The Indian Telecommunication Industry

Published Date: 02 Nov 2017

India's telecommunication network is the third largest in the world on the basis of its customer base and it has one of the lowest tariffs in the world enabled by the hyper-competition in its market. Major sectors of the Indian telecommunication industry are telephony, internet and broadcasting. The article discusses the various stages in the development of the telecommunication network. Further the present status of the sector is also enumerated. Telecommunication has come to its present status through many milestones like, Wireless communication, Mobile communication, Broadband communication, Next Generation Network and Satellites. Some of the performance indicators, viz, the growth of wireline and wireless subscribers, the trend of tele-density, the growth in internet and broadband connections, the increasing focus on rural telephony and the growth in the telecom revenue have been discussed.

Keywords: broadband, cloud computing, next generation network, rural telephony, tele-density.

Introduction

Telecommunication is the transmission of messages over significant distances for the purpose of communication. In the modern age of electricity, telecommunications has involved the use of electric means such as the telegraph and telephone, microwave communications and fiber optics. Telecommunication services have been recognized world-over as an important tool for socio-economic development of a nation. It is one of the prime support services needed for rapid growth and modernization of various sectors of the economy.

The telecommunication industry is vast and offers a wide range of career opportunities on both the hardware and software fronts. These prospects include functional jobs in mobile telephony internet protocol media systems, wireless communications, GSM, GPRS and CDMA technology, VoIP, data networks and optical networks amongst others. The global leaders in the field are companies like AT and T, Vodafone, Verizon, SBC Communications and Qwest Communications, who are all trying to take the advantage of the industry’s spiralling growth. The focus of telecommunication companies going forward is likely to be on leveraging more sophisticated telecommunication platforms like broadband technologies, LAN-WAN inter networking, optical networking, voice over Internet protocol and wireless data service etc.

Indian telecommunication sector has undergone a major process of transformation through significant policy reforms. Driven by various policy initiatives, the Indian telecommunication sector witnessed a complete transformation in the last decade. It has achieved a phenomenal growth during the last few years and is poised to take a big leap in the future also.

Stages of development

Postal communication was the only means of communication until the year 1850. In 1850 experimental electric telegraph started for first time in India between Calcutta (Kolkata) and Diamond Harbor (southern suburbs of Kolkata, on the banks of the Hooghly River). In 1851, it was opened for the use of the British East India Company. Subsequently construction of telegraph started throughout India. A separate department was opened to the public in 1854. Calcutta or the-then Kolkata was chosen as it was the capital of British India. In early1881, Oriental Telephone Company Limited of England opened telephone exchanges at Calcutta (Kolkata), Bombay (Mumbai), Madras (Chennai) and Ahmedabad. On the 28th January 1882 the first formal telephone service was established with a total of 93 subscribers.

From the year 1902 India drastically changed from cable telegraph to wireless telegraph, radio telegraph, radio telephone, trunk dialling. Trunk dialling was used in India for more than a decade, were the system allowed subscribers to dial calls with operator assistance and later moved to digital microwave, optical fiber, satellite earth station. During British period all major cities and towns in India were linked with telephones.

In the year 1975 Department of Telecom (DoT) was responsible for telecommunication services in entire country after separation from Indian Post and Telecommunication. Decade later Mahanagar Telephone Nigam Limited (MTNL) was chipped out of DoT to run the telecommunication services of Delhi and Mumbai.

In 1990s the telecommunication sector was opened up by the Government for private investment. In 1995 TRAI (Telecom Regulatory Authority of India) was setup. This reduced the interference of Government in deciding tariffs and policy making. The Government of India corporatized the operations wing of DoT in 2000 and renamed Department of Telecom as Bharat Sanchar Nigam Limited (BSNL).

In last thirteen years many private operator’s especially foreign investors successfully entered the high potential Indian telecom market. Globally acclaimed operators like Telenor, NTT Docomo, Vodafone, Sistema, SingTel, Maxis, Etisalat invested in India mobile operators.

Milestones in Telecommunication sector

The milestones in the telecommunication sector can be marked by the development of Wireless Communication, Mobile Communication, Broadband Communication, the latest Next Generation Networks and Satellites.

Wireless Communication

Pager Services - Pager communication was successfully launched in India in the year 1995. Pagers were looked upon as devices that offered the much needed mobility in communication, especially for businesses. Motorola was a major player with nearly 80 per cent of the market share. The other companies included Mobilink, Pagelink, BPL, Usha Martin telecom and Easy call. Pagers were generally worn on the belt or carried in the pocket.

The business peaked in 1998 with the subscriber base reaching nearly two million. However, the number dropped to less than 500,000 in 2002. Pager companies in India also offered their services in regional languages. But the companies in India were soon struggling to maintain their business. While two-way pagers could have buffered the fall, the pager companies were not in a position to upgrade their infrastructure to improve the ailing market. The Indian Paging Services Association was unable to support the industry. By 2002, Motorola stopped making or servicing pagers. When mobile phones were commercially launched in India, the pager companies boasted of advantages like small size, longer battery life, cheap etc. However, the mobile phones got better with time and continuously upgraded themselves.

Mobile Communication

First mobile telephone service on non-commercial basis started in India on 48th Independence Day at country’s capital Delhi. The first cellular call was made in India on July 31st, 1995 over Modi Telstra’s MobileNet GSM network of Kolkata. Later mobile telephone services were divided into multiple zones known as circles. Competition caused prices to drop and calls across India became one of the cheapest in the world. Most of the operators follow GSM mobile system operate under 900MHz bandwidth few recent players started operating under 1800MHz bandwidth. CDMA operators operate under 800Mhz band, they are first to introduce EVDO based high speed wireless data services via USB dongle. In spite of this huge growth Indian telecommunication sector is hit by severe spectrum crunch, corruption by the Indian Government officials and other financial troubles.

In 2008, India entered the 3G arena with the launch of 3G enabled Mobile and Data services by Government owned MTNL and BSNL. Later from November 2010 private operator’s started to launch their services.

Broadband communication

Broadband connectivity is increasingly being seen as an integral driver of the improved socio-economic performance of a country. After US and Japan, India stands the third largest Internet users of which 40 per cent of Internet used via mobile phones. The development of a robust broadband ecosystem is key aim of the country. Wireless is the quickest and most efficient medium to provide broadband services in the access network. To ensure broadband coverage, the Government has approved the creation of a National Optical Fibre Network (NOFN) for providing broadband connectivity in Villages. Several policies have been announced and implemented to promote broadband in the country. As a result of these the number of broadband subscribers increased from 0.18 million in 2005 to 22.86 million by 2012.

Next Generation Network (NGN)

Next Generation Networks, multiple access networks can connect customers to a core network based on IP technology. These access networks include fiber optics or coaxial cable networks connected to fixed locations or customers connected through Wi-Fi as well as to 3G networks connected to mobile users. As a result, in the future, it would be impossible to identify whether the Next Generation Network is a fixed or mobile network and the wireless access broadband would be used both for fixed and mobile services. It would then be futile to differentiate between fixed and mobile networks both fixed and mobile users will access services through a single core network. Cloud based data services have entered the field.

Indian Satellites

India has launched more than 50 satellites of various types, since its first attempt in 1975. The organization responsible for Indian satellites is the Indian Space Research Organization (ISRO). Most Satellites have been launched from various vehicles, including American, Russian, European satellite-launch rockets, and the U.S. Space Shuttle. First Indian satellite Aryabhata on 19th April 1975, later Bhaskara, Rohini, INSAT, Edusat, IRS, GSAT, Kalpana, Cartosat, IMS, Chandrayaan, ResourceSat, RiSat, AnuSat, etc. India has recently launched its 100th space mission with the indigenous PSLV-C21 rocket putting in orbit two foreign satellites .This launch has come as a shot in the arm of India’s fast expanding space and telecommunication industry

Indian Telecommunication - the present status

The Indian Telecommunications network is the third largest in the world and the second largest among the emerging economies of Asia. Today, it is the fastest growing market in the world in terms of number of wireless connections after China. The Telecommunication sector has continued to emerge as the prime engine of economic growth, contributing to nearly two per cent of the Indian GDP. Indian telecommunication sector has undergone a major transformation through significant policy reforms, particularly under NTP 1999. Driven by various policy initiatives, the Indian telecommunication sector has achieved a phenomenal growth during the last few years.

Performance Indicators of the sector

The growth and development of the telecommunication sector can be marked by some of the performance indicators like the status of the Wireline and Wireless subscription, the trend in the tele-density, the popularity of the internet and broadband services, growth the rural telephone networks and position of the telecom revenue. The stated indicators are –

Wireline vs. Wireless

The subscriber base of Wire line subscribers as on 31st March 2012 was 32.17 million as compared to 34.73 million subscribers on 31st March 2011 registering a decrease of 2.56 million subscribers during the year 2011-12. The growth of wireless services has been substantial. Wireless has overtaken wire lines. The wireless subscribers have grown at a compounded annual growth rate (CAGR) of 42.7 per cent since 2007. The wireless subscriber base was 919.17 million as on 31st March 2012 in comparison to the subscriber base of 811.59 million as on 31st March 2011. It added 107.58 million subscribers in the financial year 2011-12 registering an annual growth rate of about 13.26 per cent. The total subscriber base of wireless services has grown from 165.11 million in March, 2007 to 919.17 million in March, 2012. Wireless phones have increased as they are preferred because of their convenience and affordability. As a result, telephones today have come within the reach of the common man. The comparative status of the wire line and wireless subscriber during the last six years (year ending March) are depicted in Chart 1.

Chart 1 Comparative status of Wireline and Wireless Subscribers (in millions)

Source: TRAI Annual Report 2011-12

Tele-density

Tele-density is an important indicator of telecom penetration in the country. With the advent of wireless technologies, there has been a tremendous growth in the tele-density in the country.

Source: Compiled by the investigators from various Annual Reports

The trend of tele-density (in million) for the period from March 2007 to March 2012 is clear from Chart 2. The Urban tele-density increased from 48.10 in March 2007 to 169.55 in March 2012. The Rural tele-density which was 5.89 in March 2007 increased to 39.22 at the end of March 2012. The tele-density which was 18.22 in March 2007 increased to 78.66 in March 2012. Thus a continuous improvement in the overall tele-density has been observed since 2007.

Internet and Broadband Subscribers

Internet and broadband services empower masses. They benefit individuals to access new career and educational opportunities, businessman to reach new markets with improved efficiency and Government to deliver crucial services in the field of health, banking and commerce to all its citizens. In the year 2011-12, the number of Internet subscribers increased to 22.86 million from 19.67 million registering an annual growth of about 3.19 million. The number of broadband connections increased from 11.89 million to 13.81 million. Chart 3 shows the distribution of narrowband, broadband and total subscribers (in million) for the period from March 2007 to March 2012.

Source: TRAI, Annual Report 2011-12

The trend shows that there is remarkable growth in the internet broadband subscribers than the narrowband subscribers since 2007. However the net result shows that the total internet subscribers have increased.

Rural Telephony

There has been a tremendous increase in the rural telephone connections from 47.10 million in March 2007 to 330.82 million in March 2012. The wireless connections have contributed substantially to total rural telephone connections. The private sector has also contributed to the growth of rural telephones. The measures undertaken to increase rural connectivity in Dec 2011 were:

Under the Village Pubic Telephone (VPT) facility 5.76 lakh (97.11 per cent) villages were covered in the country.

A total number of 1, 84,775 Multi Access Radio Relay (MARR) based VPTs installed before 1.4.2002 was replaced by VPTs with advanced reliable technologies.

Under the Infrastructure Sharing Scheme, 7353 towers spread over 500 districts of 27 states of the country were set up.

5. Telecom Revenue

The total revenue of the telecom service sector increased from 1,71,719 crore in 2010-11 to 1,95,442 crore in 2011-12 indicating a growth of 13.82 per cent. The respective figures of Revenue after adjustment of infra operator interconnection charges comes to 1, 66,752 crore and 1, 79,914 crore depicting a growth of 7.89 per cent over previous year.

However, the revenue from the public sector telecom companies in 2011-12 is Rs.31, 962 crore as compared to Rs. 33,976 crore in the previous year, marking a reduction of 5.92 per cent. While the revenue of private sector telecom companies’ rouse to Rs.1, 47,952 in 2011-12 from Rs. 1, 32,776 in the previous year, marking an increase of 10.25 per cent.

Advancements in the Industry

Rise in Cloud Computing: As improved broadband capacity helps to overcome network bottlenecks, cloud-based offerings from telecom operators and ICT providers will continue to grow.

One Nation, One License Policy: With this, there will be no difference between Local and STD Calls. This also means that there will be no roaming charges while in India.

Digitization of Cable TV: This will help the government to pursue India's broadband goals and thereby help to boost economic growth.

Smart devices and Digital content: 3G being stabilized have fuel 4G, smart devices like tablet, smart phone, smart TV will become a media for video and digital content consumption. Bharti has set the trend by launching 4G services in India.

Findings and Conclusion

The growth of Indian telecommunication sector has highly enhanced by supportive government policies, emerging new technologies and changing consumer behaviour. Further this rapid growth of the telecommunication sector has benefited the customers largely in the form of better services and low tariffs. The sector has exhibited a continuous rising trend in the total number of telephone subscribers. It is clear fact that the industry has made stupendous growth in recent times which is listed as under:

The milestones in the telecommunication sector are the development of Wireless Communication, Mobile Communication, Broadband Communication, the Next Generation Networks and Satellites.

The Wireless subscriber base has come up to 919.17 million in March 2012 from 165.11 million in March 2007. It added 107.58 million subscribers in the financial year 2011-12.

The subscriber base of Wireline subscribers was 32.17 million in March 2012 as compared to 34.73 million subscribers in March 2011 showing a decrease of 2.56 million during 2011-12.

The Urban tele-density roused from 48.10 in March 2007 to 169.55 in March 2012. The Rural tele-density increased from 5.89 in March 2007 to 39.22 at the end of March 2012. The overall tele-density reached to 78.66 in March 2012 from 18.22 in March 2007.

Broadband subscriber base increased to 13.81 million. The provision of Internet and broadband through Digital Subscriber Line (DSL) technologies replaced the copper pairs.

The rural telephone connections increased from 47.10 million in March 2007 to 330.82 million in March 2012.

The total revenue of the Indian telecom sector grew to 1, 95,442 crore in the year 2011-12.

On the light of the above findings it is understood that the Indian telecommunication industry is an integral driver of improved socio-economic performance of a country. Services of broadband in rural and remote areas helped in bridging the ‘digital divide’ and in long run have a multiplier effect. The development of telecommunication services has led to the improve productivity in rural areas and help overcome constraints of inadequate transport, infrastructure and overall improve the quality of life. In addition to the headway made in telephony services, the Indian telecommunication industry also manufactures a complete range of telecom equipment using state of the art technology. Leveraging these strengths, the growth generators in the coming years are likely to be enhanced mobile value added services, integrated broadband services and the emergence of India as a global telecom manufacturing hub. Favourable factors such as policy moves of the government, tax incentives offered a large talent pool in R and D and low labour cost all provide a strong impetus to the industry. The top Indian companies are Bharti, Airtel, BSNL, Reliance Communications and Vodafone-Essar.

According to the World Telecommunications Industry, India will have 1.200 billion mobile subscribers by 2013. Furthermore, projections by several leading global consultancies indicate that the total number of subscribers in India will exceed the total subscriber count in the China by 2013. Owing to this growth, a large number of multinational telecommunication leaders are pouring into the nation and expressing their interest to invest in the telecommunication industry in India. Key factors, which fuel the growth of the sector include increased access to services owing to launch of newer telecom technologies like 3G and BWA, better devices, changing consumer behaviour and the emergence of cloud technologies. Majority of the investments go into the capital expenditure for setting up newer networks like 3G and developing the backhaul. Moreover, the introduction of Mobile Number Portability (MNP) in India has made the Indian Telecom market more competitive, in terms of service offerings and quality. The Telecommunication Industry is growing in India and India will be far ahead of other countries in near future. Thus in true sense the Indian Telecommunication Industry is emerging as a global leader………..!!!!