Boom in the Indian Telecom Sector Here to Stay

The telecom sector in India has witnessed unparalleled growth especially over the last decade as compared to global standards. In the case of wireless telephony, India has grown from having a zero subscriber base a decade ago to becoming the second largest market in the world after China in 2009 with around 359 million subscribers and another 10 million adding every month. The last couple of years have witnessed investments of a whooping 8.5 billion dollars in this sector with 550 million dollars being in the form Foreign Direct Investment, more commonly known as FDI. Even though the the telecom sector has witnessed a rapid rise only in the last few years, efforts were on by the government ever since 1994 when the first National Telecom Policy was announced and in the August of 1995 when Kolkata became the first Indian city to have cellular networking. The Telecom Regulatory Authority of India(TRAI) was setup in 1997 and the second National Telecom Policy came into effect in mid 1999. In January 2001, the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) started functioning and a policy was announced for additional licenses especially in the area of basic and mobile services. In November 2003, the Unified Access (Basic & Cellular) Service License (USAL) was introduced as a first step towards a Unified License Regime Technology and allows provisioning any kind of service.
And very recently the introduction of the additional 2G spectrum has helped in the entry of several new players who are now partnering with various international operators thereby commencing the globalisation of the Indian Telecom Industry. The impending auction of the 3G spectrum is sure to provide another huge leap to the telecom industry in India. In such a situation concerted efforts must be made by both the government and industry to have organised and systematic growth so that the entire potential of the sector can be harnessed.
This telecom boom in India can be attributed to policies of liberalisation, globalisation, certain reforms by the government and most importantly competition. The liberal policies of the government thus provide easy market access for telecom equipment and also a regulatory framework that is fair and just and offers telecom services to the Indian consumer at astonishingly affordable prices .India also provides a safe ,secured and transparent market for the telecom companies and moreover the investment policies and other lucrative incentives have made foreign collaborations possible and India one of the fastest growing markets. But the one factor that has perhaps made the maximum impact is competition. More and more companies are entering the telecom sector and with increased competition, new schemes are being introduced making it more and more economical for the consumers. Let us understand the effect of competition by considering the case of mobile telephone connections. Tata Dokomo recently introduced a 1Paise/second scheme on call rates and to maintain their consumer base competitors like Vodafone, Airtel, Idea had to follow suit. The lucrative SMS schemes are also a great hit especially with the youth. Roaming charges are also on an all time low. Just a couple of years back calling a friend in USA would surely burn a huge hole in your pocket but thanks to increasing competition and reducing call rates, you can talk to a friend in New York or Washington D.C for as less as 5 rupees per minute. Just Imagine!! Mobile phone manufacturers like Nokia, Samsung, Motorola are also slashing rates and now phones that were once available for a whooping INR 30,000, the base models are now available for as less INR 1,200. Truly Unbelievable!! Thus, in spite of the whole global meltdown, the Indian telecom industry has just kept on growing. Moreover, with more and more services being offered like internet, MMS, 3G and loads of stuff, it is an even bigger incentive for the people.

Well all this is the face of modern India. It has immensely helped in the development of both industry and economy. The economy has flourished with more foreign players entering the market, more foreign Direct Investment to mention a few aspects. The people also have undoubtedly benefitted from all this and mobile phones which were considered as only for the rich a couple of years ago are now spread all over. With rates being slashed, almost anyone and everyone can afford a mobile especially in urban areas.

So, is that all? Has the telecom sector reached its peak, its saturation point? Will we see a downward trend from here on in? Well absolutely not. I personally feel that there is still loads of potential in the Indian market and the growth rate of the telecom sector is going to be pretty encouraging for many years to come. The growth in rural markets is going to take centre stage with the urban markets almost stagnating. Operators will have to pay more emphasis on active and passive sharing. However, an adequate spectrum must be provided by the government if further growth is needed. The wireless subscriber base is also expected to grow and the fixed line base is to increase only on account of broadband growth. Mergers and acquisitions are also expected to happen and by 2012 there would be only a couple of major players. The mobile is also going to emerge as the principal means for internet access. More than 50% of the new connections will emerge from rural areas. In all this one thing is for sure, whether the world is in recession or not, whether there is a boom or not, the Indian Telecom industry is sure to boom!

Ayush Kanwar

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