The Growth of Telecommunication in Indian Business

ACKNOWLEDGEMENT

This report is the product of painstaking & accurate inductive work. A lot of guidance and support was needed to complete this project. It was essentially a team work in which many persons had a role to play, from behind the curtain. I am thankful to my faculty Dr. Tanmoy Dasgupta for his co operation & guidance. !ast but not the least, I e"press my profound sense of gratitude to all my family members and friends whose moral supports made my project report a success.

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INT"OD#CTION
The India telecom market ranks among the fastest growing industries in the country. The improvement in the standard of living and the development of infrastructure and connectivity are some of the mains reasons for the significant growth of the telecom industry. The growth is e"pected to be more over the years. 'resently, there are around 0== million telephone lines in India which make it the third largest phone network in the world after /hina and the .4. Today, the telecom market in India enjoys a growth rate of around :;> which is the highest in the whole world. India telecom market is mainly divided into two major segments namely, the 5i"ed 4ervice 'rovider #54's+ and the cellular services. 5i"ed 4ervice 'rovider network comprises land lines, basic services, domestic and long distance call service. The two major basic operators 14*! and (T*! comprise almost ?= > of the 54's in the country. Around ; > are operated by private firms and are mostly scattered in the urban areas. In most cases, the private basic service telephone operators cater to offices, business firms, schools and the corporate sector. In case of the cellular services, there are mainly two sub divisions@ /ode Division (ultiple Access #/D(A+ and 9lobal 4ystem for (obile /ommunications #94(+. In the 94( sector, the major players are 3odafone, Airtel, Idea /ellular, and Aircel and so on. The national company 14*! also has its 94( service named A/elloneA which has a major share in the semi urban and rural areas. The major companies which dominate the /D(A scenario are $eliance /ommunications and Tata Indicom. In both the sectors of cellular services, perfect competition e"ists according to the demand supply chains.

It was in the year -B;- that the 1ritish first introduced telecommunication services in India through operational land lines near /alcutta. 9radually, the telephone service was made operational in the year -BB-. After independence, the foreign telecommunication companies were nationaliCed and the 'osts, Telephone and Telegraph #'TT+ /ompany was set up by the (inistry of /ommunications. In the year -?B;, the Department of Telecommunications #D)T+ was set up to provide domestic and long distance telephone services. In the year -?B<, the government established two companies namely (ahanagar Telephone *igam !imited #(T*!+ for metropolitan telephone services and 3idesh 4anchar *igam !imited #34*!+ for international telephone services. Dith the economic liberaliCation in the -??=s, the telecom market in India was also benefited to a great e"tent. The service was improved and the tariffs were also significantly lowered. In the year -??E, the government set up the Telecom $egulatory Authority of India #T$AI+ to provide a comprehensive telecom service in the country. In -???, modification was brought to the policy and the cellular services were introduced. The Indian economy is greatly benefited by the growth of the telecom industry in the country. Dith the growth in the demand and customer base, more and more multinational companies are entering the telecom market. The India telecom market is e"pected to grow by $s 8::,?0crore by the year 0=-0. The rate of growth will be around 0< > and the sector will also generate employment to around -= million people. The number of telephone subscribers is e"pected to grow by around <;= million by 0=-0 from the current number of 0;= million.

Telecom $enetration in "ural India The mobile subscriber base in India is <B= million out of which <B> of the subscribers are from urban areas and the balance 80> is from rural areas. The urban teledensity has reached -8:> whereas rural teledensity is only 0B>. As a result, the telecom subscriber growth in urban areas is now saturated and further growth can come only from rural India. According to T$AI, ?-> of the villages in India are covered by at least one operator. )verall, ;-> of the villages in India are covered by three operators and 8-> of the villages are covered by four operators. The population density across India is very low in villages making it less viable for the telecom companies. This is due to lower number of subscribers per 1T4 and lower A$'. of a rural customer when compared to the urban customers. Difficult topography and climatic conditions are the other reasons for this low tele density in rural areas. $o%ulation densit&'( Num)er of *illa+es 1etween -=== F 0=== -0?,=== 1etween ;== -=== -::,=== !ess than ;== 0-?,=== If we look at the spread of population, E=> of the population lives in rural India spanning :?0,=== villages. (ajority of this population depends on agriculture for survival. /ontribution of the rural India is very significant as :;> of the 9D' comes from this segment. As telecom and network connectivity is seen as enablers of nationGs socio economic

growth, the 9overnment is aggressively looking at plans to improve the tele density in rural areas. The industry has made several suggestions for improving the tele density in rural areas. ,ast a%%ro*al mechanism for site ac.uisition

Telecom companies spend considerable time for the acHuisition of land and for obtaining permission from the Huasi government authorities like 'anchayats for the erection of 1T4. There is always a threat of site demolition and considerable delay is e"perienced in getting approvals till now. There is also difficulty in laying down optical fibre cable due to right of way issues. Telecom is a public utility and a critical infrastructure for rural development. 9overnment should instruct the 3illage 'anchayats I 5orest departments I 6ighway authorities to issue the permission for the erection of 1T4 site on a fast track. 4imilarly the land for the site acHuisition should be made available Huickly and there should not be any restriction or charges or penalty on conversion of agricultural land to commercial activity. /- Immediate !EB 0+rid1 %ower connection at industrial rate Another major deterrent for erecting sites at rural areas is the non availability of 4&1 power. The telecom companies depend on diesel power which is very e"pensive and does not justify the site at many rural areas. The 9overnment should treat the telecom as essential services and mandated to the state electricity board that the power connections should be made available within one month of application and at industrial tariff. The 1T4 sites should be e"empted from power cuts and uninterrupted power supply should be made available.

.4) subsidy should be considered for non conventional energy sources like Dind power, solar energy and bio fuels. 2- 3!AT connecti*it& for rural areas The telecom companies face considerable delay in providing optical fiber, leased lines and (D backbones at rural areas. 1esides it takes time and huge effort to build up this network. The 9overnment should provide 34AT connectivity at these rural areas, faster approval and lesser charges. 4- Ensurin+ a*aila)ilit& of low cost 5andset &ven though the mobile handsets are available now at $s -=== and below, the rural households may still consider this as e"pensive and it will be a major entry barrier in rural India. The telecom companies should consider bundling of handsets along with connection and subsidies the handset cost. In turn, the 9overnment needs to provide financial support I subsidy to the telecom companies to compensate this cost. 6- De*elo% a%%lications to ma7e the mo)ile handset more useful The literacy rate in rural areas is very low. It is therefore, important to develop content in vernacular language and design the application software such that it is user friendly and menu driven, with innovative graphics to overcome the limitations of illiteracy. )perators should take initiatives to offer regional and national news, weather forecasts and market prices for crops in regional languages to help improve mobile uptake in rural areas.

8- #!O su)sid& for O C connecti*it& As the )5/ connectivity at rural areas reHuires huge investments, .4) 5und should be made available to the telecom operators who invest capital e"penditure for rural connectivity. In order to reduce the capital e"penditure 9overnment should mandate that the )5/ infrastructure available in rural India should be shared among all operators at a pre fi"ed nominal cost. 9- Mo)ile Ban7in+ T$AI is of the view that mobile banking is a catalyst to promote mobile services in untapped rural India. &ven today the banking services have not reached the rural India fully. It will be very e"pensive to provide the banking services through branch e"pansion or through AT(. (obile phone is the ideal and uniHue vehicle to e"tend the banking services to rural India. (any African countries have successfully employed mobile phones for fund transfer among the rural population. $1I and the banking sector should make the necessary policy changes and join hands with the telecom sector to reach the banking services to the uncovered areas. The advent of wireless technologies, 9overnment support and policy changes have made it possible to overcome many of these difficulties. Dhile launching wireless technologies in rural India, operators are reHuired to focus on service availability, affordability, acceptability and awareness. )perators need to create and implement business models capable of driving profitable growth through a rural e"pansion strategy.

B!NL is an inte+rated telecom ser*ice %ro*ider which %ro*ides all t&%es of telecom ser*ices Wire Line !er*ices CDMA WLL Limited Mo)ilit& !er*ices National Lon+ Distance !er*ices International Lon+ Distance !er*ices Broad)and : Internet !er*ices IN !er*ices *i;- $re%aid callin+ card etc-

B!NL<s Milestones
4et up on -st )ctober,0=== Introduced cellular services on -?th )ctober,0==0 and has 80.E million customers as on date 1ecame market leader within < months, in its areas of operation Introduced limited mobility D!! services w.e.f. December 0===, and has : million customers as on date Introduced dial up internet facility w.e.f. December 0=== Introduced /!I based internet facility w.e.f. December 0==8 8.8; million Internet /ustomers with 14*! Introduced 1roadband in the country w.e.f. -:.--.0==; and has -.:; million customers.

"ole Of T"AI : TD!AT in Indian Telecom Growth T"AI 0Telecom "e+ulator& Authorit& of India1'(
4etup in -??E 'rotection of /onsumer Interest *urture /onditions for 9rowth of Telecom in India (ajor Activities $educed levies on )perators. $educed upper limit in tariff #!ocal, 4TD & I4D+ and other Inter operators tariffs. Directives on number of network access service providers. 'olicy guidelines on new services like 89, Di(AJ, Internet Telephony, $adio 'aging, 34AT, etc. $egular monitoring of Kuality of 4ervice parameters.

TD!AT 0Telecom Dis%utes !ettlement A%%ellate Tri)unal1'(

An integrated & comprehensive dispute settlement mechanism.

 4et up on 0?th (ay 0=== & started hearing w.e.f. 2an 0== B8> cases disposed off from 0==- till 0==E

T"AI : TD!AT %ro*ided health& atmos%here for health& +rowth of Telecom sector 0Teledensit& from ,-69 in ,==9 to /4 in Decem)er />>91

OB?ECTI3E! O T5E !T#D@

The objectives of this paper are

-. To find out the prospect of Telecommunication service in Indian (arket. 0. To make an idea about the teledensity in Indian market.

8. To understand the position of mobile services in Indian market.

MET5ODOLOG@
The study is mainly based on the 4econdary Data. I have carried out a study on LThe growth of telecommunication in Indian 1usinessM. I have collected the data from secondary data source such as the website of different companies, books, and journals. I have also interacted with the company people to understand about LThe growth of telecommunication in Indian 1usinessM. There are various methods, which has been used in the project. 3arious methods for collecting data are@ a+ Data obtained from the 4ubscribers b+ 4econdary data obtained fromN -+ (agaCine 0+ !ocal television and other channels 8+ Annual report

:+ Internet data

ANAL@!I!

0.25

0.23

0.22 0.19 0.17 0.16

0.2

0.15 0.11 0.1 0.11 0.11 0.09

0.05

0.05

0.05

0.04

0.03

0.02

Hong Kong

Philippines

Argentina

Malayas ia

Thailand

France

Taiwan

B razil

hina

i+' ( Mo)ile Tariffs in India one of the Lowest

India

Italy

UK

Pakis tan

B elgium

5rom the above graph we can see that only India is having the lowest mobile tariff in respect to the other developed countries.

Growth of telecommunication in India -??: *ational Telecom 'olicy F -??: announced Aug -??; %olkata became the first metro to have a cellular network -??E Telecom $egulatory Authority of India was setup -??? Tariff rebalancing e"ercises gets initiated (arch -??? *ational Telecom 'olicy F ?? announced )ct 0==0 14*! entered in to 94( cellular operation w.e.f -?th )ctober, 0==0. (ade incoming call free & initiated tariff eHualiCation process. Tariff for 94( cellular mobiles reduced *ov 0==8 .nified Access #1asic & /ellular+ 4ervice !icense #.4A!+ introduced as a first step towards .nified

!icense

$egime

Technology

neutral

and

allows

provisioning any kind of service Apr 0==: !icense fee reduced by 0> across the board for all the access licenses.

Mo)ile !er*ices' uellin+ the +rowth

Total tele%hone connections as on No*em)er />>A' ,A2-48 million No*em)er />>=' /84-99 million

5rom the above graphs we can see that the numbers of Direless connections are increasing from the 7ear 0==B to 0==? in respect to the 5i"ed lines.

Teledensit& ( "ural : #r)an

5rom the above chart we can find that the teledensity in .rban areas is much more than the $ural areas.

!u)scri)ers 0in millions1 7ear (arch =(arch =0 (arch =8 (arch =: (arch =; (arch =< (arch =E (arch 5i"ed line(obile Total including #94(OD!!#(+ D!!#5+ -:.;: =.8: -:.B 0<.<; 80.E8B.88 :-.:B :0.B: :<.-? ;=.-B -.? 8.;B <.;: -8 88.<? ;0.00 ?=.-: 0B.;; 8<.0? ::.BE ;:.:B E<.;8 ?B.:Tele density -.;E 0.B8.;0 :.0B ;.E.=: ?.--

-:=.80 -0.B

=B (arch =? Dec. 0=-=

:B.BE :8.8

-;E.?< 00<

0=<.B8 -B.:< 0<?.8 0:.=:

5rom the above chart, we can see that the teledensity is increasing from the year 0==- to the year 0=-=.

5ebP0=-- #/)AI+ 4l. *o. *ame of /ompany Total no. of subscribers 1harti Airtel -;B,??B,B<? 0 3odafone &ssar -8=,?0=,E80 8 ID&A B<,B==,B=? : 14*! B;,=?B,0== ; Aircel ;8,;==,:<? < .ninor 0-,;EE,:?E E 3ideocon <,;<:,=B8 B (T*! ;,-EB,<-E ? !oop (obile 8,=E?,0B-= 4tel 0,<?0,:<0 -&tisalat <;0,8E= *ovP0=-= #A.4'I+ 4l. *o. *ame of /ompany Total no. of subscribers /onnect -,<-B,EBE 0 $eliance /ommunications -,08,;E?,;0< 8 TATA Indicom B8,B;;,8=:

(T4

E,B-;,8B?

#/)AI /ellular )perators Association of India. A.4'I Association of .nified Telecom 4ervice 'roviders of India.+

CONCL#!ION
Telecommunication has been recogniCed as a crucial infrastructure for socio economic development of a nation. It is also one of the prime support services, needed for rapid growth and moderniCation of the various sectors of an economy. IndiaGs telecommunication network is the third largest in the world and the second largest among the emerging economies of Asia. It still continues to grow at an unprecedented pace and is one of the key sectors responsible for IndiaGs resurgent economic growth. The number of telephones has increased from ::.?E million #as on 8-st (arch 0==0+ to -:0.=? million #as on 8- (arch 0==<+ and -?= million #till December 0==<+ and 0=8 million #by 5ebruary 0==E+. Also, the tele density in the country has steadily increased from :.0?> #as on 8-st (arch 0==0+ to -<.B8> #as on 8-st December 0==<+.

"E E"ENCE! -. www.auspi.in 0. www.coai.com 8.

www.indiatelecom.org

:. Annual $eport, 0==? 0=-= ;. Indian Telecommunication 4tatistics 0==0 #'olicy 5ramework,
4tatus and Trends+, both published by the Department of Telecommunications, 9overnment of India. (inistry of /ommunications & IT,