Chapter 1

Introduction
The telecom industry is growing all over the world. More and more people are
gaining access to the telecom services such as cellular phones, broadband and
fixed telephones. Many developing countries are starting to invest more into this
sector and it is becoming an important factor for their economy. The prosperity
within the sector attracts newcomers and the competition increases. Therefore the
companies within the telecom industry, as well as other industries, have to work
hard to stay competitive in order to prosper in the market.
The telecom services have been recognized the world-over as an important tool
for socio-economic development for a nation. It is one of the prime support
services needed for rapid growth and modernization of various sectors of the
economy. Indian telecommunication sector has undergone a major process of
transformation through significant policy reforms, particularly beginning with the
announcement of (National Telecom Policy) NTP 1994 and was subsequently reemphasized and carried forward under (National Telecom Policy) NTP 1999.
Driven by various policy initiatives, the Indian telecom sector witnessed a
complete transformation in the last decade. It has achieved a phenomenal growth
during the last few years and is poised to take a big leap in the future also.
This rapid growth is possible due to various proactive and positive decisions of
the Government and contribution of both by the public and the private sectors.
The rapid strides in the telecom sector have been facilitated by liberal policies of
the Government that provides easy market access for telecom equipment and a
fair regulatory framework for offering telecom services to the Indian consumers
at affordable prices. Presently, all the telecom services have been opened for
private participation.

Chapter 2
Indian Telecommunication
History of Indian Telecommunication:
The history of Indian telecom can be started with the introduction of telegraph.
The Indian postal and telecom sectors are one of the worlds oldest. In 1850, the
first

experimental

electric

telegraph

line

was

started

between Calcutta and Diamond Harbour. In 1851, it was opened for the use of
the British East India Company. The Posts and Telegraphs department occupied a
small corner of the Public Works Department, at that time.
The construction of 4,000 miles (6,400 km) of telegraph lines was started in
November 1853. A separate department was opened in 1854 when telegraph
facilities were opened to the public. 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
exchange 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 work. In 1881, the Government later
reversed its earlier decision and a licence was granted to the Oriental Telephone
Company Limited

of

England

for

opening

telephone

exchanges

at Calcutta, Bombay, Madras and Ahmadabad and the first formal telephone
service was established in the country. On 28 January 1882, Major E. Baring,
Member of the Governor General of India's Council declared to open the
Telephone Exchanges in Calcutta, Bombay and Madras. The exchange in
Calcutta named the "Central Exchange" had a total of 93 subscribers in its early
stage. Later that year, Bombay also witnessed the opening of a telephone
exchange. Now with a subscriber base of more than 929 million, the Mobile
telecommunications system in India is the second largest in the world and it was
thrown open to private players in the 1990s.

Indian Telecommunication at Glance:

Opportunities in Indian Telecom Sector:

India offers an unprecedented opportunity for telecom service operators,
infrastructure vendors, manufacturers and associated services companies. A host
of factors are contributing to enlarged opportunities for growth and investment in
telecom:
an expanding Indian economy with increased focus on the services sector
population mix moving favourably towards a younger age profile
urbanization with increasing incomes
Investors can look to capture the gains of the Indian telecom boom and diversify
their operations outside developed economies.

Competitive landscape in Indian Telecommunication:

Demand is driven by technological innovation and by growth in business
activity. The profitability of individual companies depends on efficient
operations and good marketing.
Large companies have big economies of scale in providing a highly
automated service to large numbers of customers, and have the financial
resources required building and maintaining a large network.
Smaller companies can compete effectively only in small markets or by
providing specialty services.

Chapter 3
Department of Telecom and Its Strategies
Department of Telecom (DOT):
The Department of Telecommunications, abbreviated to DoT, is part of
the Ministry of Communications and Information Technology of the executive
branch of the Government of India.
Telecom services have been recognized the world-over as an important tool for
socio-economic development for a nation and hence telecom infrastructure is
treated as a crucial factor to realize the socio-economic objectives in India.
Accordingly, the Department of Telecom has been formulating developmental
policies for the accelerated growth of the telecommunication services. The
Department is also responsible for grant of licenses for various telecom services
like Unified Access Service Internet and VSAT (Very Small Aperture Terminal)
service. The Department is also responsible for frequency management in the
field of radio communication in close coordination with the international bodies.
It also enforces wireless regulatory measures by monitoring wireless transmission
of all users in the country.
The Telecom Commission was set up by the Government of India vide
Notification dated 11th April, 1989 with administrative and financial powers of
the Government of India to deal with various aspects of

Telecommunications.

The Commission consists of a Chairman, four full time members, who are exofficio Secretary to the Government of India in the Department of
Telecommunications and four part time members who are the Secretaries to the
Government of India of the concerned Departments.

Some of the Strategies adopted by the Government of India to promote

telecommunication sector include:
1. International Long Distance
In the field of international telephony, India had agreed under the GATS to
review its opening up in 2004. However, open competition in this sector was
allowed with effect from April 2002 itself. There is now no limit on the
number of service providers in this sector. The licence for ILD service is
issued initially for a period of 20 years, with automatic extension of the
licence by a period of 5 years. At present 24 ILD service providers (22 Private
and 2 Public Sector Undertaking) are there.
2. Unified Access Services
Unified access license regime was introduced in November 2003. Unified
Access Services operators are free to provide, within their area of operation,
services, which cover collection, carriage, transmission and delivery of voice
and/or non-voice messages over Licensee's network by deploying circuit,
and/or packet switched equipment. Further, the Licensee can also provide
Voice Mail, Audiotex services, Video Conferencing, Videotext, E-Mail,
Closed User Group (CUG) as Value Added Services over its network to the
subscribers falling within its service area on non-discriminatory basis. The
country is divided into 23 Service Areas consisting of 19 Telecom Circle and
4 Metro Service Areas for providing Unified Access Services (UAS).
3. Internet Service Providers (ISPs)
Internet service was opened for private participation in 1998 with a view to
encourage growth of Internet and increase its penetration. The sector has seen
tremendous technological advancement for a period of time and has
necessitated taking steps to facilitate technological ingenuity and provision of

various services. The Government in the public interest in general, and

consumer interest in particular, and for proper conduct of telegraph and
telecom services has decided to issue the new guidelines(Details) for grant of
licence of Internet services on non-exclusive basis. Any Indian company with
a maximum foreign equity of 74% is eligible for grant of licence.
4. Broadband Strategy
Since the announcement of Broadband Policy in 2004, several measures have
been taken to promote broadband penetration in the country.
Special efforts are being made to increase the penetration of broadband,
especially in rural and remote areas. The government has approved a project
at a cost of 20,000 crore for creating a National Optical Fiber Network
(NOFN) which will provide broadband connectivity to 2.5 lakh gram
panchayats for various applications like e-health, e-education, e-governance.
The project is being funded under the Universal Service Obligation Fund
(USOF).
By this new policy, the Government intends to make available transponder
capacity for VSAT services at competitive rates after taking into consideration
the security requirements. The service providers permitted to enter into
franchisee agreement with cable TV network operators. However, the
Licensee shall be responsible for compliance of the terms and conditions of
the licence. Further in the case of DTH services, the service providers
permitted to provide Receive-Only-Internet Service. The role of other
facilitators such as electricity authorities, Departments of ITs of various State
Governments, Departments of Local Self Governments, Panchayats,
Departments of Health and Family Welfare, Departments of Education is very
important to carry the advantage of broadband services to the users
particularly in rural areas.

Target has been set for 20 million broadband connections by 2010 and
providing Broadband connectivity to all secondary and higher secondary
schools, public health institutions and panchayats by 2010.
DOT will be subsidizing the infrastructure cost of Broadband network through
support from USO Fund to ensure that Broadband services are available to
users at affordable tariffs.
5. Tariff Changes
The Indian Telecom Sector has witnessed major changes in the tariff structure.
The Telecommunication Tariff Order (TTO) 1999, issued by regulator (TRAI),
had begun the process of tariff balancing with a view to bring them closer to
the costs. This increased competition, has resulted in a dramatic fall in the
tariffs.
The International Long Distance tariff from US$ 1.36 per minute in 2000
to US$ 0.16 per minute in 2009 for USA, Canada & UK.
The mobile tariff for local calls has reduced from US$0.36 per minute in
1999 to US$ 0.009 - US$ 0.04 per minute in 2009.
The Average Revenue per User of mobile is between US$ 5.06 - US$ 7.82
per month.
6. Increase in FDI
In July 2013, the Govt of India has increased FDI in telecom sector from 74%
to 100%. The main purpose is to encourage foreign investors to invest in the
telecom sector, thereby, promoting this sector. FDI brings certain benefits such
as:
Capital inflows for expansion and modernisation
Skills development through training by foreign firms.
Transfer of latest technology.
7. Investment Opportunities and Incentives

 No industrial license required for setting up manufacturing units for

telecom equipment.
100% Foreign Direct Investment (FDI) is allowed through automatic route
for manufacturing of telecom equipments.
Payments for royalty, lumpsum fee for transfer of technology and
payments for use of trademark/brand name on the automatic route.
Full repatriability of dividend income and capital invested in the telecom
sector.
8. Rural Telephony Strategy
With

the

objective

of

promoting

rural

telephony,

the

government formed a Universal Service Obligation Fund

(USOP). Under the Shared Mobile Infrastructure Scheme of
USOF over 7300 towers were set up by the end of November
2012 and 15,971 base transceiver stations commissioned by
service providers at these towers for providing mobile
services.
Under another scheme of Village Public Telephones (VPTs), at
the end of November 2012 a total of over 58 lakh villages had
been covered. VPTs are likely to be provided in the remaining
inhabited revenue villages by March 2013 through the
ongoing USOF scheme for provision of VPTs in newly identified
uncovered villages as per Census 2011.
For providing broadband connectivity to rural and remote
areas, the USOF signed an agreement with Bharat Sanchar
Nigam Limited on 20 January, 2009 under the Rural Wire line
Broadband

Scheme

to

provide

wire-line

broadband

connectivity to rural and remote areas by leveraging the

existing rural exchanges infrastructure and copper wire-line
network. As on August 2012, a total of 3, 91,245 broadband
connections had been provided and 10,076 kiosks set up in
rural and remote areas.

9. 3G and Broadband Wireless Services

The government has in a pioneering decision, decided to
auction 3G & BWA spectrum. The broad policy guidelines for
3G & BWA have already been issued on 1stAugust 2008 and
allotment

of

spectrum

has

been

planned

through

simultaneously ascending e-auction process by a specialized

agency. New players would also be able to bid thus leading to
technology innovation, more competition, faster roll out and
ultimately greater choice for customers at competitive tariffs.
The 3G will allow telecom companies to offer additional value
added services such as high resolution video and multimedia
services in addition to voice, fax and conventional data
services with high data rate transmission capabilities. BWA
will become a predominant platform for broadband roll out
services. It is also an effective tool for undertaking social
initiatives

of

telemedicine,

the

Government

e-health

and

such

as

e-Governance.

e-education,
Providing

affordable broadband, especially to the suburban and rural

communities is the next focus area of the Department.
BSNL & MTNL have already been allotted 3G & BWA spectrum
with a view to ensuring early roll out of 3G & WiMax services
in the country. They will pay the same price for the spectrum

as discovered through the auction. While, Honourable Prime

Minister launched the MTNL's 3G mobile services on the
inaugural function of India Telecom 2008 held on 11th
December 2008, BSNL launched its countrywide 3G services
from Chennai, in the southern Tamil Nadu state on 22nd
February 2009.
In private sector, Bharti Airtel launched India's first 4G
service, using TD-LTE technology, in Kolkata on 10 April 2012.

10.

Mobile Number Portability (MNP)

Mobile Number Portability (MNP) allows subscribers to retain

their existing telephone number when they switch from one
access service provider to another irrespective of mobile
technology or from one technology to another of the same or
any other access service provider. The Government has
announced the guidelines for Mobile Number Portability (MNP)
Service Licence in the country on 1st August 2008 and has
issued a separate Licence for MNP service w.e.f. 20.03.2009.
The Department of Telecommunication (DoT) has already
issued licences to two global companies (M/s Syniverse
Technologies Pvt. Ltd. and M/s MNP Interconnection Telecom
Solutions India Pvt. Ltd.) for implementing the service.