[Study of the evolution and growth in Indian Telecom Industry ]

EXECUTIVE SUMMARY

The main objective of the project is to get the full knowledge of the products and
study the complete TELECOMMUNICATION SECTOR OF INDIA.

To analyze what the service providers in this sector are doing to get the customer
loyalty, to maintain their market.

This is also to find the preferences of customer and there market knowledge and
product information, information about the presence of the different type of
services provided by service provider like GSM, CDMA, Broadband, Landline,
and WLL.

What are the techniques used by the service providers to increase their customer
base.

This project also gives the glimpses about the telephone usage in the rural
market along with the comparison with the urban sector.

This project also gives you the highlight about the future challenges and
opportunities to be faced by telecom sector such as evolution in technology as
from 2G to 3G technology.

INTRODUCTION
1 Oriental Institute of Management, Vashi.
 [Study of the evolution and growth in Indian Telecom Industry ]

India with a trillion dollar economy is now the second fastest growing economy in the world
With a net growth of over 9% per annum. The telecom sector is key contributory in the growth

World class telecom infrastructure provides to reduce the digital divide. And extensive
connectivity

To unconnected area

History
Telecom in the real sense means transfer of information between two distant points in
space. The popular meaning of telecom always involves electrical signals and
nowadays people exclude postal or any other raw telecommunication methods from its
meaning. Therefore, the history of Indian telecom can be started with the introduction of
telegraph.
Introduction of telegraph
The postal and telecom sectors had a slow and uneasy start in India. In 1850, the first
experimental electric telegraph Line was started between Kolkata and Diamond Harbor.
In 1851, it was opened for the British East India Company. The Posts and Telegraphs
department occupied a small corner of the Public Works Department, at that time.
Construction of 4,000 miles (6,400 km) of telegraph lines connecting Kolkata (Calcutta)
and Peshawar in the north via Agra, Mumbai (Bombay) through Sindwa Ghats, and
Chennai in the south, as well as Ootacamund and Bangalore was started in November
1853. Dr. William O'Shaughnessy, who pioneered telegraph and telephone in India,
belonged to the Public Works Department. He tried his level best for the development of
telecom through out this period. A separate department was opened in 1854 when
telegraph facilities were opened to the public.
Introduction of the telephone
In 1880, two telephone companies namely The Oriental Telephone Company Ltd. and
The Anglo-Indian Telephone Company Ltd. approached the Government of India to
establish telephone exchanges in India. The permission was refused on the grounds
that the establishment of telephones was a Government monopoly and that the
Government itself would undertake the

2 Oriental Institute of Management, Vashi.

 [Study of the evolution and growth in Indian Telecom Industry ]

Work. By 1881, the Government changed its earlier decision and a license was granted
to the Oriental Telephone Company Limited of England for opening telephone
exchanges at Kolkata, Mumbai, Chennai (Madras) and Ahmedabad. January 28, 1882,
is a Red Letter Day in the history of telephone in India. On this day Major E. Baring,
Member of the Governor General of India's Council declared open the Telephone
Exchange in Kolkata, Chennai and Mumbai. The exchange at Kolkata named "Central
Exchange" was opened at third floor of the building at 7, Council House Street. The
Central Telephone Exchange had 93 numbers of subscribers. Bombay also witnessed
the opening of Telephone Exchange in 1882.
Further developments
• 1902 - First wireless telegraph station established between Saugor Islands and
Sandheads.
• 1907 - First Central Battery of telephones introduced in Kanpur.
• 1913-1914 - First Automatic Exchange installed in Shimla.
• July 23, 1927 - Radio-telegraph system between the UK and India, with beam
stations at Khadki and Daund, inaugurated by Lord Irwin by exchanging
greetings with the King of England.
• 1933 - Radiotelephone system inaugurated between the UK and India.
• 1953 - 12 channel carrier system introduced.
• 1960 - First subscriber trunk dialing route commissioned between Kanpur and
Lucknow.
• 1975 - First PCM system commissioned between Mumbai City and Andheri
telephone exchanges.
• 1976 - First digital microwave junction introduced.
• 1979 - First optical fiber system for local junction commissioned at Pune.
• 1980 - First satellite earth station for domestic communications established at
Secunderabad, A.P..
• 1983 - First analog Stored Program Control exchange for trunk lines
commissioned at Mumbai.

3 Oriental Institute of Management, Vashi.

 [Study of the evolution and growth in Indian Telecom Industry ]

• 1984 - C-DOT established for indigenous development and production of digital

exchanges.
• 1985 - First mobile telephone service started on non-commercial basis in Delhi.
While all the major cities and towns in the country were linked with telephones during
the British period, the total number of telephones in 1948 was only around 80,000. Even
after independence, growth was extremely slow. The telephone was a status symbol
rather than being an instrument of utility. The number of telephones grew leisurely to
980,000 in 1971, 2.15 million in 1981 and 5.07 million in 1991, the year economic
reforms were initiated in the country.
While certain innovative steps were taken from time to time, as for example introduction
of the telex service in Mumbai in 1953 and commissioning of the first (subscriber trunk
dialing) route between Delhi and Kanpur in 1960, the first waves of change were set
going by Sam Pitroda in the eighties. He brought in a whiff of fresh air. The real
transformation in scenario came with the announcement of the National Telecom Policy
in 1994.

Research Methodology
Objectives
• To review the overview of telecom industry of India.

• To analyze the different brand of the telecom industry.

• To study consumer awareness and perception about the different brand available
in India

This study would help Indian telecom Industry tounderstand the growth of the
Industry and the further measures to be taken for effective marketing
communications.

4 Oriental Institute of Management, Vashi.

 [Study of the evolution and growth in Indian Telecom Industry ]

Limitations
✔ The study is confined to Mumbai area only
✔ There is possibility of sampling errors in the study
✔ The responses of the consumers may not be genuin
Sources of Data Collection
The relevant data was collected from both primary sources and secondary
sources. The starting point of my information gathering has been the secondary
sources such as internet, books, and journals and articles.

5 Oriental Institute of Management, Vashi.

 [Study of the evolution and growth in Indian Telecom Industry ]

India, emerging as a major player

In 1975, the Department of Telecom (Dot) was separated from P&T. DoT was
responsible for telecom services in entire country until 1985 when Mahanagar
Telephone Nigam Limited (MTNL) was carved out of DoT to run the telecom services of
Delhi and Mumbai. In 1990s the telecom sector was opened up by the Government for
private investment as a part of Liberalisation-Privatization-Globalization policy.
Therefore, it became necessary to separate the Government's policy wing from its
operations wing. The Government of India corporatised the operations wing of DoT on
October 01, 2000 and named it as Bharat Sanchar Nigam Limited (BSNL). Many private
operators, such as Reliance India Mobile, Tata Telecom, Vodafone, BPL, Bharti, Idea
etc., successfully entered the high potential Indian telecom market.
Liberalisation of telcommunications in India
The Indian government was composed of many factions (parties) which had different
ideologies. Some of them were willing to throw open the market to foreign players (the
centrists) and others wanted the government to regulate infrastructure and restrict the
involvement of foreign players. Due to this political background it was very difficult to
bring about liberalization in telecommunications. When a bill was in parliament a
majority vote had to be passed, and such a majority was difficult to obtain, given to the
number of parties having different ideologies.
Liberalization started in 1981 when Prime Minister Indira Gandhi signed contracts with
Alcatel CIT of France to merge with the state owned Telecom Company (ITI), in an effort
to set up 5,000,000 lines per year. But soon the policy was let down because of
opposition from leaders of the opposite political party. She invited Sam Pitroda a US
based NRI to set up a Center for Development of Telematics(C-DOT), however the plan
failed due to political reasons. During this period, after the assassination of Indira
Gandhi, under the leadership of Rajiv Gandhi, many public sector organizations were
set up like the Department of Telecommunications (DoT) , VSNL and MTNL. Many
technological developments took place in this regime but still foreign players were not
allowed to participate in the telecommunications business.
The demand for telephones was ever increasing. It was during this period that the P.N
Rao led government introduced the national telecommunications policy [NTP] in 1994

6 Oriental Institute of Management, Vashi.

 [Study of the evolution and growth in Indian Telecom Industry ]

which brought changes in the following areas: ownership, service and regulation of
telecommunications infrastructure. They were also successful in establishing joint
ventures between state owned telecom companies and international players. But still
complete ownership of facilities was restricted only to the government owned
organizations. Foreign firms were eligible to 49% of the total stake. The multi-nationals
were just involved in technology transfer, and not policy making.
During this period, the World Bank and ITU had advised the Indian Government to
liberalize long distance services in order to release the monopoly of the state owned
DoT and VSNL; and to enable competition in the long distance carrier business which
would help reduce tariff's and better the economy of the country. The Rao run
government instead liberalized the local services, taking the opposite political parties
into confidence and assuring foreign involvement in the long distance business after 5
years. The country was divided into 20 telecommunication circles for basic telephony
and 18 circles for mobile services. These circles were divided into category A, B and C
depending on the value of the revenue in each circle. The government threw open the
bids to one private company per circle along with government owned DoT per circle. For
cellular service two service providers were allowed per circle and a 15 years license
was given to each provider. During all these improvements, the government did face
oppositions from ITI, DoT, MTNL, VSNL and other labor unions, but they managed to
keep away from all the hurdles.
After 1995 the government set up TRAI (Telecom Regulatory Authority of India) which
reduced the interference of Government in deciding tariffs and policy making. The DoT
opposed this. The political powers changed in 1999 and the new government under the
leadership of A.B Vajpayee was more pro-reforms and introduced better liberalization
policies. They split DoT in two- one policy maker and the other service provider (DTS)
which was later renamed as BSNL. The proposal of raising the stake of foreign
investors from 49% to 74% was rejected by the opposite political party and leftist
thinkers. Domestic business groups wanted the government to privatize VSNL. Finally
in April 2002, the government decided to cut its stake of 53% to 26% in VSNL and to
throw it open for sale to private enterprises. TATA finally took 25% stake in VSNL.[9]

7 Oriental Institute of Management, Vashi.

 [Study of the evolution and growth in Indian Telecom Industry ]

This was a gateway to many foreign investors to get entry into the Indian Telecom
Markets. After March 2000, the government became more liberal in making policies and
issuing licenses to private operators. The government further reduced license fees for
cellular service providers and increased the allowable stake to 74% for foreign
companies. Because of all these factors, the service fees finally reduced and the call
costs were cut greatly enabling every common middle class family in India to afford a
cell phone.

INDIAN TELECOM SECTOR AND OVERVIEW:

• World fastest growing telecom sector with addition of over 7million subscribers every
month on a sustainable basis.
• Target of adding more than 250 million subscribers in the next three year.
• Liberal government policy led to boom in Indian telecom sector.
• Emerging telecom manufacturing hub-Nokia, erricsion, Motorola, Flextronics etc.
• Already set up their base.
• Huge untapped potential for expansion in rural sector.
• Focus on broadband rural telephony to cover maximum geographical reach.
• USO fund to focus bridge the digital divide by increasing rural penetration.
• Demographics advantage in term of large younger population.
• Export promotion forum for enhancing the export of telecom equipments & services.

• India became the second largest wireless network in the world, overtaking the
USA and second
• only to China, with addition of about 8 million subscribers every month in the
recent times
• Subscriber base reached 300.49 million as on 31st March 2008 as compared to
14.88 million for the same period in 1997
• Teledensity of 26.22 as on 31st March 2008 as compared to 2.30 for the same
period in 1998 – much ahead of the teledensity target set under NTP, 1999 of 15
by the year 2010.

8 Oriental Institute of Management, Vashi.

 [Study of the evolution and growth in Indian Telecom Industry ]

• Rural teledensity at the end of March 2008 was 9.20 as compared to 0.40 for the
same period in1998 – which too is much ahead of the NTP, 1999 target of 4 by
the year 2010.
• Decline in Tariffs:
• Local call tariff for mobile @ Rs. 15.00 is now less than Re. 1.00
• One minute STD call between Delhi and Mumbai at the rate of Rs.37.00 now
cost Re. 1.00 i.e. at the rate of local call
• ISD call to American continent @ Rs. 75.00 now costs less than Rs. 7.00
• Subscriber base of internet reached 11.09 million on 31st March 2008 as
compared to 0.09 million in1997
• Putting in place Interconnection and Cost Based Interconnection Usage Charges
regime
• Introduction, continuation and phasing out of Access Deficit Charges regime
• Introduction of Calling Party Pay regime
• Introduction of Mobile Termination Charges, which is lowest in the world
• Putting in place Tariff Order regime with the issue of Telecom Tariff Order 1999
and shift to a regime
• of tariff de-regulation in gradual manner
• Important Recommendations on USO, Spectrum issues, Broadband, Internet
Telephony, Growth of
• Telecom Sector in Rural areas facilitating the Government to formulate policies
on these issues Putting in place a regulatory framework in the Broadcasting &
Cable Sector after the same was brought within the purview of TRAI in January
2004
• Successful roll out of Conditional Access System (CAS) in the metro city of Delhi,
Mumbai, Chennai
• and Kolkata
• Introduction of Tariff and Interconnection regime for the Broadcasting & Cable
Sector
• Tariff ceiling for cable subscribers in Non-CAS areas
9 Oriental Institute of Management, Vashi.
 [Study of the evolution and growth in Indian Telecom Industry ]

• Ensuring orderly growth of the sector with a Consumer Centric approach

• Engaging consumer Advocacy Groups (CAGs) & NGOs in regulation of the
telecom sector and regular
• interaction
• Establishment of three tier consumer grievances redressal mechanism
• Establishment of Telecommunication Consumers Education and Protection Fund
• Putting in place a mechanism for restricting unsolicited commercial
communications

Growth Of The Telecom In India

India has become one of the fastest growing mobile markets in the world. The mobile
services were commercially launched in August 1995 in India. In the initial 5-6 years the
average monthly subscribers additions were around 0.05 to 0.1 million only and the total
mobile subscribers base in December 2002 stood at 10.5 millions. However, after the
number of proactive initiatives taken by regulator and licensor, the monthly mobile
subscriber additions increased to around 2 million per month in the year 2003-04 and
2004-05.
Although mobile telephones followed the New Telecom Policy 1994, growth was tardy in
the early years because of the high price of hand sets as well as the high tariff structure
of mobile telephones. The New Telecom Policy in 1999, the industry heralded several
pro consumer initiatives. Mobile subscriber additions started picking up. The number of
mobile phones added throughout the country in 2003 was 16 million, followed by 22
millions in 2004, 32 million in 2005 and 65 million in 2006. The only countries with more
mobile phones than India with 156.31 million mobile phones are China – 408 million and
USA – 170 million.

India has opted for the use of both the GSM (global system for mobile communications)
and CDMA (code-division multiple access) technologies in the mobile sector.
The mobile tariffs in India have also become lowest in the world. A new mobile
connection can be activated with a monthly commitment of US$ 5 only. In 2005 alone

10 Oriental Institute of Management, Vashi.

 [Study of the evolution and growth in Indian Telecom Industry ]

32 million handsets were sold in India. The data reveals the real potential for growth of
the Indian mobile market.

Exponential Growth of Wireless

Growth of Telephone Connections

Wireline Wireless Total

9.5 272.88
300

8
250

22
206.83
200
No. of Connections (in

142.07
Millions)

150

5
6.0
16
56 98.37
100

5
76.53

1.8
10
54.63

.95
44.97
36.29

50
28.53

41.33 40.92 41.42 40.22 40.78 43.30

1.2 22.81

32.71 38.29
21.61 26.65
.61

0
.30
8

35
0

3.5

13
8
1.8

6.6

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Year as on 31st March

Teledensity – Rural and Urban

11 Oriental Institute of Management, Vashi.

 [Study of the evolution and growth in Indian Telecom Industry ]

Mobile Tariffs in India one of the lowest

Teledensity
70
Mobile
60 Tariffs in India
Rural
one of theTotal
Urban
lowest 60.04

50 48.52

40 39.45

30
26.88
23.21
20 20.74
18.31
14.32 12.74
10.37 12.2
10 8.36 8.95
Mobile Tariffs
6.94 in India
2.86
one
3.58
of the
4.29lowest
5.11 7.02 5.88 7.9
2.32
0.52 0.68 0.93 1.21 1.49 1.57 1.73 1.86
0
1999

2001

2002

2005

2007
2000

2003

2004

2006

2007(Nov)
Year

BSNL’s Contribution to the Growth of Telecom in India

Telephones Provided by BSNL

Year Fixed Mobile Total

31.03.2001 28.11 0 28.11

31.03.2002 33.4 0.02 33.42

31.03.2003 35.93 2.26 38.19

12 Oriental Institute of Management, Vashi.

 [Study of the evolution and growth in Indian Telecom Industry ]

31.03.2004 36.11 5.54 41.65

31.03.2005 37.04 9.9 46.93

31.03.2006 37.51 17.65 55.16

31.03.2007 36.92 27.8 64.72

31.01.2008 35.84 33.75 66.59

BSNLCustomerBase: Status as on 31.01.2008

13 Oriental Institute of Management, Vashi.
 [Study of the evolution and growth in Indian Telecom Industry ]

 Wireline Customer : 31.61

 WLL Customers : 4.23
 GSM Customers : 33.75
 Total Customers : 69.59
 Broadband customers : 1.50
 Internet Customers : 3.35

BSNLmajor Provider of Universal Services (As on 31.01.2008)

 Village Public Telephones : 5.18 lakhs

 Rural Wire line Connections :116.76 lakhs

 Rural WLL(F) connections : 35.30 lakhs

 Rural GSM Connections : 92.90 lakhs

 Block Headquarters covered : 5921
 Internet Nodes operational at all DHQs.
 All wire line connections enabled for Dial-up Internet Services.

Telephone system: The Mobile telecommunications system in India is the second

largest in the world and it was thrown open to private players in the 1990s. The country
is divided into multiple zones, called circles (roughly along state boundaries).
Government and several private players run local and long distance telephone services.
Competition has caused prices to drop and calls across India are one of the cheapest in
the world.[25] The rates are supposed to go down further with new measures to be taken
by the Information Ministry.[26]
Landlines: Landline service in India is primarily run by BSNL/MTNL and Reliance
Infocomm though there are several other private players too, such as Touchtel and Tata
Teleservices. Landlines are facing stiff competition from mobile telephones. The
competition has forced the landline services to become more efficient. The landline

14 Oriental Institute of Management, Vashi.

 [Study of the evolution and growth in Indian Telecom Industry ]

network quality has improved and landline connections are now usually available on
demand, even in high density urban areas.
Mobile Cellular: The mobile service has seen phenomenal growth since 2000. In
September 2004, the number of mobile phone connections have crossed fixed-line
connections. Currently there are an estimated 201.29 million mobile phone users in
India compared to 39.73 million fixed line subscribers. India primarily follows the GSM
mobile system, in the 900 MHz band. Recent operators also operate in the 1800 MHz
band. The dominant players are Airtel, Reliance Infocomm, Vodafone, Idea cellular and
BSNL/MTNL. There are many smaller players, with operations in only a few states.
International roaming agreements exist between most operators and many foreign
carriers.
Dialling System: On landlines, intra circle calls are considered local calls while inter
circle are considered long distance calls. Currently Government is working to integrate
the whole country in one telecom circle. For long distance calls, you dial the area code
prefixed with a zero (e.g. For calling Delhi, you would dial 011-XXXX XXXX). For
international calls, you would dial "00" and the country code+area code+number. The
country code for India is 91.
Call Rates Slashed: Communication rates in India fell sharply after the year 2000 when
infrastructure improvements and entry of many major players made Indian Telecom a
highly competitive sector.
There is a conversion process underway to make all numbers in India 10 digits long.

Key companies of India

As on Apr 2007 India has 167 million mobile phone subscribers. Out of this 125 million
are GSM users and 41 million CDMA users.

15 Oriental Institute of Management, Vashi.

 [Study of the evolution and growth in Indian Telecom Industry ]

BSNL, Bharti Airtel, Hutch, Idea, Aircel, Spice and MTL are the main GSM providers in
India. Reliance Communications and Tata Indicom are the main CDMA providers in

India.
Airtel is providing cellular services in Delhi, Mumbai, Kolkata, Chennai, Andhra Pradesh,
Gujarat, Haryana, Himachal Pradesh, Jammu and Kashmir, Karnataka, Kerala, Madhya
Pradesh, Maharashtra, Goa, Orissa, Punjab, Rajasthan, Tamil Nadu, UP and West
Bengal. Airtel is the No.1 cellular service provider in India using GSM technology. Airtel
has 23% market share in India with a total subscriber base of 38 million.

Reliance has both CDMA and GSM networks and total subscriber base of 29 million or
17% market share. It has GSM network in Assam, Bihar, Himachal Pradesh, Kolkata,
North East, Madhya Pradesh, Orissa and West Bengal. Reliance has CDMA networks
in other states and cities.

• MTNL - State owned operator covering the cities of Mumbai and Delhi
• Provides both fixed and mobile services

BSNL is a state owned telecom company which has GSM presence in almost every
cities and towns. BSNL has 27 million subscribers with a market share of 16%.

16 Oriental Institute of Management, Vashi.

 [Study of the evolution and growth in Indian Telecom Industry ]

Growth of Telephone Connections

Wireline Wireless Total

.5272.88
300
Vodafone is another emerging GSM provider in India with coverage in Kerala, Mumbai,

8
9
No. of Connections (in

250

206.83

22
Delhi, Kolkata, Chennai, Gujarat, Andhra Pradesh, Karnataka and Punjab with a total
200

142.07
subscriber base of 27 million.
Millions)

05
150

6.
56 98.37

16
85
76.53
100

1.
54.63
44.97

10
36.29

.9
28.53
1. 22.81

50 38.29 41.33 40.92 41.42 40.22 40.78 43.30

21.61 26.65 32.71

1
0

.6
0

.3
58
20

88

35
68

13
3.
1.

1999 2000 2001 6.

2002 2003 2004 2005 2006 2007 2008
Tata Indicom is a main CDMA provider in India with 16 million subscribers all over India.
Year as on 31st March
Tata Indicom has presence in almost every states and cities in India.

The leading cellular service providers have the following number of

subscribers:

Service Provider No. of CDMA Subscribers No. of GSM Subscribers

Reliance 2.75 crores 38.76 lakhs

Tata 1.07 crores

Airtel 3.37 crores

MTNL 24.98 lakhs

BSNL 2.44 crores

Vodafone 2.44 crores

Idea 1.3 crores

Spice 25.56 lakhs

BPL 10.62 lakhs

Aircel 48 lakhs

17 Oriental Institute of Management, Vashi.

 [Study of the evolution and growth in Indian Telecom Industry ]

Market Share

MARKET SHARE OF PRIVATE AND PUBLIC PLAYERS

✔ The public players and the private players share the
fixed line and the mobile segments.
✔ Currently the public players have more than 60% of the
market share.
✔ Bharti airtel has the largest customer base with 31%
market share, followed by hutch (vodafone) and bsnl
with each holding 22% market share.
✔ The value added services provided by the mobile
service operators contribute more than 10% of the total
revenue.

MARKET SHARE MAJOR PLAYERS IN TELECOM SECTOR

18 Oriental Institute of Management, Vashi.

 [Study of the evolution and growth in Indian Telecom Industry ]

Bharti Airtel has the largest customer base with 31% market share, followed by Hutch
and BSNL with each holding 22% market share.
The 2007 budget has brought further relief to the customers with the reduction in the
tariffs, both local and long distance, and with slashing down the roaming rentals. This is
likely to lead to even more people going for cellular services and more and more use of
the value added services. However, landline telephony is likely to remain popular, too, in
the foreseeable future. MTNL, the largest landline service provider, has recently taken
some bold initiatives to retain its market share and, if possible, expand it.

IMPACT OF BUDGET 2007 ON TELECOM SECTOR

19 Oriental Institute of Management, Vashi.

 [Study of the evolution and growth in Indian Telecom Industry ]

Budget 2007 has brought disappointment to the telecom sector.

Mobile service providers have been asked to cut down their roaming rentals as well as
their long distance and international call tariffs.
Telecom regulatory authority of india (trai) is of the opinion that this will lead to
increased use of roaming, which will ultimately lead to more revenue generation.
With cheaper handsets and lesser tariffs, it is expected that by the year 2010 there will
be over 500 million subscribers in the indian telecom market.

Technology
GSM vs. CDMA
GSM and CDMA are the two main competing network technologies deployed by cellular
service provider’s world over. Understanding the pros and cons of both the technologies
will help you make right decision according to your requirement.
GSM (Global System for Mobile Communications) originated in Europe in 1990. The
GSM Association is an international organization founded in 1987, dedicated to
developing, providing and overseeing the worldwide wireless standard of GSM.
While CDMA (Code Division Multiple Access) is a proprietary standard designed by
Qualcomm Inc in United States and has been the dominant network standard for North
America and parts of Asia. It became an international standard in 1995.
However now, GSM networks have penetrated the United States and the CDMA
networks have spread in other parts of the world. People of both the camps claim that
their architecture is superior to the other.

The Technology:
Mobile personal communication systems use microwave frequencies above 800 MHz
for transmission and reception. All service providers operate in some pre allocated
frequency bands according to international standards. For operating in these microwave
frequencies there are following access methods:
• FDMA (Frequency Division Multiple Access) - FDMA puts each call on a separate
frequency.

20 Oriental Institute of Management, Vashi.

 [Study of the evolution and growth in Indian Telecom Industry ]

• TDMA (Time Division Multiple Access) - TDMA assigns each call a certain portion
of time on a designated frequency
• CDMA ( Code Division Multiple Access) - CDMA gives a unique code to each call
and spears it over available frequencies
• GSM is a global standard based on TDMA. It is very popular in entire Europe,
Middle East and Asia while CDMA is the dominant technology in United States
and some part of Asia. But how does it affect the ultimate consumer? For
understanding further considerations may be helpful.
GSM CDMA
1. In case of GSM you can choose a 1. Handset is network locked. You buy a
handset separately from a wide variety package from the Service Provider like
available in the market. It should be GSM Reliance or Tata Indicom that includes a
900/1800 compatible for use in India. handset and a pre-paid or post-paid plan.
Then buy a pre-paid or post-paid SIM card Earlier it was difficult to change the handset
(Subscriber Identity Module that contains and keep the same number but now to
user account information) from any of the change a Reliance handset in future, you
GSM Service Providers like Airtel, Hutch, just need a handset change card costing a
Idea, MTNL, BSNL, Aircel, Spice etc. Just nominal amount’s-SIM enabled handsets of
insert this SIM into your handset and start Tata Indicom can be changed easily.
talking.

2. A very large range of handsets to choose 2. Choice of handsets is limited to the

from as the big handset companies like models offered by the Service Provider.
Nokia, Motorola, SonyEricsson, LG, Although both Reliance and Tata have now
Samsung etc. are marketing their products a range of entry level, mid-segment and
through independent distribution and retail features rich advance handsets available
network. with them.
3. You can easily change the service 3. You can't change service provider and
provider and continue with the same continue with the same handset. It could be
handset. technically possible but not easy.
4.In GSM different frequencies are used 4.Voice clarity is supposed to be better in
across different cells but that does not CDMA network as it uses same frequency

21 Oriental Institute of Management, Vashi.

 [Study of the evolution and growth in Indian Telecom Industry ]

mean that voice clarity is necessarily across all cells.

compromised. Actually it depends upon the
location and network traffic too.
5. EDGE (Enhanced Data Rates for GSM 5. Data Transfer Speed is traditionally more
Evolution) enabled GSM networks are in case of CDMA. BREW(Binary Runtime
comparable in terms of download speed. Environment for Wireless) technology
Please note an EDGE enabled handset is which is exclusive to CDMA networks
also required. enables faster data downloads.
6. Check for International roaming tie ups if
6. GSM service providers are better
you travel abroad frequently. Also check for
networked globally to offer international
the coverage in the region where you
roaming. But you must check for roaming
intend to use your cellphone within India.
call rates and coverage in the regions or
Tata is soon launching T-SIM to enable
countries where you visit frequently.
international roaming with one world one
number concept.
7. If you travel to other countries you can 7. CDMA phones that are not card-enabled
even use your same GSM cell phone do not have this capability.
abroad if it is a quad-band phone
(850/900/1800/1900 MHz). By purchasing a
local SIM card with call value and a local
number in the country you are visiting, you
can make calls against the card to save
yourself international roaming charges from
your home service provider.

Broadband Internet Access

The number of broadband connections in india have seen a continous growth since the
beginning of 2006. At the end of August 2008, total broadband connections in the

22 Oriental Institute of Management, Vashi.

 [Study of the evolution and growth in Indian Telecom Industry ]

country have reached 4.73 million. However the definition of broadband is pretty
constrained in India compared to other countries. A 256 kbit/s always on connection is
the definition of broadband in India compared to 2 Mbit/s in other countries. However
most ISPs,especially the Government managed companies are now offering speeds up
to 2 Mbit/s. [28] [3]
BSNL, Sify, MTNL, STPI, Airtel, Netcom, Reliance Communications and Hathway are
some of the major ISPs in India. TRAI has defined broadband as 256 kbit/s or higher.
However, many ISPs advertise their service as broadband but don't offer the suggested
speeds. Broadband in India is more expensive as compared to Western Europe/United
Kingdom and United States.
After economic liberalization in 1992, many private ISPs have entered the market, many
with their own local loop and gateway infrastructures. The telecom services market is
regulated by TRAI. ADSL providers include:
• Tata Indicom (VSNL)
• MTNL/BSNL
• Bharti Telecom (Airtel, Bharti Televentures)
• Reliance Infocomm
Because of the increase in ISPs and the quality of service Qos, It became cheaper to
call India from around the world. Many Indians today, studying or living all around the
world, are using calling cards to India to speak with their families back home. It used to
be much more expensive prior to 2002.
Airtel and BSNL have launched 8 Mbit/s & Reliance Communication offers 10 Mb/s
broadband internet services in selected areas recently. For home user, the maximum
speed for unlimited downloads is 1 Mbit/s , available for USD 60 (roughly , with taxes)
Internet Users: 60,000,000 (September 2007) Source: Internet World Stats
Broadband Subscribers: Broadband in India is defined as 256 kbit/s and above by the
government regulator. Total subscribers were 2.3 million (April 2007) Source: TRAI

Internet Service Providers (ISPs) & Hosts: 86,571 (2004)

23 Oriental Institute of Management, Vashi.

 [Study of the evolution and growth in Indian Telecom Industry ]

Wireless local loop (WLL)

A term for the use of a wireless communications link as the

connection for delivering plain old telephone service (pots) and/or
broadband internet to telecommunications customers

Revenue and growth

The total revenue in the telecom service sector was Rs. 86,720 crore in 2005-06 as
against Rs. 71, 674 crore in 2004-2005, registering a growth of 21%. The total
investment in the telecom services sector reached Rs. 200,660 crore in 2005-06, up
from Rs. 178,831 crore in the previous fiscal.
Telecommunication is the lifeline of the rapidly growing Information Technology industry.
Internet subscriber base has risen to 6.94 million in 2005- 2006. Out of this 1.35 million
were broadband connections. More than a billion people use the internet globally.
The value added services (VAS) market within the mobile industry in India has the
potential to grow from $500 million in 2006 to a whopping $10 billion by 2009 (Music,
games to drive mobile VAS growth).

Major classes of Services

• Fixed Copper, Optical Fiber, Wireless
• Mobile GSM and CDMA based
• Narrow band Voice, Internet, Fax
• Broad band High speed Internet, Video

Current Telecom Scenario (contd):

24 Oriental Institute of Management, Vashi.

 [Study of the evolution and growth in Indian Telecom Industry ]

• Fixed lines 49.2 m

• Mobile lines 105.36 m

• WLL Fixed 6.79 m

• Total wireless lines 112.15 m

• Teledensity 15.12

• Internet connections 8.4 m

• Broadband connection 1.92 m

Telephone
Telephony Subscribers (Wireless and Landline): 400.05 million (Jan 2009)
Cellphones: 362.3 million (Jan 2009)
Land Lines: 37.75 million (Jan 2009)
Yearly Cellphone Addition: 113.26 million (2007)
Monthly Cellphone Addition: 15.41 million (Jan 2009)
Teledensity: 34.5% (Jan 2009)
Projected teledensity: 500 million, 40% of population by 2010.
Broadband connection: 5.65 million (Jan 2009)

Type of Value Added Service Description

1. News National, International, Business, Entertainment, Sports News
2. Finance Stocks (NSE, BSE, NASDAQ), Forex
3. Entertainment Games, Mobile TV and Jokes
4. Travel Railways, Airlines
5. Downloads Logos, Ringtones, Caller tones etc.
6. Astrology service Personal Horoscope / Personalized prediction
7. Cricket ‘Cricket scores, Match clippings, cricket commentary
8. Missed call alters Subscriber to get a SMS alert of incoming calls when the

25 Oriental Institute of Management, Vashi.

 [Study of the evolution and growth in Indian Telecom Industry ]

subscriber’s mobile phone is switched off / not reachable

and busy
9. E-mail’ E-mail through SMS
10. Music on demand Dial a song
11. Contest Reality shows
12. GPRS / WAP Mobile Internet, Mobile Chat, Mobile TV
13. MMS Picture messages, picture clippings
14. Health tips, Beauty tips
15. M-commerce Transactions based services with multiple payment
modes and support in multiple domains like WAP, GPRS,
SMS, IVR and Web
16. Miscellaneous Devotional, Movies & Music, Fun, Navigation etc.
Internet Users: Number of Internet users in India is the 4th largest in the world.
Internet population is expected to grow to 100 million users by 2007.[27]
Though the number of internet users is high, the penetration level is still lower than most
countries across the globe.

Challenges Ahead
Managing Growth : Biggest Challenge
• Fast growth and fierce competition putting pressure on the resources of
operators, their Supply Chain and Operational Support

• ARPUs of operators going down thus putting pressure on margins

• Quality of Service a major casualty

• Churn is a cause of concern for operators

• Creation of Infrastructure- A major challenge for operators

Falling ARPUs
• Rapid expansion leading to falling ARPUs

• Margins of the service providers under pressure

26 Oriental Institute of Management, Vashi.

 [Study of the evolution and growth in Indian Telecom Industry ]

• Cost of networks to go up as service providers migrate to rural areas

• Revenues from International calls getting eroded due to regulatory intervention

• Multiplicity of Operators

• Multiple operators in LSAs leading to Interconnection challenges and

complexities

• Scarcity of Spectrum- A major issue of concern for all operators

• Pricing of Spectrum becoming a bone of contention

• 3G and WiMAX services awaiting resolution of spectrum issues

• Monitoring of multiple networks getting cumbersome

• Technological Innovations…

• Technological innovations blurring the geographical boundaries of the networks

• Content based services to dominate the future business and revenues

• The diminishing of network boundaries leading to overlapping of services and

may lead to disputes

• Fast convergence of PSTN and IP networks taking place

• VoIP challenging the traditional voice telephony

• Internet and Data Networks have started churning the traditional traffic

• Managing evolution of IP networks a big challenge

• Fast convergence of PSTN and IP networks taking place

ICT Infrastructure:
• Proliferation of ICT infrastructure required for a knowledge based society- A
major challenge

• Broadband penetration is very low as compared to other developing economies

27 Oriental Institute of Management, Vashi.

 [Study of the evolution and growth in Indian Telecom Industry ]

• Delay in WiMAX and 3G rollouts is severely affecting the penetration

• Wireline broadband can give very limited penetration as further growth of wireline
networks is doubtful.

• Cost of PC an entry barrier

• High cost of International bandwidth and poor power situation are other
bottlenecks.

Reliability and Security of Networks

• Reliability of converged networks yet to be proven

• Interconnection boundaries of converged IP networks not definable
• Security of such networks a major concern and issue for licensor and regulator
• Technical and legal frameworks need to be upgraded to manage the Security
issues for emerging networks and services.

Major achievements in Telecom Sector

During the Financial Year 2007-08
• The total wireless subscriber base {GSM, CDMA and WLL (F)} stood at 261.07
million at the end of financial year.
• The number of wireline subscribers on 31st March 2008 was 39.42 million.
• On an average, around 8 million subscribers were added every month during the
financial year.
• The total number of PCOs in the country as on 31st March 2008 was 61,85,904
and the number of VPTs was 5,59,503.
• The overall teledensity at the end of March 2008 was 26.22% as compared to
18.23% ending March2007
• The rural teledensity at the end of March 2008 was 9.20 as compared to 5.80
ending March 2007

28 Oriental Institute of Management, Vashi.

 [Study of the evolution and growth in Indian Telecom Industry ]

• Institution of Telecommunications Consumers Education and Protection Fund

and having a
resource of Rs. 14.21 Crore in the Fund as on 31st March 2008, which is to be
utilized, inter-alia,for
• Study & Market Research Projects on matters relating to Protection of interests
of Consumers

• Organizing Seminars etc. on the subject of Telecommunication Consumer’s

Welfare andEducation
• There were 11.09 million internet subscribers on 31st March 2008 as compared
to 9.27 million on31st March 2007.
• Besides the internet subscribers mentioned above, there are 66.09 million
wireless data subscribers who are accessing internet through wireless (GSM and
CDMA) networks.
• The number of broadband connections on 31st March 2008 was 3.87 million
compared to 2.34million for the same period during previous year.

Next generation networks

In the Next Generation Networks, multiple access networks can connect customers to a
core network based on IP technology. These access networks include fibre 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.
Indian telecom networks are not so intensive as developed country’s telecom networks
and India's teledensity is low only in rural areas. 670,000 route kilometers (419,000
miles) of optical fibres has been laid in India by the major operators, even in remote

29 Oriental Institute of Management, Vashi.

 [Study of the evolution and growth in Indian Telecom Industry ]

areas and the process continues. BSNL alone, has laid optical fibre to 30,000
Telephone Exchanges out of their 36 Exchanges. Keeping in mind the viability of
providing services in rural areas, an attractive solution appears to be one which offers
multiple service facility at low costs. A rural network based on the extensive optical fibre
network, using Internet Protocol and offering a variety of services and the availability of
open platforms for service development, viz. the Next Generation Network, appears to
be an attractive proposition. Fibre network can be easily converted to Next Generation
network and then used for delivering multiple services at cheap cost.

Evolution from 2G to 3G
2G networks were built mainly for voice data and slow transmission. Due to rapid
changes in user expectation, they do not meet today's wireless needs. Evolution from
2G to 3G can be sub-divided into following phases:
• 2G to 2.5G
• 2.5G to 2.75G
• 2.75G to 3G
From 2G to 2.5G (GPRS)
The first major step in the evolution to 3G occurred with the introduction of General
Packet Radio Service (GPRS). So the cellular services combined with GPRS became
2.5G.
GPRS could provide data rates from 56 kbit/s up to 114 kbit/s. It can be used for
services such as Wireless Application Protocol (WAP) access, Short Message Service
(SMS), Multimedia Messaging Service (MMS), and for Internet communication services
such as email and World Wide Web access. GPRS data transfer is typically charged per
megabyte of traffic transferred, while data communication via traditional circuit switching
is billed per minute of connection time, independent of whether the user actually is
utilizing the capacity or is in an idle state.
GPRS is a best-effort packet switched service, as opposed to circuit switching, where a
certain Quality of Service (QoS) is guaranteed during the connection for non-mobile
users. It provides moderate speed data transfer, by using unused Time division multiple
access (TDMA) channels. Originally there was some thought to extend GPRS to cover

30 Oriental Institute of Management, Vashi.

 [Study of the evolution and growth in Indian Telecom Industry ]

other standards, but instead those networks are being converted to use the GSM
standard, so that GSM is and newer releases. It was originally standardized by
European Telecommunications Standards Institute (ETSI), but now by the 3rd
Generation Partnership Project (3GPP)..m

From 2.5G to 2.75G

GPRS networks evolved to EDGE networks with the introduction of 8PSK encoding.
Enhanced Data rates for GSM Evolution (EDGE), Enhanced GPRS (EGPRS), or IMT
Single Carrier (IMT-SC) is a backward-compatible digital mobile phone technology that
allows improved data transmission rates, as an extension on top of standard GSM.
EDGE can be considered a 3G radio technology and is part of ITU's 3G definition, but is
most frequently referred to as 2.75G. EDGE was deployed on GSM networks beginning
in 2003—initially by Cingular (now AT&T) in the United States.
EDGE is standardized by 3GPP as part of the GSM family, and it is an upgrade that
provides a potential three-fold increase in capacity of GSM/GPRS networks. The
specification achieves higher data-rates by switching to more sophisticated methods of
coding (8PSK), within existing GSM timeslots.
EDGE can be used for any packet switched application, such as an Internet, video and
other multimedia.
From 2.75G to 3G
From EDGE networks the introduction of UMTS networks and technology is called pure
3G. 3G Bandwidth 5 MHz
Migrating from GPRS to UMTS
From GPRS network, the following network elements can be reused:
• Home location register (HLR)
• Visitor location register (VLR)
• Equipment identity register (EIR)
• Mobile switching centre (MSC) (vendor dependent)
• Authentication centre (AUC)
• Serving GPRS Support Node (SGSN) (vendor dependent)

31 Oriental Institute of Management, Vashi.

 [Study of the evolution and growth in Indian Telecom Industry ]

• Gateway GPRS Support Node (GGSN)

From Global Service for Mobile (GSM) communication radio network, the following
elements cannot be reused
• Base station controller (BSC)
• Base transceiver station (BTS)
They can remain in the network and be used in dual network operation where 2G and
3G networks co-exist while network migration and new 3G terminals become available
for use in the network.
The UMTS network introduces new network elements that function as specified by
3GPP:
• Node B (base station)
• Radio Network Controller (RNC)
• Media Gateway (MGW)
The functionality of MSC and SGSN changes when going to UMTS. In a GSM system
the MSC handles all the circuit switched operations like connecting A- and B-subscriber
through the network. SGSN handles all the packet switched operations and transfers all
the data in the network. In UMTS the Media gateway (MGW) take care of all data
transfer in both circuit and packet switched networks. MSC and SGSN control MGW
operations. The nodes are renamed to MSC-server and GSN-server.

Security
3G networks offer a greater degree of security than 2G predecessors. By allowing the
UE to authenticate the network it is attaching to, the user can be sure the network is the
intended one and not an impersonator. 3G networks use the KASUMI block crypto
instead of the older A5/1 stream cipher. However, a number of serious weaknesses in
the KASUMI cipher have been identified.
In addition to the 3G network infrastructure security, end to end security is offered when
application frameworks such as IMS are accessed, although this is not strictly a 3G
property.

Issues

32 Oriental Institute of Management, Vashi.

 [Study of the evolution and growth in Indian Telecom Industry ]

Although 3G was successfully introduced to users across the world, some issues are
debated by 3G providers and users:
• Expensive input fees for the 3G service licenses & agreements
• Numerous differences in the licensing terms
• Large amount of debt currently sustained by many telecommunication
companies, which makes it a challenge to build the necessary infrastructure for
3G
• Lack of member state support for financially troubled operators
• Expense of 3G phones
• Lack of buy-in by 2G mobile users for the new 3G wireless services
• Lack of coverage, because it is still a new service
• High prices of 3G mobile services in some countries, including Internet access
(see flat rate)
Current lack of user need for 3G voice and data services in a hand-held device

FUTURE PROSPECT OF TELECOM SECTOR

India poised to be a USD 40 bn - 45 bn telecom market by FY 2010

Telecom sector targets announced by Government of India

• 250 million subscribers by 2007

• 500 million subscribers by 2010

• 20 million broadband subscribers by 2010

• Mobile access to all villages with population more than 5,000 by 2006

• Mobile access to all villages with population of more than 1,000 by 2007

33 Oriental Institute of Management, Vashi.

 [Study of the evolution and growth in Indian Telecom Industry ]

Suggestion
• Airtel is top in the market of telecom sector , so it has to maintain its
position by continuous advertising and promotional schemes to sustain the
position. So it is very essential for other companies to have a strong
promotional and creative advertising.
• Telecom service providers have to create and maintain its goodwill in the
mind of customers.
• The Telecom sector has to Increase its reach in outskirts to improve sales.
• The sales person must be professionally trained.
• The service providers must maintain its standard to sustain in the
competition.
• The unsatisfied customer wants must be satisfied and the loyal customer
must be taken care off.
• The new marketing methodology like 4G must be adopted to penetrate the
market and further increase the sales and profitability.

34 Oriental Institute of Management, Vashi.

 [Study of the evolution and growth in Indian Telecom Industry ]

Conclusions

• Telecom market in India is growing very fast this day.

• Because of the increase in competition the customer are getting more and
more options.
• Airtel leads in the Telecom market . Followed by Idea and Vodafone.
• Airtel and Vodafone provide strong promotional benefits Schemes for the
distributors and consumers.
• The Telecom companies are having a sound distribution channel.
• The telephone is available in both Urban and Rural market.
• All the consumers are satisfied by the product.

Bibliography:
Books:

1. Marketing management/ Philip kotler/13th edition

2. Research Methodology/ C.K. Kothari

35 Oriental Institute of Management, Vashi.

 [Study of the evolution and growth in Indian Telecom Industry ]

Magazines and Newspapers:

1. Business line
2. Outlook
3. Business Standard

Websites:

1. www.scribd.com
2. www.wikipedia.com
3. www.howstuffworks.com
4. www.managementparadise.com

36 Oriental Institute of Management, Vashi.