Synopsis of Telecom Industry

SYNOPSIS OF TELECOM INDUSTRY
The rapid growth in Indian telecom industry has been contributing to India’s GDP at large. Telecom industry in India started to set up in a phased approach. Privatisation was gradually introduced, first in value-added services, followed by cellular and basic services. Telecom Regulatory Authority of India (TRAI), was established to regulate and deal with competition (the service providers). This gradual and thoughtful reform process in India has favoured industry growth. Upcoming services such as 3G and WiMax will help to further augment the growth rate.The Indian telecommunications industry is one of the fastest growing in the world and India is projected to become the second largest telecom market globally by 2010. This is evident from the facts of Telecom Industry for example, India added 113.26 million new customers in 2008, the largest globally. The country’s cellular base witnessed close to 50 per cent growth in 2008, with an average 9.5 million customers added every month. This would translate into 612 million mobile subscribers, accounting for a tele-density of around 51 per cent by 2012. It is projected that the industry will generate revenues worth US$ 43 billion in 2009-10. In this report we have tried to capture most of the areas of Telecom Industry. Major highlights of the report are History of Telecom Industry, Current Industry Analysis, Role of TRAI, Spectrum allocation, FDI Regulation, Competitive advantages, Outsourcing in Telecom, Emerging Technologies, Latest Innovation, and Growth Trends, Mergers and Acquisitions

1.1 History 1851 |  Introduction of Telegraph services | 1947 |  Foreign Telecom Companies nationalized to form PTT | 1980’s: The Beginning |  Tele-density in 1980-81: 0.3%  Introduction of public pay phones  Private Sector allowed  DoT, MTNL and VSNL formed | Early to Mid 90’s: A Messy Affair |  Telecom policy 1994 - Basic telephony service to private operators - 49% FDI - 8 licensees began operations in Aug 1995 | Late 90’s |  Birth of a regulator: TRAI  NTP 1999  (New Telecom Policy) | 2000+ |  CAGR of around 85% since 1999  FDI: 74% (2005) | 2007-2009 |  having the world's lowest call rates the fastest growth in the number of subscribers (45 million in 4 months),  the fastest sale of million mobile phones (in a week),  the world's cheapest mobile handset  the world's most affordable colour phone |
Telecom services
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 on latest technologies like GSM (Global System for Mobile Communications), CDMA (Code Division Multiple Access), PMRTS (Public Mobile Radio Trunking Services), Fixed Line and WLL(WirelessLocal Loop ). India has a prospering market specifically in GSM mobile service and the number of subscribers is growing very fast.

Growth Avenues

Strengths: * Huge wireless subscriber potential * One of the fastest growing sectors * Consumers are ready to pay for cutting edge services * FDI limits are 74% * Unified license regime
Weaknesses;
* Lowest call tariffs * Market is regulated by Government bodies * Too many authorities are ruling this sector * Wide scales of consumer churn in this sector. Now the number * portability is coming up so it will increase the consumer churn rate * Value Added Services (VAS) is restricted because of literacy and language problems
It is difficult to make into the semi-rural and rural areas because of the lack of infrastructure.
Problem of limited spectrum availability and the issue of interconnection charges between the private and state operators.
Opportunities:
To offer more VAS on GSM, CDMA and Internet Service Providers
(ISP)
Language independent services. E.g. sending the message in local language, information available in local language etc.
New innovations in service providers
Huge content providing to local culture as well as globally
Foreign investments in form of equity or technology
Unified messaging platforms
Threats:
Weak Intellectual Property Rights (IPR)
Threat of low cost service providers

Political instability
Regulator interference
The service providers have to incur a huge initial fixed cost to make a mark in rural markets.
Achieving
break-even under these circumstances may prove to be difficult.