History of Telecom Industry in India

Ch 1: The Telecom Industry & It's Recent Trends

History of telecom industry in India

The history of telephone services in India found its beginning when a 50-line manual telephone exchange was commissioned in Kolkata in the year 1882 in less than five years after Alexander Graham Bell invented the telephone. While India became independent in the year 1947, the country had about 82,000 telephone connections, which slowly rose up to 3.05 million by the year 1984. The telecom sector in India was a government monopoly until the year 1994 when liberalization was gradually unrolled. For the first time, cellular services were launched in India in Kolkata in the year 1995.One of the world's most progressive telecom markets - the Indian telecom industry has seen massive investments by both private and government sectors in the previous decade. The success story and the potential have attracted newer players on the canvas due to which the intensity of competition has paced up between domestic and foreign players, which as a result, has benefitted the end user. Increasing network coverage and competitive tariffs - these are the two most prominent catalysts that are contributing to the growth of the Indian Telecommunication sector.

Indian Telecommunication - Key Players

The Indian telecommunication sector has become highly competitive over the last four years. The industry is highly fragmented. There are as many as 15 players who strive to gain competitive edge in the market.

As of September April 2011:

* Bharti telecom led the market with 19.19 per cent share

* Reliance (16.77 per cent)

* Vodafone (16.56 per cent)

* BSNL (11.13 per cent)

* Idea (11.12 per cent)

* Tata (10.93 per cent)

* Aircel (6.77 per cent)

With the remaining share being held by other smaller operators, according to Telecom Regulatory Authority of India (TRAI) database.

Latest services in the industry

I. Hi5 For Wi-Fi

The growth in the wireless category was led by Reliance Communications, which added 2.93 million subscribers, taking the subscriber base to 138.65 million at the end of April 2011. Idea Cellular added 2.45 million new users, taking the user base to 91.95 million. Bharti Airtel added 2.41 million subscribers (increasing its user base to 164.61 million), while Vodafone added 2.40 million users (taking its user base to 136.97 million). Aircel added 1.10 million users, while Tata Teleservices added 1.24 million users in April.

Wi-Fi networks, offering secured connections, are getting popular over broadband services due to cheaper data plans and faster speeds. Mobile operators, trying to tap market potential, are pledging high investments to upgrade their 3G networks into 4G ones, though capacities remain a constraint. To remove such constraints, Wi-Fi has become a significant tool for offloading traffic.

Discarding the conventional dependency on third-party Wi-Fi providers, mobile operators are pulling their socks to build their own Wi-Fi networks.

Examples: Tata Indicom, Aircel and Vodafone have publicized their Wi-Fi services the most. Broadband subscription reached 12.01 million in the reported month from 11.87 million in March, growing 1.17 per cent.

II. Indian Telecommunication - Value-Added Services (VAS) Market

Value added services (VAS) market has been expanding at about 60 per cent year-on-year, according to a study by the firm 'Research and Markets'. The study underlines mobile advertising, m-commerce, multi-media games, 3G, mobile internet for faster data upload, as major factors for growth. Also the rural VAS market possesses a huge potential in India.

Features like SMS, Ringtones, Caller Ring Back Tone (CRBT) and Games form part of VAS and their delivery is mainly based upon IVR, GPRS and WAP platforms. In India, VAS accounts for 9-10 per cent of the operator's revenue, which contributes 20 per cent to global telecom revenues.

Mobile VAS are expected to garner US$ 12.25 billion in sales by 2015 (more than double the current figure of US$ 4 billion), reports consulting firm PricewaterhouseCoopers (PwC). The students section looks the most lucrative market for VAS in next four years. The study also assessed that the new generation of content users will desire for more entertainment and utility-based services.

Techzone is planning a product expansion, including its entry into mobile gaming service business in 2011-12. The Chennai-based mobile VAS provider has pledged US$ 6.67 million of investment for the same. The company is holding discussions with two international gaming service providers for strategic alliance, said Naveen Bhandari, director, Techzone.

Indian Telecommunication - The Road Ahead

The sector is a huge employment generator, expected to generate numerous employment opportunities. There is a huge demand for qualified and skilled professionals with technical knowledge and hands on experience.

As per the 12th five year plan (2012-2017), the total number of telecom subscribers is projected to grow from the existing 860 million to 1,200 million during the five year period. About 25 per cent (roughly 300 million) would be 3G/4G subscribers, which would require scaling up the infrastructure.

The total investment in the pan-India broadband rollout is expected to be US$ 16.79 billion, while another US$ 9 billion will be invested in augmenting the transmission network.

Policies of telecom industry in India

Government of India implemented the unified access licensing regime, which enables basic and cellular mobile service to use any modern technology. In 1997, Telecom Regulatory Authority of India (TRAI) was formed to facilitate the growth of the telecom sector in India.

Major services and market potentiality of Telecom industry in India

Telecommunication sector in India is primarily subdivided into two segments, which are fixed.

Service Provider (FSPs) and Cellular Services. Telecom industry in India constitutes some essential telecom services like telephone, radio, television and Internet. Telecom industry in India is specifically emphasizing