The telecom industry in India has grown significantly over the past decades. It started with the introduction of the telegraph in 1850 and has since evolved to include telephony, mobile networks, broadband internet, television and radio broadcasting. The industry was historically state-run but was opened to private players in the 1990s. Today there are numerous private and public operators providing various telecom services across India. However, the industry faces challenges of declining revenues, uneven rural connectivity, and issues around spectrum allocation and management. The government aims to further develop the sector to support India's growing digital economy and connect more of the population by 2020.

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REPORT
INDIAN TELECOM
INDUSTRY:
PAST, PRESENT &
FUTURE
Prepared by-
Reeha Paul
PGDTM, IISWBM.

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CONTENTS
SL. NO. TOPICS
1 Introduction 1
2 Flashback (1850-1990) 2
3 Till Date (1990-2013) 3
 Telephony 3
 Data Service 4
 Broadcasting 5
 Mobile Communication 5
 Spectrum Allocation 6
 National Telecom Policy 2012 9
4 Path Ahead (Vision 2020) 10
5 Conclusion 12

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INTRODUCTION
Since time immemorial the concept of communication has been there in this universe. The only
thing that is in constant phase of transformation since ages is the mode of communication. As
the human voice is limited by distance, the need for telecommunication intrigued us. The
history of mankind has shown that there has always been some form of telecommunication.
Derived from French dictionary, the term, ‘telecommunication’ means 'communication at
distance' through signals of varied nature coming from a transmitter to a receiver. In ancient
days, the most common way of producing a signal to communicate with distant areas was by
producing audio signal by beating drums or whistling etc. or by creating visual signals with fire
or smoke etc. As time passed by, human beings learnt to communicate by sending handwritten
messages via pigeons or humans. For centuries, people used to communicate to distant people
through these channels. But all these modes of telecommunication were not secured, reliable
and convenient.
People then started looking for direct and reliable communication channels and from there
experiments on communication with the use of electricity started. The foundation stone of such
experiments was established in about 1726 and following the footsteps of these experiments,
finally in 1876 Alexander Graham Bell propounded the concept of conventional telephone
which is now in use worldwide and the first telephone exchanges for public use came up in the
western world in 1878.
Since then, the term ‘telecommunication’ got a technical definition: “Telecommunication is a
communication at a distance by technological means, particularly through electrical signals or
electromagnetic waves.”

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FLASHBACK (1850-1990)
Coming into Indian telecom scenario, telecommunication in India started with the introduction
of telegraph. The Indian postal and telecom sectors are one of the world’s oldest. In 1850, the
first experimental electric telegraph line was started between Calcutta and Diamond Harbour.
In 1851, it was opened for the use of the British East India Company. The Telegraph line opened
on 5th November 1850 marked the beginning of telecommunication in India. In 1881 the Govt.
of India granted permission to The Oriental Telephone Company Ltd. of England to set up
telephone exchanges at Calcutta, Bombay, Madras, Karachi and Ahmedabad and Indian
Telegraph Act of 1885 was passed. After that this industry experienced a lot of developments in
technology and some of the significant milestones are as follows:
Till 1902 – Cable telegraph
1902 – First wireless telegraph station established between Sagar Island and Diamond Harbour.
1905 – A wireless telegraph system was established with Port Blair.
1907 – First Central Battery of telephones introduced in Kanpur.
1913–1914 – First Automatic Exchange installed in Shimla.
1927 – Radio-telegraph systembetween the UK and India, with Imperial Wireless Chain beam
stations at Khadki and Daund.
1933 – Radiotelephone systeminaugurated between the UK and India.
1953 – 12 channel carrier systemintroduced.
1960 – First subscriber trunk dialing route commissioned between Lucknow and Kanpur.
1975 – First PCM systemcommissioned between Mumbai City and Andheri telephone
exchanges.
1976 – First digital microwave junction.
1979 – First optical fiber system for local junction commissioned at Pune.

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1980 – First satellite earth station for domestic communications established at Secunderabad,
U.P.
1983 – First analogue Stored Programme Control exchange for trunk lines commissioned at
Mumbai.
1984 – C-DOT established for indigenous development and production of digital exchanges.
1985 – Post and Telegraph Dept. was bifurcated and telecommunication came under Dept. of
Telecom (DoT).
1986 – MTNL was formed to take up the Telecom Operation in the Metro areas of Delhi &
Bombay.
TILL DATE (1990-2013)
The demand for telephones was ever increasing and in 1990s Indian government was under
increasing pressure to open up the telecom sector for private investment as a part of
Liberalisation-Privatisation-Globalisation policies that the government had to accept to
overcome the severe fiscal crisis and resultant balance of payments issue in 1991.
Modernization came in Indian telecom industry on 15th August, 1995 when for the first time
mobile telephone service started in India on non-commercial basis along with internet service
in Mumbai, Delhi, Calcutta, Chennai and Pune. Prior to this, National Telecom Policy (NTP) 1994
was implemented to allow private participation in telecom service field and Universal Service
Obligation. Then in 1997, the Govt. of India set up TRAI (Telecom Regulatory Authority of India)
which reduced the interference of Government in deciding tariffs and policy making. In 2000,
another governing body, the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) was
set up through an amendment of the TRAI Act, 1997. This was done to release TRAI from
adjudicatory and dispute settlement functions in order to strengthen the regulatory framework.
In the same year, Department of Telecommunication Services (DTS) came out as a wing of DoT
which later became popular as Bharat Sanchar NigamLimited (BSNL). In April 2002, the
government decided to cut its stake of 53% to 26% in VSNL and opened the doors for sale to
private enterprises and then TATA Group took 25% stake in VSNL. This was the gateway in
Indian telecom market for the foreign investors. Today, Indian telecom sector is highly dynamic,
fast growing and multi-operator based. In today’s telecom sector, there are three major
divisions:
 Telephony: This telephony service can again be classified into two sectors:
a) Fixed Line Telephony (PSTN): Until the implementation of the New Telecom Policy
1999, only the Government-owned BSNL and MTNL were allowed to provide land-line

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phone services through copper wire in India with MTNL operating in Delhi and
Mumbai and BSNL servicing all other areas of the country. Due to the rapid growth of
the cellular phone industry in India, landlines started facing stiff competition from
cellular operators. This has forced land-line service providers to become more efficient
and improve their quality of service. But owing to the reliability and stability of
landline services, landline connections are still in high demand and today India has
over 31 million landline customers. Moreover, today, this landline network is being
largely influenced by the optic fiber revolution.
b) Mobile Telephony (PLMN): The revolution of mobile telephony began in August, 1995
in India when the first mobile voice call was made by the then Chief Minister of West
Bengal, Shri Jyoti Basu to the then Union Telecom Minister, Sukhram. Mobile
telephony is the convenient platform for both voice and data service although fixed
line telephony offers internet access but at a very low speed as low as 56 kbps which is
commonly known as dial-up internet connection.
 Data Service: At the advent of internet service in 1995 in India, the concept of data service
also appeared in the scenario. Mobile service started with first generation service (1G)
followed by second generation (2G), third generation (3G) and finally after 16 long years,
Kolkata, West Bengal again got the opportunity to experience the fourth generation (4G)
service for the first time in the nation in June 2012. With a subscriber base of more than
929 million, the mobile telecommunications system in India is the second largest in the
world and it was thrown open to private players in the 1990s. GSM was comfortably
maintaining its position as the dominant mobile technology with 80% of the mobile
subscriber market, but CDMA seemed to have stabilized its market share at 20% for the
time being. Till May 2012 the country had 929 million mobile subscribers, up from 350
million just 40 months earlier. The mobile market was continuing to expand at an annual
rate in excess of 40% coming into 2010. Starting with 56 kbps speed, in 2004, Govt. of India
formulated its broadband policy which defined broadband with download speed of 256
kbps or above. From 2005 onward, the growth of the broadband sector accelerated, but
remained below the growth estimation due to various issues. This bottleneck was removed
in 2010 when the government auctioned 3G spectrum followed by an equally high profile
auction of 4G spectrum that sets the scene for a competitive and invigorated wireless
broadband market. India has the world's third largest number of Internet users with over
121 million users (59% of whom only access the Internet via mobile devices) in December
2011. The number of broadband subscribers at the end of May 2013 was 15.13 million.

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 Broadcasting: Television broadcasting began in India in 1959 by Doordarshan, a state run
medium of communication, and had slow expansion for more than two decades. The policy
reforms of the government in 1990s attracted private initiatives in this sector, and since
then, satellite television has increasingly shaped popular culture and Indian society.
However, still, only the government owned Doordarshan has the license for terrestrial
television broadcast. Private companies reach the public using satellite channels; both cable
television as well as DTH has obtained a wide subscriber base in India. In 2012, India had
about 148 million TV homes of which 126 million has access to cable and satellite services.
Mobile communication
According to official data, India has 736,654 base transceiver stations (BTSs) including 2G (GSM
& CDMA) 3G and 4G as of November 2012 out of which 96,212 BTSs provide 3G mobile and
data services. The territory of India has been divided into 23 telecom circles and these 23
circles covers 640 districts of India. Reports say that out of these 640 districts, 3G service
coverage is there in 610 districts of India.
In a precise way, Indian telecom sector has faced significant technological changes, mainly in
data services in the last decade. Starting with GPRS and now moving ahead with 4G service,
here is a brief description of the technological advancement in data service:
a) GPRS: Refers to a service on the 2G network that provides basic data up to 56kbps (similar
to dial-up speeds).

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b) EDGE: It is a 2.5G technology. An enhancement of the 2G technology which provides higher
data transfer rates compared to GPRS (the default on 2G).The speeds can go up to 144 Kbps.
c) 3G: 3G technology provides faster / higher data transfer rates compared to the 2G network
(EDGE & GPRS).This technology theoretically can offer speeds between 1-21 Mbps.
d) 4G: This technology rides on LTE (Long Term Evolution) platform and is the latest in the
world of mobile data transfer. It is the next generation of mobile communications. Currently it
is the most advanced radio access technology available. Theoretical data downlink speeds
range between 2-100 Mbps.
Cumulative Annual Growth rate (CAGR) of broadband during the five-year period between 2005
and 2010 was about 117 per cent. The number of mobile internet users increased rapidly from
2009 onwards and there were about 274 million mobile users at the end of September 2010,
with a majority using 2G mobile networks. Mobile internet subscriptions as reported by the
TRAI in March 2011 increased to 381 million. But there are some major issues that Indian
telecom market is facing:
 Decline in Average Revenue Per User (ARPU) and
 Allocation of spectrum band
Spectrum allocation
2G : GSM 900 MHz, GSM 1800 MHz
3G : UMTS 2100 MHz
4G : TD-LTE 2300 MHz
There are total of 12 telecom operators working in Indian telecom market: BSNL, MTNL, Bharti
Airtel, Vodafone, Idea Cellular, MTS, Virgin Mobile, Loop Mobile, Uninor, Aircel, Tata Docomo
and Reliance. These operators either operate on 900 or 1800 MHz for 2G and depending on
the bandwidth, they need to redesign their coverage area which sometimes results in customer
churn. Besides this, there are many other issues due to which ARPU is decreasing whereas
demand for Value Added Service (VAS) is increasing. This demand has lead to a shift from circuit
switching to the rise of packet based switching which is popularly known as Next Generation
Networking (NGN). It provides telecommunication services and makes use of multiple
broadband, quality of service-enabled transport technologies in which service-related functions
are independent from underlying transport-related technologies. It offers unrestricted access

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by users to different service providers. It supports generalized mobility which will allow
consistent and ubiquitous provision of services to users.
The total revenue in the telecom service sector was Rs. 86720 crore (US$13.3 billion) in 2005–
06 as against Rs. 71674 crore (US$11.0 billion) in 2004–2005, registering a growth of 21% with
estimated revenue of financial year 2011 of Rs. 835 crore (US$130 million). The total
investment in the telecom services sector reached Rs. 200660 crore (US$30.7 billion) in 2005–
06, up from Rs. 178831 crore (US$27.4 billion) in the previous fiscal year. Telecommunication is
the lifeline of the rapidly growing Information Technology industry. Internet subscriber base has
risen to more than a 121 million in 2011 out of which 11.47 million were broadband
connections.
Mobile communications in India has grown immensely during the last couple of years by adding
up to 20 million new subscribers per month, but the influx of new mobile subscribers dropped
to 5-7 million per month during the later part of 2011. The explosive growth has resulted in a
mobile customer base of 870 million (Oct 2011), translating into a mobile penetration of 73%.
However, it varies considerably between urban and rural areas with a mobile penetration of
160% and 36% respectively. The ARPU is around EUR 2-3 per month, and call charges are
around Rs. 0.9-1.5 per minute. The Indian mobile operators have access to 10-15 MHz
(downlink) of which 5 MHz is 3G spectrum, but it differs between service areas and operators.
Although 3G licenses were auctioned in 2010 and networks have been deployed the growth of
3G has so far been limited. India had about 12 million 3G subscribers’ by the end of 2011,
representing 1.5% of the total mobile subscribers. The slow start for 3G can be explained by the
incapability to afford 3G compatible handsets and smartphones. The Indian authorities
allocated three 3G licenses with 5 MHz per license in most service areas. But given that there
are at least six 2G operators in most service areas the major operators have entered into

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roaming agreement, so called intra circle roaming (ICR) agreements with the holder of 3G
licenses, in order to be able to provide 3G services nationwide. But DoT has questioned the
roaming agreements which initiated legal processes by the end of 2011. On back of a limited
availability of fixed broadband, with a penetration of 1.1%, 2G data with GPRS and EDGE have
been the primarily carriers for mobile data. But given that non-voice revenues generates 15% of
total mobile revenues, of which SMS makes up around 50%, the revenue stream from the
estimated 347 m mobile internet users have so far been limited.
Given the high mobile penetration in urban areas in India the major growth opportunities are in
rural areas. This requires extension of networks in order to extend coverage and capacity calling
for more CAPEX. The slow start for 3G indicates that India is lagging behind within mobile data.
But with a limited availability of fixed broadband mobile is set to be the primary vehicle for
digital access and applications. This analysis shows that 5 MHz can support the first stage for
mobile broadband and mobile internet. But in order to provide sufficient capacity for
supporting smartphones as well as dongles driving considerably higher data volumes, the
availability of more spectrum are required. The high gearing level for the Indian operators in
combination with extensive CAPEX requirements and high prices for spectrum will be
challenging for the companies. Ultimately, the willingness for the Indian consumers to pay for
mobile data will be pivotal for how this will play out. Although CAPEX in relation to sales have
come down for the Indian operators they are facing lower growth as the mobile voice market is
maturing, and they are experiencing high cost for capital as their financial flexibility are
impacted by the financial turmoil. The improvement in the effectiveness of total spectrum
utilization has been over a trillion times in the last 90 years, and a million times in the last 45
years. Of the million times improvement in the last 45 years, roughly 25 times were the result
of being able to use more spectrum, 5 times can be attributed to the ability to divide the radio
spectrum into narrower slices — frequency division. Modulation techniques like frequency
multiplexing, time division multiplexing and various other approaches to spread spectrum can
take credit for another 5 times or so. The remaining sixteen hundred times improvement was
the result of confining the area used for individual conversations to smaller areas, what is called
spectrum re-use. Hence it is the use of small cell that accounts for the largest improvement of
capacity. The increase of spectrum accounts for just 25 times of the 1 million improvements but
it is the bandwidth that is the raw material and makes it possible to exploit the benefits of the
other types of development. The operators can use the same type of modulation, radio
technology and deployment strategy but it is the amount of bandwidth that makes a clear
difference. We can also identify differences between operators and their different options
when it comes to the network deployment approaches. Network and spectrum sharing (like

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3GIS and Net4Mobility) enables both higher cost efficiency (site re-use) and the possibility to
offer higher data rates.
The implementation of the National Telecom Policy 2012 is a positive step in this scenario.
National Telecom Policy 2012
• Increase rural teledensity from the current level of around 39 to 70 by the year 2017 and 100
by the year 2020
• Repositioning of Mobile phone- as an instrument of empowerment
• Broadband –“'Broadband for All” at a minimum download speed of 2 Mbps
• Domestic Manufacturing- Making India a global hub
• Convergence of Network, Services and Devices
• Liberalization of Spectrum- any Service in any Technology
• Simplification of licensing regime- Unified Licensing, delinking of Spectrum from License,
Online real time submission and processing
• Consumer Focus - Achieve One Nation - Full Mobile Number Portability and work towards
One Nation - Free Roaming
• Resale of Services
• Voice over Internet Protocol
• Cloud Computing, Next Generation Network including IPV6

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Today the Indian telecommunication network comprises of around 621 million connections
which credit it as the world’s third largest network and second largest wireless network. The
Subscriber Base has increased exponentially registering a growth of 2.36% over the previous
quarter as against 4.69% during the same quarter of June 2011. This reflects the growth of
25.39% over the same quarter of last year. The overall teledensity of country’s telecom sector
has reached 75.48 as on 30th September, 2011. Subscription in urban and rural areas also has
shown growth from 587.94 million to 601.72 million and 298.05 million to 305.51 million
respectively. The share of rural areas in total subscription has been around 33.49% at the end
of June 2011 and the share of urban area has been 63.52%. The total revenue of the telecom
service sector went up with a growth of 8.69%. Public sector contribution to the revenue was
20.37 % and private sector contributed 79.63%.
PATH AHEAD (Vision 2020)
As the world is living in a technology-driven era, the dynamics of telecom industry will be
changing very significantly in the near future. The evolution of disruptive technology that is the
six technology trends: huge data accumulation, cloud computing, mobility, embedded systems
in the devices, social media networking and augmented reality is likely to change the entire
scenario of the telecom world. Though all the other business sectors will be highly influenced
by these six technology trends but telecom industry is predominant over these technologies.
Telecom industry is a very interesting and hyper active sector that acts as a horizontal enabler
as well as a vertical user end.

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So in this competitive ecosystem, besides the uptake of disruptive technologies in the telecom
sector, this industry will also face huge investment as stakeholder to cater the needs and
demands of other sectors. Very soon, the trend will come when everyone will have to fulfill the
changed demand patterns from all verticals which will keep on increasing due to high influence
of disruptive technologies. Moving more towards the future, the industry will witness more
development where there will be the convergence of these six technology trends. All will come
together to build a cost-efficient solution.
The DoT will encourage telecom service providers to share their infrastructure. The telecom
industry and the Government need to work together to attract investments and exploit
advances in technology. With the success in voice-connectivity being carried forward to data
and emerging technologies including cloud computing, the government is targeting broadband
connectivity from 15 million currently to over 600 million in 2020.
On the back of the ongoing investments into infrastructure, the country is projected to witness
high penetration of internet, broadband, and mobile subscribers in the near future. Various
policy initiatives by the Indian government have led to a complete transformation of the
industry in the last decade. It has achieved a phenomenal growth during the last few years and
is poised to grow further.

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CONCLUSION
Increasing demand for smart phones and availability of high speed networks, such as 3G and 4G
services, has resulted in the rapid growth of the Indian market, besides offering immense
opportunities to players involved in the business. The RNCOS’ research study, ‘Indian Mobile
Gaming Market Forecast to 2017’ estimated the market to reach Rs 18.5 billion (US$ 302.28
million) in 2017 and grow at a CAGR of nearly 24 per cent during the period 2013–2017.
As the subscriber base is increasing exponentially demand for additional spectrum is also
increasing by mobile operators. To serve the need department of telecommunication has to
evolve its guidelines for the allotment of extra spectrum and this allotment has to be done on
certain justifications and criteria such as demographic characteristics, average traffic per
subscriber, and number of base stations at a particular location. Being a scarce resource, its
equal allotment for systems using different technologies can be the solution. Government
should try to create a policy for a flexible and technological neutral regime to allow new
technologies have equal access to the spectrum. It should also enable market mechanism to
promote efficient use of spectrum. The government must permit public and private users to
trade spectrum to allow new users to access spectrumand to provide them option to move to
another frequency bands if possible. The government must make the allotment procedure
more transparent and opened so that this scarce resource can be put to the optimal use.