Telecommunications network grew by over 40 per cent during 2010 with addition of 216.13 million connections . Telephone connections stood at 742.13 million on October 31, 2010, whereas it was only 526 million on the same day previous year. Of these 706.70 million are wireless connections. With this, Indian Telecom Network is now the largest wireless network in the world.

The current addition of more than 17 million connections per month puts the telecom sector on a strong footing. The target of 600 million connections by the end of Eleventh Five year plan has been achieved in February 2010 itself.

Growth of Telecom Sector

            The opening of the sector has not only led to rapid growth but also helped a great deal towards maximization of consumer benefits as tariffs have been falling across the board.  From only 54.6 million telephone subscribers in 2003, the number increased to 621.28 million at the end of March 2010 and further to 742.13 million at the end of October 2010 showing an addition of 120.85 million during the period from March 2010 to October 2010.  Wireless telephone connections have contributed to this growth as the number of wireless connections rose from 3.57 million in March 2001 to 13.29 million in 2003, 101.86 million in March 2006, 584.32 million in March 2010 and 706.70 million at the end of October, 2010. The year also witnessed two more telecom companies crossing the 100 million mark in terms of wireless connections.  Bharti Airtel was the first Indian Operator to achieve the landmark in 2009.  It was followed by Vodafone and Reliance Communication in 2010.

Wireline Vs. Wireless

            The growth of wireless services has been substantial, with wireless subscribers growing at a compound annual growth rate (CAGR) of 57% per annum since 2004. Today, the wireless subscribers are not only much more than the wireline subscribers in the country, but also increasing at a much faster pace. The share of wireless phones has increased from 5.26 per cent in 1999 to 95.23% in October 2010.  

Private vs. Public

            The liberalization efforts of the Government are evident in the growing share of the private sector. The private sector is now playing an important role in the expansion of telecom sector. The share of private sector in total telephone connections is now 84.42% as per the latest statistics available for October, 2010 as against a meager 5% in 1999.

Teledensity

Teledensity is an important indicator of telecom penetration in the country. The teledensity which was 2.32% in March 1999 increased to 12.7% in March 2006 and 52.74% in March 2010 and further to 62.51% in October 2010.  Thus there has been continuous improvement in the overall teledensity of the country.  The rural teledensity which was above 1.21% in March 2002 has increased to 24.31% in March 2010 and further to 29.25 in October 2010.  The urban teledensity has increased from 66.39 in March 2008 to 119.45% in March 2010 and stands at 140.06% at the end of October 2010.  

Universal Service Obligation Fund (USOF)

Wide gap between urban and rural teledensitites indicate need for rapid increase in  teledensity of rural areas. Introduction of wireless phones in rural areas and various measures of Government under USOF for expansion of mobile network in remote rural areas will enhance rural teledensity.  Private Service providers are also looking for opportunities in rural areas. 

 Focus on Rural Telephone

            While the urban subscribers have been growing significantly, similar growth has not been on the rural front. With introduction of mobile services in rural areas, the rural subscribers have recently shown an increase though. The rural Telephone connections have gone up from 3.6 million in 1999 to 12.3 million in March 2004 and further to 200.77 million in March 2010.  Their share in the total telephones has constantly increased from around 14% in 2005 to 32.75% at the end of October 2010. The rural subscribers have grown to 243.04 million at the end of October 2010. The wireless connections have contributed substantially to total rural telephone connections; it stands at 233.95 million in October 2010. During 2010-11, the growth rate of rural telephones was 21.05% as against 18.69% of urban telephones.  The private sector has contributed to the growth of rural telephones as it provided about 84.27% of rural telephones during October 2010.

Internet and Broadband

 It is necessary to increase the broadband connectivity for the knowledge-based society to grow quickly and for reaping the consequent economic benefits. Several policies have been announced and implemented to promote broadband in the country. As a result of these measures the broadband subscribers grew from 0.18 million in 2005 to 8.8 million as on  March 31, 2010 and about 10.34 million, at the end of the October, 2010. Internet subscribers grew from 9.2 million during QE June 2007 to 17.96 million during QE September 2010.

Manufacturing

Indian telecom industry manufactures a complete range of telecom equipment using state of art technology.  Considering the growth of telecom, there are excellent opportunities to domestic and foreign investors in manufacturing sector.  The last five years saw many renowned telecom companies setting up their manufacturing base in India. The production of telecom equipments in value terms is expected to increase from Rs.4,88,000 million during 2008-09 to Rs.5,35,000 million in 2010-2011.  There are favourable factors such as policy moves taken by the Government, incentives offered, large talent pool in R&D and low labour cost which can provide an impetus to the industry. Exports increased from INR 4,020 million in 2002-03 to INR 1,35,000 million in 2009-10 accounting for 26 per cent of the total equipment produced in the country and it is expected to increase to Rs 1,50,000 million in 2010-11.

Foreign Direct Investment (FDI)

The liberalization in financial sector has beneficial results in the telecom sector. Liberalization, with allowing entry to the private firms has resulted in unprecedented growth in telecom sector. Allowing greater participation of foreign investor has helped in growth of the sector.  Today, telecom is the third major sector attracting FDI inflows after services and computer software sector. At present 74% to 100% FDI is permitted for various telecom services. This investment has helped telecom sector to grow.  The total FDI equity inflows in telecom sector have been US$ 1057 million during 2010-11 (April-September).

NEW HORIZONS FOR FURTHER GROWTH (FDI)

3G and BWA Telecom services

The phenomenal growth of the telecom industry in India is being followed by the urge to move towards better technology and the next level of service delivery. While the last 5 years have been transformational for Indian telecom industry, the next few years look even more exciting.

3G spectra have already been allotted to successful bidders for commercial use on September 1, 2010 as per the timelines indicated in the Notice Inviting Application (NIA) and in the Letter of Intent issued after the bid amounts were deposited. The 3G spectrum has been allotted to AirTel, Aircel, Vodafone, S Tel, Reliance, Idea Cellular and Tata Cellular Services who won the bids through the electronic auction spread over a period of 34 days in respect of 3G and 16 days in respect of BWA. The BWA spectra have also been assigned to the successful bidders which are Aircel, Augere, Tikona, Qualcomm, Infotel and Bharti.  3G & BWA spectrum would enable users to have value added services like video streaming, mobile internet access, higher & faster data downloads. With the allotment of spectrum, the Department of Telecommunications met all the timelines in strict adherence to the NIA, right from the issuing of the NIA, conducting the auction, earning a revenue of Rs.106000 crores and assigning spectrum on due date. The electronic auction conducted for 3G & BWA spectrum, the first of its kind in the country, has been historic in terms of its success. The auctions took place in a fair and transparent manner satisfying all the stakeholders including the bidders who have won the spectrum for pan-India and different circles. The success of this auction has been unparallel and the Government intends to replicate this model in other sectors involving large stakes.

Newer access technology like BWA and 3G would completely transform the character of internet/broadband scenario in India.  BWA will overcome the key hindrance of Right of Way (ROW) in India, while 3G has the potential to make the mobile phone, a ubiquitous device for accessing the internet.

Mobile Number Portability (MNP) 

MNP allows any subscriber to change his service provider without changing his mobile phone number. The much-awaited mobile number portability was launched on November 25^, 2010 in Haryana and will be available to more than 700 million subscribers from January 20, 2011 across the country. As continued efforts of the Government to increase competition in the market and to provide wider choice to customer, Mobile Number Portability will be an important step.  The networks in all the remaining 21 Licensed Service Areas have started migration for working in the MNP environment. For orderly technical migration of complex interconnected networks, each of the remaining service areas will be migrated one by one on alternate days. This will enable simultaneous validation of technical parameters and removal of any problems arising from migration activity to ensure successful and smooth migration of a service area

Vision

            While celebrating the success in the telecom sector, the government recognizes the fact that there is no room for complacency. The government is now looking forward to achieve the target of 1 billion by the end of 2015. Rural telephony continues to be the thrust area of the government. It is recognized that provision of affordable telecom services in rural areas enhances the ability of people to participate in market economy, which, in turn improves their productivity and contributes to their earnings.  In view of the present growth, 40% rural teledensity is expected by 2014.

Recognizing the potential of Broadband services in the growth process, it has been proposed in the Eleventh Plan targets to provide the broadband for all secondary and higher secondary schools; all Public Health Care Centers and Gram Panchayats.

The successful auction of 3G and BWA Spectrum has laid a good foundation for a push towards achieving  broadband infrastructure, which will lead us to the vision of providing ”Broadband for all”. The vision demands a synergetic push across technologies such as DSL, fiber, cable and wireless amongst telecom operators and across the broadband value chain so as to provide this universal service to residents living anywhere in the country and to match the customer expectations across all segments. 

The rural market is expected to drive the next round of growth for the voice-based services while data services will create the much needed churn with in maturing urban markets. The government has a vision to provide telephone connection and broadband facilities on demand across the country at an affordable price and it thrives to achieve the same.

 Inclusive Telecom Growth and Broadband for all

Telecom connects people across the length and breadth of the country irrespective of income bracket and it provides immense benefit to all in the society.  It contributes significantly to India’s GDP and particularly benefits the poor people in the country. The mobile phone has revolutionized Indian economy, in that it has become more inclusive in terms of enabling greater participation of the poorer sections of society.  People can now transact their business in a more economical manner saving expenditure on incremental cost involved in physical movement. Now, they do not have to move from place to place in order to do business.  And expanding broadband base will only improve the scenario.

****************

SP/AB