2007 Asia - Telecoms, Mobile and Broadband in India

2007 Asia - Telecoms, Mobile and Broadband in India

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
Mobile Voice and Data Markets
Internet, including VoIP
Broadband development
Convergence and Digital Media
Regulatory Environment

Executive summary
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 150 million by early 2007, the rate of market expansion being boosted by low tariffs and falling handset prices. While GSM technology has continued to be dominant in the country’s mobile market, CDMA has been increasing its market share and had grabbed a 30% share by early 2007. With this in mind the mobile industry should continue its present strong growth.

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 (TRAI) 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 (ADC) regime, increased sharing of infrastructure and coverage of new areas by operators were all expected to contribute to ongoing growth.

By early 2007, the total telephone subscriber base (mobile and fixed) had passed the 200 million subscriber milestone. The number of phone subscribers was rising by an average of 6 million each month coming into 2007. With fixed-line subscribers at just over 40 million, growth in that segment of the market had stalled in 2006 and was not likely to pick up again for some time.

For more statistical information, see chapter 1, page 1.

Regulatory change in the industry has not been easy. In the early stages of reform, the structure of the market was frequently criticised. However, there has been an evolution through a series of mergers and takeovers among the mobile operators that has seen a welcome and productive consolidation. The so-called ‘licensing by circles’ policy, in particular, has been credited with establishing a highly competitive and healthy telecoms market. It was not always so, with the circles policy being considered far too complex and unwieldy to administer. But, with what has now become a comparatively well regulated commercial environment and with plenty of growth potential, the Indian market is proving to be an attractive telecoms market for foreign investment with a clear way forward to further growth.

For more information, see chapter 3,page 11.

In early 2007, estimates put the total worth of India’s telecommunications sector at nearly US$100 billion. 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 (BSNL) 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 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.

One segment of the market that has been puzzling is broadband Internet. Despite the manner in which the country’s Internet market has been booming, India’s move into high-speed broadband Internet access has been distinctly sluggish. And, while there appears to be considerable enthusiasm amongst the population for the Internet itself, this has not been reflected in broadband subscription numbers. The dial-up Internet subscriber base has been increasing steadily since 1999, accelerating rapidly in 2005 when the number of subscribers increased by over 200% during that year. By early 2007, Internet subscribers in India totalled more than 8.5 million. This equated to an estimated 60 million Internet users throughout the country or a penetration of almost 6%. It was during 2006 that finally we witnessed a substantial surge in broadband users with the total subscriber base in the country expanding by almost 200% to just over 2 million by year’s end. Despite this surge, broadband penetration in India still remains around only 0.2%; broadband services were still only accounting for 25% of the total Internet subscriber base, still in itself comparatively low.

For more information, see chapter 6,page 79.

The Ministry of Communications and Information Technology (MCIT) is targeting 250 million telephone subscribers by end-2007 and 500 million by 2010. Most of the expansion in subscribers was set 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 lived in rural India.

Key highlights
India continues to see its mobile market boom; by early 2007, the country had 150 million mobile subscribers, with growth continuing into 2007 at an annual rate approaching 90%. For more information, see chapter 8.1, page 122.
While GSM has continued to be the dominant technology in the mobile market, CDMA has been increasing its market share in India; the technology platform had grabbed a handy 30% share by early 2007.
During 2006, there was a significant surge in broadband subscribers in India, the total subscriber base expanding by almost 200% to just over 2 million by year’s end; but this was still only a 0.2% penetration of the population. For more information, see chapter6.1, page 79.
In the broadband segment, most significant growth was in DSL subscriptions, with the market jumping from 0.6 million subscribers to 1.8 million in a twelve month period.
In other words, DSL has continued to be the clearly dominant broadband technology platform with about 85% of the local market.
The booming telecoms market in India saw total revenues of US$22.4 billion in 2006, and it is likely to hit US$25 billion in 2007. Of the 2006 total, mobile services contributed around 60%.
Quarterly net mobile subscriber additions in India exceeded those in China for the first time in the September quarter of 2006.
Ministry of Communications and Information Technology (MCIT) said they were targeting 250 million telephone subscribers by end-2007 and 500 million by 2010.
India’s mobile subscriber growth - GSM versus CDMA – 2000 - 2007

Year GSM Subscribers (millions) GSM Annual growth CDMA Subscribers (millions) CDMA Annual growth
2000 3.1 94% - -
2001 505 76% - -
2002 10.5 91% 0.8 -
2003 22.0 110% 6.4 700%
2004 37.4 70% 10.9 70%
2005 58.5 57% 19.1 75%
2006 105.4 80% 44.2 131%
2007 180.0 71% 85.0 92%

1. KEY STATISTICS
1.1 Subscribers statistics
2. TELECOMMUNICATIONS MARKET
2.1 Overview
2.2 Growth forecasts
2.3 Foreign investment
2.4 Universal service
3. REGULATORY ENVIRONMENT
3.1 Overview
3.2 Telecommunications authorities
3.2.1 Ministry for Communications (MoC)
3.2.2 Department of Telecommunications (DoT)
3.2.3 Telecom Commission
3.2.4 Telecom Regulatory Authority of India (TRAI)
3.2.5 Telecom Dispute Settlement & Appellate Tribunal (TDSAT)
3.2.6 Telecom ombudsman
3.3 Regulatory background
3.3.1 Licensing circles
3.3.2 Licence fees
3.3.3 Licence dispute
3.4 National Telecom Policies
3.4.1 National Telecom Policies 1999 (NTP-99)
3.4.2 Addendum to NTP-99
3.4.3 Proposed new National Telecom Policy
3.5 Foreign investment
3.6 Regulatory reforms
3.7 Rural telephony
3.8 Quality of Service (QoS)
3.8.1 Local Loop Unbundling (LLU)
3.9 Conditional Access System (CAS)
3.10 Liberalisation
3.10.1 Policy highlights
3.10.2 Basic service
3.10.3 Local Loop Unbundling (LLU)
3.11 Fixed-line licences
3.11.1 National Long-distance (NLD)
3.11.2 International Long-distance (ILD)
3.11.3 ‘Fixed’ mobile
3.11.4 Tariffs
3.11.5 Compensation
3.11.6 Other outcomes
3.12 Privatisation
3.12.1 VSNL
3.12.2 MTNL
4. FIXED NETWORK OPERATORS
4.1 Overview of the 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 BSNL/MTNL merger
4.2 International operators
4.2.1 Videsh Sanchar Nigram Ltd (VSNL)
4.2.2 Data Access
4.2.3 Bharti Telesonic
4.2.4 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 Network 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 development
5.3.1 Voice over Internet Protocol (VoIP)
5.3.2 IP networks
5.3.3 Next Generation Networks (NGN)
6. BROADBAND AND INTERNET MARKET
6.1 Broadband market
6.1.1 Overview
6.1.2 National Broadband Policy 2004
6.1.3 Personal computers
6.1.4 Cable modems
6.1.5 Digital Subscriber Line (DSL)
6.1.6 Wireless broadband
6.1.7 Satellite
6.1.8 Other broadband networks
6.2 Internet market
6.2.1 Overview
6.2.2 Regulatory issues
6.2.3 ISP market
6.3 Content and e-services
6.3.1 E-commerce
7. CONVERGENCE
7.1 Triple play
7.2 Overview of the broadcasting market
7.2.1 Statistical overview
7.2.2 Regulatory issues
7.3 Digital TV
7.3.1 Internet Protocol TV (IPTV)
7.3.2 Cable TV
7.3.3 Satellite TV
7.3.4 Free-to-Air TV
7.3.5 TV content
8. MOBILE COMMUNICATIONS
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 in India
8.4.1 Market overview
8.4.2 Mergers and acquisitions
8.4.3 Competition
8.4.4 Subscriber statistics and market share
8.4.5 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 Radio 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
8.7 Mobile content
8.7.1 Gaming
9. GLOSSARY OF ABBREVIATIONS


Exhibit 1 – Major telecommunications players
Exhibit 2 – ISRO satellite network - April 2007
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 to consumers in India
Exhibit 6 – CDMA 2G deployment in India – 2006
Exhibit 7 – CDMA 3G deployment in India – 2006




Table 1 – India’s mobile subscriber growth - GSM versus CDMA – 2000 - 2007
Table 2 – Country statistics India – 2006
Table 3 – Telecom revenue and investment statistics – 2006
Table 4 – Telephone network statistics – 2006
Table 5 – Internet user statistics – 2006
Table 6 – Broadband statistics – 2006
Table 7 – Mobile statistics – 2006
Table 8 – National telecommunications authorities
Table 9 – Fixed-line services versus mobile services and penetration – 2006
Table 10 – Telephone services to villages - 2006
Table 11 – Number of telecom licences issued - by category – January 2007
Table 12 – Fixed-line basic services* by operator – 2006
Table 13 – Fixed-line growth and teledensity – 1995 - 2005
Table 14 – Fixed-line growth and teledensity – 2005 - 2006
Table 15 – Growth of VPT scheme – 2001 - 2006
Table 16 – PCOs in operation and market share by operator – 2006
Table 17 – Fixed WLL subscriber* growth – 2004 - 2006
Table 18 – International undersea cable capacity – 1997 - 2006
Table 19 – Broadband subscriber growth – 2001 - 2007
Table 20 – Broadband subscribers by access – 2006
Table 21 – Broadband and Internet subscriber targets – 2005; 2007; 2010
Table 22 – Cable modem subscribers – 2001 - 2006
Table 23 – DSL subscriber growth – 2001 - 2006
Table 24 – Internet user growth – 1995 - 2007
Table 25 – Internet subscriber growth – 1995 - 2007
Table 26 – ISP market in India – leading operators, subscribers and market share – 2006
Table 27 - Broadcasting market overview - 2006
Table 28 – TV household growth – 1995 - 2006
Table 29 – Total TV industry revenue growth – 2000 - 2006
Table 30 – Pay TV subscriber growth – 2002 - 2006
Table 31 – Mobile subscribers (GSM and CDMA) and annual growth – 2002 - 2006
Table 32 – GSM mobile subscribers and annual growth – 1997 - 2006
Table 33 – WLL technology-based subscribers – June 2006
Table 34 – Mobile services revenue – 1996 - 2007; 2010
Table 35 – Mobile ARPU (GSM and CDMA) and annual change – 2005 - 2006*
Table 36 – Mobile subscribers and market share by region/circle – 2006
Table 37 – GSM mobile subscribers by region/circle – 2004 - 2007
Table 38 – Total mobile subscribers (GSM & CDMA) per operator and market share – 2006
Table 39 – Mobile operators - subscribers and annual change – September 2006
Table 40 – GSM mobile operators – subscribers and market share per operator – 2006
Table 41 – CDMA mobile operators – subscribers and market share per operator – 2006
Table 42 – ARPU* for mobile subscribers by technology prepaid, postpaid and blended – 2006**