Indian Telecom: A Tale of Stupendous Growth

The past decade has seen an exponential growth in the Indian Telecom Sector. In the year 2000, Telecom Regulatory Authority of India(TRAI) Act was amended and in 2001 Telecom Disputes Settlement And Appellate Tribunal (TDSAT) started its functioning. In 2002, Bharat Sanchar Nigam Limited (BSNL) entered into GSM cellular operation and made incoming calls free for the first time and since then there is no looking back. Currently, the call rates in India are one of the lowest; to the extent where some operators are even offering Per-Second-Billing.

Despite the financial slowdown, the industry continued its high growth rate. In 2009 the Indian Telecom sector contributed 5.65 to the country’s Gross Domestic Product (GDP) and attracted a Foreign Direct Investment (FDI) of over $2 billion. India is Third in the world in terms of the number of Telecom subscribers. The Indian telecom industry had an awesome run in 2009, adding some 170 million phone connections to take the subscriber base to nearly 550 million.

In addition to this, India has the second largest wireless network in the world, next only to China. There were 442 million wireless subscribers as of July 2009, with a Compounded Annual Growth Rate (CAGR) of 65% during the last five years.

The government initiatives like announcement of 3G policy and WiMax rollout are bold steps in serving mass communications. Sharing of the basic telecom infrastructure among the major telecom players such as Airtel and Vodafone has also resulted in a pan India reach.

The Telecom Scenario can be broadly dissected into four categories:

1) Rural India: Bridging the Telecom Divide.

The emergence of Rural Market in India provides an extensive market place for mobile industry. The adoption of 3G and Broadband Wireless Association (BWA) is likely to galvanize competition and expand network coverage into the hinterlands of the country. With in a short span of 3 years the rural tele-density has jumped from 4.5% to 19%. Communications Minister A. Raja believes that the continued participation of private sector will help us achieve the target of 40 percent rural tele-density well before the set timeline of 2014.

2) India as hub for Telecom Equipments Manufacturing and Exports.

In order to make the latest technology available in the market, focus is on commercialization of telecom innovation and technology. this can contribute towards inclusive growth by making low cost handsets available that support affordable access in rural areas. TheĀ  production of telecom equipments as of March 2009 was INR 518 billion with a CAGR of 29% during the last five years. At the same time INR 81 billion of telecom equipments were exported with a CAGR of 100% during the last five years.

3) VAS, Mobile Banking and M-commerce

Value Added Services(VAS) has an immense potential to grow with services like Mobile banking and Mobile -commerce. Content development, pricing and innovative strategies are the key factors for driving the VAS demand.

4) Exploring New Frontiers

With growing competitive pressure on all fronts and the inevitable need to keep pace with emerging technologies globally, telecom operators are re-examining their traditional business models and are making substantial investments in upcoming technologies. These include 3G Band Allocation, Worldwide Interoperability for Microwave Access (WiMax) and Future Generation Networks.

Himanshu Singhal

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