optics.•ISPs have been permitted to provide ISP Services through Cable T VInfrastructure / Operators.•The Government has initiated an ambitious plan to developed National InternetBackbone (NIB) in the country.•100% FDI allowed through automatic route to the ISP (without gateways), 74% incase of ISPs setting up International Gateways.•ISPs permitted to set up Submarine Cable Landing Stations either singly or jointlyin collaboration with International Undersea Bandwidth Carriers.•National Long Distance Services opened to private sector on non-exclusive basis.•International Long Distance Services opened up to private sector on non-exclusivebasis w.e.f. April 1, 2002•Internet Telephony Services opened up to ISPs w.e.f. April 1, 2002.•De-licensing of W-LAN in 2.4 Ghz band using IEEE 802.11b technology•Reduction of Performance Bank Guarantee by 50% for Category A & B ISPs and
  14. 14. Telecom Software Vendors • Outsourcing gave boost to the Telecom Software Industry • Industry revenue: 1,2 billion Euro (2003-04) a growth of 18% • A middle level expert costs < 600 US$ a year • Big pool of skilled workforce, 50 out of world’s 74 SEI CMM Level 5 companies are in India • Multi level services • Device architecture • Symbian, Series 60 • Content Applications • Web, GSM, GPRS, CDMA, 3G applications India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 14For the ICT industry and its customers, the primary driver for offshore outsourcingis the reduction of costs. Some estimate that costs can be reduced by 40 percentand sometimes by as much as 70 percent for offshore destinations such as India,China and the Philippines. These cost savings are directly attributed to reducedlabour and other business costs.A snapshot of average base salaries for programmers around the world shows that aUS programmer cost on average approximately US$ 63,350 in 2002, substantiallymore than many of their overseas counterparts. A professional of similar skillscosts US$ 40,000 in Australia, US$ 5880 in India, US$ 6564 in the Philippines, US$7200 in Malaysia and US$ 8952 in China.In some cases, like for China, IT and ITES outsourcing may assist global oroverseas firms to establish a presence in the region of the outsourcer (e.g. China orAsia), hence assisting those companies to expand their businesses globally andbenefiting their home economies.In the particular case of India, its success first in software development and now inIT Enabled Services (ITES) is driven by a number of additional advantages. Afocus on demonstrating quality services has proven to be a significant factor ingaining market share. According to NASSCOM, the Indian software industrycontinues to receive international recognition for its quality in softwaredevelopment. Out of the top 300 companies, more than 216 have already acquiredISO 9000, SEI or other certification. As far as SEI CMM (Software EngineeringInstitute Capability Maturity Model) Level 5 is concerned, the Indian software
  15. 15. Content Business Overview• Indian content market is mainly SMS driven• Almost 1 billion SMS per month• Most of the downloads and service requests are oriented through SMS• M-banking also available – SMS based• GPRS penetration 8-10%• Overall content market estimated at 5 million Euro• SMS and MMS account for 10% of operator ARPU• Downloadable content available through portals, operator portals• M-ticketing is missing India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 15
  16. 16. Industry Growth Drivers 1(2) • Fixed Line Segment • Capacity expansion of fixed line exchanges helped consumers avail quick connections • Quick connection availability boosted no. of fixed line connections during 1985 - 1995 • Wireless Segment • Vast geographic expanse of India acted as a catalyst to boost mobility • Low call costs since 2002 fueled the wireless segment • Narrowing gap of call costs between fixed and wireless convinced customers to subscribe to wireless connections • Nationwide roaming facilities on GSM • SMS facility • Internet + Subscription bundling • Reduced cost of handsets (affordability factor) • Customs duties have been reduced from 10% to 5% • In remote areas where providing fixed line connections was difficult, wireless did the magic • CDMA fixed wireless gave customers 3 in one advantage – Mobility, internet and messaging Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 16 IndiaUntil 1996, India was a pure fixed line market.
  17. 17. Industry Growth Drivers 2 of 2 • ISPs • Advanced communication options like instant messenger • Voice Communication through VoIP and Instant Messenger • Lowered tariffs • Broadband availability • Always on connection availability • CDMA Systems helped internet spread further India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 17•Over 78% of the Internet Users are in the age group 18 – 39 years and 75% of theInternet Users are Males.•The Capital Cities (New Delhi and Other State Capital) accounts for 79% ofInternet Connections of the Country.•More than 86% of top Corporate Houses have endorsed that Internet and E-Commerce is an integral part of their corporate strategic framework.•Over 76 % of the Internet Users use E-mail Services•Over 61% of the Users Access Internet from school, colleges, place of work andCyber Cafes while 27% access Internet from homes.•Among the career conscious and education driven middle class, Internet is seen ascritical to success in professional life.•There are approx 59 million telephone connections (including Mobile) and 8.5million PC base in India.•There are approx. 47 million Cable T V Connections out of 92 million TV Sets inthe Country
  18. 18. Growth Inhibitors• Cultural misunderstandings• Project management difficulties• Infrastructure failures• Language barriers• Political factors India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 18
  19. 19. Market Regulations - Telecom • The industry is governed under National Telecom Policy - 1999 • full competition through unrestricted private entry in almost all service sectors • end to monopoly in the national and international long distance segment • Provide a telephone on demand by 2002. • Achieve a teledensity of 7 by the year 2005 and 15 by the year 2010. • Increase the rural teledensity from 0.4% to 4% by the year 2010 with greater reliability. • Cover all villages by 2002. • Provide Internet access to all district headquarters by the year 2000. • Provide high-speed data and multimedia capability using the latest technologies to all town with a population greater than 200,000 by the year 2002. • Encourage rural telecommunications through affordable tariffs and imposing rural coverage obligations an all fixed-service providers. • Unified Licensing introduced in 2004 • No difference between fixed line and mobile segments • Operators can provide ”ANY” service(s) to their customers by using “ANY” technology India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 19The NTP 99 has been a positive milestone for the industry.After NTP 99, industry attracted foreign investments in form of equity from globalplayers like Vodafone, BT, AT&T, Warburg, Hutchison etc.In early 2004, there was a major rift among CDMA and GSM operators because oflicensing conditions. GSM operators blamed that CDMA license holders are notallowed to offer National roaming as their license permits them to offer servicewithin a Short Distnace charging area known as SDCA. The matters were taken toTelecom Dispute Settlement Tribunal TDSAT. The government howeverunderstood it basic mistake in license drafting and as a result offered UnifiedLicensing. Now all operators can offer all services using any technology platform.They will, however be supposed to pay unified license fee deficits.
  20. 20. Market Regulations - ISPs • Industry governed under Indian Telegraph Act, 1885, Indian Wireless Telegraphy Act 1933 and TRAI Act 1997 • A Company registered in India under the Companies Act, 1956 will be eligible to apply for being an ISP • Licenses area divided into Zones known as “Circles” • Three categories of licenses • A: All over India • B: 20 Territorial Telecom Circles • C: Remaining Areas • The validity of license is initially for a period of fifteen years • Interface Requirements (i) Subscriber Dial up Access 2 wire access over PSTN for modem interface. 2 wire dial up access on ISDN Basic and Primary rate interfaces. (ii) Leased Line Interface 64K, N x 64K or 2.048 Mb/s, N x 2.048 Mb/s Leased lines. Frame Relay. X.25 ATM G. 703 • ISPs will be free to fix their own tariff India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 20Since 1995, a number of countries have permitted VOIP as a technology option tothe classical PSTN as well as Internet Telephony so as to provide a cheaperalternative to classical PSTN calls. In India, the ISPs were allowed to offer InternetTelephony Services with effect from April 1, 2002. With the choice availability ofToll Quality (PSTN) and Non-Toll Quality options, Internet Telephony has thrownopen Long Distance Telephony to those sections of Society, which could not affordthe same earlier. Further, Internet Telephony is proving to be a key driver for localentrepreneurs to set up Community Information Centers / Cyber-kiosks, etc evenin small towns and villages. In fact it has made distance learning, Tele-medicine ande-governance etc a reality in Indian context.More than 90 ISPs have been granted license for offering Internet TelephonyServices. There has been a substantial growth in the Cyber Café / offering InternetTelephony Services. It is expected that Internet Telephony will provide fillip to thedemand for network facilities including bandwidth, last mile access and otherconnectivity resources and bridging the digital divide within the Country. However,an important issue needing immediate attention is tackling the Internet TelephonyGrey Market which is estimated to be about 90 per cent of the total InternetTelephony market in India and requires concerted efforts by Government andindustry. It is imperative that all leading ISPs including VSNL, BSNL and MTNLjoin hand to tackle the menace.
  21. 21. IPR & DRM Issues • Indian Copyright Act 1957 governs the IPR and Copyright issues • India recognizes digital signatures and e-documents at par with paper documents • Anti Piracy laws are strict but…. wide scale illegal copying of softwares, music cds, mp3s, DVDs and Video CDs • Software Piracy is among the highest in the world • Metro cities like Delhi and Mumbai have Piracy hubs, where almost each and every software is available • Software piracy exists beacuse consumers usually buy Assembled PCs having illegal software copies • Filesharing (software and music) through Kazaa and Morpheus are prevalent • Spam is an offence and it is madatory for operators and ISPs to deploy spam filters • Attempt to crack digital encoding of copyright software, music, movie etc. is an offence ------ BUT ONLY IF YOU ARE CAUGHT !!!!! India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 21Protecting the IPR is a complex issue in India altogether.Software and music piracyis immense in the country. India is a huge piracy hub in Asian continent. Majorityof piracy is about softwares and Operating System.Though government has strictlaws, it is difficult to completely wipe out piracy.In India the intellectual property protection with regard to a computer software isgoverned by the Indian Copyright Act, 1957 (hereinafter called “ The Act” ). Aperson claiming to be a creator of a software programme, can claim a copyrightover it. Unlike in the United Kingdom, which has a separate law governing adatabase, be it computer generated or otherwise, called the “database right”, inIndia there is no special right apart from the copyright that can be claimed by sucha creator. However under the Act, registration of a copyright is not mandatory, butadvisable. The Act, applies only to works first published in India, irrespective of thenationality of the author. However the Government of India has the power toextend the benefits of the Act to works first published in any foreign country.Any work first published in any country which is a member of the BerneConvention or the Universal Copyright Convention will be accorded the sametreatment as if it was first published in India. And for this purpose a bodyincorporated under any law of a country mentioned in the schedule so brought outby the Government of India shall be treated in the same manner as if it wasincorporated under the Indian law.As per the Act, computer software falls under the category of “Literary work”,which has been defined to include computer programmes, tables and compilations
  22. 22. Market SWOT Analysis Strenghts Weaknesses • Lowest call tariffs in the world • Huge wireless subscriber potential • Market strongly regulated by Govrenment body – Governing • Fastest growing mobile market in the world both ISP and Telecom sectors • Consumers are ready to pay for cutting edge services • Too many authorities ruling the sector • Government proposes to hike FDI limit in Telecom to 74% • Huge potential for low end and cheap handsets • Unified license regime • Wide scale Consumer churn in Telecom and ISP • Wide spread VAS deployment is restricted due to language and literacy problems • Primarily a voice based marketOpportunities Threats• To offer value added services on GSM, CDMA and IP • Low cost service providers – no possibility of breaking even in short term• Language independent services • Weak IPR protection• Mobile Marketing concepts • Software and digital content Piracy• Content influenced bu local culture and Global sucess stories • Political instability• M-Commerce • Regulatory interference• Unified messaging platforms• Foreign investment in form of equity or technology India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 22
  23. 23. CHAPTER TWOSERVICE PROVIDERS Vipul Chauhan
  24. 24. Operators – Fixed, CDMA and GSM FIXED LINE WLL/CDMA • BSNL (state owned) GSM • BSNL • MTNL (state owned) • Bharti • MTNL • Bharti (Touchtel) • BPL • Reliance • Tata Telecom • BSNL • Shyam Telecom • HFCL • Hutch • Tata Telecom • Shyam Telecom • Idea • HFCL • MTNL • Reliance •Spice Telecom6 Operators 6 Operators 8 Operators India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 24
  25. 25. Telecommunication Segments Services Entry Policy Players in operation Basic fixed line • No cap on number of • BSNL in all circles except Delhi & Mumbai held licences. Separate by MTNL. 5 Private Operators with 31 licences. licence for each circle. Mobile • Present cap of 4 • MTNL in Mumbai and Delhi. BSNL in one metro (GSM+CDMA) operators per circle and and 16 circles. 9 Private companies operating in metro. 3 private and 23 circles and 4 metros, with 50 licences. BSNL/MTNL NLD (National • No cap on number of • Earlier there was a monopoly of BSNL. Now Long licences. Only all-India Reliance, Bharti and VSNL have been granted Distance) licences will be granted. licences. ILD (International • No cap on number of • A monopoly of VSNL until April 2002. Tatas Long licences. acquired controlling stake in VSNL. Recently Distance) entry of Bharti, Reliance and Data Access. India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 25The Indian Telecommunications industry is divided into four Service segments:•Basic Services (Conventional Fixed line + CDMA Fixed line)•Mobile (GSM + CDMA)•National Long Distance (NLD) or Subscriber Trunk Dialing (STD)•International Long Distance (ILD)•ILD – Voice over internet (VoIP)The entire country is divided into Telecom License Zones known as “Circles”.Licenses are awarded to the operators as per the circles, not as per the states.Each circle requires a different license.
  26. 26. Fixed Line Operators
  27. 27. Fixed Line Operators Subscriber Base 34,862,000 BSNL is a public sector giant with a huge market share Public sector companies hold majority market share in Fixed line telephony 4,475,000 609,047 100,438 160 71,932 371,148 BSNL MTNL Bharti HFCL Reliance Shyam Tata State Owned Private Operators India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 27BSNL (Bharat Sanchar Nigam Limited) is the public sector giant having majoritymarket share in fixed line telephony.BSNL is followed by Mahanagar Telephone Nigam Limited (MTNL) which is againGovernment owned. MTNL has licenses to operate fixed line services in the citiesof New Delhi and Mumbai only.The private operator Bharti operates under the brand name Touchtel. Bharti hasbeen very lucky in penetrating the so called nest of public sector giants.
  28. 28. Fixed Line Market Share Shyam Reliance Tata HFCL Bharti MTNL BSNL BSNL is a market leader with a massive 86% market share India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 28BSNL’s Telephone Network includes:•Local Switching (as on 30.04.2004) Total Equipped Capacity 46.3 million Lines Direct Exchange Lines 35,4 million Lines•Village Public Telephones as on 30.04.200: 4,50 million•STD StationsNumber of STD Stationsas on 30.04.200431,733•Transmission Systems as on 30.04.2004 Coaxial 6024 kms. Microwave 63249 kms. UHF 45,130 kms. Optical Fiber 0,45 million kms.•Satellite Based Services (as on 30.04.2004) Total Number of MCPC –VSATs: 301 Number of IDR ROUTES: 71STD: Subscriber Trunk Dialing (abbreviation for Intercity calls)
  29. 29. Operators Operator Subscribers Range of Services Service Areas BSNL 34,86 million Fixed line network, GSM, CDMA All over India (WLL), Internet, MPLS VPN, Unified Messaging, IN, ISDN,Leased line, long sitance calling, international gateway MTNL 4.47 million Fixed line network in cities of DELHI Only in New Delhi and and BOMBAY only. GSM, CDMA Bombay (WLL), Internet, IN , Unified Messaging, ISDN,Leased line, long distance calling BHARTI 609,047 Fixed line network, GSM, DSL, IN, Delhi, M.P, VPN, International gateway HFCL Infotel 100,438 Fixed line, Broadband DSL, CDMA Only in State of Punjab India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 29As already described the entire country is divided into telecom circles and operatorsare required to have licenses as per the respective circles.With the entry of more and more private players in the fixed line telephony, thecompetition is becoming fierce, as a result operators are now focusing uponoffering various services to the consumers along with their fixed line connections.BSNL, which is a market leader in fixed line segment, also offers I-NET, India’sx.25 based packet Switched Public Data Network is operational in104 cities of thecountry. It offers x.25 x.28 leased, x.28 Dial up (PSTN) Connection) and framerelay services. It had 4661 I-Net connections all over India as of Dec. 2003.
  30. 30. Operators Operator Subscribers Range of Services Service Areas Reliance 160 Fixed line network, CDMA (WLL), Gujarat, Haryana, Punjab, Internet, VPN, Unified Messaging, Delhi, WB, UP(E), IN, ISDN,Leased line, long sitance calling, international gateway, nationwide fiber optic network TATA 371,148 Fixed line, CDMA, VPN, Centrex, AP, Delhi, Gujarat, Broadband, ADSL, DSL, Karnataka, Tamil Nadu, Conference services MaharastraSHYAM TELELINK 71.932 Fixed line network, International Only in Rajasthan gateway, CDMA India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 30
  31. 31. Fixed Vs. Mobile - Statistics 45 • Mobility is fast catching up with fixed line Millions 40 35 30 • Mobile subscribers are expected to cross fixed 25 line subscribers by mid 2005 20 15 10 5 0 Fixed GSM CDMA 45 Millions 40 35 In Telecom circles like Delhi, Punjab, 30 Haryana and Mumbai Mobile users have 25 crossed over fixed line users already 20 15 10 Fixed Mobile India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 31The difference between the numbers of fixed line and mobile subscribers is fastnarrowing.Low tariff structures offered by mobile operators are attracting consumers to switchover to mobile phone subscriptions. This trend has a two way side effect on fixedline telephony, first fixed line operators are finding it hard to reduce consumerchurn, second their ARPU has taken a big leap downwards.Reduced mobile tariffs could be explained as the most prominent reason forincreased mobile subscriber base.Facilities like SMS, MMS further attract consumers to shift from fixed line servicestowards mobile.
  32. 32. GSM Operators
  33. 33. GSM Segment Overview• GSM introduced in 1995• One of the fastest growing mobile markets in the World for GSM• Subscriber growth rate for Jan. 2003-2004 was 200% approx.• 35 networks on 900 Mhz, 11 on 1800 Mhz Technology• Presently, approximately 1 million GSM subscribers are added every month• Unified license system introduced by government in 2004• 3G spectrum decision is awaited India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 33
  34. 34. GSM Growth Drivers 1 (2)• 1st wireless communication standard in India• Nationwide roaming available in Prepaid and Postpaid• European and USA roaming widely available• Wide handset options - high end and low end• Camera Phones• Low call tariffs fuelled the growth since 2002• Large unsatisfied demand • Affordability: Middle class embracing cheap low-cost services• Low entry barriers• Large urban take-up due to aggressive marketing by Telcos India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 34
  35. 35. GSM Growth Drivers 2 (2) Call costs have fallen 0.31 drastically over 90% Fallen call costs have been a major growth driver for wireless industry (especially GSM) 0.16 Call costs in € from 1996 – Present day Operators are worried over falling ARPU, therefore a minor consolidation is seen in costs 0.08 this year 0.06 0.05 0.04 During festivals, special offers are introduced by operators for international dialing 1996-97 1997-98 2000-01 2002-02 2003-04 2004-onw ard India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 35Lowered call costs are the major driving force behind the industry growth. It is nowpossible for an individual to afford making calls.On one side where call costs have boosted the industry growth, as a side effectARPU has shown a negative growth.From last year onwards, operators are now looking towards streamlining theirARPU, therefore one can see minor escalation in call costs towards the end of lastyear.
  36. 36. Wireless Subscribers Growth – GSM India presently is one of the 28,153,674 fastest growing mobile markets in the World, with Growth rate in GSM segment during 2003 21,991,743 touching nearly 200% 10,600,000 5,478,932 3,107,449 Dec. 2000 Dec. 2001 Dec. 2002 Dec. 2003 May-04 Tim eline *Subscribers in Millions India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 36The subscriber growth saw a phenomenal increase from 2002 onwards. This wasmainly due to lowered call tariffs and full scale implementation of SMS services allover India. December 2002, where India touched the 10 million mark could bedefined as a milestone for Indian wireless industry.Subscriber growth continued from 2002-03 and there were close to 22 millionsubscribers as of December 2003.Two main elements for this phenomenal growth are 1. lowered call tariffs & 2.Free incoming callsConsumers who were once reluctant to subscribe to mobile subscriptions foundedfeasible and convenient to avail as now there was hardly any difference between themonthly bills compared to fixed line, and mobility was definitely a crucial element.The above phenomena in India is taking shape because of the presence of hugemiddle class population. On an estimate there are some 300 to 350 million peoplebelonging to this group in India. Unlike a car or a television set (where one isenough in the family) with the lowered call tariffs it became possible even for familymembers to own a mobile phone each.
  37. 37. Indian GSM Industry Revenues 1.56 1.18 Industry revenues show a increase of over 30% over last year Revenues in billion € 2002-03 2003-04 India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 37The increase in revenue reflects the new subscriber additions.
  38. 38. Market Developments since 2001 in 2001 in 2004 Bigger operators acquired small players to 18 GSM consolidate their 9 GSM subscriber base Operators and to be able to Operators counter low tariff CDMA operators India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 38India is a vast country with over 3000 Kms of distance from north to south andsimilarly from east to west. Covering this huge scope of land became a challengingtask for the operators, as a result many failed and vanished from the businessbecause the industry demanded huge capital investments and some of them were ofcourse unable to do so.The above scenario triggered two situations:•Smaller operators sold their licenses to big players•The bigger players seeing an opportunity to expand, acquired smaller operators
  39. 39. Mobile Operators Subscriber Base - GSM Bharti is the undisputed 6,761,367 leader among GSM operators 5,254,117 5,148,048 Bharti was the first mobile operator in India 3,721,773 1,882,754 1,208,890 1,026,377 850,831 230,550 Bharti BSNL Hutch Idea BPL Spice Aircel MTNL Reliance India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 39Aircel is recently acquired by HUTCH for an estimated amount of 223 millionEuro.
  40. 40. Market Share – GSM operatorsBig private operators like Bharti and Hutch eachhave recently acquired 2 other smaller operators State Owned 25% MTNL Reliance 1% 3% Aircel 4% Bharti Spice 26% 5% BPL 7% Private Idea 75% 14% Hutch 20% Private operators lead the GSM business BSNL 20% India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 40
  41. 41. Operator ARPU for 2003-04 9.90 ARPU dropped by 17% in 2003-04 8.43 8.36 Q4 compared to 9,9 € in Q1 8.05 7.32 7.35 7.60 Subscriber base of monthly ARPU 6.80 9,25 € or less has gone up to 46% in 2003 compared to 28% in 2002 ALL INDIA BPL Hutch Idea Reliance Bharti Spice Aircel Amount in € India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 41During the days when incoming was not free, operator ARPU was almost twice asthat of today.Despite of offering various data services over their networks, operators have beenunable uplift the ARPU. This shows that India still is mainly a voice market.On an estimate 80% of operator revenues are voice based and the remaining 20%constitute of all the data traffic.In such a scenario, operators have a big challenge not only to introduce more andmore attractive content but also to see that they add new subscribers on the basis ofcontent not voice. This however will be a big challenging task for Indian operatorsas promoting data services where roughly 45% of the population is still completelyilliterate. To add to the complexity is the language scenario in India. There are 18languages and 844 dialects and offering streamlined data services in all of theselanguages is by no means a simple task.SMS is the only thing which is available in different languages.
  42. 42. ARPU vs. Subscriber Statistics 29 24.43 ARPU Subscribers 8.36 1.6 1999 2004 *ARPU in Euro *Subscriber in Millions India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 42Indian consumer is extremly cost conscious.The cost syndrome is visible in the above figure, as call costs fell, no. of subscribersrose! In a way, as operator’s ARPU declined, they experienced a surge in subscriberadditions.
  43. 43. PrePaid vs. PostPaid Subscribers PostPaid 33% The growth in Prepaid has been 26.7% during 2003—04, while postpaid segment has just grown some 6% Prepaid rules in India PrePaid 67% India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 43Prepaid is a big phenomena in India. Although detailed statistics are not availablefor each operator but on an estimate 60-70% of the subscribers (of all theoperators) are prepaid customers.The reasons for prepaid being so successful in India are:•During the days when incoming calls were not free, it was difficult to control theindividual expense limit which prepaid easily solved.•To avail a postpaid connection one needed documentation like address proof etc.•Roaming on prepaid further boosted the prepaid subscriber base.•Teenage users whose parents wanted them to exercise restrain, founded easier togive them prepaid connections.•Retail channels earned good commission selling prepaid coupons to consumersand therefore, they invested more on promoting prepaid
  44. 44. GSM Operators Business Model Portals In India, third party billing doesn’t Revenue Sharing exist Revenue share model is the most prevalent mode of doing ASP business Revenue Sharing Operator Billing End User Revenue Sharing TV Channels Royalties Movies Content Revenue Sharing Developers India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 44The billing relationship in India exists exclusively between the operator and theconsumer. All the other contributors (value added service providers, ASPs, TVchannels and movie production houses maintain revenue sharing or profit sharingrelationship only with the operator.Operators in India get to keep a major share of the revenues coming from all theother services besides voice.When a consumer downloads a ringtone or a logo from a website, operator gets tokeep 60% of the earnings, similarly;•Almost 60-70% of the revenues for services hosted by ASP•80% of the revenues for SMS based TV opinion polls•75% incase of downloading a movie clip or a movie ringtoneM ticketing is missing in India, however, one can request for a ticket for an eventthrough an SMS but one cannot actually complete a transaction over his mobilephone.
  45. 45. VAS Awareness in India Basic VAS Advanced VAS 90 While roaming is well known, 76 MMS is surprisingly less known, similar to M-Banking 62 56 Operators have to promote awareness now, instead of 39 introducing any more new 33 27 services 21 10 7 5 4 Email MMS Roaming M-Banking Call Waiting Messaging Data services Voicemail Internet Services conferencing Access Call forward Dial in Voice Call Source: Voice and Data India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 45As described earlier, literacy is a big factor which determines the success of valueadded services especially, advanced services like email, M-banking and MMS.Roaming, voice mail, call waiting, call forward are some of the services whichconsumers are well aware of. Advanced services like call conferencing, email andM-banking have so far been unable to penetrate.One critical aspect to be considered here is the share of relevant consumers forrelevant services. Housewives and teenagers of course do not have any immediatevalue added for advanced services. Operators here face a challenge to market theirservices exclusively for corporate consumers.
  46. 46. GSM OPERATOR- BHARTI • Brand Name: AIRTEL • Network: GSM 900, 1800, GPRS, EDGE • Network Coverage: 17 Telecom circles • Subscriber base: 7,062,443 (May 2004) • Market Share: 26% • ARPU (Mar. 03-04): 8,4 € • Subscriptions: Post Paid, Pre Paid India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 46Bharti was the first mobile operator operational in India. India’s first GSM basedphonecall was made on Airtel network.
  47. 47. BHARTI Services Business Model and Revenue Sources• VOICE BASED • Content and Data Downloads • Voice mail • Offers Java games, logos, ringtones through their content • Dial a service portal• SMS BASED • Also in agreement with Yahoo India for basic content download • Info messages • SMS Chat • Advertising Campaigns • Email access via SMS • Latest movie ringtones, wallpapers available at their content • Ringtones and Logo downloads portal • Instant Messenger • Hosting third party campaigns like Coke and Master Card• GPRS • SMS Polls on TV • Mobile office • Users can vote through SMS for polls organized by TV • Content Portal Channels • Revenue sharing agreements with TV channels• OTHERS • Prepaid Recharging • MMS • Fax & Data, CLIR, Prepaid Roaming, • Subscribers can recharge either at ATMs using their ATM cards Or • Itemised billing, • Location based services • Direct debit facility with the subscriber’s bank account (SMS based service) India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 47
  48. 48. HUTCHISON TELECOM• Brand Name: HUTCH• Network: GSM 900, GSM 1800, GPRS, EDGE• Network Coverage: 14 Telecom Circles• Subscriber base: > 5 million• Market Share: 20%• ARPU (Mar. 03-04): 9,9 Euro (Highest in GSM segment)• Subscriptions: Post Paid, Pre Paid India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 48
  49. 49. HUTCHISON TELECOM Services Business Model and Revenue Sources• VOICE BASED • Content and Data Downloads • Voice mail • Offers News, Java games, logos, ringtones over GPRS in partnership with • Dial in services ( Dial a Pizza etc.) MSN and Mauj • Voice Response • Also in agreement with Yahoo India for basic content download• SMS BASED • Info messages • SMS Polls on TV • SMS Chat • Users can vote through SMS for polls organized by TV Channels • Yahoo Email & Messenger access via SMS • Revenue sharing agreements with TV channels • M-Banking • Ringtones and Logo downloads • Mobile Banking • Instant Messenger • HDFC and Bank of Punjab customers can access their accounts by SMS • BBC News• GPRS • E-Mail and communications • MSN & Yahoo email • Users can access their office emails through GPRS or SMS • Content Portal • Hotmail and MSN Messenger• OTHERS • Yahoo email and Messenger • MMS • PUSH TO TALK over GPRS • Fax & Data, CLIP, Call forward, CLIR, Prepaid Roaming, • Itemised billing, • Location based services India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 49 • Unified messaging (UMS)
  50. 50. IDEA• Brand Name: IDEA• Network: GSM 900, 1800, GPRS, EDGE• Network Coverage: 6 Telecom circles• Subscriber base: < 4 million• Market Share: 14%• ARPU (Mar. 03-04): 8,05• Subscriptions: Post Paid, Pre Paid India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 50
  51. 51. IDEA Services Business Model and Revenue Sources• VOICE BASED • Content and Data Downloads • Voice mail (Voice Courier) • Offers News, Java games, logos, ringtones over GPRS • Voice response • Also in agreement with Yahoo India for basic content download • Dial and Buy• SMS BASED • SMS Polls on TV • Info messages • Users can vote through SMS for polls organized by TV Channels • Chat – SMS, GPRS and PC • Revenue sharing agreements with TV channels • Web and POP3 Email access • M-Banking • Ringtones and Logo downloads • Mobile Banking • Global and Group SMS • Missing • Language SMS • City Guide • E-Mail and communications• GPRS • Web Mail and POP3 Access through SMS • Surfing • Content Downloads• OTHERS • Prepaid recharging • MMS • In agreement with Banks for Prepaid recharging through ATMs or • Fax & Data, CLIP, Call forward, CLIR, through SMS (account debit) Prepaid Roaming, • Itemised billing, India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 51
  52. 52. BPL Mobile• Brand Name: BPL• Network: GSM 900, 1800, GPRS• Network Coverage: 6 Telecom circles• Subscriber base: < 2 million• Market Share: 7%• ARPU (Mar. 03-04): 7,85• Subscriptions: Post Paid, Pre Paid India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 52
  53. 53. BPL Mobile Services Business Model and Revenue Sources • VOICE BASED • Content and Data Downloads • Voice mail • Offers News, Java games, logos, ringtones over GPRS • Dial and Buy Services• SMS BASED • SMS Polls on TV • Info messages • Users can vote through SMS for polls organized by TV Channels • Chat – SMS, GPRS • Revenue sharing agreements with TV channels • Web Email access • M-Banking • Ringtones and Logo downloads • Mobile Banking • City Guide • Customers of HDFC Bank and ICICI Bnak can access their accounts (SMS Based Service) • GPRS • Surfing This August 2004, BPL has introduced its first • Content Downloads own manufactured handset in India • OTHERS • MMS • Fax & Data, CLIP, Call forward, CLIR, Prepaid Roaming, • Itemised billing, India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 53BPL is a leading player in consumer electronics like TV, Fridge, Washing machinesetc. BPL has produced it’s own handset this August. Priced at around Euro 90, theBPL handset will compete with the likes of Nokia, Motorola, Sony-Ericsson andSiemens for a pie of the Indian handsets market. Industry sources said that thehandset will be part of the BPL consumer durables stable and will be manufacturedat its Bangalore unit.Sources said that the company had tied up with Japanese electronics major Sanyofor providing lithium batteries for the handset. The company is also planning tolaunch handsets at higher price range.
  54. 54. Expansion Strategy of GSM Operators – d “Acquisition” re d ui ire cq qu A Ac Sterling Cellular Airtel Hexacom Hutch Hutchison Essar Aircel Digilink With stiff competition in sight, bigger operators Hutchison Max Telecom are consolidating their subscriber base by Aircel* acquiring other smaller operator licenses d re re d ui ui Acq cq A Aircel* RPG Cellular Idea Escotel *Aircel was recently acquired by HUTCH India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 54As explained earlier, operators are constantly seeking to consolidate their standingin the market. Indian telecom regulations limit the number of operators in eachcircle to four but it does not limit operators acquiring each other. Airtel and Hutchhave been very active in this mergers and acquisition activity.Hutchison Telecom (Hutch) recently acquired Aircel which operated in state ofTamil Nadu.Similarly, Airtel acquired Hexacoms licenses for states of Rajasthan and few north-eastern states.
  55. 55. CDMA Operators
  56. 56. Understanding WLL(F) & WLL (M) WLL (M) = Wireless in Local Loop (Mobile) WLL (M) = Wireless in Local Loop (Fixed) • Classified as fixed line telephones • No Roaming • Works within a city limit • SMS • Data Baud for Internet • Mobile Handset (Just • Two options: like GSM) • FWP • Roaming • FWT • MMS • SMS • Java • Data Baud for Internet India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 56Understanding WLL services and how they are classified has been a big confusion not only forconsumers but even to an extent some services providers have taken a long time in understandingthe services completely.CDMA in India is known as WLL (Wireless in local loop). This WLL is further divided into twocategories fixed and mobile. However, the technology standard is similar in both cases i.e. CDMA2000 1XWLL fixed refers to handsets which can replace the existing fixed line sets.WLL mobile refers to handsets which have all the features like GSM handsets.WLL fixed works within a city while WLL mobile functions similarly as that of GSM mobile.There are 2 categories to choose from in WLL Fixed:1. WLL- FWP: Fixed Wireless Phone (without wires)2.If consumers are willing to keep their old phone set then they have an option to opt for WLL(FWT) Fixed Wireless Terminal. FWT is connected to existing telephone set.Both the phones come with a data port which can be connected to a PC/Laptop serial port througha special data cable. The data cable comes along with an installation CD and it is available in theopen market for five to ten Euros.Presently LG, Samsung and Nokia are the leading equipment suppliers for WLL mobile in India.For WLL fixed, LG and Samsung handsets dominate the market.WLL fixed phones have an option to send SMS.
  57. 57. CDMA Segment overview• Present Standard: CDMA 2000 1x• Started in March 2003• Offered by 6 operators• LG and Samsung hold majority device market share• Streaming media options• Always on internet connectivity @ 114 kbps India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 57
  58. 58. CDMA growth drivers Growth in Fixed line in 2003 (much due to CDMA fixed wireless) • Nationwide roaming • Bundled internet facility • CDMA phones come with a data port where consumers can connect to internet at 114kbps • Easy subscription availability, starting from Euro 10 only • Huge variety of content • Online bill view • SMS based service activations • Aggressive launch Source: IDC Asia/Pacific Semiannual Telecom Fixed- Line Services Tracker (2H 2003), March 2004 India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 58There was a big debate in India just before the launch of CDMA services that will itsucceed or not? Recent trends reveal that CDMA is here to stay, but that doesntmean that it is going to overpower GSM.Nationwide roaming helped to boost subscribe base, option of connecting tointernet using a simple data cable proved as a catalyst in promoting CDMA servicesin India.The call tariffs over CDMA were initially lower as compared to GSM but todayCDMA and GSM call tariffs are moreover same.The calls are tariffed again on the distance parameter which is already explainedearlier.
  59. 59. CDMA Operator Subscriber Base 6,414,047 Statistics include WLL(M) and WLL (F)Reliance, a CDMA 2000 1xoperator, is a undisputedmarket leaderBoth WLL(F) and WLL (M)have been immenslysucessful in Indian Market 800,000 625,267 29,908 27,632 130,000 Reliance Tata HFCL Shyam BSNL MTNL Private Operators State Owned India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 59Reliance Infocomm was the first private operator to start with the CDMA servicesin India. However, BSNL and MTNL offered CDMA before Reliance they wereunable to tap subscribers.Reliance’s strategic alliance with LG and Samsung to offer their handsets along withtheir subscriptions proved to be a catalyst in the process. Tata Indicomm whichwas the second private operator to offer CDMA services initially failed to attractconsumers but since early 2004, it has revived its strategy and has been able to gainsome market share.
  60. 60. CDMA Operators Market Share State Ow ned 12% BSNL MTNL Shyam 10% 2% HFCL 0% 0%Tata8% Private 88% Reliance, having introduced its service in March Reliance 80% 2003 has emerged as market leader with a huge 80% market share India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 60
  61. 61. CDMA Operator Business Model Similar to GSM model, third party Movies billing is also missing from CDMA operators business model Royalties Due to spectrum availability, operators find it feasible to offer high end content themselves TV Channels Internet surfing facility over Revenue Sharing CDMA is catalyst in boosting End User subscriber growth Billing Operator Services hosted Content Downloads and offered by operator Java Games Internet accessIndia Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES // 61Due to spectrum availability it is feasible for the operators to introduce enhanceddata services over their networks. This includes streaming media, JAVA games etc.The possibility for offering enhanced data services has proved to be a catalyst inpromoting CDMA services in India.Reliance Infocomm floated a company by the name of Paradox Studios whichdevelops interactive content for Reliance’s subscribers. Following the trend TataIndicom also formed an alliance with Nokia and some major content developers tooffer 1000 games to its subscribers.The revenue sharing percentage between TV channels, movie production houses,websites is moreover similar to GSM operators.As mentioned earlier the sets come with a data port for internet connectivity, theseCDMA operators also function as a internet service provider. Consumers have todial in a specific number to activate their phone as a modem and they can use 114Kbps internet almost everywhere in India.
  62. 62. CDMA Operators - RELIANCE• Brand Name: RIM- Reliance India Mobile• Network: CDMA 2000-1x• Network Coverage: 18 Telecom circles• Subscriber base: > 6,8 million• Market Share: 80%• ARPU (Mar. 03-04): Euro 13• Subscriptions: Post Paid, Pre Paid India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 62
  63. 63. Reliance Services Business Model and Revenue Sources• VOICE BASED • Content and Data Downloads • Voice mail • Offers News, Java games, logos, ringtones • Call forward •Reliance has formed a new company called PARADOX • 3 Way Call conferencing STUDIOS, which develops content for its network• SMS BASED • View Bills • Info messages • Streaming media • International SMS • New songs from movies, Live News channels • M-Banking • Ringtones • SMS Polls on TV • Language SMS • Users can vote through SMS for polls organized by TV Channels • City Guide • Revenue sharing agreements with TV channels • Movie info • Song clips • Mobile Banking• OTHERS • with HDFC bank • CLIP, Call forward, CLIR, Prepaid Roaming, • Itemised billing • E-Mail and communications • R-CONNECT – Users can use their phones to connect to internet. Reliance • Missing also serves as an ISP in this model. • Users need a data cable to connect to their PC serial port and configure the dial in settings India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 63
  64. 64. TATA INDICOM• Brand Name: TATA or TATA Indicom• Network: CDMA 2000-1x• Network Coverage: 6 Telecom circles• Subscriber base: > 2 million• Market Share: 8 – 10%• ARPU (Mar. 03-04): Euro 10-12• Subscriptions: Post Paid, Pre Paid India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 64
  65. 65. TATA INDICOM Services Business Model and Revenue Sources• VOICE BASED • Content and Data Downloads from their portal • PUSH TO TALK • Offers News, Java games, logos, ringtones • Voice mail • View Bills • Call forward • Streaming media • 3 Way Call conferencing • New songs from movies, Live News channels• SMS BASED • Info messages • International SMS • SMS Polls on TV • Ringtones • Users can vote through SMS for polls organized by TV Channels • Language SMS • Revenue sharing agreements with TV channels • City Guide • Mobile Banking• OTHERS • Missing • CLIP, Call forward, CLIR, Prepaid Roaming, • Itemised billing • E-Mail and communications • SMART WIRELESS – Users can use their phones to connect to internet. TATA also • Missing serves as an ISP in this model. • Users need a data cable to connect to their PC serial port and configure the dial in settings India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 65
  66. 66. CHAPTER THREEINTERNET SERVICE PROVIDERS Priyanka Kapoor Vipul Chauhan

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