2008 Asia - Telecoms, Mobile and Broadband in India

Publication Date	April 2008
Publisher	BuddeComm
Product Type	Report
Pages	208
ISBN Number	not applicable
Product Code	BUD00273

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Summary

This report provides a comprehensive overview of the developments and trends in telecommunications, Internet and digital media markets in India. Subjects covered include:

Key Statistics;
Market Overviews;
Major Players (fixed and mobile);
Infrastructure development - national and international;
Mobile Voice and Data Markets;
Internet, including VoIP;
Broadband development;
Convergence and Digital Media;
Regulatory Environment.
Researcher:- Peter Evans

Current publication date:- April 2008 (14th Edition)

Next publication date:- April 2009

Without a doubt India continues to be one of the most dynamic and fastest growing major telecom markets in the world. The mobile sector has grown from around 10 million subscribers in 2002 to reach 240 million by early 2007, the rate of market expansion being boosted by low tariffs, falling handset prices and the highly competitive market that has been created by the government and the regulator. While GSM technology has continued to be dominant in the country's mobile market, CDMA was managing to hang on to a 25% market share by early 2008. The total mobile market was expanding at an annual rate of just below 60% coming in to 2008. All things considered the mobile industry should continue its present strong growth for the time being.

Regulatory reform has been central to the development of India's telecoms market. Sweeping reforms by successive governments over the last decade have dramatically changed the nature of telecommunications in the country. The Telecom Regulatory Authority of India has predicted that the rate of market expansion would increase with further regulatory and structural reforms. The adoption of Unified Licensing, a change in the Access Deficit Charge regime, increased sharing of infrastructure and coverage of new areas by operators were all contributing to ongoing growth. For more information, see chapter 3, page 11.

By early 2008, the total telephone subscriber base (mobile and fixed) had passed the 280 million subscriber milestone. The number of phone subscribers was rising by an average of 8 million each month coming into 2008. With fixed-line subscribers at around 40 million, growth in that segment of the market had stalled in 2006 and was not likely to pick up again for some time. (It should be noted that in 2005 India's telecom regulator began counting fixed WLL services as 'wireless' services and not as 'wireline' meaning that they were absorbed into the mobile statistics and were not able to be separated out any longer as fixed services. This caused confusion in the reporting data.)

Regulatory change in the industry has not been easy with many observers initially being sceptical of the strategies adopted by the government for the Indian market. There has been a continuing evolution through a series of mergers and takeovers among the mobile operators that has seen welcome and productive consolidation. In the final analysis the so-called 'licensing by circles' policy has been credited with establishing a highly competitive and healthy telecoms market. Initially the circles policy had been considered complex and unwieldy. But, with the assistance of a comparatively well regulated commercial environment, with plenty of growth potential and an increasingly open market, India is proving to be an attractive telecoms destination for foreign investment with a clear way forward to further growth.

Estimates put the total worth of India's telecommunications sector at nearly US$100 billion in 2007. This was on the back of soaring valuations of the country's telecommunications companies, both listed and unlisted. Listed companies like Bharti Airtel and Reliance Communications could claim valuations in the range of US$26-27 billion and US$19-20 billion, respectively. And big operators like Bharat Sanchar Nigam Ltd and Idea Cellular would be likely to range in value from US$8 billion to US$30 billion if they were listed. Over a 10 year period, the telecom industry saw numerous high profile exits by multinational companies such as AT&T, Telecom Italia, British Telecom, Telstra, Cingular and France Telecom. Others to exit included some local companies as well such as Aircel, BPL, Escorts, RPG, Usha Martin, JT Mobile and Hindujas. Vodafone, which had also exited the Indian market earlier on, had made a comeback in recent times with its successful bid for Hutch. Over the years, the exits and entry of new players have been part of market consolidation, ultimately resulting in strong value creation. A joint venture between AT&T and Mahindra Telecommunications saw the US-based company become the first foreign telecom operator to get a licence under the Indian government's revised FDI policy increasing the foreign ownership cap from 49% to 74%.

One segment of the market that has been puzzling is broadband Internet. Despite a booming Internet market across the country, India's move into high-speed broadband Internet access has been distinctly sluggish. The number of dial-up Internet subscribers has been increasing steadily since 1999, accelerating rapidly in 2005 and 2006 when the number of subscribers increased roughly tenfold over that two year period. But the growth was at a more modest rate in 2007 (around 45%). The question remained, where was the broadband? It was during 2006/07 that finally we witnessed a substantial surge in broadband users with the total broadband subscriber base in the country expanding by more than 300% in just two years. Despite this surge, broadband penetration in India still remained around only 0.3%; and broadband services were only accounting for 30% of the total Internet subscriber base, still in itself comparatively low. In other words, by early 2008 there were only slightly more than 3 million broadband subscribers in the country, out of a total of around 10 million Internet subscribers. Broadband penetration continued to be depressingly low. In fact broadband household penetration was running at a little more than 1% coming into 2008. In the meantime the overall level of Internet usage seemed to be growing strongly, perhaps boosted by the widespread use of Internet cafes. There were an estimated 80 million Internet users throughout the country by end-2007 representing a penetration of almost 8%. For more information, see chapter 6.2, page 88.

The Ministry of Communications and Information Technology was targeting 250 million telephone subscribers by end-2007 and 500 million by 2010. (The 2007 figure was comfortably achieved thanks to a booming mobile market.) Most of the expansion in subscriber numbers has been occurring and will continue to occur in rural India. The ministry noted in setting its targets that India's rural teledensity had been languishing at around 1.9%; officials stressed that the country could not move forward unless it supported the 70% of the population who live in rural India.

Key highlights:

India continues to see its mobile market boom; by early 2008, the country had 240 million mobile subscribers, with growth continuing into 2008 at an annual rate approaching 60%.
While GSM has continued to be the dominant technology in the mobile market, CDMA has maintained a reasonably stable 25% market share. For more information, see chapter 8.3.3, page 139.
During 2007, there was a significant surge in broadband subscribers in India on the back of a similar surge in 2006; the total broadband subscriber base had expanded by more than 300% to just over 3 million in just two years; however, this still only represented a 0.3% penetration of the population.
In the broadband segment, DSL remained the dominant technology in the country; however, 2007 saw more significant growth in non-DSL subscriptions, with this segment of the market jumping over 60% in a twelve month period. For more information, see chapter 6.1.1, page 80.
In the meantime, DSL maintained it hold on about 83% of the local broadband market.
The booming telecoms market in India saw total revenues of around US$25 billion in 2007, with mobile services contributing around 60%.
The MCIT said it was targeting 500 million telephone subscribers (fixed and mobile) by 2010.

Mobile, fixed, broadband & Internet subscribers in India - 2003; 2007; 2010

Market segment 2003 2007 2010
Subscribers (million)
Mobile 28.4 233 454.0
Fixed 42.1 39.31 46.01
Broadband 0.1 3.1 10.5
Internet 4.1 10.0 23.0

(Source: BuddeComm data) - Note: 1Official figures after 2005 do not include fixed wireless subscribers.

Data in this report is the latest available at the time of preparation and may not be for the current year.

Content

1. Key Statistics
- 1.1 Subscriber statistics
2. Telecommunications Market
- 2.1 Overview
- 2.2 Foreign investment
- 2.3 Universal service
3. Regulatory Environment
- 3.1 Telecommunications authorities
  - 3.1.1 Ministry for Communications (MoC)
  - 3.1.2 Department of Telecommunications (DoT)
  - 3.1.3 Telecom Commission
  - 3.1.4 Telecom Regulatory Authority of India (TRAI)
  - 3.1.5 Telecom Dispute Settlement & Appellate Tribunal (TDSAT)
  - 3.1.6 Telecom Sector Ombudsman (TSO)
- 3.2 Regulatory background
  - 3.2.1 Licensing circles
  - 3.2.2 Licence fees and taxes
- 3.3 National Telecom Policies
  - 3.3.1 National Telecom Policies 1999 (NTP-99)
  - 3.3.2 Addendum t NTP-99
  - 3.3.3 Proposed new National Telecom Policy (NTP)
- 3.4 Foreign investment
- 3.5 Regulatory reforms
  - 3.5.1 Overview
  - 3.5.2 Access Deficit Charge (ADC)
  - 3.5.3 Rural telephony
  - 3.5.4 Quality of Service (QoS)
  - 3.5.5 Local Loop Unbundling (LLU)
  - 3.5.6 Conditional Access System (CAS)
- 3.6 Fixed-line (Basic Service) licences
  - 3.6.1 Licensing guidelines
  - 3.6.2 Development of basic service sector
  - 3.6.3 National Long-Distance (NLD)
  - 3.6.4 International Long-Distance (ILD)
  - 3.6.5 'Fixed' mobile
  - 3.6.6 Basic service tariffs
  - 3.6.7 Compensation
  - 3.6.8 Other outcomes
- 3.7 Privatisation
  - 3.7.1 VSNL
  - 3.7.2 MTNL/BSNL
4. Fixed Network Operators in India
- 4.1 Overview of operators
  - 4.1.1 Bharat Sanchar Nigam Limited (BSNL)
  - 4.1.2 Bharti Airtel (formerly Bharti Telenet)
  - 4.1.3 Hughes Telecom
  - 4.1.4 Mahanagar Telephone Nigam Limited (MTNL)
  - 4.1.5 Tata Teleservices Ltd
  - 4.1.6 Reliance Infocomm
  - 4.1.7 Shyam Telelink
  - 4.1.8 BSNL/MTNL merger
- 4.2 International operators
  - 4.2.1 Market development
  - 4.2.2 Tata Communications (formerly Videsh Sanchar Nigam Ltd (VSNL)
  - 4.2.3 Data Access
  - 4.2.4 Bharti Telesonic
  - 4.2.5 Reliance Communications/Flag Telecom
- 4.3 Other operators
5. Telecommunications Infrastructure
- 5.1 National infrastructure
  - 5.1.1 Overview
  - 5.1.2 Network development
  - 5.1.3 National network
  - 5.1.4 Tariffs
  - 5.1.5 Infrastructure sharing
  - 5.1.6 Rural and regional networks
  - 5.1.7 Fibre optic cable projects
  - 5.1.8 Wireless Local Loop (WLL)
- 5.2 International infrastructure
  - 5.2.1 Overview
  - 5.2.2 India-Pakistan
  - 5.2.3 Submarine cable networks
  - 5.2.4 Satellite communications
- 5.3 Infrastructure developments
  - 5.3.1 Voice over Internet Protocol (VoIP)
  - 5.3.2 IP networks
  - 5.3.3 Next Generation Networks (NGNs)
6. Broadband and Internet Market
- 6.1 Internet market
  - 6.1.1 Overview
  - 6.1.2 Regulatory issues
  - 6.1.3 ISP market
- 6.2 Broadband networks and services
  - 6.2.1 Overview
  - 6.2.2 Market development
  - 6.2.3 National Broadband Policy 2004
  - 6.2.4 Personal computers
  - 6.2.5 Cable modems
  - 6.2.6 Digital Subscriber Line (DSL)
  - 6.2.7 Wireless broadband
  - 6.2.8 Satellite
  - 6.2.9 Other broadband networks
7. Convergence
- 7.1.1 Overview
- 7.2 Triple play
- 7.3 Overview of broadcasting market
  - 7.3.1 Statistical overview
  - 7.3.2 Regulatory issues
- 7.4 Digital TV
  - 7.4.1 Internet Protocol TV (IPTV)
  - 7.4.2 Cable TV
  - 7.4.3 Satellite TV
  - 7.4.4 Free-to-Air TV
8. Mobile Communciations
- 8.1 Overview of India's mobile market
  - 8.1.1 Market background
  - 8.1.2 Mobile statistics
  - 8.1.3 Mobile market segments
  - 8.1.4 Pricing and marketing strategies
- 8.2 Regulatory issues
  - 8.2.1 New Telecommunications Policy - 1999 (NTP-99)
  - 8.2.2 Year 2007
  - 8.2.3 Year 2006
  - 8.2.4 Year 2005
  - 8.2.5 Year 2004
- 8.3 Mobile technologies
  - 8.3.1 Overview of mobile technologies used in India
  - 8.3.2 GSM
  - 8.3.3 CDMA
  - 8.3.4 Third Generation (3G) mobile
- 8.4 Major mobile operators
  - 8.4.1 Market overview
  - 8.4.2 Market structure and earlier growth
  - 8.4.3 Mergers and acquisitions
  - 8.4.4 Competition
  - 8.4.5 Subscriber statistics and market share
  - 8.4.6 Overview of major mobile operators
- 8.5 Mobile voice services
  - 8.5.1 Prepaid
  - 8.5.2 Satellite mobile
- 8.6 Mobile data services
  - 8.6.1 Market overview
  - 8.6.2 Short Message Service (SMS)
  - 8.6.3 Multimedia Messaging Service (MMS)
  - 8.6.4 General Packet Radi Service (GPRS)
  - 8.6.5 Push-to-Talk over Cellular (PoC)
  - 8.6.6 Binary Runtime Environment for Wireless (BREW)
  - 8.6.7 Enhanced Data for GSM Evolution (EDGE)
  - 8.6.8 Mobile entertainment
  - 8.6.9 i-mode
  - 8.6.10 BlackBerry
  - 8.6.11 Mobile TV
  - 8.6.12 Mobile content
9. Glossary of Abbreviations
- Table 1 - Country statistics India - 2008
- Table 2 - Telecom revenue and investment statistics - 2007
- Table 3 - Telephone network statistics - 2007
- Table 4 - Internet user statistics - 2007
- Table 5 - Broadband statistics - 2007
- Table 6 - Mobile statistics - 2007
- Table 7 - National telecommunications authorities
- Table 8 - Fixed-line services versus mobile services and penetration - 2007
- Table 9 - Foreign Direct Investment in telecom sector - 2004 - 2008
- Table 10 - Telephone services t villages - September 2007
- Table 11 - Number of telecom licences issued by category - January 2007
- Table 12 - Fixed-line basic services1 by operator - September 2007
- Table 13 - Fixed-line subscribers and teledensity - 1995 - 2005
- Table 14 - Fixed-line subscribers and teledensity - 2005 - 2007
- Table 15 - Growth of VPT scheme - 2001 - 2007
- Table 16 - PCOs in operation and market share by operator - September 2007
- Table 17 - Fixed WLL subscribers1 - 2004 - 2006
- Table 18 - International undersea cable capacity - 1997 - 2007
- Table 19 - Internet users - 1995 - 2007
- Table 20 - Internet subscribers - 1995 - 2007
- Table 21 - ISP market - leading operators, subscribers and market share - September 2007
- Table 22 - Broadband subscribers - 2001 - 2008
- Table 23 - Broadband subscribers and households - 2007
- Table 24 - Broadband subscribers by access and annual change - 2007
- Table 25 - Broadband subscribers and market share by access - September 2007
- Table 26 - Broadband and Internet subscriber targets - 2005; 2007; 2010
- Table 27 - Cable modem subscribers - 2001 - 2007
- Table 28 - DSL subscribers - 2001 - 2008
- Table 29 - Broadcasting market overview - 2007
- Table 30 - Cable and TV households - 1995 - 2007
- Table 31 - Total TV industry revenue - 2000 - 2007
- Table 32 - Pay TV subscriber growth - 2002 - 2007
- Table 33 - Licensing of DTH service providers - September 2007
- Table 34 - Mobile subscribers and annual change - 2006 - 2007
- Table 35 - Mobile subscribers (GSM and CDMA) and annual change - 2002 - 2007
- Table 36 - GSM mobile subscribers and annual change - 1997 - 2008
- Table 37 - WLL technology-based subscribers - June 2006
- Table 38 - Mobile services revenue - 1996 - 2007; 2010
- Table 39 - Mobile ARPU (GSM and CDMA) and annual change - 2005 - 2007
- Table 40 - Mobile subscribers and market share by region/circle - September 2007
- Table 41 - GSM mobile subscribers by region/circle - 2004 - 2007
- Table 42 - GSM ARPU - 2004 - 2007
- Table 43 - GSM ARPU/month by region/circle, prepaid/postpaid/blended - June 2007
- Table 44 - GSM ARPU/month by operator grouping, prepaid/postpaid/blended - June 2007
- Table 45 - CDMA mobile subscribers by operator - June 2007
- Table 46 - CDMA mobile ARPU/month by region/circle, prepaid/postpaid/blended - June 2007
- Table 47 - Total mobile subscribers (GSM & CDMA) by operator & market share - September 2007
- Table 48 - Mobile operators, subscribers and annual change - September 2007
- Table 49 - GSM mobile operators - subscribers & market share by operator - September 2007
- Table 50 - CDMA mobile operators - subscribers & market share by operator - September 2007
- Table 51 - Mobile monthly ARPU (GSM & CDMA) - postpaid/prepaid - September 2007
- Table 52 - Mobile monthly ARPU (blended) for selected operators - September 2007
- Table 53 - Monthly ARPU for mobile subscribers by technology, prepaid/postpaid/blended - June 2007
- Exhibit 1 - Major telecommunications players
- Exhibit 2 - ISRO satellite network - March 2008
- Exhibit 3 - Broadcasting Standard and major broadcasters
- Exhibit 4 - Information on FTA turned Pay and New Pay Channels - 2006
- Exhibit 5 - Overview of major channels available t consumers in India
- Exhibit 6 - CDMA 2G deployment in India - 2006
- Exhibit 7 - CDMA 3G commercial deployment in India - 2007
- Exhibit 8 - BSNL 'mega-contract' procurement process - timeline - Jul 2005 - Nov 2007