The Importance Of Telecommunication Marketing Essay

Published Date: 23 Mar 2015

Communication plays very chief role in the life of human beings. Since the moment we born, we communicate our desires and needs. Telecommunication is the science and practice of transmitting information by the mode of electronic. Telecommunication, however, is talking through technology meaning phones, Internet, radio etc...

Telecommunication is the exchange of information over considerable distances by the means of electronic. A absolute, single telecommunications circuit consists of two location, each outfitted with a transmitter and a receiver. The transmitter and receiver at any location may be united into a single device called a transceiver. The intermediate of signal transmission can be electrical wire or cable (also known as "copper"),optical fiber or electromagnetic fields. The simplest form of telecommunications takes place between two locations. However, it is frequent for numerous transmitting and receiving stations to swap over data among themselves. Such a collection is called a telecommunication network.

In earlier times, telecommunications mixed up with the exercise of illustrated signals, such as  smoke signals, beacons, signal flags, semaphore telegraphs,  and optical heliographs, or audio messages such as coded drumbeats, loud whistles , and lung-blown horns.

Now a days, telecommunications engages the work out of electrical instruments such as the telephone, telegraph, and teleprompter and as well as the use of radio, as well as fiber optics and their connected electronics, plus the utilize of the orbiting satellites and the Internet.

Need of telecom industry

Use of several modes of telecommunication has now becomes a vital part of civilization. Information found to be one of the most significant elements for the resourceful expansion of an economy. With efficient use of telecommunication one can remove various constraints of all the sectors in the economy resulting into increased output and better administration. Effective controlling mechanism can be possible only through better communication and with better use of telecommunication equipments.  In the developing countries earlier telecommunication was a big problem because all the means of communications were confined to the rich people only. But with the revolution in this sector now all the means are also available to middle and lower class people who play vital role in the growth of economy of any country.

Importance of telecommunication

Society today has made itself so used to telecommunication that the world would crumple if it was taken away. The reason for the marvelous expansion of telecommunications is because we needed a better way to communicate messages to each other.

Communication is a immensely significant aspect, not only for people around the world, but also for minute and huge businesses. With the passage of time, methods such as horns became a way of communication. But with the growing time there has been a bundle of expansion and with that came the more superior technologies such as radio, phone, television and the Internet.

Businesses would be vanished without the current technological progression and a lot of companies would come to an end. But this is not the only advantage that telecommunications can bring. Without telecommunications, we would be powerless to fly on planes and helicopters or effectively find the way in the seas. Besides this, space travel would be nearly unfeasible.

A world exclusive of telecommunications would not be possible, society has made itself so addictive to this form of technology that the world would end up in danger if it was taken away. The reason for the incredible growth of telecommunications is because, as people and cities throughout the planet grew, we desired a improved way to relay messages between one another.

The supreme scientific progression that we could have possibly got from this is the manufacture of phone and the Internet. The phone was a most important instrument of communication, whereby you could right away communicate with another person that was on the other side of the world. Almost every domestic now has at least one phone, with most having several.

Telecommunication makes us communicate with every spot of the earth to resolve problems and make the world a much safer place to live.

 

A concise channels to innovative technologies and new networks in telecommunication industry:

Asymmetric Digital Subscriber Line (ADSL)

Asynchronous Transfer Mode (ATM)

Bluetooth

Cellular

Digital Subscriber Line Lite (DSL Lite)

Extended-rate Single-pair High-speed DSL (ESHDSL)

Fixed Radio Access (FRA)

Frame Relay

General Packet Radio System (GPRS)

High speed Digital Subscriber Line (HDSL)

Integrated Services Digital Network (ISDN)

Internet

Internet Protocol (IP) Networks

Intranet

IP Multimedia Subsystem

Local Area Network (LAN)

Mesh systems

Metropolitan Area Network (MAN)

Multipoint Video Distribution Systems (MVDS)

Next Generation Access

Next Generation Networks (NGN)

Optical fibre

Personal Communications Networks (PCN)

Power Line Telecommunications (PLT)

Super JANET

Synchronous Digital Hierarchy (SDH)

Ultra Wide Band (UWB)

Universal Mobile

Telecommunications Systems (UMTS)

Very high speed Digital Subscriber Line (VDSL)

Wave Division Multiplexing (WDM)

Wide Area Network (WAN)

Wi-Fi

Wi MAX

Wireless Application Protocol (WAP)

World Wide Web (WWW)

x Digital Subscriber Line (xDSL)

Zig Bee

Establishment of telecom industry in India

History :

Telecommunications is the broadcast of signals over extended distances. It began with the discovery of the telephone in 1876, then lingering to radio broadcasts in the late 1800s and to television in the early 1900s.

In 1851 , it was opened for the use of the British East India company. Subsequently construction of telegraph throughout India. A separate department was opened to the public in 1854. Dr. william O'shaughnessy, who pioneered the telegraph and telephone in India.

1851 - first operational landlines were laid by government near Calcutta.

1881 - telephone services introduced into India.

1883 - merger with postal system.

1923 - Indian radio telegraph company formed.

1932 - merger of ETC and IRT Indian radio and cable communication company.

1947 - nationalization of foreign telecom companies to form posts, telegraph and telephone.

1985 - department of telecommunication established.

1986 - conversion of DOT into two wholly state owned companies VSNL for international telecommunications and MTNL for services and metropolitan areas.

1989 - the telecom commission was constituted.

1994 - national telecom policy created.

1995 - entry of GSM in India triggering telecom revolution. BPL mobile services launched.

1997 - telecom regulatory authority of India formed in the month of January.

1999 - NTP-99. National telecom policy with reformed goals set.

2000- BSNL was created. A new entity to operate services in different parts of the country as a public sector unit.

2004 - broadband policy launched.

2005 - ILD and NLD annual license fees reduced from 15% to 6%.

2008 - 3G guidelines issued, spectrum allocation through auction, foreign players allowed to bid.

2009 - TRAI announces rule and regulations to be followed for mobile number portability .

2010 - completed the auction of 3G and BWA spectrum.

2013 - proposed auction of 4G.

Chief companies of Indian telecom industry and year of establishment

New technologies, new regulation, new services, and new customer demands: there is no doubt that the telecom sector is in chaos. Following are the major companies which are ruling the Indian telecom market :

Bharti airtel - 1985

BSNL - 2000

Vodafone essar - 2007

Reliance communications - 1999

Idea cellular - 1995

Tata communications - 1986

Tata teleservices - 1996

Aircel - 1999

MTNL - 1986

TTML -1998

TATA DOCOMO

UNINOR - 2009

Videocon telecommunications ltd - 2008

Pie chart Companies with their market share in 2012-

Companies and their market share in 2012

MTNL

0.60%

Videocon

0.60%

Uninor

4.20%

Aircel

6.90%

TATA DOCOMO

9.20%

BSNL

10.80%

Idea cellular

11.90%

Vodafone

16.40%

Reliance communications

16.70%

Bharti Airtel

19.50%

Nutshell conclusion of the pie-chart

There are four major companies in telecom industry. Airtel, reliance, vodafone, idea and BSNL.

Airtel is a market leader with 19.50% market share and reliance on the 2nd place with 16.40% market share.

Major players in the Indian telecom market

Since the liberalization and the privatization of the Indian telecom market, public telecom operators as well as domestic and foreign private telecom operators have invested in various submarkets of the Indian telecom market.

Though the Indian telecom market has an vast number of telecom operators.

The major telecom players discussed are from the following categories:

Public telecom operators

ii. Domestic private telecom operators

Public telecom operators add upto a large number in the county. However, following are some of the most vital public telecom operators:

Bharat Sanchar Nigam Limited (BSNL) was formed on October 1, 2000 by corporatization of the former Department of Telecom Services and Department of Telecom Operations. BSNL is a government of India owned Public Sector Undertaking (PSU). It is the largest PSU in the country and serves the entire length and breadth of India. The main functions of BSNL include planning, engineering, installation, maintenance, management and operation of voice and non-voice telecommunications services all over the country. It has launched a nationwide mobile phone service under the brand 'CellOne' and internet telephony services under the brand name 'Webfone'. BSNL provides fixed, internet and cellular services in the country.

Videsh Sanchar Nigam Limited (VSNL) was the exclusive international telephony provider of India till the government opened the international long distance service market for private players on 1st April 2002, two years ahead of schedule. On 13th of February 2002 VSNL was privatized by the drop of government equity to 26% percent and the transfer of the management to the original business corporation Tata group. VSNL provides international telecom services and value added services.

Mahanagar Telephone Nigam Limited (MTNL) provides fixed, internet and cellular services in the metropolitan cities of Mumbai and Delhi. It provides cellular service in the metros of Delhi and Mumbai under the brand 'Dolphin'. However, there is a high prospect of merger of MTNL with BSNL in the future.

Indian Telecom Industry Limted (ITI) was formed in 1948 and was among the first public sector undertakings to be set up by the government of India. It has seven manufacturing units spread across the country, which produce a broad range of equipment including electronic switching equipment, transmission equipment, VSAT equipment and telephone instruments of various types.

Telecommunications Consultants of India Limited (TCIL) undertakes projects in all the fields of telecommunications in India and abroad. The centre capability of the company is communication network projects, software support, switching and transmission systems, cellular services, rural telecommunications and optical fibre based backbone network. It has plans to enter the basic services market abroad through joint ventures and the internet services segment in India. There are several domestic private telecom operators in the Indian telecom market.

Some of the most important domestic private operators are discussed as follows.

Bharti Group is the largest private communication service provider in the country, across all types of licensed communication services. It focuses on different areas of business through independent joint venture companies: Bharti Cellular for cellular operations, Bharti Telenet for fixed services, Bharti-BT Internet for Internet services, Bharti BT for VSAT and WAN consultancy, Bharti Telesoft for telecom software development, Bharti International for joint ventures in global markets, Bharti Televentures for projects, and Bharti Telecom for telecom equipment development. It is the second largest player in terms of total number of subscribers from cellular and fixed services. The cellular service offered by Bharti group under the brand name 'AirTel' is rated one of India's best cellular service operator. It was also the first Indian company to provide wide-ranging telecom services outside India. It should not be surprising therefore that it is the fastest growing VSAT company in India, and its first multinational internet service provider.

BPL Group too is a service provider as well as an equipment manufacturer. The BPL Group is widely regarded as a successful, energetic business house with more than two decades of successful consumer marketing expertise. It occupies the top slot in terms of market share in all its areas of operation. The Group has five focus areas: telecom, consumer electronics, home appliances, components and power. BPL group has three companies-BPL Mobile, BPL Cellular and BPL Telecom. BPL Mobile is a joint venture between the BPL Group and France Telecom. BPL Cellular Limited is the licensee to provide cellular mobile services in the States of Maharashtra (excluding Mumbai but including Goa), Tamil Nadu (excluding Chennai but including Pondicherry) and Kerala. BPL Cellular Limited is a joint venture between, BPL, India's number one consumer durable giant and AT&T Broadband. BPL Telecom manufactures, designs and markets high quality telecom and information technology products and solutions.

Tata Group holds leadership position in emerging markets. Tata group is the industrial corporation group in India functioning business in seven key industry sectors - Materials, Engineering, Energy, Chemicals, Consumer products, Telecommunication and Information Technology and Services.

Hutchison Whampoa, which is a unit of Hong Kong's Hutchison Whampoa Limited, has a joint venture with the native Essar group and is one of the major cellular service provider in India's industrial capital Mumbai under the brand name Orange. Besides Mumbai, Hutchison also provides cellular services in the Delhi region too. It is rated one of the best next to the domestic group Bharti. The Hutchison group ranks fourth in the country and the major companies under it are Hutchison Max, Sterling Cellular, Fascel and Usha Martin Telekom, all providing cellular services in different regions. In 2007 Vodafone purchased stake in hutch (Hutchison telecom international) for USD 11.08 billion.

Reliance communication is the India's largest private sector information and communications company, with over 100 million subscribers. It has established a pan- India, high capacity, integrated, convergent, digital network, to offer services spanning the entire infocomm value chain.

Idea Cellular is a part of the aditya birla group and has bagged fifth position in the Indian telecom market. It is a leading GSM mobile services operator in India with 67 million subscribers. Idea was the first cellular services provider to launch GPRS and enhanced data rates for GSM evolution (EDGE) in the country.

Aircel recorded highest growth of 37.2% among operators in 2009-10. It is a joint venture between maxis communications of Malaysia and sindya securities investment pvt limited. Aircel commenced operations in 1999 and became the leading mobile operator in tamil nadu.

(References - www.bharti.com , www.Videocon.com , www.Tatadocomo.com , www.Vodafone.com , www.bsnl.co.in , www.ideacellular.com , www.tatacommunications.com , www.tatadocomo.com , www.mtnl.net.in

www.uninor.com)

Position of Indian Telecom Sector

The Indian Telecommunications network with 621 million connections (as on March 2010) is the third leading in the world. The telecom sector is rising at a speed of 45% during the recent years. This speedy growth is possible due to diverse active and positive decisions of the Government and input of both by the public and the private sectors.  The speedy steps in the telecom sector have been make possible by liberal policies of the Government that provides simple market access for telecom equipment and a fair regulatory framework for offering telecom services to the Indian consumers at reasonable prices. Currently, all the telecom services have been opened for private contribution. The Government has taken following main initiatives for the enlargement of the Telecom Sector:

Liberalization

The process of liberalization in the country began in the right intense with the announcement of the New Economic Policy in July 1991. Telecom equipment manufacturing was delicensed in 1991 and value added services were declared open to the private sector in 1992, following which radio paging, cellular mobile and other value added services were opened steadily to the private sector. This has resulted in large number of manufacturing units been set up in the country. As a result most of the equipment used in telecom area is being manufactured within the country. A major step forward was the clear enunciation of the government's intention of liberalizing the telecom sector in the National Telecom Policy resolution of 13th May 1994. 

National Telecom Policy 1994 

In 1994, the Government proclaimed the National Telecom Policy which defined definite chief objectives, including availability of telephone on demand, provision of world class services at rational prices, improving India's competitiveness in global market and promoting exports, attractive FDI and stimulating domestic investment, ensuring India's emergence as major manufacturing export base of telecom equipment and universal availability of basic telecom services to all villages. It also announced a series of specific targets to be achieved by 1997.

For more details, visit National Telecom Policy 1994

Telecom Regulatory Authority of India (TRAI)

The entry of private service providers brought with it the expected need for independent regulation. The Telecom Regulatory Authority of India (TRAI) was, thus, established with effect from 20th February 1997 by an Act of Parliament, called the Telecom Regulatory Authority of India Act, 1997, to regulate telecom services, including fixation/revision of tariffs for telecom services which were earlier vested in the Central Government.

TRAI's mission is to create and cultivate circumstances for enlargement of telecommunications in the country in manner and at a pace, which will enable India to play a leading role in emerging global information society. One of the main objectives of TRAI is to provide a reasonable and transparent policy environment, which promotes a level playing field and facilitates fair competition. In pursuance of above objective TRAI has issued from time to time a large number of regulations, orders and directions to deal with issues coming before it and provided the required direction to the evolution of Indian telecom market from a Government owned monopoly to a multi operator multi service open competitive market. The directions, orders and regulations issued cover a wide range of subjects including tariff, interconnection and quality of service as well as governance of the Authority.

The TRAI Act was amended by a rule, effective from 24 January 2000, establishing a Telecommunications Dispute Settlement and Appellate Tribunal (TDSAT) to take over the adjudicatory and disputes functions from TRAI. TDSAT was set up to adjudicate any dispute between a licensor and a licensee, between two or more service providers, between a service provider and a group of consumers, and to hear and dispose of appeals against any direction, decision or order of TRAI.

For more details, visit, http://www.trai.gov.in/  http://www.tdsat.nic.in

New Telecom Policy 1999

The most important landmark and instrument of telecom reforms in India is the New Telecom Policy 1999 (NTP 99). The New Telecom Policy, 1999 (NTP-99) was approved on 26th March 1999, to become effective from 1st April 1999. NTP-99 laid down a clear roadmap for future reforms, contemplating the opening up of all the segments of the telecom sector for private sector participation. It clearly recognized the need for strengthening the regulatory regime as well as restructuring the departmental telecom services to that of a public sector corporation so as to separate the licensing and policy functions of the Government from that of being an operator. It also recognized the need for resolving the prevailing problems faced by the operators so as to restore their confidence and improve the investment climate.

Key features of the NTP 99 include:

Strengthening of Regulator.

National long distance services opened to private operators.

International Long Distance Services opened to private sectors.

Private telecom operators licensed on a revenue sharing basis, plus a one-time entry fee. Resolution of problems of existing operators envisaged.

Direct interconnectivity and sharing of network with other telecom operators within the service area was permitted.

Department of Telecommunication Services (DTS) corporatized in 2000.

Spectrum Management made transparent and more efficient.

All the obligations made under NTP 99 have been fulfilled; each one of them, in letter and spirit, some even ahead of schedule, and the reform process is now accomplish with all the sectors in telecommunications opened for private competition.

For more details, visit New Telecom Policy 1999

National Long Distance

National Long Distance opened for private participation. The Government announced on 13.08.2000 the guidelines for entry of private sector in National Long Distance Services without any restriction on the number of operators. The DOT guidelines of license for the National Long Distance operations were also issued.

Highlights - NLD Guidelines

Unlimited entry for carrying both inter-circle and intra-circle calls.

Total foreign equity (including equity of NRIs and international funding agencies) must not exceed 74%. Promoters must have a combined net worth of Rs.25 million.

Private operators will have to enter into an arrangement with fixed-service providers within a circle for traffic between long-distance and short-distance charging centers'.

Seven years time frame set for rollout of network, spread over four phases. Any shortfall in network coverage would result in encashment and forfeiture of bank guarantee of that phase.

Private operators to pay one-time entry fee of Rs.25 million plus a Financial Bank Guarantee (FBG) of Rs.200 million. The revenue sharing agreement would be to the extent of 6%.

Private operators allowed to set up landing facilities that access submarine cables and use excess bandwidth available.

Licence period would be for 20 years and extendable by 10 years.

For more details, visit National Long Distance

International Long Distance

In the field of international telephony, India had agreed under the GATS to review its opening up in 2004. However, open competition in this sector was allowed with effect from April 2002 itself. There is now no limit on the number of service providers in this sector. The licence for ILD service is issued initially for a period of 20 years, with   automatic extension of the licence by a period of 5 years. The applicant company pays one-time non-refundable entry fee of Rs.25 million plus a bank guarantee of Rs.250 million, which will be released on fulfillment of the roll out obligations. The annual licence fee including USO contribution is @ 6% of the Adjusted Gross Revenue and the fee/royalty for the use of spectrum and possession of wireless telegraphy equipment are payable separately. At present 24 ILD service providers (22 Private and 2 Public Sector Undertaking) are there. As per current roll out obligations under ILD license, the licensee undertakes to fulfill the minimum network roll out obligations for installing at least one Gateway Switch having appropriate interconnections with at least one National Long Distance service licensee. There is no bar in setting up of Point of Presence (PoP) or Gateway switches in remaining location of Level I Taxes. Preferably, these PoPs should conform to Open Network Architecture (ONA) i.e. should be based on internationally accepted standards to ensure seamless working with other Carrier's Network.

For more details, visit International Long Distance

Universal Service Obligation Fund

Another major step was to set up the Universal Service Obligation Fund with effect from April 1, 2002. An administrator was selected for this reason. Subsequently, the Indian Telegraph (Amendment) Act, 2003 giving constitutional status to the Universal Service Obligation Fund (USOF) was passed by both Houses of Parliament in December 2003.  The Fund is to be utilized exclusively for meeting the Universal Service Obligation and the balance to the credit of the Fund will not lapse at the end of the financial year. Credits to the Fund shall be through Parliamentary approvals. The Rules for administration of the Fund known as Indian Telegraph (Amendment) Rules, 2004 were notified on 26.03.2004.

The resources for implementation of USO are raised through a Universal Service Levy (USL) which has presently been fixed at 5% of the Adjusted Gross Revenue (AGR) of all Telecom Service Providers except the pure value added service providers like Internet, Voice Mail, E-Mail service providers etc. In addition, the Central Govt. may also give grants and loans. An Ordinance was promulgated on 30.10.2006 as the Indian Telegraph (Amendment) Ordinance 2006 to amend the Indian Telegraph Act, 1885 in order to enable support for mobile services, broadband connectivity, general infrastructure and pilot project for new technological developments in rural and remote areas of the country. Subsequently, an Act has been passed on 29.12.2006 as the Indian Telegraph (Amendment) Act 2006 to amend the Indian Telegraph Act, 1885.

USFO has initiated action to bring mobile services within the ambit of Universal Service Obligation Fund (USOF) activities. Under this initiative, 7387 mobile infrastructure sites are being rolled out, in the first phase, across 500 districts and 27 states of India. This scheme will provide mobile services to approximately 0.2 million villages which where hitherto deprived of the same. As on 30th June 2010, 7183 shared towers have been set up under the First Phase of the scheme. The USOFof DOT has proposed to set up about 10,128 additional towers in order to extend the mobile coverage in other uncovered areas under the Second Phase of the Scheme.  

For more details, visit Universal Service Obligation Fund

Unified Access Services

Unified access license regime was introduced in November 2003.  Unified Access Services operators are free to provide, within their area of operation, services, which cover collection, carriage, transmission and delivery of voice and/or non-voice messages over Licensee's network by deploying circuit, and/or packet switched equipment. Further, the Licensee can also provide Voice Mail, Audiotex services, Video Conferencing, Videotex, E-Mail, Closed User Group (CUG) as Value Added Services over its network to the subscribers falling within its service area on non-discriminatory basis. The country is divided into 23 Service Areas consisting of 19 Telecom Circle and 4 Metro Service Areas for providing Unified Access Services (UAS). The licence for Unified Access Services is issued on non-exclusive basis, for a period of 20 years, extendable by 10 years at one time within the territorial jurisdiction of a licensed Service Area. The licence Fee is 10%, 8% & 6% of Adjusted Gross Revenue (AGR) for Metro and Category `A, Category `B and Category `C Service Areas, respectively. Revenue and the fee/royalty for the use of spectrum and possession of wireless telegraphy equipment are payable separately. The frequencies are assigned by WPC wing of the Department of Telecommunications from the frequency bands earmarked in the applicable National Frequency Allocation Plan and in coordination with various users subject to availability of scarce spectrum.

For more details, visit (CMTS & Unified Access Service)

 

Internet Service Providers (ISPs)

Internet service was opened for private participation in 1998 with a view to encourage growth of Internet and increase its penetration. The sector has seen tremendous technological advancement for a period of time and has necessitated taking steps to facilitate technological ingenuity and provision of various services. The Government in the public interest in general, and consumer interest in particular, and for proper conduct of telegraph and telecom services has decided to issue the new guidelines for grant of licence of Internet services on non-exclusive basis. Any Indian company with a maximum foreign equity of 74% is eligible for grant of licence.

Broadband Policy 2004

Recognizing the potential of ubiquitous Broadband service in growth of GDP and enhancement in quality of life through societal applications including tele-education, tele-medicine, e-governance, entertainment as well as employment generation by way of high-speed access to information and web based communication; Government has announced Broadband Policy in October 2004. The main emphasis is on the creation of infrastructure through various technologies that can contribute to the growth of broadband services. These technologies include optical fibre, Asymmetric Digital Subscriber Lines (ADSL), cable TV network; DTH etc. Broadband connectivity has been defined as with the minimum speed of 256 kbps. It is estimated that the number of broadband subscribers would be 20 million by 2012. With a view to encourage Broadband Connectivity, both outdoor and indoor usage of low power Wi-Fi and Wi-Max systems in 2.4 GHz-2.4835 GHz band has been delicensed. The use of low power indoor systems in 5.15-5.35 GHz and 5.725-5.875 GHz bands has also been delicensed in January 05.  The SACFA/WPC clearance has been simplified.  The setting up of National Internet Exchange of India (NIXI) would enable bringing down the international bandwidth cost substantially, thus making the broadband connectivity more affordable.

The prime consideration guiding the Policy includes affordability and reliability of Broadband services, incentives for creation of additional infrastructure, employment opportunities, induction of latest technologies, national security and brings in competitive environment so as to reduce regulatory interventions.

By this new policy, the Government intends to make available transponder capacity for VSAT services at competitive rates after taking into consideration the security requirements. The service providers permitted to enter into franchisee agreement with cable TV network operators. However, the Licensee shall be responsible for compliance of the terms and conditions of the licence. Further in the case of DTH services, the service providers permitted to provide Receive-Only-Internet Service. The role of other facilitators such as electricity authorities, Departments of ITs of various State Governments, Departments of Local Self Governments, Panchayats, Departments of Health and Family Welfare, Departments of Education is very important to carry the advantage of broadband services to the users particularly in rural areas.

Target has been set for 20 million broadband connections by 2012 and providing Broadband connectivity to all secondary and higher secondary schools, public health institutions and panchayats by 2010. In rural areas, connectivity of 512 KBPS with ADSL 2 plus technology (on wire) will be provided from about 20,000 existing exchanges in rural areas having optical fibre connectivity.  Community Service Centres, secondary schools, banks, health centres, Panchayats, police stations etc. can be provided with this connectivity in the vicinity of above-mentioned 20,000 exchanges in rural areas.  DOT will be subsidizing the infrastructure cost of Broadband network through support from USO Fund to ensure that Broadband services are available to users at affordable tariffs. 

For more details, visit Broadband Policy 2004

Tariff Changes

The Indian Telecom Sector has witnessed major changes in the tariff structure. The Telecommunication Tariff Order (TTO) 1999, issued by regulator (TRAI), had begun the process of tariff balancing with a view to bring them closer to the costs. This supplemented by Calling Party Pay (CPP), reduction in ADC and the increased competition, has resulted in a dramatic fall in the tariffs.  ADC has been abolished for all calls w.e.f. 1st October 2008.

The peak National Long Distance tariff for above 1000 Kms. in 2000 has come down from US$ 0.67 per minute to US$ 0.02 per minute in 2009.

The International Long Distance tariff from US$ 1.36 per minute in 2000 to US$ 0.16 per minute in 2009 for USA, Canada & UK.

The mobile tariff for local calls has reduced from US$0.36 per minute in 1999 to US$ 0.009 - US$ 0.04 per minute in 2009.

The Average Revenue Per User of mobile is between US$ 5.06 - US$ 7.82 per month

Foreign Direct Investment (FDI)

In Basic, Cellular Mobile, Paging and Value Added Service, and Global Mobile Personal Communications by Satellite, Composite FDI permitted is 74% (49% under automatic route) subject to grant of license from Department of Telecommunications subject to security and license conditions. (para 5.38.1 to 5.38.4 of consolidate FDI Policy circular 1/2010 of DIPP)

FDI upto 74% (49% under automatic route) is also permitted for the following: -

Radio Paging Service

Internet Service Providers (ISP's)

FDI upto 100% permitted in respect of the following telecom services: -

Infrastructure Providers providing dark fibre (IP Category I);

Electronic Mai Mail; and

Voice Mail

Subject to the conditions that such companies would divest 26% of their equity in favor of Indian public in 5 years, if these companies were listed in other parts of the world.

In telecom manufacturing sector 100% FDI is permitted under automatic route.

The Government has modified method of calculation of Direct and Indirect Foreign Investment and have also issued guidelines on downstream investment by Indian Companies 

Guidelines for transfer of ownership or control of Indian companies in sectors with caps from resident Indian citizens to non-resident entities have been issued. 

Investment Opportunities and Incentives

An attractive trade and investment policy and lucrative incentives for foreign collaborations have made India one of the world's most attractive markets for the telecom equipment suppliers and service providers.

No industrial license required for setting up manufacturing units for telecom equipment.

100% Foreign Direct Investment (FDI) is allowed through automatic route for manufacturing of telecom equipments.

Payments for royalty, lump sum fee for transfer of technology and  payments  for use of trademark/brand name on the automatic route.

Foreign equity of 74% (49 % under automatic route) permitted for telecom services - basic, cellular mobile, paging, value added services, NLD, ILD, ISPs - and global mobile personal communications by satellite.

Full reparability of dividend income and capital invested in the telecom sector. 

Network Expansion

The telecom sector has shown robust growth during the past few years. It has also undergone a substantial change in terms of mobile versus fixed phones and public versus private participation. The following table shows the growth trend of telecom sector since 2003 till 2012:

The number of telephones has increased from 54.63 million as on 31.03.2003 to 621.28 million as on 31.03.2012. Wireless subscribers increased from 13.3 million as on 31.03.2003 to 584.32 million as on 31.03.2012. Whereas,  the fixed line subscribers decreased from 41.33 million in 31.03.2003 to 36.95 million in 31.03.2012. The broadband subscribers grew from a meager 0.18 million to 8.76 million as on 31.03.2012. 

Trend in Tele-density

Tele-density in the country increased from 5.11% in 2003 to 52.74 % in March 2012. In the rural area tele-density increased from 1.49% in Mar 2003 to 24.31% in March 2012 and in the urban areas it is increased from 14.32% in Mar 2003 to119.45% in March 2012.This indicates a rising trend of Indian telecom subscribers.

Rural Telephony 

Apart from the 200.77million fixed and WLL connections on March 2012 provided in the rural areas, 570000 uncovered VPTs have been provided as on March 2012. Thus, 96% of the villages in India have been covered by the VPTs. More than 3 lakh PCOs are also providing community access in the rural areas. Further, Mobile Gramin Sanchar Sewak Scheme (GSS), a mobile Public Call Office (PCO) service is provided at the doorstep of villagers. At present, 2772 GSSs are covering 12043 villages. Also, to provide Internet service, Sanchar Dhabas (Internet Kiosks) have been provided in more than 3500 Block Headquarters out of the total 6337 Blocks in the country. The target of 80 million rural connections by 2012 have already met during year 2008 itself. USOF subsidy support scheme is also being utilized for sharing wireless infrastructure in rural areas with about 19,000 towers by 2012.

Performance of telecom equipment manufacturing sector 

As a result of Government policy, progress has been achieved in the manufacturing of telecom equipment in the country. There is a significant telecom equipment-manufacturing base in the country and there has been steady growth of the manufacturing sector during the past few years.

(references - Department of Telecommunications (DoT)(2012), Annual Report 2011-12, New Delhi: Government of India, Department of Telecommunications (DoT) (2003), Annual Report 2002-03, New Delhi: Government of India)

India- an ideal destination for investment in telecom sector

According to Yoshio Utsumi, the secretary general of the International Telecommunication Union (ITU), the world market has changed almost beyond recognition over the last twenty years. The former features of the traditional state owned telecom market is rapidly being replaced by competition and privatization. Nevertheless, the pace and growth contrasts in different regions of the world.

Motivated by implacable technological and market forces, telecommunications is one of the world's most dynamic economic sectors. Large and small businesses, user groups, investment banks, policymakers, development organizations, legislators, economists, political scientists, and lawyers, among others, are now actively and visibly involved in telecommunications. Hardly a day goes by without telecommunications dealings making news in the international and local press.

The markets in Asia like India and China are quite attractive with tremendous growth potential. This has inspired numerous foreign telecom companies to enter the Indian market in the recent past. India's 153.37 million lines telephone network, including mobile, is one of the largest in the world and the second largest among emerging economies (after China) with a wide range of services such as basic, cellular, internet, paging and V-SAT. Given the low telephone penetration rate of about 5 per hundred people of population, which is much below the global average, India offers vast scope for growth. It is, therefore, not surprising that India has one of the fastest growing telecommunication systems in the world with an average annual growth of about 22% for basic telephone services and over 100% for cellular and internet services. Telephone lines added to the fundamental services network over the last 5 years have been one and a half times that added over the previous five decades. Recognizing that telecom sector is one of the prime movers of economy, the Government's regulatory policy proposal has been directed towards establishing a world class telecommunications infrastructure in the country.

The Indian government also realized that in order to overcome constant shortfalls in telecommunications development, it is necessary to magnetize private investment and new entrants to the telecommunications business as well as to transfer the role of government from ownership and management of operations to sector policy formulation and regulation. This resulted in the privatization of the Indian telecom sector in October 2000.

With the liberalization of the Indian telecom market and with its vast growth potential, it has been perceived as a gifted market for foreign investors. This has generated a immense interest among the foreign companies to enter the Indian telecom market. Since then a number of foreign companies started their business in India in providing basic services, cellular services, paging services and V-SAT services- e.g., Hutchison Max Telecom Ltd., Hexacomm India Limited, Swisscom AG, Birla AT&T communications Limited, RPG Cellcom Limited, Nortel Networks India Limited, Alcatel India Limited, Tata Avaya, Qualcomm Inc., etc.

Key points:

World's largest democracy

Independent judiciary

Skilled and competitive labor force

Fifth largest telecom network in the world, second largest among the emerging economies after china

On an average, about 6-7 million new users added per month, making India the world's fastest growing wireless services market

Liberal foreign investment regime - FDI limit increased from 49% to 74% ; the rural telecom equipment market is also open to large investments

Among the countries offering the highest rates of return on investment

The large untapped potential in India's rural markets - 1.9% tele density in rural markets as compared to the national level of 18%

The government promoting telecom manufacturing by providing tax sops and establishing telecom specific special economic zones

( References - www.trai.gov.in , www.dot.gov.in, www.telecomindiaonline.com ,www.rcom.co.in , www.mospi.nic.in)

Classification of indian telecom sector

FIXED LINE TELEPHONY

MOBILE TELEPHONY

INTERNET

TELECOM EQUIPMENTS

BSNL and MTNL account for 90% revenue for basic services

25 private companies providing cellular services in 19 telecom circles and 4 metro cities, covering 1500 towns across the country.

There is no restriction on the number of internet companies and more than 185 companies are operational.

Growth in the telecom equipment market resulted in increasing demand for telecom services.

Private sector available in 18 circles and collectively account for 10% of revenue.

Presently, there are 5 private services operator in each area, and an state operator.

Growth demand of corporate for applications such as electronic commerce, internet leased lines, ISDN, VPN etc is driving the growth of the internet services market.

Key players like BSNL, airtel, reliance, TATA, BPL, and Vodafone will drive equipment market growth.

Indian telecom - global reach

PLAYERS

COUNTRIES

SERVICES

PARTNERS

Bharti

Telecom Seychelles

Jersey telenet

seychelles

state of jersey

Fixed, FMP, cellular

2G and 3G, ILD

Emtel of Mauritius (since 1998) private investors and the govt. of Seychelles

MTNL

United telecom (2002)

MTML (since 2005)

Nepal

Mauritius

CDMA -based WLL services

CDMA- based WLL services

TCIL VSNL, and NVPL wholly

Owned subsidiary

Reliance

IndiaCall services (since 2005)

US, UK and Canada

ILD services to India, Australia, Canada, France , Germany, Malaysia, NY, Singpore, and UK

-

VSNL

(acquired licence in 2005)

South Africa

Fixed (services to commence in aug-sep 2006)

Transnet/ transtel, eskom, nexus, two, communiTel

SECTION 2 -outline of marketing trends in Indian telecom industry

This section is comprises of the research associated to the marketing trends of Indian telecom market and more over it will sanction us to identify the strengths and weakness of the market. Add on to it, it will support us to know the numerous challenges which a foreign company can face while entering into a Indian telecom market.

This section is further distributed into several sub topics. As in:

TOPIC

PAGE NO.

The Indian telecom market

38

Entering the Indian telecom market is a very difficult task

40

Challenges to be faced in Indian telecom market

42

Marketing environment

43

Indian telecommunication market- opportunities for foreign companies

46

Latest developments in Indian telecom market

52

Key projects by leading players

54

Proportions of the expansion in performance of telecommunication services

54

Submarkets in Indian telecom market

56

The indian telecom market

Telecommunications came to India almost at the same time as in other advanced countries. The first telegraph link experiment in 1839 between Calcutta and Diamond Harbor, 21 miles apart, was the indication of telecommunication in India. India's current telephone network of 153.37 million lines is one of the leading in the world and the second largest among rising economies, after China. Indian telecom market has a wide range of services - basic or fixed, cellular, internet, paging, VSAT, etc. It is not surprising to know that India has one of the top growing telecommunication systems in the world with an average annual growth of about 22% for fixed telephone services and over 100% for cellular and internet services.

Some of the key features of the Indian telecom market are as follows:

5th largest network in the world with a wide range of services - fixed, cellular, internet, paging, VSAT, etc.

Cellular subscribers are increasing ten times more than the fixed subscribers but the fixed subscribers are also growing rapidly approximately at a rate of 22 percent.

Current players include state-owned operators as well as private operators

Both sorts of operators are on a 'level-playing field'

Independent regulatory body-Telecom Regulatory Authority of India (TRAI)

Independent dispute settlement body-Telecom Dispute Settlement and Appellate Tribunal (TDSAT)26 Until 1990, the state owned monopoly, the Department of Telecommunications (DoT) obtained super-normal profits as it was not only the monopoly provider of services, but also the monopoly buyer of equipment, as well as the sole network operator, not to mention the supreme regulator.

Entering the indian telecom market is a very difficult task

With globalization of the world economy and liberalization in developing countries in Asia like India and China, it is not as difficult as it was few years ago for multinationals to operate. This entry of the multinational telecom companies in the third world countries and developing countries has been found to be beneficial both to the foreign company and as well as to the domestic telecom market. These multinationals are gateway to new technologies and enhance the use of telecom by making life more comfortable and easy. Every market is different in terms of economy, political and legal system, regulation and policies of the government concerning telecom sector, technology, society and culture. In the case of a country like India that is almost the size of Europe, there is a great diversity in almost every area of life. There is a wide gap between the rich and the poor, the educated and the uneducated, and the urban and the rural. India has a population of around 1.3 billion, which is the second largest in the world next only to China. About 29% of the population lives below poverty line. There is a sizable educated middle class and then a thin layer of the rich. India also has a large number of young and highly qualified people who know English. With all the above-mentioned qualities, the Indian telecom market is attractive to foreign telecom companies. India, a democratic country, with the world's second highest population and seventh largest area, is also the fourth largest economy in terms of purchasing power equivalence.

In the recent past, many foreign companies entered the India telecom market, some of whom have managed to build a stronghold in the Indian telecom market, some are still trying to do so and some could not even survive for a short period. Most companies in rapidity ignore the socio-cultural aspects of the country thinking it to be the least influential aspect of business. Some companies try to enter just with the help of the modern and sophisticated technology and face utter failure-

e.g., Swisscom is one of the telecom companies well known for its technology and its stand in telecom field as one of the best in Europe mainly in Switzerland but it failed in its attempt to enter the Indian market way back in 1997.

Almost every company entering a new market has teething problem that is kind of foreseen before, but it all depends how a company exercises the opportunities and benefits seen in such a market to establish its stand. In the past many companies began their operation in the Indian telecom market but some of the companies could not withstand and defaulted in paying the annual license fee to the Indian government in subsequent years resulting in termination of licenses. This is mostly because of high cost of initial capital investment, burden of high license fee and poor return contrary to their expectations.

The failure mentioned above clearly shows that entering the Indian telecom market is definitely not an easy task. Therefore a good entry strategy has to be devised taking into account both the hard and the soft factors that influence successful entry of a foreign company in the Indian telecom market.

Challenges to be faced in indian telecom market

India centric - major revenues from India

Falling ARPU

Intense competition and shortage of Bandwidth

New players coming in India

Uncertain economic conditions

Mobile number portability - upcoming challenge

Regulatory policies

# lack of level playing field

Penetration level

# across the world and within India

# seamless roaming

Infrastructure program

# manufacture telecom equipment in India

# passive infrastructure sharing

Value Added Services

# unutilized software capability

Digital Divide

# non availability of technology, equipment, network access for millions of poor

Marketing enviornment -

a) on basis of micro environment:

INDIAN MARKET

CONCLUSION

Companies

There is presence of government , private and foreign companies giving tough competition to each other.

Indian telecom market is competitive market.

Suppliers

Indian telecom industry is totally dependent upon foreign suppliers.

Indian telecom market is dependent.

intermediaries

Intermediaries are playing vital role in Indian telecom market due to huge demand as well as due to infancy of Indian companies.

Indian telecom industry is still infant and mainly focusing on their growth and left the sales and marketing on intermediaries

Customers

Indian telecom industry has all types of customer like end users, corporate customers and government.

Indian telecom market does not have edge of international customer.

Publics

Publics in Indian telecom market consist of government, consumer, media, and internal employee.

Indian telecom industry has not any international publics as they has no business outside its premises.

(reference- Consumer Behaviour by Michael Solomon)

b) on basis of macro environment:

INDIAN MARKET

CONCLUSION

demography

India has 747 million population which can be targeted as consumer.

Demography is quite favorable for the growth of telecom industry in India.

Economy

India's GDP growth is 6.5% for the year 2011-12.

India is moving upward with a healthy rate which is good sign for the growth of telecom industry in India.

Technology

India is in the process of making its place in technology in the world level but telecom industry is still dependent on foreign suppliers for telecom equipments.

Indian telecom market is dependent on foreign suppliers.

Politics

India have democratic political system in which election use to held after every five years which is mandatory under constitution but sometimes it held very frequently due to lack of majority by the ruling party.

India's political system is unstable which may obstruct the economy growth of the country.

Culture

India's culture is not so much flexible and somehow resists the economic growth of the country and results in slower growth rate.

India's culture is not favorable for economic growth.

Indian telecommunication market- opportunities for foreign companies

Overview :

With more than 638 million-line telephone network (fixed plus cellular) India is among the top 4 networks in the world. India has one of the highest growing telecommunications systems in the world, with system size (total connections) growing at an average of more than 20 percent per annum over the last 4 years. The industry is considered as having the highest potential for investment in India. The growth in demand for telecom services in India will be highest in the Cellular Services Sector, followed by national long distance, international long distance and Basic Telecom Sector. According to the Government of India (GOI), the demand for new telephone lines during the next 3 years is estimated to be over 200 million.

Opportunities:

India offers an extraordinary opportunity for telecom service operators, infrastructure vendors, manufacturers and associated services companies. A crowd of factors are contributing to blown up opportunities for enlargement and savings in telecom sector: 

A growing Indian economy with improved spotlight on the service sector

Population mix moving favorably towards a younger age profile

The total subscriber base of cellular subscribers is currently at 635 million, up by 48.73% percent from the previous year. The subscriber base is estimated to reach 737 million by 2013, thus follow-on in huge opportunities for overseas telecom equipment vendors.

Key points:

Rural telephony

3G services

WiMAX

Value added services

Infrastructure sharing

Managed service

Opportunities for the Industry

Rural Telephony - Connecting the Real India

With the urban markets fast reaching their saturation points for telecom services, especially the voice telephony services, the vast rural market holds a huge potential to drive the future growth of the telecom companies. In fact, the teledensity in rural areas is just about 15%, which reflects the extent of opportunity left untapped for telecom companies, going forward. Further, the government initiatives for increasing telecom connectivity in rural areas are also likely to aid the telecom service providers to extend their services in the unconnected rural areas. Initiatives such as USO Fund and infrastructure sharing would be instrumental in increasing the coverage of telecom services in the far-flung areas. Penetration in rural areas will not only support the growth of telecom service providers but also boost demand for equipment and telecom infrastructure.

3G Services - Potential Growth Driver

Currently the 3G deployment in India is at a very promising stage. In fact, 3G services have been launched recently in India. The 3G services will be instrumental in inspiring future growth of the telecom industry. The 3G services will not only facilitate business through provision of high-speed data and content prosperous services but also will play a essential role in bridging the urban-rural divide by facilitating quicker mobile operation in rural areas. Introduction of 3G will be beneficial to the Indian BPO industry by growing their competitiveness. In India, where mobile cellular penetration is much higher than that of fixed telephone lines (nearly 30 mobile cellular subscriptions per 100 inhabitants as compared with less than 4 fixed telephone lines per 100 inhabitants), mobile broadband through 3G will drive broadband access. The inherent benefits of economies of scale and faster time to market of 3G services will benefit service providers. The high-end customers may get attracted to these services and provide a first-mover advantage to the initial applicant in the 3G space. The launch of 3G is also likely to facilitate introduction of various VAS such as video calling, gaming, high-speed Internet access and other data services, which in turn might provide some support to the falling ARPU.

Worldwide Interoperability for Microwave Access (WiMAX) - Reaching the Last Mile

In the wireless communication ground, WiMAX technology has emerged as one of the most significant developments. Deployment of WiMAX would not only enable the provision of high-speed internet services through high bandwidth spectrum but also prove to be a useful mode of communication in inaccessible territory. WiMAX could be used as an alternative to cable and DSL for providing broadband access in rural areas and hence could be a major factor pouring the growth of Indian telecom services, especially the wireless services. Moreover, it is likely to facilitate the spread of the e-governance services such as telemedicine, e-learning et al through broadband, particularly in the rural areas. Given the fact that WiMax deployment does not require significant resources, it will also be an economically-feasible option to cater to rural communication needs.

Mobile Value Added Service (MVAS) - An Opportunity to Increase the ARPU

The value added services segment is rapidly emerging as a potential revenue generator for the telecom services industry. Given that a substantial part (around 60%) of the total VAS revenue goes into the kitty of the service providers, the development of this segment is likely to offer them an opportunity to support their falling ARPU. The increasing acceptance and usage of mobile commerce services is also likely to boost the VAS segment. Mobile banking is likely to emerge as a major growth driver in the near future given the issuance of M-banking guidelines issued by the RBI and increasing demand for this service.

The demand for new VAS services is likely to surge given that increasing number of younger generation has started using mobile services and are more liable to adopt the VAS services. With the implementation of mobile number portability, the service providers would be encouraged to constantly develop new VAS as a service differentiator and retain their existing customers and attract new ones. The introduction of the Next Generation Networks would help in bringing down the cost and roll out time of new MVAS and provide impetus to the growth of the VAS, going forward. Further, with reduction in prices of the feature rich handsets capable of accessing many of the VAS services the demand for the MVAS is set to increase in the future.

Infrastructure Sharing - A Profitable Proposition

The rapid expansion in subscriber base has brought to the fore the challenge of increasing and upgrading the telecom infrastructure to maintain quality of services. In the recent years, infrastructure sharing has emerged as a profitable proposition for both the parties involved. It would guide to considerable reduction in initial set-up costs for new service providers and existing service providers planning to enter new service areas. Infrastructure sharing might assist the service providers to reduce their operating costs. The cost saving through infrastructure sharing could be passed on to the customers thereby augmenting their affordability. Further, with infrastructure sharing, the companies can reduce the time required to roll out the telecom services in the rural areas. The sharing of telecom infrastructure by companies could lead to optimum utilization of these resources and thereby improve efficiency.

Managed Service - Outsourcing in Telecom

Managed Services typically involve the outsourcing of a specific technical function or capability to a Managed Service Provider (MSP). It is an alternative to in-house management or traditional outsourcing since firms/enterprises do not have to transfer complete control over assets/operations to the MSP but rather can contract or outsource specific management challenges for a shorter period of time.

With the rapidly-growing subscriber base, managing infrastructure and networks is becoming increasingly difficult for the service providers. Therefore, many service providers have been outsourcing their infrastructure or network management operations completely or partially. Given the increasing demand for the managed services, the telecom equipment vendors could have an opportunity to take up more roles in the value chain by entering into managed service contracts.

Managed Services are fast-emerging as an attractive proposition for many enterprises that do not want to dedicate human resources and capital toward acquiring and administering technology infrastructure. It also allows the telecom service providers to focus on their core activities, to develop new and innovative products and services so as to distinguish themselves from other players in this highly-competitive market.

The service providers can gain significantly in terms of cost reduction and improved efficiency in operations from the economies of scale that an MSP can offer.

Latest developments in indian telecom market

FDI of 74% is allowed subject to license granted by Department Of Telecommunication In Basic, Cellular, Paging and Value Added Service and Global Mobile Personal Communications by Satellite.

FDI up to 100% is allowed for dark fibre, electronic and voice mail. The condition set was that these companies would divest 26% of thei