COUNTRY REPORT SUBMITTED TOWARDS THE PARTIAL FULFILLMENT OF POST GRADUATE DEGREE IN INTERNATIONAL BUSINESS

COMPARATIVE ANALYSIS OF THE GROWTH OF TELECOM SECTOR IN INDIA & US

SUBMITTED BY: Name-MANINDER SINGH JUNEJA MBA-3CMBA (2010-2012) Roll No. : A1808710023

FACULTY GUIDE Faculty-prof debashish choudhary Amity International Business School

AMITY INTERNATIONAL BUSINESS SCHOOL, NOIDA AMITY UNIVERSITY UTTAR

PRADESH

ACKNOWLEDGEMENT
Doing a project requires the assistance of many people. These people do their part by guiding us, efficiently developing an outline & providing us the feedback. This project is an honest effort towards putting forward whatever I have gained as a valuable experience that surely, will help me in the path I have chosen. I owe my sincere & heartiest gratitude to Mr Ajit Kumar Pandey and Dr Sanjeev Chaturvedi Faculty, Amity International Business School, for his able guidance, continuous support and cooperation throughout my project without which the present work would not have been possible.They constantly encouraged me and showed the right path from day first till the completion of my project. I would also like to thank the Head of the Organization, Prof:DEBASHISH CHOUDHARY for providing chance to do this research and also his entire constant support and help in the successful completion of my project. It was an extremely rewarding experience for me in terms of learning I consider it a privilege to express through the pages of this report, a fewwords of gratitude and respect to those who guided and inspired in the completion of this project

However, I accept the sole responsibility for any possible errors of omission and would be extremely grateful to the readers of this project report if they bring such mistakes to my notice. Signature (student)

CONTENTS:

Chapter-1 INTRODUCTION Chapter-2 HISTORY Chapter-3 OBJECTIVES Chapter-4 TELECOM SECTOR IN INDIA Chapter-5 GROWTH OF TELECOM IN INDIA Chapter-6 TELECOM SECTOR IN USA Chapter-6 SWOT ANALYSIS Chapter-7 CONCLUSIONS OF INDIA Chapter-8 CONCLUSIONS OF USA Chapter-9 REFRENCES

4 6 11 12 53 70 90
97

98 99

INTRODUCTION
Telecommunication is the transmission of information over significant distances to communicate. In earlier times, telecommunications involved the use of visual signals, such as beacons, smoke signals, semaphore telegraphs, signal flags,

and optical heliographs, or audio messages via coded drumbeats, lung-blown horns, or sent by loud whistles, for example. In the modern age of electricity and electronics, telecommunications now also includes the use of electrical devices such as the telegraph, telephone, and teleprinter, as well as the use of radio and microwave communications, as well as fiber optics and their associated electronics, plus the use of the orbiting satellites and the Internet. A revolution in wireless telecommunications began in the 1900s (decade) with pioneering developments in wireless radio communications by Nikola Tesla and Guglielmo Marconi. Marconi won the Nobel Prize in Physics in 1909 for his efforts. Other highly notable pioneering inventors and developers in the field of electrical and electronic telecommunications include Charles Wheatstone and Samuel Morse (telegraph), Alexander Graham Bell(telephone), Edwin Armstrong, and Lee de Forest (radio), as well as John Logie Baird and Philo Farnsworth (television). The world's effective capacity to exchange information through two-way telecommunication networks grew from 281 petabytes of information in 1986, to 471 petabytes in 1993, to 2.2 exabytes in 2000, and to 65 exabytes in 2007.This is the informational equivalent of 2 newspaper pages per person per day in 1986, and 6 entire newspapers per person per day by 2007. Given this growth, telecommunications play an increasingly important role in the world economy and the worldwide telecommunication industry's revenue was estimated to be $3.85 trillion in 2008. The service revenue of the global telecommunications industry was estimated to be $1.7 trillion in 2008, and is expected to touch $2.7 trillion by 2013. Telecom industry comprises the firms in business transmission of voice and data between devices.Voice and data are encoded and decoded into electrical signals after transmission and before reaching the destination. The signals are then transmitted over a network of copper/fiber-optic cable.The significance of this industry can be judged from the enormous amount of the revenues it generates. In 2005 the total revenues across the world in this industry to amounted 1.2 trillion which is almost 3% of the world GDP. In the US,Voice

business amounts to 64.9% of the business while Data and other services take the rest of the market However due to recent advances in technology the share of data has been increasing rapidly High speed internet is rapidly making a way into households and is poised to become the leading revenue earner for the firms in the industry. Most of the firms in the business have one or more four distinct lines of business, 1) Voice services 2) Wireless voice/data services and 3) Internet/ Broadband/Data services and more recently 4) Video services.

Until the early 90s the industry was compromised of monopoly regional operators strictly regulated by the Federal Communication Commission (FCC) and the state public utility commissions. The firms who wanted to enter the business in this industry needed the licenses from FCC. The monopolistic nature of these corporations meant price controls were imposed any price rises were decided by the regulatory bodies upon requests by businesses citing increased expenses.

Chapter 2 HISTORY
Ancient systems
Greek hydraulic semaphore systems were used as early as the 4th century BC. The hydraulic semaphores, which worked with water filled vessels and visual signals, functioned as optical telegraphs. However, they could only utilize a very limited range of pre-determined messages, and as with all such optical

telegraphs could only be deployed during good visibility conditions. During the Middle Ages, chains of beacons were commonly used on hilltops as a means of relaying a signal. Beacon chains suffered the drawback that they could only pass a single bit of information, so the meaning of the message such as "the enemy has been sighted" had to be agreed upon in advance. One notable instance of their use was during the Spanish Armada, when a beacon chain relayed a signal from Plymouth to London that signaled the arrival of the Spanish warships

Systems since the Middle Ages

In 1792, Claude Chappe, a French engineer, built the first fixed visual telegraphy system between Lille and Paris. However semaphore systems suffered from the need for skilled operators and the expensive towers at intervals of 1030 kilometers (620 mi). As a result of competition from the electrical telegraph, Europe's last commercial semaphore line in Sweden was abandoned in 1880.

Telegraph and telephone

The first commercial electrical telegraph was constructed by Sir Charles Wheatstone and Sir William Fothergill Cooke, and its use began on April 9, 1839. Both Wheatstone and Cooke viewed their device as "an improvement to the electromagnetic telegraph" not as a new device. The businessman Samuel F.B. Morse and the physicist Joseph Henry of the United States developed their own, simpler version of the electrical telegraph, independently. Morse successfully demonstrated this system on September 2, 1837. Morse's most important technical contribution to this telegraph was the rather simple and highly efficient Morse Code, which was an important advance over Wheatstone's complicated and significantly more expensive telegraph system. The communications efficiency of the Morse Code anticipated that of the Huffman code in digital communications by over 100

years, but Morse and his associate Alfred Vail developed the code purely empirically, unlike Huffman, who gave a detailed theoretical explanation of how his method worked. The first permanent transatlantic telegraph cable was successfully completed on 27 July 1866, allowing transatlantic electrical communication for the first time. An earlier transatlantic cable had operated for a few months in 1859, and among other things, it carried messages of greeting back and forth between President James Buchanan of the United States and Queen Victoria of the United Kingdom. However, that transatlantic cable failed soon, and the project to lay a replacement line was delayed for five years by the American Civil War. Also, these transatlantic cables would have been completely incapable of carrying telephone calls even had the telephone already been invented. The first transatlantic telephone cable (which incorporated hundreds of electronic amplifiers) was not operational until 1956. The conventional telephone now in use worldwide was first patented by Alexander Graham Bell in March 1876. That first patent by Bell was the master patent of the telephone, from which all other patents for electric telephone devices and features flowed. Credit for the invention of the electric telephone has been frequently disputed, and new controversies over the issue have arisen from time-to-time. As with other great inventions such as radio, television, the light bulb, and the digital computer, there were several inventors who did pioneering experimental work on voice transmission over a wire, and then they improved on each other's ideas. However, the key innovators were Alexander Graham Bell and Gardiner Greene Hubbard, who created the first telephone company, the Bell Telephone Company in the United States, which later evolved into American Telephone & Telegraph (AT&T). The first commercial telephone services were set up in 1878 and 1879 on both sides of the Atlantic in the cities of New Haven, Connecticut, and London, England.

Radio and television

In 1832, James Lindsay gave a classroom demonstration of wireless telegraphy via conductive water to his students. By 1854, he was able to demonstrate a transmission across the Firth of Tayfrom Dundee, Scotland, to Woodhaven, a distance of about two miles (3 km), again using water as the transmission medium. In December 1901, Guglielmo Marconi established wireless communication between St. John's, Newfoundland and Poldhu, Cornwall (England), earning him the Nobel Prize in Physics for 1909, one which he shared with Karl Braun. However small-scaleradio communication had already been demonstrated in 1893 by Nikola Tesla in a presentation before the National Electric Light Association. On March 25, 1925, John Logie Baird of Scotland was able to demonstrate the transmission of moving pictures at the Selfridge's department store in London, England. Baird's system relied upon the fast-rotating Nipkow disk, and thus it became known as the mechanical television. It formed the basis of experimental broadcasts done by the British Broadcasting Corporation beginning September 30, 1929. However, for most of the 20th century, television systems were designed around the cathode ray tube, invented by Karl Braun. The first version of such an electronic television to show promise was produced by Philo Farnsworth of the United States, and it was demonstrated to his family in Idaho on September 7, 1927. Television, however, is not solely a technology, limited to its basic and practical application. It functions both as an appliance, and also as a means for social story telling and message dissemination. It is a cultural tool that provides a communal experience of receiving information and experiencing fantasy. It acts as a window to the world by bridging audiences from all over through programming of stories, triumphs, and tragedies that are outside of personal experiences.

Computer networks and the Internet

On 11 September 1940, George Stibitz was able to transmit problems using teleprinter to his Complex Number Calculator in New York and receive the computed results back at Dartmouth College in New Hampshire. This configuration of a centralized computer or mainframe computer with remote "dumb terminals" remained popular throughout the 1950s and into the 1960s. However, it was not until the 1960s that researchers started to investigate packet switching a technology that allows chunks of data to be sent between different computers without first passing through a centralized mainframe. A four-node network emerged on December 5, 1969. This network soon became the ARPANET, which by 1981 would consist of 213 nodes. ARPANET's development centred around the Request for Comment process and on 7 April 1969, RFC 1 was published. This process is important because ARPANET would eventually merge with other networks to form the Internet, and many of the communication protocols that the Internet relies upon today were specified through the Request for Comment process. In September 1981, RFC 791 introduced the Internet Protocol version 4 (IPv4) and RFC 793 introduced the Transmission Control Protocol (TCP) thus creating the TCP/IP protocol that much of the Internet relies upon today. However, not all important developments were made through the Request for Comment process. Two popular link protocols for local area networks (LANs) also appeared in the 1970s. A patent for the token ring protocol was filed by Olof Soderblom on October 29, 1974, and a paper on the Ethernet protocol was published by Robert Metcalfe and David Boggs in the July 1976 issue ofCommunications of the ACM. The Ethernet protocol had been inspired by the ALOHAnet protocol which had been developed by electrical engineering researchers at the University of Hawaii

TELECOMMUNICATION INDUSTRY

The Telecommunications Industry Association (TIA) is the leading trade association representing the global information and communications technology (ICT) industry through Standards development, Policy initiatives, business opportunities, market intelligence and networking events. With support from hundreds of members, TIA enhances the business environment for companies involved in telecom, broadband, mobile wireless, information technology, networks, cable, satellite, unified communications, emergency communications and the greening of technology. TIA is accredited by ANSI.

CHAPTER-3 OBJECTIVES
To compare and contrast the difference in the USA and INDIAS TELECOM SECTOR and their contributions to respective economies. Major challenges for TELECOM SECTOR in INDIA AND USA and its weaknesses, and analyze their roots. The opportunities for TELECOM Business in future and the major competitors to its business.

INDIAN TELECOM MARKET

Third largest in the world and the second largest among the emerging economies of Asia, the Indian Telecommunication network has proved its mettle time and again. Public as well as private segments of the economy have made significant contributions to make the sector one of the key contributors to India's success story. The growth of Indian telecommunication sector is highly driven by supportive government policies, emerging new technologies and changing consumer behaviour. The fact that the industry has made stupendous growth in recent times is reflected in the statistics, key developments, investments and future prospects pertaining to itare discussed hereafter.

Key Statistics

In its recent statement issued, Telecom Regulatory Authority of India (TRAI) has revealed that the country's mobile subscriber base has increased from 893.84 million in December 2011 to 903.73 million in January 2012, growing by 1.11 per cent Telecom operators added 9.88 million mobile subscribers in January 2012, taking the total telephone user base to 936.12 million

The overall tele-density (telephones per 100 people) reached 77.57 per cent Broadband subscriber base increased from 13.30 million at the end of December 2011 to 13.42 million at the end of January 2012

Market Dynamics
The Indian handset market has registered 14.1 per cent growth in 2011 marking a volume sale of 182 million handsets. The Indian handset market is led by Nokia with 37.2 per cent market share, followed by Samsung (14.9 per cent), G'Five (7.5 per cent) and Micromax (5.8 per cent). Indian handset market experiences a strong presence of domestic and Chinese handset makers (like Micromax, G'Five, Karbonn, Spice, Maxx and Lava) owing to their offerings that are reasonably priced as well as fully featured with latest technologies and applications. Moreover, every vendor is venturing into the flourishing smartphone market in India. A report by CyberMedia Research (CMR) reveals that that there were 10 million units of smartphones shipments over January-November 2011. The report titled 'India Monthly Mobile Handsets Market Review' also stated that there were 23 smartphone model launches in the month of November itself. For smartphone shipments also (during January-November 2011), Nokia led the market with 38.4 per cent share, with Samsumg (27.5 per cent) and Reliance India Mobile (RIM [15.5 per cent]) trailing behind.

Key Developments & Investments

In a bid to globalise its Indian operations that would support its global product supply chain, Ericsson, the world's largest mobile network equipment maker, has plans to ramp up its investments in the country. Driven by changing demographics and consumer behaviour, Ericsson's strategy is to upgrade Indian operations from being domestic-market oriented to export oriented Indian start-up company Lava has formed a strategic partnership with Intel with the launch of the first Intelpowered smartphone in India, the Xolo X900. Lava, which has so far manufactured budget phones, will now produce smartphones under the brand name 'Xolo' India's third largest mobile phone company Idea Cellular has entered an alliance with Opera Software to launch a customised 'Opera Mini' mobile web browser. Apart from being a mass-market web browser that claims to offer a rich web experience to smartphone users, Opera Mini would also help in driving data traffic and increase average revenue per user (ARPU) Bharti Airtel has launched an innovative mobile money platform called 'Airtel Money' in India through its whollyowned subsidiary Airtel M Commerce Services Ltd (AMSL). Airtel users, across 300 key cities in India, would be empowered to top-up their cell-phones with airtime and pay for their utility bills, recharges, shopping at 7,000-plus merchant outlets and online transactions through this fast, simple and secure service India's fifth-largest Global System for Mobile Communications (GSM) operator Aircel, has decided to renew its outsourcing contract worth US$ 100 with Nokia Siemens Networks (NSN) to manage its mobile networks in seven circles - Delhi, Mumbai, Kolkata, Punjab, Haryana, West Bengal and Rajasthan

NSN has also bagged a contract from Bharti Airtel, the world's fifth largest telecom company, to build and operate its longterm evolution (LTE) network in Maharashtra circle. LTE is a 4G mobile broadband technology that supports services like highspeed internet and video streaming on the go.

Government Initiatives
The sector regulator, TRAI, has issued guidelines to all the operators to set up a complaint centre under Telecom Consumers Complaint Regulations, 2012. The centre would be responsible in acknowledging all the complaints it receives, even if the complaint is made by a subscriber of another mobile operator. It would have a toll-free number and would be equipped with a web-based complaint monitoring system, through which the consumers can track their complaints. TRAI is also doing its bit to achieve the aim of carbon emission reduction under which operators are directed to achieve carbon reduction to the extent of 5 per cent by 2012-13, 12 per cent by 2016-17 and 17 per cent by 2018-19. With regards to these norms under 'Green Telephony', TRAI has further mandated for all the operators that at least 50 per cent of all rural towers and 20 per cent of all urban towers are to be powered by hybrid power by 2015. The government has also given its nod for the same. Moreover, the National Telecom Policy (NTP) 2012 has received approval from the Telecom Commission. It will now head to the Cabinet for further consideration and approval. The new telecom policy endorses free roaming service to telecom users while allowing them to retain their numbers without paying extra. The new policy would also allow telecom players to exit from the business under specific conditions

Information Note to the Press (Press Release No. 72/2012)

TELECOM REGULATORY AUTHORITY OF INDIA

New Delhi, 7th April, 2012

For immediate release

Website: www.trai.gov.in

Highlights on Telecom Subscription Data as on 29th February 2012 Particulars Total Subscribers
Monthly Growth (%)
(Millions)

Wireless
911.17 7.44 0.82% 594.11 3.01 0.51% 317.06 4.43 1.42% 75.42 162.61 37.62 65.20% 34.80%

Wireline
32.33 -0.07 -0.21% 24.71 -0.02 -0.07% 7.62 -0.05 -0.65% 2.68 6.76 0.90 76.43% 23.57%

Total
Wireless+Wireline

Total Net Addition (Millions)

943.49 7.37 0.79% 618.82 2.99 0.49% 324.68 4.38 1.37% 78.10 169.37 38.53 65.59% 34.41%

Urban Subscribers
Monthly Growth (%)

(Millions)

Urban Subscribers Net Addition (Millions)

Rural Subscribers
Monthly Growth (%)

(Millions)

Rural Subscribers Net Addition (Millions)

Overall Teledensity*
Urban Teledensity* Rural Teledensity* Share of Urban Subscribers Share of Rural Subscribers

Mobile Number Portability requests increased from 32.79 million subscribers at the end of January 2012 to 37.11 million at the end of February 2012. In the month of February 2012 alone, 4.32 million requests have been made for MNP. Active wireless subscribers on the date of Peak VLR in February 2012 are 670.65 Million.

Broadband subscription reached 2012 from 13.42 Million in January 2012.

to

13.54

Million

in

February

_______________________________________________________________________________________________

* Based on the population projections from Census data published by the Office of Registrar General & Census Commissioner of India.

I. Total Telephone Subscribers

The number of telephone
Total (Wireless+Wireline) Subscribers in Million

subscribers in India increased 943.49 Million at the end

to of
1000 900 800 936.12 943.49

February, 2012 from 936.12 Million at the end of January 2012, thereby registering a growth rate of 0.79%. The share of Urban subscribers has declined to has 65.59% from 65.79% in the

700 600 500 400 300 200 100 0

615.83

618.82

320.29

324.68

whereas share of Rural Subscribers increased to 34.41%

month of February 2012. the overall Tele-density reaches to

With this, in India of

78.10 at the end

January12
Total Subscribers

February12
Urban Rural

February, 2012 from 77.57 of the previous month.

Overall Teledensity
180 160 140 120 100 80 60 40 20 0 January12
Overall

Subscription in Urban Areas grew from 615.83 million in January, 2012

168.84

169.37

to

618.82 million

at the end

of

February, 2012. Subscription in Rural Areas increased from 320.29 million to

77.57 78.10

324.68 million during the same

period. The growth of Urban and Rural Subscription is 0.49% and

38.53

38.04

1.37% respectively. The overall Urban teledensity has increased from 168.84 to 169.37 and Rural teledensity

February12
Urban Rural

increased from 38.04 to 38.53.

Overall Teledensity (Circle Wise)

Overall Teledensity
All India Assam Bihar Madhya Pradesh J&K UP* North East Orissa Rajasthan West Bengal* Andhra Pradesh Haryana Gujarat Karnataka Maharashtra* Kerala Punjab Tamil Nadu Himachal Pradesh Delhi
0

78.10 45.46 48.25 53.52 54.17 60.16 64.74 65.45 71.80 79.25 80.64 87.82 90.04 96.81 96.50 107.77 113.25 116.57 119.59 236.33

50

100

150

200

250

* Population data/Projections are available state wise only. Notes: 1. Teledensity figures are derived from the subscriber data provided by the operators and the population projections published by the Office of the Registrar General & Census Commissioner, India. wireless 2. Delhi Service area, apart from the State of Delhi, includes wireless subscribers of the areas served by the local exchanges of Ghaziabad & Noida (in UP) and Gurgaon & Faridabad (in Haryana).

II. Wireless Segment (GSM, CDMA & FWP)

Total Wireless subscriber base

Total Wireless Subscribers (in Millions) 1000 900 800 700 600 500 400 300 200 100 0 January12
Total Subscribers

increased from 903.73 Million in January 2012 to 911.17 Million at the end of February 2012, The has

903.73

911.17

registering a growth of 0.82%. share of Urban Subscriber

591.10

594.11

marginally decreased from 65.41 % to 65.20% where as share of Rural Subscribers has marginally

312.62

317.06

increased from 34.59% to 34.80%. The overall wireless Tele density in India reaches 75.42.

February12
Urban Rural

Wireless subscription in Urban

Wireless Teledensity 180 160 140 120 100 74.89 80 60 40 20 0 January12
Overall

Areas increased from 591.10 million in January 2012 to 594.11 million at the end of February 2012. in Rural The Areas to

162.06

162.61

subscription

increased from 312.62 million 317.06

75.42

million during

the

same

period. This shows higher growth in Rural Subscription (1.42%) than (0.51%). The has
37.62

37.13

Urban Subscription Urban wireless

teledensity

increased from 162.06 to 162.61 and

February12
Urban Rural

Rural teledensity has increased from 37.13 to 37.62. Detailed statistics is at Annexure I.

Private operators hold 88.64% of the wireless market share where as BSNL

and MTNL, two PSU operators hold only 11.36% market share. The graphical presentations of market shares and shares in net additions of all the service providers during the month of February 2012 are given below: A. Service Provider wise Market Share as on 29th February 2012.
Videocon Sistema 0.68% 1.69% MTNL 0.63% Loop 0.38% Stel 0.36% HFCL 0.15% Etisalat 0.09% Bharti 19.62%

Uninor 4.52% Aircel 6.94%

Tata 8.99%

BSNL 10.73% Reliance 16.68% Idea 12.15% Vodafone 16.40%

Pvt : 88.64%

PSU: 11.36%

B. Service Providers share in net additions during February 2012

31.48%

Share in Net Addition

(Net Add.= 7,440,985)

2 4. 5 0 %

1 3 .08%

26% .6 .69 1 7 % 0 %

1 . 54%

1.17%

12 34. %

MTNL 0. 47% Loop 0.15%

0. 00%

22 %

Vodafon ei r c e Videoc l on

hUninor a r t Relianc i e

HFCL

BSNL

Sistema

Stel

Note: The subscriber figures of S Tel are taken as on January 2012, due to non submission of non-submission information for February 2012.

T a t a

6 2 1 4 %

. .

III. VLR Data

Out of the total 911.17 Million wireless subscribers, 670.65 Million were active on the date of Peak VLR for the month of February 2012. The total active VLR number excludes the CDMA VLR figure of BSNL, as the service provider has not provided the VLR figures of their total CDMA subscriber base of 4.10 million. The proportion of VLR subscribers is approximately 73.60% of the total wireless subscriber base reported by the service providers. Circle-wise, J&K has the highest proportion of VLR subscribers with 82.81% followed by Assam (82.13%) and MP (80.55%); Mumbai has the lowest proportion with 63.74%. Service Provider wise, Idea leads the tally with 92.90% followed by Bharti (91.88%); STel is at the bottom with 28.53%. The detailed statistics of proportionate VLR is at Annexure II & methodology used for reporting subscriber base/active subscribers is at Annexure IV. Proportion of VLR subscribers (Circle wise) Proportion of VLR
8 .8 2 1 8 2 .13 8 0 .55 7 9 .00 7 7 .71 7 7 .51 7 6 .48 75 .68 7 4 .85 7 4 .33 7 .6 3 3 7 .9 2 7

Subs cribe rs

J&K Assam Madhya Maharashtra Rajasthan Gujarat Andhra U P (E) . . Delhi Karnataka Punjab West U P (W) . . Bihar Kerala

Haryana Nort HP h East Orissa Kolkata Tam il Nadu

Total Subs

VLR Subs

VLR %

Mumbai

40 30 20 10 0

40 30 20 10 0

VLR %

90 80 70 60 50

72 .59 7 .5 2 2 7 .3 1 1 7 .1 1 3 6 .3 9 7 6 .2 8 3 6 .6 7 2 6 .4 7 1 6 .3 4 9 63.7 4

90 80 70 60 50

ill io n s)

Proportion of VLR subscribers (Service Provider wise) Proportion of VLR

.9 0 .8 8 9 2 9 1 87.68

48.66 4 8 5 6 4 7 3 9 4 .4 2 7 4 5 1 5

5 2 28 3 .9

Idea

Loop

100 80 60 40 20 0

50 40 30 20 10 0

Vodafo ne Reli

Siste ma

is al at

Videoc on

anc e

Total Subs

VLR Subs

VLR %

* The subscriber figures of S Tel are taken as on January 2012, due to non-submission of information for Feb-2012.

M T N L

S Tel

Tata

VL R %

200 180 160 140 120

100 90 80 70 60
3 6 .

6 5 .39

57. 31 5 7 06 5 7 5 9

53 .11

IV. Mobile Number Portability As per the data reported by the service providers, by the end of February 2012 about 37.11 million subscribers have submitted their requests to different service providers for porting their mobile number. In MNP Zone-I (Northern & Western India) maximum number of requests have been received in Gujarat (3.42 million) followed by Rajasthan (3.26 million) whereas in MNP Zone-II (Southern & Eastern) maximum number of requests have been received in Karnataka (3.94 million) followed by Andhra Pradesh Service area (3.46 million). In the month of February 2012, total number of subscribers who have submitted their request for MNP is 4.32 million. The status of MNP requests in various service areas is given below:

Service Area Wise MNP Status at the end of February, 2012

Zone -1 Service Area Number of Porting Requests Service Area Zone - 2 Number of Porting Requests

Delhi Gujarat Himachal Pradesh Haryana Jammu & Kashmir Maharashtra Mumbai Punjab Rajasthan Uttar Pradesh - East Uttar Pradesh - West
Total

1641506 Andhra Pradesh 3426450 Assam 141593 Bihar 1642668 Karnataka 6055 Kerala 2909573 Kolkata 1299078 Madhya Pradesh 1436221 North East 3256438 Orissa 2031205 Tamil Nadu 2038921 West Bengal
19829708 Total
(Zone-1 + Zone-2)

3460753 85400 778624 3940238 1860763 777454 2264486 27959 788425 2232754 1064683
17281539 37111247 4322509

Total

Net Addition
(in February 2012)

V. Wireline Segment Wireline subscriber base declined from 32.39 Million at the end of January 2012 to 32.33 Million at the end of February 2012. The share of Urban Subscribers has increased from 76.32% to 76.43% where as share of Rural Subscribers has declined from 23.68% to 23.57%. The overall wireline tele teledensity in India has remained, more or less, stable at 2.68 with urban and rural teledensity being 6.76 and 0.90 respectively. BSNL and MTNL, two PSU operators hold 80.76% of the Wireline market share. Detailed statistics is at Annexure-III. The graphical presentation of market share of all service III. providers as on 29th February 2012 is given below: A. Service Provider wise Market Share as on 29th Feb. 2012
Reliance 3.93% Tata 4.40% HFCL 0.62% Sistema 0.15% Vodafone 0.05%

Bharti 10.08%

MTNL 10.69%

BSNL 70.07%

Pvt : 19.24%

PSUs : 80.76%

Note: Fixed line subscriber base corresponding to Vodafone is for corporate customers, which they have started reporting to TRAI from February 2012.

B. Service providers share in Net Addition during February 2012. Share in Net addition
0.73% (Net addition= -66562)

40% 20% 0% -20% 40% 60% 80% 100% -120% -140% -160% -180%

23.23% 26.41% 1.36% -1.30% 1.50% 1.01%

S i s t e m a

BS NL

Relianc e

Vodafo Vodafo ne

Bh arti

-152.95% 152.95%

H F C L

MT NL

10

VI. Category wise Growth From the below tables, Circle A shows the highest net addition and highest rate of monthly growth in the wireless sector from January 2012 to February 2012. Category wise Net Additions and subscriber base Net Additions during the month of February, 2012 Wireline Circle A Circle B Circle C Metro All India -14356.7 14356.7 -57196 57196 -5998 5998 10988.43 -66562 66562 Wireless 3789806 3320601 1251812 -921234 7440985 Subscriber Base as on 29th February, 2012 Wireline 12769715 10471157 2075705 7075461 32392038 Wireless 322010067 360624143 125336344 103197639 911168193

Category

Category-wise Growth Rate in Access Service wise Monthly Rate of Growth Category (Feb-2011 to Feb 2011 Feb-2012) Wireline Circle A Circle B Circle C Metro All India -0.11% 0.11% -0.55% 0.55% -0.29% 0.29% 0.16% -0.21% 0.21% Wireless 1.19% 0.93% 1.01% -0.88% 0.82% Yearly rate of growth (Feb-2011 to Feb 2011 Feb-2012) Wireline -4.97% -8.24% -27.95% -1.86% -7.28% Wireless 14.03% 16.56% 19.63% 8.83% 15.14%

Metros indicate data for Delhi, Mumbai & Kolkata. Data for Chennai service area has tros been included in Circle A, as part of TN

11

VII. Broadband ( 256 Kbps download) Total Broadband subscriber base has increased from 13.42 million at the end of January 2012 to 13.54 million at the end of February 2012, there by showing a monthly growth of 0.87%. Yearly growth in broadband subscribers is 18.02% during the last one year (Feb. 2011 to Feb. 2012). As on 29th Feb. 2012, there are 155 Internet Service Providers (ISPs) which are providing broadband services in the country. Top three ISPs in terms of market share are: BSNL with 8.78 million subscribers, Bharti Airtel with 1.36 million and MTNL with 1.03 million subscribers.
Broadband Market Share

Others, 17.5% BSNL, 64.8% MTNL, 7.6%

Bharti, 10.0%

BSNL

Bharti

MTNL

Others

***

Contact details in case of any clarification:

Raj Pal, Advisor (ER), TRAI Mahanagar Doorsanchar Bhawan Jawahar Lal Nehru Marg, New Delhi 110002 Ph: 011-23230752 Fax: 011-23236650 E-mail: adveco@trai.gov.in

Authorised to issue:

(Raj Pal) Advisor (ER)

Note: Information in the Press Release is based on the data provided by the Service Providers.

12

Wireless Subscriber Base

Annexure-I

Page 1 of 3

Circle
18005577 3604326 17075806 8666307 6867664 2349201 1806122 2052589 15353628 3507520 3830230 9635114 9646997 3719123 2228206 6175241 6944261 14011209 13292922 14295939 6631344 9077805 9349500 2686136 9462237 8686907 8170553 4260263 1872074 520531 8045188 4253749 5342181 12286268 10844584 8761138 906254 4700014 4914581 7673753 8653682 12499488 9705091 7434027 9443471 2771995 9491206 8653048 8309872 4265016 1837334 537378 8069504 4266119 5403634 12288542 10901353 8714220 955146 4699435 4953072 7694048 8742594 12586458 9797371 7620750 6784329 1951967 5799023 8340459 15761617 4343430 422962 685929 6614514 5825894 4445740 3790520 12659140 6002506 916493 2514974 4454905 9409930 12235508 14559374 9464037 11618854 6624192 2000504 5887902 8415704 15947610 4368831 433969 700996 6684965 5838915 4419352 4005622 12853290 5902412 928000 2552046 4504979 9257085 12248080 14689390 9504231 11672101 7707188 127535 5002835 4856373 3857732 2867646 400506 116735 7014596 2376342 3156152 4950199 9198909 5177457 75687 2513609 3097240 3927410 4511465 4640824 4933645 3208778 7697402 127528 4966124 4640386 3754102 2848288 399813 118169 7101538 2391961 3029610 4957233 8676060 4673113 75407 2515623 3168079 3802547 4549243 4659549 4736206 2999751 9623900 287682 5476438 4585267 7713978 3431364 429235 162560 5528696 7402840 1210597 13315056 14972162 2818843 191918 976758 5194458 3762139 2018098 7054244 9995876 1975171 9874869 298823 5598131 4736999 7944883 3559508 442471 170863 5599658 7398445 1283469 13532307 15139241 2866050 195971 1028637 5365154 3950149 2084095 7310273 10214038 2115580

Bharti Jan-12 Feb-12

Reliance Jan-12 Feb-12

Group Vodafone Tata Jan-12 Feb-12 Jan-12 Feb-12 Idea Jan-12 Feb-12

Aircel/Dishnet Jan-12 Feb-12

1957801 3704649 5082942 2364118 591428 583521 693185 1575250 1731093 2415121 1776039 834563 1205671 1202151 2371230 2759507 873883 1405751 21868334 2365414 2038307 3062163 1877284 3700224 5135743 2444970 625241 594308 725663 1606563 1700038 2351517 1792172 862474 1222626 1252429 2377169 2873435 889984 1523698 22074747 2460822 2103031 3061930

Andhra Pradesh Assam Bihar Delhi Gujarat Haryana Himachal Pradesh J&K Karnataka Kerala Kolkata Madhya Pradesh Maharashtra Mumbai North East Odisha Punjab Rajasthan Tamil Nadu U.P.(E) U.P.(W) West Bengal

17900408 3565349 16816652 8589731 6814699 2275808 1777668 2026209 15278989 3501206 3801989 9602627 9449972 3714217 2194615 6003168 6926186 13768431 13266658 14019449 6625502 9034631

Total Net Addition

176954164 178777131 151028199 152001566 148602105 149440176 83718863 81887732 108127280 110709614 62462121 63256068 1822967 -1831131 973367 838071 2582334 793947

13

Annexure-I

Circle
8949035 1250394 6110271 0 4187494 2986988 1709085 1036358 6759761 7046043 2413871 4725504 6121687 0 1587344 4371415 4727579 5656771 9597504 10157472 4773450 3583168 0 0 0 2826624 0 0 0 0 0 0 0 0 0 2912105 0 0 0 0 0 0 0 0 0 0 0 2851834 0 0 0 0 0 0 0 0 0 2921883 0 0 0 0 0 0 0 0 3142932 127 4571564 0 3052199 205 61 40 1823105 722923 1698321 883 4080333 1424832 51 1347034 319 383 1677247 7054485 4560885 3640447 3468012 172 4655224 0 3463080 273 94 75 1986471 713853 1761685 845 4507648 1481997 62 1379335 399 645 1998367 6973229 4848913 3900324 618866 1134 1572850 1074913 128836 213261 313 516 2074851 622228 816077 1888 712265 677237 188 434 691 2351655 1657076 456560 452964 1715463 621737 1229 1580729 1127867 142587 206924 544 297 2127990 630758 841383 2071 731410 503662 205 519 808 2355410 1752738 487100 492396 1773784 0 325 364 0 73 93 0 0 618 0 2348 270 357 3240766 41 966 147 400 0 0 8 0 0 325 364 0 73 88 0 0 653 0 2369 307 413 3252030 41 965 145 421 0 0 8 0

BSNL Jan-12 Feb-12

MTNL Jan-12 Feb-12

Wireless Subscriber Base Page 2 of 3 Group Uninor Sistema Jan-12 Feb-12 Jan-12 Feb-12
Loop Jan-12 Feb-12
10934 0 20299 0 1234333 852165 79015 0 11987 238083 2966 1158819 13681 980278 0 10670 0 10570 1179228 16722 8827 20152

Videocon Jan-12 Feb-12

10933 0 20095 0 1318783 923538 78709 0 11900 240595 4152 1234316 13830 1024215 0 10673 0 10849 1248902 16719 8825 20575

Andhra Pradesh Assam Bihar Delhi Gujarat Haryana Himachal Pradesh J&K Karnataka Kerala Kolkata Madhya Pradesh Maharashtra Mumbai North East Odisha Punjab Rajasthan Tamil Nadu U.P.(E) U.P.(W) West Bengal

8940056 1604587 6033464 0 4135930 2994325 1716774 1014332 6665782 6955611 2401422 4854454 6018121 0 1558450 4308907 4742674 5662270 9546801 10189190 4729667 3563744

Total Net Addition

97636561 97751194 114633

5738729

5773717 38798376 34988

41140703 15150266 15382148 231882 2342327

3246776

3258202 11426

5848729

6197609 348880

14

Wireless Subscriber Base Page 3 of 3 Annexure-I

Circle

S-Tel* Jan-12 Feb-12 Jan-12 Net Add.

Group HFCL Jan-12 Feb-12 Etisalat Jan-12 Feb-12 Total Feb-12

Andhra Pradesh Assam Bihar Delhi Gujarat Haryana Himachal Pradesh J&K Karnataka Kerala Kolkata Madhya Pradesh Maharashtra Mumbai North East Odisha Punjab Rajasthan Tamil Nadu U.P.(E) U.P.(W) West Bengal 1379754

0 79992 2029624 0 0 0 454924 0 0 0 0 0 0 0 32083 833665 0 0 0 0 0 0

0 79992 2029624 0 0 0 454924 0 0 0 0 0 0 0 32083 833665 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1292888 0 0 0 0 0

34868 0 41222 759210 32712 15171 0 0 29712 12097 0 78190 35051 469909 0 0 18440 35987 31915 50246 47133 0

16217 0 16974 423731 16840 7161 0 0 14240 5435 0 35557 15568 143732 0 0 8986 18756 13448 25300 20346 0

66070782 14009483 61909514 42083602 51494090 21837252 7846717 6102102 54819131 34326094 24653832 50873737 69190246 37381439 8247010 25969706 31516412 48008679 76646012 72905996 52561942 45273430

66588729 13835512 62568193 41960846 52578229 22110124 7888728 6223288 55410346 34391161 24781927 51279892 69830123 36454866 8379634 26440989 31943200 48281588 77602640 73662251 53130159 45825768

517947 -173971 658679 -122756 1084139 272872 42011 121186 591215 65067 128095 406155 639877 -926573 132624 471283 426788 272909 956628 756255 568217 552338

Total Net Addition

3430288

3430288 0

1292888

1379754 86866

1691863

782291 903727208 911168193 -909572 7440985

7440985

* The subscriber figures of S Tel are taken as on January 2012, due to non-submission of information for Feb-2012.

15

Proportion of VLR on the date of Peak VLR in the month of February, 2012 (%)
BSNL
(Except
CDMA)

Annexure-II
Tata Uninor Videocon Vodafone Total

Circle Etisalat HFCL Idea Loop MTNL Reliance S Tel* Sistema

Aircel

Bharti

Andhra Pradesh

60.95 70.72 35.44 64.97 58.43 51.54 60.18 92.42 91.37 1.10 3.55 72.73 3.57 0.71 54.99 22.38 58.64 51.40 50.35 45.65 43.46 48.61 48.23 53.11 45.86 43.79 92.90 78.54 41.55 36.29 0.74 92.45 0.39 93.62 1.61 65.32 0.00 107.66 15.20 0.23 43.79 91.49 13.10 65.37 2.07 90.95 9.76 57.30 60.83 56.27 60.98 54.68 68.33 61.20 74.01 65.39 28.53 82.15 41.61 32.02 70.02 33.24 28.88 119.27 41.46 45.59 49.91 46.37 47.58 62.58 48.66 96.42 63.29 100.85 36.48 72.03 2.15 67.40 94.42 57.04 49.25 52.71 50.65 49.26 27.17 91.13 66.05 62.01 68.95 65.67 53.52 64.83 33.92 56.73 67.34 61.52 12.7 35.12 68.51 63.80 59.46 68.10 68.00 63.61 47.78 75.64 53.37 56.38 53.40 56.75 52.55 51.73 38.12 57.31 46.01 62.54 57.42 53.74 57.06 51.09 64.11 56.14 52.40 33.67 49.90 91.32 52.63 61.44 1.66 91.25 64.90 43.01 62.21 87.00 40.67 78.21 27.13 49.45 59.33 9.24 94.03 72.71 24.58 38.02 47.52 57.14 94.52 7.69 68.88 52.77 87.88 74.34

94.99

70.65

0.06

92.86

58.45

59.50

63.57

57.94

4.45

66.33 90.03

76.48 82.13

Assam

78.37

95.65

Bihar

45.90

97.84

6.85

99.47 93.79 47.50 40.80 14.43 87.84 93.80 97.74 77.21 0.61 24.60 77.60 83.17 82.11 43.48 2.45 46.84 74.58 91.51 82.47 82.91 1.15 84.97 92.32 4.35 42.85 12.18 3.72 2.06 42.47 87.45 88.22 91.00 92.17 90.79 87.68

72.52 74.85 77.51 71.13 69.37 82.81 74.33 71.31 67.41 80.55 79.00 63.74 68.23 67.62 73.63 77.71 64.39 75.68 72.59 72.97 73.60

Delhi

53.53

84.00

Gujarat

87.42

87.79

Haryana

33.76

94.12

Himachal Pradesh

58.60

95.09

J&K

84.08

96.13

Karnataka

39.68

92.62

Kerala

40.85

84.85

Kolkata

53.59

87.10

Madhya Pradesh

57.53

90.63

Maharashtra

42.83

87.98

Mumbai

52.66

86.10

North East

69.83

96.01

Orissa

50.06

95.36

Punjab

55.17

91.48

Rajasthan

94.17

93.43

Tamil Nadu

51.24

93.40

U.P.(E)

68.80

96.45

U.P.(W)

61.40

79.78

West Bengal

51.85

86.73

Total

55.79

91.88

* The subscriber figures of S Tel are taken as on January 2012, due to non-submission of information for Feb-2012.

16

Wireline Subscriber Base

Annexure-III

Circle
125048 125070 88499 88795

BSNL Jan-12 Feb-12

MTNL Jan-12 Feb-12

Bharti Jan-12 Feb-12

Group Reliance Tata Jan-12 Feb-12 Jan-12 Feb-12 HFCL Jan-12 Feb-12 Sistema Jan-12 Feb-12 Vodafone Jan-12 Feb-12 0 750

Net Add.

1967206 228179 594198 1556643 1559242 1074176 1074222.4 54949 55006 23769 23812.688 4827 182449 110702 4876 4462 4859 183027 109943 4956 4462

0 0

7710 30

0 0 0 0 0

1590 690 30 210 5700

1899470

1896006

489563 55473 92323 240365 70049 330631

489640 55487 92335 240379 70088.3 330679

110870 55991 81581 35659 101347 230307

110590 56202 81377 35032 101816 230812

199315

200222

Andhra Pradesh Assam Bihar Delhi Gujarat Haryana Himachal Pradesh J&K Karnataka Kerala Kolkata Madhya Pradesh Maharashtra Mumbai North East Odisha Punjab Rajasthan Tamil Nadu U.P.(E) U.P.(W) West Bengal 105423 105427 39164 39176 484146 484187 50294 50323.063 24080 24105.25 4130 32348 25389 146962 40346 5689 2263 4143 31682 25703 147727 40588 5690 2290

1964273 228385 594310 0 1630181 548403 305985 205100 1982030 3078823 977592 850448 2256119 0 252940 453149 1117328 1071837 2509358 1269513 772128 685082

1619725 545324 304013 204165 1976209 3073401 969509 848544 2247892 0 252383 451438 1100762 1064300 2502289 221650 1796518 683475

171120 2602 10149 77040 65974 19107 1861 334 121345 12681 30431 10127 225419 542818 249 7222 15540 5545 61761 13125 7518 6113

172718 2582 9730 78189 66760 19689 1903 334 123100 12317 31082 10990 230666 545869 244 7044 15289 5795 62691 13124 7518 5910

47395

48070

0 0 0 0

30 90 90 660

5599 -226 -499 12082.431 -10342 -2373.313 -1930 -935 -2679 -5561 -6934 -1624 -2261.7 5840 -562 -1846 -16482 -6196 -4673 -1047593 1024416.3 -1783

Total Net Addition

22752984 22651180 -101804

3456113

3455248 -865

3259453

3259938 485

1268697

1269694 997

1408081

1423544 15463

199315

200222 907

47395

48070 675

17580 17580

Total Jan-12 Feb-12 2348940 2354539 230987 230761 609286 608787 2890308 2902390 1861806 1851464 596155 593782 312308 310378 205434 204499 2703808 2701129 3202968 3197407 1181927 1174993 1136599 1134975 2652934 2650672 3003226 3009066 253189 252627 464501 462655 1469954 1453472 1189330 1183134 3202227 3197554 1373278 325685 809415 1833831 693458 691675 32392038 32325476 -66562

-66562

Note: Fixed line subscriber base corresponding to Vodafone is for corporate customers, which they have started reporting to TRAI from February 2012.

17

Annexure IV
VLR Subscribers in the Wireless Segment

Home Location Register (HLR) is a central database that contains details of each mobile phone subscriber that is authorized to use the GSM core network. The HLRs store details of every SIM card issued by the mobile phone operator. Each SIM has a unique identifier called an International Mobile Subscriber Identity (IMSI), which is the primary key to each HLR record. The HLR data is stored for as long as a subscriber remains with the mobile phone operator. HLR also manages the mobility of subscribers by means of updating their position in administrative areas. It sends the subscriber data to a Visitor Location Register (VLR).

Subscriber numbers reported by the service providers is the difference between the numbers of IMSI registered in service providers Home Location Register(HLR) and sum of other figures as given below:1 2 a. b. Total IMSI's in HLR (A) Less: (B=a + b + c + d + e) Test/Service Cards Employees Stock in Distributional (Active Card) Subscriber period expired hand/in Cannels

c.

Retention

d. e. 3

Service suspended pending disconnection Subscribers Base (A-B)

18

Visitor Location Register (VLR) is a temporary database of the subscribers who have roamed into the particular area, which it serves. Each base station in the network is served by exactly one VLR; hence a subscriber cannot be present in more than one VLR at a time.

If subscriber is in active stage i.e. he is able to send/receive calls/SMSs he is available both in HLR and VLR. However, it may be possible that the subscriber is registered in HLR but not in VLR due to the reason that he is either switched-off or moved out of coverage area, not reachable etc. In such circumstances he will be available in HLR but not in VLR. This causes difference between subscriber number reported by the service providers and numbers available in VLR.

The VLR data calculated here is on the basis of active subscribers in VLR on the date of Peak VLR of the particular month for which the data is being collected. This data is to be taken from the switches having the purge time of not more than 72 hours.

---------

19

GROWTH OF TELECOM IN INDIA

37

 1994

National Telecom Policy 1994 Announced

1995 Kolkata became the first metro to have a (Aug) cellular network 1997 Telecom Regulatory Authority of India was Setup 1999 Tariff rebalancing exercises gets Initiated

1999 National Telecom Policy 99 announced (Mar) 1999 License fee (revenue share) reduced from (Aug) provisional 15% to 12%, 10% & 8% on Circle wise basis (A type, B type & C type circles) 2000 TRAI Act amended & separate tribunal Proposed TDSAT started functioning

2001 (Jan) 2001 (Jan) 2001 (Jan)

Policy announced for additional licenses in Basic and Mobile Services Limited mobility allowed to Basic Services (CDMA spectrum allotted to Basic Service Operators) BSNL entered in to GSM cellular operation w.e.f 19th October, 2002. Made incoming call free & initiated tariff equalization process Tariff for GSM cellular mobiles reduced.
38

2002 (Oct)

 2003 (Nov)

Unified Access (Basic & Cellular) Service License (USAL) introduced as a first Step towards Unified License Regime. Technology neutral and allows provisioning any kind of service. License fee reduced by 2% across the board for all the access licenses. Issue of 3G guidelines for spectrum allocation through auction.

2004 (Apr) 2008 (Apr)

Exponential Growth

39

During the month of January 2012, the operators added 9.59 million subscribers.
Particulars Wireless Wireline Total Total subscribers 903.73 32.39 936.12 Total Net addition 9.88 -0.29 9.59 % of monthly growth 1.11% -0.90% 1.04% Urban subscribers 591.1 24.73 615.83 Rural subscribers 312.62 7.67 320.29 Tele density 74.89% 2.68% 77.57% Urban teledensity 162.06% 6.78% 168.84% Rural teledensity 37.13% 0.91% 38.04% Share of Urban subscriber 65.41% 76.32% 65.79% Share of Rural subscriber 34.59% 23.68% 34.21%

Mobile Services
Mobile connections technology are provided on GSM and CDMA

40

 GSM Connections increased from 12.68 Million in March 2007 to 219.297 Million in July 2008. CDMA connections rose from 0.31 Million in March 2003 to 76 Million in July 2008. Ratio of GSM and CDMA subscribers is 3:1 Mobile connections are provided on GSM and CDMA technology. GSM Connections increased from 12.68 Million in March 2007 to 219.297 Million in July 2008. CDMA connections rose from 0.31 Million in March 2003 to 76 Million in July 2008. Ratio of GSM and CDMA subscribers is 3:1

Growing Share of Private Sector

Share of private sector in total Connections has steadily increased from 20.9% in 2003 to 75.92% in July 2008. Private Sector is mainly active in Wireless Segment.
41

 Private Sectors contribution in Wireline Segment is just 11.6%.

Growing Share (%) of Private Sector

80 70 60 Share (%) 50 40 30 20.9 20 10 39.27 47.05 57.01 65.32

75.92

0 TELECOM SERVICE PROVIDERS July 2003 2004 2005 2006 2007 2008

There are 23 Licensed Service Areas. 12 Service Providers are providing phone services in these areas. Two Public Sector Operators are MTNL and BSNL. MTNL providing service in Delhi + Mumbai only.
42

 BSNL providing service in 21 out of 23 LSAs excluding Delhi and Mumbai. There are six major Telecom players i.e. BSNL, Airtel, Reliance, Vodaphone, Tata Tele & Idea.

PERCENTAGE MARKET SHARE OF MAJOR TELECOM PLAYERS IN INDIA

30 25 20 15.79 15 10 5 0
BSNL AIRTEL RELIANCE VODAPHONE TATA TELE IDEA

22.38 22.06 15.12 8.33 8.36

MAJOR PLAYERS DATA

43

BSNL AIRTEL RELIANCE

IDEA

Customer Base (in millions) Annual Revenues (in US $ bn) Annual Profit (in US $ bn) 1.9 1.7 1.3 10 6.9 3.75 1.1 72.8 71.8 51.4 27.2

0.1

Mobile Tariffs in India one of the Lowest

44

0.25

0.23

0.22

0.2 0.19

0.17

0.16

0.15

0.11

0.11

0.11

0.1 0.09

0.05 0.05

0.05

0.04

0.03

0.02

0 Philippines Argentina Malayasia Thailand Belgium Taiwan France Hong Kong Pakistan China Brazil India Italy UK

TELECOM TARIFF & REVENUES

45

 Telecom Tariffs have fallen to very low level during past five years. Local call tariff from mobile calls has seen steady decline from Rs. 16 per minute to Rs. 0.50 per minute

Public Sector has played crucial role in bringing mobile tariff.

down

Despite low tariffs, telecom sector has shown positive financial results. Gross revenues for the sector have grown at compound annual rate of about 21% and stands at US $ 26 Billion 34% contribution of Public Sector and 66% of Private Sector.

REGULATORY REGIME
46

 Tariff under forbearance except for fixed rural line services, National roaming in mobile service and Leased Circuits.Operators to report tariff plans to TRAI within 7 days from the date of implementation.Tariff once offered can not be hiked for minimum period of 6 months. Lifetime / unlimited tariff plans to be available to subscribers during the period of current / renewed license. No chargeable Value Added Services to be provided to a customer without explicit consent. Publication/ advertisement of tariff for consumer information shall contain minimum essential information. Websites of the service provider to contain complete details of the tariff plans as well as financial implications for various usage slabs.

Customers to be informed in writing, within a week of activation of service, the complete details of his tariff plan.Quality of Service Standard bench marks to be ensured by Operators.

47

Opportunities & New revenue streams

BPO & KPO business is growing fast: Telecom can ride on it. As globalization is increa Opportunities & New revenue streams sing, more percentage of global business for Indian telecom. Technologies like NGN, 3G, Wi-MAX, will open up new frontier of business.

Services Through 3 G
Services ON DEMAND DATA / VOICE
Data connectivity on the move,Quad play i.e Voice, Video, Data and mobility with suitable core network. E-mail and Web services on demand for SME VPN service for group of customersGaming, Video Services like Live TV, Egovernance, E-health, E-education Internet Access on the move Video Messaging and rich data appliactions

48

Service Performance Guarantee

IP services with QoS, and support concurrently 3 types of QoS for one subscriber. Class of service: Support for different types of data delivery services which are-UGS,RT UGS,RT-VR,NRT-VR,BE and ERT-VR VR Bandwidth management: support flexible bandwidth assignment and the inter-user QoS user

49

NEW OPPORTUNITIES VAS

Value added services like M-Commerce, M-Marketing, Special Information, Ring tones, etc. offer venues of additional revenue. Annual Revenue US $ 1.2 billion (approx.) VAS contributes 10 14% of total telecom revenue [source Voice-Data]. Non-voice revenue increasing. Present contribution > 50% through SMS (P to P). Revenue from other value added services growing [IVR, PRBT, Games, Data].

PROJECTIONS:
Revenue Expected by 2015 US $ 5.2 Billion. Applications which can ride on SMS,Mobile Commerce (Bill Payment, Prepaid top-up, ticket booking) Search (on Voice, SMS, WAP) Location Based Services, Music based Services, IVR

50

MNP OPPORTUNITY as well as THREAT for Operators

It will change the market dynamics.The perception of ownership of customer will have a paradigm shift. New innovations will be needed for keeping customer ons attached to service Enterprise business will be the key target and will face intense competition

51

Internet & Broadband Services

No. of Broadband Connections have grown from 0.02 Million in March 2004 to 4.57 Million in July 2008. BSNL is the largest Broadband Internet Service Provider with 53 % Market Share. 589 District Hqrs., 2698 Block Hqrs., 3261 Cities & 30124 Villages have been covered by Broadband. In INDIA, ISPs are providing Broadband Service on DSL, Cable Modem, Ethernet LAN, Fibre, Radio, Leased Line etc.

Telecom Growth- the way ahead

Network expansion
o 250 million by 2007 - Already achieved o 600 million by 2012

Rural connectivity
o 100 million by 2010 o 200 million by 2012

Broadband
o 20 million broadband connections and 40 million internet connections to provide by 2010 o Broadband connections to provide on demand across the country by 2012.

52

Challenges in Telecom Sector

No. of operators are increasing per circle. ARPUs are going down. Cost/ Customer is very high in rural areas. Spectrum a scare commodity. Infrastructure readiness in rural. PC prices are very high. Availability of Contents in local language. International Bandwidth is costly.

Broadcasting & Cable Services

Like Telecom Sector, Broadcasting & Cable Services have been opened for Private participation. Broadcast & Cable services being provided through All India Radio, FM Channels, Community Radio Stations, Cable TV, Satellite TV Channels, DTH & IPTV. Multi System Operators (MSOs) across the country providing Cable TV services. MSOs are carrying maximum 133 Free-to-Air Channels, 95 Pay Channels & 8 Local Channels on their networks . IPTV Service has been recently soft launched in Gurgaon, Faridabad & Noida by BSNL. BSNL plans to launch IPTV Service in 100 Cities by March 2009.

53

U.S. INDUSTRY ANALYSIS

How it all started

1982
In January, AT&T ends a long-running antitrust suit by the US Department of Justice by agreeing to break itself up into a national long-distance carrier and seven Baby Bells. The breakup is scheduled to happen in 1984.

1984
The breakup takes place. AT&Ts old local phone companies become Ameritech, Bell Atlantic, BellSouth, NYNEX, Pacific Telesis, Southwestern Bell, and US West.

54

1986
GTE, an independent phone company with roots going back to 1918, spins off its GTE Sprint division and merges it with US Telecom, which has roots going back to 1899. The merged company begins offering long-distance service in competition with AT&T under the name Sprint (which, incidentally, stands for Southern Pacific Railroad Intelligent Network of Telecommunications).

1987
Wireless phone company Fleet Call is founded. It changes its name to Nextel in 1993. SBC acquires Cellular One, the cellular business of Metromedia.

55

1988
Pacific Northwest Cellular is founded. It later changes its name to VoiceStream.

1994
AT&T acquires wireless pioneer McCaw Cellular, joint owner with Southwestern Bell of the Cellular One brand name, and begins using the AT&T name rather than Cellular One (but Southwestern Bell continues to use the Cellular One name) . Pacific Telesis spins off its wireless services into AirTouc

56

1995
Southwestern Bell changes its name to SBC.

1996
In the first major reversal of the Bell breakup, Bell Atlantic acquires NYNEX.

57

1997
SBC acquires Pacific Telesis. WorldCom, a long-distance company with roots dating to 1983, acquires MCI, which goes back to 1963, to form MCI WorldCom.

1999
SBC acquires Ameritech. AirTouch merges with Vodfone of the UK to form Vodafone Airtouch.

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2000
QWEST (founded in 1996) acquires US West. Vodafone Airtouch and Bell Atlantic form a joint venture called Verizon Wireless. Bell Atlantic merges with GTE to form Verizon.

2001
SBC and BellSouth combine their wireless businesses into a company called Cingular.

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2002
AT&T (which has been trying to turn itself into a long-distance/wireless/cable megaconglomerate) spins off its wireless business to form AT&T Wireless Services. German telecommunication giant Deutsche Telekom, which had acquired VoiceStream in 2001, changes the U.S. operations name to T-Mobile.

2003
WiMAX provider Clearwire is founded. After a massive accounting scandal, WorldCom changes its name to MCI.

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2004
Cingular acquires AT&T Wireless. Qwest, which had offered its own wireless service, sells off its assets and becomes a reseller for Sprint (in 2008, it switches to Verizon Wireless). (It continues to offer landline service, but Im removing it at this point from this accounting.)

2005
Sprint buys Nextel to form Sprint Nextel. SBC acquires AT&T and adopts its name. Verizon acquires MCI.

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2006
AT&T acquires BellSouth and renames the latters Cingular wireless service to AT&T.

2008
Sprint Nextels wireless broadband unit XOHM merges with Clearwire, giving Sprint 54% ownership of the combined company. (Clearwire is still in business, but Im removing it from this accounting since its majority-owned by Sprint.)

2011
AT&T agrees to buy T-Mobile US from Deutsche Telekom, in a deal expected to close next year.

Whew. At this point, there arent many theoretical mergers left to happen, although Sprint (which was supposedly angling to buy T-Mobile before AT&T stepped in) could end up being bought by somebody. And hey, if the Department of Justice feels like stepping in and imposing competition before we end up with one phone company again, theres a handy template. We could just go back to this: 62

MARKET SATURATION
Four o o o o major mobile telephony operators: AT&T Wireless Sprint PCS Verizon Wireless Cingular Wireless

In 2001 over $65 billion in revenues was generated with a penetration rate of about 45%

U.S. Market Share Data

Alltel Voice stream Nextel Sprint At& T Cingular Verizon Small Providers 0% 5% 10% 15% 20% 25%

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GROWTH RATE
1987 Cellular telephone subscribers exceed 1 million 1999 Spending on wireless communications services totaled $45.2 billion 2002 268 million people in the U.S. live in counties with access to 3 or more different operators 2003 Spending projected increase to $75.6 billion

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Porters Five Forces Analysis

Threat of Entry:
Prior to Mid-nineties, entry into fixed line telecom business was very difficult owing to several factors, Firstly it was a very capital intensive industry, entry into this industry meant that the firms needed access to huge amount of capital mainly to cover the fixed costs to lay and maintain a physical network (exchanges, fiber optic cables etc) to the premises of customers. In addition to that firms needed to get regulatory approval/licenses from the Federal Communications Commission (FCC), which was both costly, and a tedious affair. Hence the companies in this industry mostly tended to monopolies strictly regulated by the government subject to price controls and moderate to heavy taxation. Deregulation and the telecom act of 1996 provided a significant reduction in barriers as the new entrants did not need to own their networks.The technological changes also provided impetus to the significant reduction of barriers; Internet Telephony provided a way for several firms to enter the market and compete with the incumbents without the significant upfront fixed costs. One of the notable entrants into the business is Vonage, this firm began offering its version of IP telephony product since 2003. The entry of new progressively become very easy, in fact it has become so easy that there are companys like RTC Factory claim to provide services that can let firms start their own branded fixed line IP telephony voice business within 6-8 weeks in 10 easy steps.

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Supplier Power:
The Suppliers in this industry are the manufacturers of telephone switching /switch board equipment, fiber optic cables, network equipment, and billing software makers. The prominent names in this industry include Cisco, Alcatel-lucent, Nokia, Nortel, Motorola and Tellabs etc. After the deregulation of downstream service providers and the technological breakthrough in IP networks, Telecom equipment makers began to ramp up manufacturing in order to meet the huge anticipated demand, however aftermath the dot com bubble, demand did not pan out as expected and led to overcapacity and eventually demise of several firms. The evidence of decline can be gauged from the fact that the telecommunications industry Association (TIA) reported that in 2001, a cumulative decline of $30.5 billion in revenues4 [Encyclopedia of American Industries]. With excess capacity and falling demand, the suppliers have do not have the power and clout to negotiate with the telecom behemoths. However with the demand in recent years has started to pick up with fixed line providers deciding to install fiber based networks to provide faster data and video services.

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Power of Buyers:
With increased choice of several technologies and means of communication available and entrance of several new firms buyer power is been increasing. The consumer now has access to several means of communication like email, instant messaging which are diminishing the importance voice services. Residential consumer also benefits with local number portability (A regulation from FCC which mandates the carriers to move the phone number when the customer switches to a different carrier). This feature makes switching costs negligible. The business segment however is prone to significant switching costs as they rely on more customized products which are tailored to their businesses and most times are locked into long-term contracts.

Threat of Substitutes:
Several substitute products and services have emerged to fixed line telephones as a result of technological breakthroughs. Some of these are more convenient and offer far greater value to the consumer and have diminished the importance of fixed line phones. Substitutes include IP Telephony, Mobile phones, Satellite, Email, and Instant Messaging etc. Among the several substitutes that have emerged, IP telephony has emerged as the biggest threat. Applications like Skype have been extremely popular among younger generation users and are fast emerging as preferred means of communication.Wireless phones are also getting cheaper each year over the last decade; this has provided consumers with more convenience and mobility, to the extent that the younger demographic now considers a fixed line phone redundant.

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Industry Rivalry:
Industry rivalry has become extremely intense with the emergence of new competing firms leading to price cuts across the industry. Voice offerings are turning into commodities with the business going to lowest cost provider.

Major Players in U.S.

AT&T Verizon Wireless Cingular Sprint

AT&T
Competitive monthly fee Best home area coverage Best national coverage Unlimited night and weekend minutes Best rates international calling Good website compared to Verizon

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Verizon
Largest wireless provider Lowest monthly fee Good home area coverage Good national coverage Second best international calling Easy to navigate website/ well organized

Sprint
Smallest of four companies Average monthly charges Higher priced phones Minimal home and national coverage Minimal/non-existent international calling Poor website not easy to navigate and technical problems

Competitive Advantages Summary

AT&T - Best coverage, unlimited nights and weekends Verizon Best monthly charges, good coverage, largest supplier

Cingular No roaming calling from anywhere Sprint- No competitive advantage noted in comparison

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U.S. Environmental Analysis

The Demographic Environment
As of December 2009, 128.5 million subscribers (45% of population) 268 million people (94% of the total population) have three different operators offering mobile phone service 229 million people (80 % of the population) live in countries with five or more mobile operators Nearly 58% of Americans 12 and older own a mobile phone Geographic: Rural Vs. Urban Virtually no difference in price Usage is significantly different

The Sociocultural Environment

Cutting the Cordgrowing evidence proves more people are canceling service from their home telephone provider Almost one in five mobile phone users regard their wireless phoane as their primary phone Even though average pricing has been increasing since 1999, usage has increased to an average of 385 minutes. An increase of 51% from the prior year, during the same month

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U.S. SWOT Analysis

Strengths
Lows prices/affordability Variety of service providers and calling plans Calling plan benefits free long distance wireless web PDA-like features Easy of use

Weaknesses
Customer service Service provider web sites not user friendly Mass marketing strategy Need to market to different segments Need to differentiate from competitors Service contracts

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Opportunities
Wireless web Bundling Bundle phone with accessories Business to Business market Work on current weaknesses improve customer service practice differentiated marketing Improve service provider web sites

Threats
Satellite communication Current infrastructure would be rendered obsolete Two-way radios Nextel Government regulations

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Key Success Factors in Telecommunications Industry

Bundling:
Consumers value convenience more than anything else. A companys ability to provide multiple services like wireline / wireless/ high speed internet / video at an attractive price not only provides value to the consumer but also helps the companys bottom-line due to reduced customer acquisition costs. It also is widely believed in the telecom industry and supported by the data, that churn reduces drastically for customers subscribed to a bundle as a result of increased switching costs.

Network Quality:
One of the key difference between the old generation PSTN (public switched telephone network) used by telecom companies versus the new generation IP networks used by both the cable providers and VoIP providers is the ability to receive phone calls on the PSTN networks when the power is out. There is difference in quality of the voice transmitted, however the gap is closing fast .1.4.3 Economies of scale: Telecom is a huge fixed cost business; most of the costs go into installing and maintaining the network. The marginal cost of adding a new customer is very small. As a result, Providers with large subscriber bases enjoy a significant advantage over the smaller ones.

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Customer Service:
In this industry, although the customer contact with the firm is minimal, it is very critical and can define customer experience. Customer mostly comes into contact with the employees of the firm only during installation and service outages, the expectation of the customer is that the service be always available and the problems be immediately fixed.

Brand Name:
Brand Name plays an important role for the customer choosing the service. In this Industry Bell and Cable companies have been able to build brand recognition over time, VoIP entrant however have to spend significant amount of money in advertising to be able to counter these strong brand names.

Retail Presence:
Wireless phone industry has required retail presence from traditional telecoms mainly to display and sell wireless devices, this presence has helped them with customer as they were more accessible to the customers and provided a new medium of distribution for all services, Cable and VoIP firms however have to depend on electronic retailers.

Financial Strength/Resources:
With high fixed costs in this industry and frequent network up gradation and licensing costs, it is essential for the firms in this industry to have a strong balance sheet. The ability to raise money at cheaper rates compared to the competition provides a significant competitive advantage
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Convergence:
Convergence is the ability for customers to access any data seamlessly without restrictions and the networks and the devices to get to that data. In future the success of the telecom companies is dependent on how effectively they can provide converged services.

Partnerships:
Diversity of services this industry makes it difficult for a service provider to be good at everything, so the crucial thing for a firm in this industry is to be able to forge partnerships to be able to provide what customers need.

Data Speeds/Bandwidth:
Explosive growth of internet has created content rich applications which require enormous amount off bandwidth. The Service provider who has the biggest amount of bandwidth with the last mile connectivity will have competitive advantage over the rest of the competition

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4 Ps in the U.S.
Product Price Place Promotion

4Ps: Product
Voice & data products and services Text Messaging Wireless Internet Family/share plans Mobile-to-mobile

4Ps: Price
Competitive pricing Dependant upon local or national plans & number of minutes Options pricing sets companies apart

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4Ps: Place
Internet sales & service Full service stores for sales & service Retail chains for activation

4Ps: Promotion
TV, Print, Radio, Direct Mailings, and in-store placement Sponsorships of Movies, TV, and events Free services

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CONCLUSION INDIA

India is second largest emerging economy of the world. GDP growth 9% & Services Sector growth 10.8%. Fastest growing Telecom Market in the World. Teledensity is still less than 30% with rural teledensity just around 10%. Wireless technologies to play crucial role in providing connectivity in rural, remote & far flung areas. Mobile Number Portability to change Market Dynamics & ensure improved standards of service. With launch of VOIP telephony, Long Distance call charges slated to fall further. IPTV & DTH are providing digital experience to users. High Growth in Mobile, Internet & Broadband foreseen till 2012.

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Conclusion US
Biggest national market Analog switching digital - 4 technologies Focus on individual users Cutting the cord Trying to define niche market Price competitiveness Increasing the market share through price differentiation strategy

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Reference
Nicholas Economides The Telecommunications Act of 1996 and its Impact http://www.stern.nyu.edu/networks/telco96.html FCC Local Telephone Competition and Broadband Deployment http://www.fcc.gov/wcb/iatd/comp.html Telephony. Encyclopedia of Emerging Industries. Online Edition. Thomson Gale, 2007. Reproduced in Business and Company Resource Center. Farmington Hills, Mich.:Gale Group. 2008. http://galenet.galegroup.com.proxy.libraries.uc.ed u/servlet/BCRC VoIP Magazine, 2005. Telecom Industry Revenue to Reach $1.2 Trillion in 2006 The Industry Handbook The Telecommunications Industry Investopedia

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