More than 125 million telephone network is one of the largest communication networks in world, which continues to grow at a blistering pace.
The rapid growth in the telecom sector can be attributed to the various pro-active and positive policy measures taken by the government as well as the dynamic and entrepreneurial spirit of the various telecom service providers both in private and public sector. The telecom sector has shown impressive growth during the past decade.
Two striking features of this growth viz. increasing preference for mobile phones and higher contribution of private sector in the incremental growth have predominated the telecom sector. The share of mobile phones (including WLL mobile) has overtaken the share of landlines with 62% in the total number of phones. The private sector’s contribution is also increasing rapidly. Currently more than 30 lakh phones are being added each month and it is targeted that by the end of 2008 the total number of phones may reach a level of 350 million taking the tele-density to more than 30% which is currently at 24.63%.
Network Expansion: The total number of telephone subscribers has reached 281.62 million at the end of January 2008 as compared to 232.87 million in July 2007. The overall teledensity has increased to 23.63% in January 2008 as compared to 21.20% in August 2007.
Wireless Service: The wireless segment saw a surge of 8.77 million subscribers last month compared to 8.17 million in December2007. This pushed the total wireless subscriber’s base to 242.40 million by Jan 31 2008.
Wireline Subscribers: The wireline segment subscriber base stood at 39.73 million with a decrease of 0.16 million at the end of January 2008.
Teledensity: The gross subscriber base reached 206.83 million at the end of March 2007. The teledensity is 24.63%at the end of January 2008 as compared to 18.31% at the end of March 2007, registering an increase of 6%.
Increasing Role of Private Sector: The private sector has played a significant role in the growth of telecom sector. The share of private sector has risen to 85 per cent in December 2007 from 64.14 per cent in November 2006.
Tariff Rebalancing Measures: There has been a dramatic fall in the tariffs due to increased competition. The minimum effective charges for local calls have fallen considerably in recent months especially for cellular service. The long distance domestic as well as international charges have also fallen considerably.
Telecom Regulatory Authority of India (TRAI): TRAI was established under the Telecom Regulatory Authority of India Act, 1997 enacted on March 28, 1997. The goals and objectives of TRAI are focused towards providing a regulatory framework that facilitates achievement of the objectives of New Technology Policy (NTP) 1999. TRAI has endeavored to encourage greater corporation in the telecom sector together with better quality and affordable prices.
Telecommunication sector in India can be divided into two segments: Fixed Service Provider (FSPs), and Cellular Services. Fixed line services consist of basic services, national or domestic long distance and international long distance services. The state operators (BSNL and MTNL), account for almost 90 per cent of revenues from basic services. Private sector services are presently available in selective urban areas, and collectively account for less than 5 per cent of subscriptions. However, private services focus on the business/corporate sector, and offer reliable, high- end services, such as leased lines, ISDN, closed user group and videoconferencing.
Cellular services can be further divided into two categories: Global System for Mobile Communications (GSM) and Code Division Multiple Access (CDMA). The GSM sector is dominated by Airtel, Vodfone-Hutch, BSNL and Spice-Idea Cellular, while the CDMA sector is dominated by Reliance and Tata Indicom. Opening up of international and domestic long distance telephony services are the major growth drivers for cellular industry. Cellular operators get substantial revenue from these services, and compensate them for reduction in tariffs on airtime, which along with rental was the main source of revenue. The reduction in tariffs for airtime, national long distance, international long distance, and handset prices has driven demand.
CLASSIFICATION OF TELECOMMUNICATION SERVICES
1. Basic services
- Cellular services
- Internet Service Provider (ISP)
Ø   CELLULAR SERVICE
§ There are five private service operators in each area, and an incumbent state operator. Almost 80% of the cellular subscriber base belongs to the pre-paid segment.
§ The DOT has allowed cellular companies to buy rivals within the same operating circle provided their combined market share did not exceed 67 per cent. Previously, they were only allowed to buy companies outside their circle.
Growth Drivers
Opening up of international and domestic long distance telephony services are growth drivers in the industry. Cellular operators now get substantial revenue from these services, and compensate them for reduction in tariffs on air time, which along with rental was the main source of revenue. The reduction in tariffs for airtime, national long distance, international long distance, and handset prices has driven demand.
THE KEY PLAYERS IN THE TELECOM MARKET IN INDIA
Ø Cellular Service provider:
v Airtel
v Vodafone
v BSNL
v Spice/Idea
v Reliance
v Tata indicom
v Aircel
v MTNL
Ø Subscribers
- Wireless subscribers crosses 200 million mark
- Tele density reaches 21.20%
- India has become the second largest wireless network given the exceptional growth in Mobile subscribers in India.
According to latest release by TRAI (Telecom Regulatory authority of India), the total wireless subscribers base stood at 261.09 million at the end of March 2008, compared to 255 million subscribers in U.S. A total of 10.16 million wireless subscribers have been added in the month of March 2008 as against 8.53 million wireless subscribers added in the month of February 2008.
Another landmark that March saw was reaching a total telephone connections to 300 million (wireline+wireless). The overall tele-density is pegged at 26.22% at the end of March 2008 as against 25.31% in February 2008.
The total number of telephone subscribers has reached 241.02 million at the end of August 2007 as compared to 232.87 million in July 2007. The overall teledensity has increased to 21.20% in August 2007 as compared to 20.52% in July 2007.
In the wireless segment, 8.31 million subscribers have been added in August 2007 while 8.06 million subscribers were added in July 2007. The total wireless subscribers (GSM, CDMA & WLL (F)) base reaches 201.29 million at the end of August 2007.
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