Dear Team,
It gives me a great pleasure in presenting the second edition of the Insiders Power up series where we have an excellent article contributed by Yogita Ahuja from the Delhi office and Ramaa Devi from the Bangalore office.
The focus of this article will be on the Telecom revolutions in India. While it’s a common knowledge that the telecom sector in India has shown phenomenal growth during the last decade. With so many new companies emerging and the existent companies expanding their operations, the telecom revolution in India has been truly extraordinary. All these have resulted in a huge spurt in telecom jobs – at all levels and in all functional areas - in India.
The year 2009, saw the Indian telecom sector add 170 million mobile phone connections to take the total subscriber base to 550 million. T R Dua, Deputy Director General of Cellular Operators Association of India (COAI), said, “It is indeed a matter of great satisfaction that the Indian telecom industry continued to grow even when most other sectors grappled with a demand slowdown.” Studies have shown that in India, the telecom sector has been a major enabler of economic growth. An Indian Council for Research on International Economic Relations (ICRIER) study has shown that states with higher mobile penetration are forecast to grow faster. At present, the Indian telecom market is the fastest growing in the world with the lowest tariffs , This sector takes third highest position in FDI for over 2500 M $ in 2009.
The telecom sector directly employs more than 1,50,000 people and also provides indirect employment to an equal number of people through retail outlets, prepaid card sellers and tower constructors. With the advent of newer technologies such as 3G and Wimax, the demand for qualified and skilled professionals is growing tremendously. Thus, the telecom sector in India is expected to be one of the largest generators of employment in the years immediately ahead.
This article would take you on a very interesting journey detailing the past present and the future of this industry.
Happy reading
Cheers !
Anil S Kumar
Head – Corporate Relations; CAS
Telecommunication is the prime support service needed for rapid growth and modernization of various sectors of the economy, apart from improving the quality of life. The Sector has seen unprecedented growth and it’s not wrong to say that the Revolution has just been started and there is a long way to go...
Regards,
Yogita Ahuja
The success of Indian telecommunication industry has become apotheosis of the world making India an investment destination of the world.
We have made a humble effort to bring to picture the Revolution of Indian Telecommunication industry and the Evolution of Mobile technology.
Regards,
Ramaa.KR
The Indian telecommunication industry is one of the fastest growing industry in the world. With 621.28 million telephone (landlines and mobile) subscribers and 584 million mobile phone connections as of March 2010, India is the second largest telecommunication network in the world. The tele-density has crossed the 50% mark this year. Favorable government initiatives and timely policy changes has ensured that India has transformed itself into a telecom services giant. The fast track growth of the Indian telecom industry has made it a key contributor to India’s progress and a cynosure of the world.
The ‘Telecom Revolution’ which arrived in India in the 19th century, continues with great momentum in the 21st century.
The Past - A Brief History
The History of Indian Telecommunication started in the year 1950 with the first experimental electric telegraph line which was started between Kolkata and Diamond Harbor, a year later, the lines were open to British East India Company. Three decades later, in 1882 (barely six years after Alexander Graham Bell first developed the telephone) the first telephone exchange came into existence. After Independence in 1947, all foreign telecommunication companies were nationalized to form the Posts, Telephone and Telegraph (PTT), a monopoly run by the government's Ministry of Communications.
India adopted a phased approach for reforming the telecom sector right from the beginning. Privatization was gradually introduced in 1990’s, first in value-added services, followed by cellular and basic services. An independent regulatory body, Telecom Regulatory Authority of India (TRAI), was established in 1997 to deal with competition in a balanced manner. This gradual and thoughtful reform process in India has favored the telecom industry growth.
The Present - Indian Telecommunication
The Facts and the Figures
Telephony Subscribers (Wireless and Landline): 621.28 million (Mar 2010)
Land Lines: 36.96 million (Mar 2010)
Cell phones: 584.32 million (Mar 2010)
Yearly Cell phone Addition: 178.25 million (Jan-Dec 2009)
Monthly Cell phone Addition: 20.31 million (Mar 2010)
Teledensity: 52.74%% (Mar 2010)
The Indian telecom industry can be divided into basic (fixed), mobile and internet services. There are also some smaller segments such as radio paging services, Very Small Aperture Terminals (VSATs), Public Mobile Radio Trunked Services (PMRTS) and Global Mobile Personal Communications by Satellite (GMPCS).
Basic
The total number of fixed services connections in India has increased from 5.81 Million in 1991-92 to 36.96 million in 2009-10. However, due to mobile substitution and their low tariffs, net additions in fixed-line subscribers have started slowing down. From 2006-07 to 2009-10 there have seen a decrease in 4 Million fixed connections.
Landline services were originally concentrated only by BSNL and MTNL. Today, there are several private players such as Airtel, Reliance Infocomm, Tata Teleservices and Touchtel. The competition from mobile services has forced the landline services to become more efficient. They have started combi offers of internet/ broadband and allied services. The landline network quality has improved and landline connections are now usually available on demand, even in high density urban areas as against the 90’s when I had to wait for 3 years to get a landline connection.
Mobile
The inventor of the first modern portable handset is Dr Martin Cooper, who was the general manager for the systems division at Motorola at that time. In 1973, Dr Cooper made the first call on a portable cell phone. He called his rival Joel Engel, head of research at Bell Labs, to give him the latest news on how the competition between them was turning out. The picture above represents him and his first mobile .
Roti, Kapda, Makhan aur….MOBILE
From the time when mobile phones were a status symbol rather than being an instrument of utility, the decade gone by has brought a cell phone to every fifth Indian. It’s also been a decade driven by affordability. Call rates have tumbled from Rs 16.50 in the 1990’s to Rs 0.30 per minute, from paying for incoming calls to free incoming calls. Handsets can be bought for just Rs 700.
The Government of India opened up mobile services to private participation in 1994-95 by inviting bids for providing services in the four metropolitan cities and 18 non-metro circles. Services were introduced in 1995 with the high tariffs resulting in poor demand. Adopting the National Telecom Policy 1999 resulted in lower tariffs and addition of 12 million subscribers in the 1999-03 period.
The market is highly competitive with each telecom circle having 7-8 operators. Competitive intensity in the market contributed to reduction in tariffs and launch of innovative schemes like lifetime prepaid and low cost handset bundling. As of March 2010 India had 584.32 million subscribers, with a teledensity of more than 98% of the urban Indian population. According to a report, the country’s upper middle class spends 6 per cent of its earnings on telecom services.
VAS
The ABC of VAS- Astrology, Bollywood and Cricket of Value Added Services.
VAS refers to services that offer differentiation, away from voice business, allowing mobile operators to charge a premium. VAS is becoming the backbone of telecom service providers, as users look beyond voice, the mobile turns into a PC. Mobile value added services include text or SMS, MMS, menu-based services, downloading of music or ring tones, mobile TV, videos and sophisticated m-commerce applications.
According to a survey, more than 50% cell phone users play games on mobiles, while more than 70% download ringtones. The mobile VAS market in India is growing at around 40% annually, say telecom analysts.
Prior to 2008 a majority of VAS revenue was attributed to SMS, that too person to person. But with greater penetration of new services, availability of relatively inexpensive, feature-rich handsets and consumer education, value-added services other than SMS are gaining importance. It is interesting to note that over the last 1-2 years, non-SMS VAS has been gaining importance and is likely to become a dominant contributor to VAS revenue over the next few years. Currently, VAS market is worth INR 100,000 million and contributes 9 to 12% of an operator’s revenue.
Major VAS players in India include Mauj Telecom, On-Mobile, Mobile2win, Cellebrum, IndiaGames, IMIMobile and Roam-ware.
Broadband
Broadband is defined as an “always on” data connection that is able to support interactive services, including internet access and has the capability of minimum download speed of 256 kilo bits per second (kbps) to an individual subscriber.
Department of Telecom issued Broadband Policy 2004, on 29th April 2004, in a bid to encourage high speed internet growth in the country and address the demand of applications enabling economic growth.
With 3G, the surge in broadband penetration is expected to be one of the key drivers for next phase of telecommunications growth in the country.
Telecom Manufacturing
Communications Minister A. Raja said his ministry is aiming to make India a telecom manufacturing hub by facilitating various policies.
The boom in the telecom sector has slowly and steadily paved the way for another industry; the telecom equipment manufacturing industry. India has all the makings of a globally competitive telecom manufacturing and R&D destination. This is evident from a large and booming domestic market with Indian operators reaching out to the global market providing wider access to Indian telecom companies. At least 70 percent of Indian domestic telecom needs are met by products manufactured in India.
The Future- Growth Avenues
Telecom and Rural India
The tremendous growth witnessed by the Indian telecom sector has been driven in a large part by the immense demand originating from urban areas. With the urban sector close to saturation, the industry has begun to consider ‘the next billion’ users. These are the rural populations (720 million people in 630,000 villages) living beyond the reach of traditional communications networks of any kind.
With low tariff rates and lower costs of mobile devices and low cost operation models rural India is today’s and tomorrow’s market for telecommunication.
Telecom industry changing India’s business and economic landscape
The contribution of Indian telecom sector to the growth of India’s economy is immense. It directly contributes more than 1.5 per cent GDP of the country. According to the TRAI, the total gross revenue of the Indian telecom services industry was Rs 1,524 bn in FY09.
The market is witnessing M&A activities that are leading to consolidations in the industry. This trend has assisted companies in expanding their reach in the Indian telecom market and beyond.
FDI/ Mergers and Acquisitions
· Vodafone purchased stake in Hutch (Hutchison Telecom International) for USD 11.08 billion
· Norway-based telecom operator Telenor has invested a total of US$ 1.32 billion in Unitech Wireless
· The government has approved the foreign direct investment (FDI) proposal of the Federal Agency for State Property Management of the Russian Federation to buy 20 per cent stake in telecom service provider Sistema-Shyam for US$ 660.1 million
· In March 2010, Bharti Airtel bought the African operations of Kuwait-based Zain Telecom for US$ 10.7 billion, driving the Indian player into the league of top ten telecom players globally.
· Mobile phone service providers paid up for the 3G spectrum they bought, making the government richer by almost Rs 70,000 crore and causing a sharp drop in the amount of excess cash in the banking system.
· According to the Department of Industrial Policy and Promotion (DIPP), the telecommunications sector which includes radio paging, mobile services and basic telephone services attracted foreign direct investment (FDI) worth US$ 2,495 million during April to February 2010. The cumulative flow of FDI in the sector during April 2000 and February 2010 is US$ 8,872 million.
Evolution
1G refers to the first-generation of wireless telephone technology, mobile telecommunications. These are the analog telecommunications standards that were introduced in the 1980s
2G is short for second-generation. 2G networks are digital, 2G networks were built mainly for voice services and slow data transmission.
2.5G (GPRS) The term "second and a half generation" is used to describe 2G-systems that have implemented a packet switched domain in addition to the circuit switched domain.
2.75G (EDGE) GPRS networks evolved to EDGE networks with the introduction of 8PSK encoding. Enhanced Data rates for GSM Evolution
3G: the third generation of wireless technologies. 3G is a set of technologies and standards that include W-CDMA, WLAN and cellular radio, among others. It comes with enhancements over previous wireless technologies, like high-speed transmission, advanced multimedia access and global roaming. 3G is mostly used with mobile phones and handsets as a means to connect the phone to the Internet or other IP networks in order to make voice and video calls, to download and upload data and to surf the net.
3G technologies are a way for mobile users to make free or cheap calls worldwide. 3G networks have the advantage of being available on the move, unlike Wi-Fi, which is limited to a few meters around the emitting router
3G phones are comparable to small laptops that can cater to several broadband applications like browsing the internet, receiving streaming videos online, video conferencing and sending and receiving faxes. The soaring towers are among the most important element of the group, allowing the data to be transferred from one hone to another. 3G basically is a cellular phone network protocol.
The users and uses of 3G will be diverse.
3G terminals will provide u-Information
3G terminals will be personalized. Organizer: calendar, diary and notepad. ID: security pass, driving license and membership cards. Electronic keys: car, house, and safe. Information: health, and ‘how to …’ Current affairs: news, sport and weather.
3G terminals will provide networked entertainment.
Broadcast: TV and radio, On-demand: music and movies, Games: gambling and competitions,
3G terminals will provide location-based services.
Navigation: directions to a destination. Travel information: congested roads, train schedules and flight arrivals/departures. Local information: a ‘Yellow Pages’ of nearby amenities. Security and safety: report position of a stolen vehicle or accident. Work-force management – co-ordinate agents (e.g. repair men) in the field.
3G terminals will support electronic commerce.
Banking: salary, bill payment, and alternative to cash/credit cards. Investing: stock tips, portfolio performance, stop-loss alerts, and on-line trading. Shopping: obtain details about items in a shop and pay for them with e-credit. Purchases: parking tickets, theatre tickets and drinks/snacks from vending machines. Advertising: sales catalog (estate agents). Auctions: real-time on-line bidding.
3G terminals will support m-Communications
3G terminals will allow rich-media mobile communication. Video phone: video conferencing with optional recording for later viewing. Messaging: electronic postcards and e-mail. Remote monitoring: check on home and children while away.
3G terminals will support business sector
Availability of 3G would improve employee productivity because of the higher bandwidth possible on mobile devices.
4G the Fourth-Generation is a term used to describe the next complete evolution in wireless communications. A 4G system will be able to provide a comprehensive IP solution where voice, data and streamed multimedia can be given to users on an "Anytime, Anywhere" basis, and at higher data rates than previous generations.
For you and me, that means we can use the so-called triple play service (TPS), which can handle voice and video data at the same time, meaning we can make video calls and watch TV on the cell phone. Users can download HD movies and watch them on their phone and also interact, for instance by taking part in a poll while watching TV.
Long-distance medical diagnosis via cell phones will also become possible. For example, diabetes patients can measure their blood sugar level with their cell phone and send the information to their doctor to get a prescription. Users can use the wireless Internet on an overseas business trip by simply connecting their cell phone to their notebook computer, since the principle of the fourth-generation service is to connect networks around the world.
Telecom Sectors impact on Recruitment and CAS
The telecom industry is going for high scale recruitments. There is a huge demand for software engineers, mobile analysts, and hardware engineers for mobile handsets.
Not only will the sector be looking for core Telecom professionals but will also be a keen hirer of management students for Project management and general management roles. With the higher level of competitions, consultant roles and strategy roles will fall into management students lap. Besides, there are ample opportunities for marketing people whose services are required to capture more and more customer base.
This changing phase will ensure unprecedented increase of lateral jobs on CAS portal.
To Conclude: Those who think the big telecom game is over with rock bottom tariffs couldn't be more wrong. The telecommunications industry is in a state of continuous technological and economic flux driven by intense competition and new technologies.
