11 - Chapter 2 PDF
11 - Chapter 2 PDF
11 - Chapter 2 PDF
The telecom industry is one of the fastest growing industries in India. India
has nearly 200 million telephone lines making it the third largest network in the world
after China and USA. With a growth rate of 45%, Indian telecom industry has the
highest growth rate in the world. The telecom services have been recognized the
role of telephony in everyday life has undergone a complete transformation over the
last decade to warrant such a view. Close to 65 persons in every 100 own a phone
today. Sustained fall in handset price and telecom tariff and expansion of mobile
telephony’s geographic coverage continue to increase the size of India’s target able
It is one of the prime support services needed for rapid growth and
the Indian telecom sector witnessed a complete transformation in the last decade. It
has achieved a phenomenal growth during the last few years. Indian Telecom service
sector is becoming one of the fastest growing sectors in the world. The impact of
telecom on the economy goes beyond mere connectivity. Telecom will continue to
generate both direct and indirect employment opportunities for millions of youth in
and infrastructure labour. But its biggest impact is felt in the area of entrepreneurship
neighborhood plumber, everyone has found a way to leverage the device to improve
is K U L I B R A kT
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Call.No.
his life. The omnipresent device clearly has the potential to nurture millions of
entrepreneurial dreams across rural and urban India, who could prove to be a critical
elitist bias. Telephone was considered a luxury and was treated as the exclusive
preserve of the rich. Today, mobile telephony has graduated from its elitist status to
be one among the essentials such as roti, kapada and makaan for a large section of the
population. The customer base, which stood at 80,000 in 1948, had grown to a mere
five million by 1991, the year the country began its historic journey towards market
economy. The telecom revolution typically represents the country’s post 1991
mobile telephony led revolution is spreading to every corner of the country and over
eight million mobile subscribers’ sign up for services every month. Over the last
decade, not only has India emerged as the fastest growing mobile market but also as
This revolution should ideally be seen as a part of the wider change process
entrepreneurs. In telecom service, mobile telephony was the first to see private
entrepreneurs in 1995. Bharti Airtel was a pioneer in the sector when it launched its
services in Delhi. Then nobody had anticipated this new technology to be such a
powerful trigger for change - connecting people across urban and rural India and in
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In terms of technology too, Indian telecom has evolved at a very fast rate since
the 1980s; from the first suitcase-sized ‘mobile’ phones to the slim hand-held
instruments now available, from 1G to 2.5G networks, with 3G and 4G now knocking
at the doors. Many more new technologies are likely to break through in the coming
years. But is it just technology that makes India the world’s fastest growing mobile
operational land lines were laid by the government near Calcutta (seat of British
services were merged with the postal system. Indian Radio Telegraph Company (IRT)
was formed in 1923. After independence in 1947, all the foreign telecommunication
companies were nationalized to form the Posts, Telephone and Telegraph (PTT), a
considered as a strategic service and the government considered it best to bring under
state's control3.
It was an exclusive provider of domestic and long-distance service that would be its
own regulator (separate from the postal system). In 1986, two wholly government-
owned companies were created: the Videsh Sanchar Nigam Limited (VSNL) for
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2.3. Liberalization
The process of liberalization in the country began in the right earnest with the
manufacturing was de-licensed in 1991 and value added services were declared open
to the private sector in 1992, following which radio paging, cellular mobile and other
value added services were opened gradually to the private sector. This has resulted in
large number of manufacturing units were set up in the country. As a result most of
the equipment used in telecom area is being manufactured within the country. A
liberalizing the telecom sector in the National Telecom Policy resolution of 13th May
1994.
the economy. Examples of telecom revolution in many other countries, which resulted
in better quality of service and lower tariffs, led Indian policy makers to initiate a
change process finally resulting in opening up of telecom services sector for the
private sector4.
1. Telecommunication Services
a) Basic service
b) Cellular service
c) Internet Service Provider (ISP)
2. Telecommunication Equipment
3. Issues
a) Rural Telecommunications
b) Interconnection
c) Spectrum Allocation
d) ICT and Gender
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Table 2.1: Mobile service share (all India) (As on 29-6-2010)
Source: Websites
45
Table 2.3: Indian Telecommunications at a glance (As on 31st March 2009)
373
Rank in world in network size
Tele-density (per hundred populations) 36.98
Telephone connection (In million)
Fixed 37.96
Mobile 391.76
Total: 429.72
Village Public Telephones Covered (Out of 66,822 57,167
uncovered villages)
Foreign Direct Investment (in million) (from January 2000 275,441
till January 2009)
Licenses issued
Basic 2
C MTS 39
UAS 240
Infrastructure Provider I 177
ISP (Internet) 349
ISP with Telephony (Broadband) 125
National Long distance 26
International Long Distance 24
Broadband Internet:
• Total number of subscribers 7.8 million 11.0 million
Mobile services:
• Total number of subscribers 525million 760 million
• Annual growth 51% 44%
• Mobile penetration (population) 45% 64%
(Source: BuddeComm)
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2.5. National Telecom Policy (NTP)
announcement of NTP 1994 and was subsequently re-emphasized and carried forward
under NTP 1999. National Telecom Policy (NTP) 1994 was the first attempt to give a
Regulatory Authority of India (TRAI) was created. TRAI was formed to act as a
regulator to facilitate the growth of the telecom sector. New National Telecom Policy
was adopted in 1999 and cellular services were also launched in the same year5.
1997.
The entry of private service providers brought with it the inevitable need for
thus, established with effect from 20th February 1997 by an Act of Parliament, called
the Telecom Regulatory Authority of India Act, 1997, to regulate telecom services,
including fixation/revision of tariffs for telecom services which were earlier vested in
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TRAI’s mission is to create and nurture conditions for growth of
telecommunications in the country in manner and at a pace, which will enable India to
play a leading role in emerging global information society. One of the main objectives
level playing field and facilitates fair competition. In pursuance of above objective
TRAI has issued from time to time a large number of regulations, orders and
directives to deal with issues coming before it and provided the required direction to
multi operator multi service open competitive market. The directions, orders and
regulations issued cover a wide range of subjects including tariff, interconnection and
The TRAI Act was amended by an ordinance, effective from 24 January 2000,
(TDSAT) to take over the adjudicatory and disputes functions from TRAI. TDSAT
was set up to adjudicate any dispute between a licensor and a licensee, between two or
more service providers, between a service provider and a group of consumers, and to
hear and dispose of appeals against any direction, decision or order of TRAI.
the New Telecom Policy 1999 (NTP 99). The New Telecom Policy, 1999 (NTP-99)
was approved on 26th March 1999, to become effective from 1st April 1999. NTP-99
laid down a clear roadmap for future reforms, contemplating the opening up of all the
segments of the telecom sector for private sector participation. It clearly recognized
the need for strengthening the regulatory regime as well as restructuring the
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departmental telecom services to that of a public sector corporation so as to separate
the licensing and policy functions of the Government from that of being an operator.
It also recognized the need for resolving the prevailing problems faced by the
• Strengthening of Regulator
All the commitments made under NTP 99 have been fulfilled; each one of
them, in letter and spirit, some even ahead of schedule, and the reform process is now
complete with all the sectors in telecommunications opened for private competition.
Service Provider (FSPs), and Cellular Services. Fixed line services consist of basic
services, national or domestic long distance and international long distance services.
The state operators (BSNL and MTNL), account for almost 90 per cent of revenues
from basic services. Private sector services are presently available in selective urban
areas, and collectively account for less than 5 per cent of subscriptions. However,
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private services focus on the business/corporate sector, and offer reliable, high- end
services, such as leased lines, ISDN, closed user group and videoconferencing9.
Cellular services can be further divided into two categories: Global System for
Mobile Communications (GSM) and Code Division Multiple Access (CDMA). The
GSM sector is dominated by Airtel, Vodfone-Hutch, and Idea Cellular, while the
international and domestic long distance telephony services are the major growth
drivers for cellular industry. Cellular operators get substantial revenue from these
services, and compensate them for reduction in tariffs on airtime, which along with
rental was the main source of revenue. The reduction in tariffs for airtime, national
long distance, international long distance, and handset prices has driven demand.
The past decade has seen an exponential growth in the Indian Telecom Sector.
In the year 2000, Telecom Regulatory Authority of India (TRAI) Act was amended
and in 2001 Telecom Disputes Settlement And Appellate Tribunal (TDSAT) started
its functioning. In 2002, Bharat Sanchar Nigam Limited (BSNL) entered into GSM
cellular operation and made incoming calls free for the first time and since then there
is no looking back. Currently, the call rates in India are one of the lowest; to the
Despite the financial slowdown, the industry continued its high growth rate. In
2009 the Indian Telecom sector contributed 5.65 to the country’s Gross Domestic
Product (GDP) and attracted a Foreign Direct Investment (FDI) of over $2 billion.
India is Third in the world in terms of the number of Telecom subscribers. The Indian
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telecom industry had an awesome run in 2009, adding some 170 million phone
Compounded Annual Growth Rate (CAGR) of 65% during the last five years.
1) Rural India: Bridging the Telecom Divide: The emergence of Rural Market in
India provides an extensive market place for mobile industry. The adoption of 3G and
expand network coverage into the hinterlands of the country. With in a short span of 3
telecom innovation and technology. This can contribute towards inclusive growth by
making low cost handsets available that support affordable access in rural areas.
The production of telecom equipments as of March 2009 was INR 518 billion with a
CAGR of 29% during the last five years. At the same time INR 81 billion of telecom
equipments were exported with a CAGR of 100% during the last five years11.
3) VAS, Mobile Banking and M-commerce: Value Added Services (VAS) has an
immense potential to grow with services like Mobile banking and Mobile -commerce.
Content development, pricing and innovative strategies are the key factors for driving
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4) Exploring New Frontiers: With growing competitive pressure on all fronts and
the inevitable need to keep pace with emerging technologies globally, telecom
operators are re-examining their traditional business models and are making
Networks12.
Today the world of telecom has changed. Earlier there was just Reliance
Communications providing mobile phones at cheap rates but, now there are many
mobile phone operators providing mobile phone services at cheap prices. All this has
indeed helped consumers. The entry of AIRCEL was not expected to be good due to
the existing tough competition but now it has become one of the most successful
operators in the country. Competition is on the rise and even foreign companies like
UN1NOR are trying their luck in India. The growth in the telecom sector has led to
involved in Telecom industry will help the consumer gain to access the facilities like
video phone, high speed internet and streaming TV and all this because of the existing
competition.
The opening of the telecom sector has not only led to rapid growth in
subscriber base but also helped a great deal towards maximization of consumer
in tariffs. From only 54.6 million telephone subscribers in 2003, the number
increased to 429.7 million at the end of March 2009 and further to 562 million as on
October 31, 2009 showing addition of 2.49 million during the period from March to
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December 2009. With 525.1 million wireless connections, Indian telecom has
become the second largest wireless network in the world. Approximately 85 per cent
of the Eleventh Five Year Plan target of 600 million connections has already been
The opening of the sector has not only led to rapid growth but also helped a
great deal towards maximization of consumer benefits as tariff have been falling
across the board. From only 76.54 million telephone subscribers in 2004, the number
connections have contributed to this growth as their number rose from 35.62 million
in March 2004 to 729.58 million at the end of November 2010. The wire-line has
shown a decline from 40.92 million in 2004 to 35.19 million in November 2010.
The total number of telephone subscribers in the country was 826.25 million
as of Feb 2011. The total numbers of mobile phone subscribers have reached 791.38
million at the end of Feb 2011. The overall tele-density has increased to 69.29 % in
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Feb 2011. In the wireless segment, 20.20 million subscribers have been added in Feb
2011. The total wireless (GSM, CDMA & WLL (F)) subscribers’ base is 791.38
million as of Feb 2011. The wire line segment subscriber base stood at 34.87 million.
subscribers in the 12 months between Feb 2010 and Feb 2011 averaging at 18.97
percentage points from Feb 2010 and Feb 2011 (47.91% to 66.36%) while wire line
subscriber additions means that the Indian mobile subscriber base has shown a year
the year 2013. (However recent trends indicate that the event may occur earlier than -
as early as October 2011) It was also predicted that by 2013, the teledensity will shoot
up to 75% and the total mobile subscriber base would be a staggering 1.159 billion.
Given its spread, it is reasonable to expect that mobile telephony will exert an
between mobile tele-density and economic growth. Given its spread, it is reasonable
to expect that mobile telephony will exert an what fixed lines did in many other
regions and countries over two decades ago: widen markets, create better information
flows, lower transactions costs and substitute costly (in time and money) physical
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declining and projections now exclusively focus on mobile telephony. At the current
level of accretion of over 10 million wireless subscribers per month. This contrasts
dramatically with the situation in 1994, the year the National Telecom Policy was
drafted, when fewer than one in 100 Indians owned a phone. There are now over 350
The value of a mobile phone can be particularly high because other forms of
communication, such as postal systems, roads and fixed line networks, are often poor.
At the same time, in many developing countries, including India, growth has been low
due to a host of other reasons — poor governance, lack of capital, low skill levels and
many others. It is unlikely that increased mobile penetration by itself will be able to
States with high mobile penetration can be expected to grow faster than those
with lower mobile penetration rates by 1.2 percentage points for every 10 per cent
Not only can the mobile phone help nudge up the rate of growth, but it can also
the country. The three segments of the population — agriculture, small and medium
enterprise (SMEs) and urban slum dwellers are the beneficiaries of mobile phones.
efficiency improvements and, thereby, making it possible for the benefits of economic
growth to be shared.
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The telecom sector is also afflicted by a number of restraints. These include:
make inroads into this market segment as service providers have to incur a
revolution in the past decade and has played a major part in bridging the rural-urban
divide
With new players coming in, the intensity of competition in the industry has
increased, especially over the last few years. The market share of the telecom
companies reflects the fragmented nature of the industry, with as many as 15 players.
As of September 30, 2010, Bharti Airtel led the market with 20.8 per cent share,
Reliance (17.1 per cent), Vodafone (16.8 per cent), BSNL (11.4 per cent), Tata (11.5
per cent), Idea (10.8 per cent), Aircel (6.8 per cent), with the remaining share being
(TRAI) database16.
(TRAI), the number of telephone subscribers in the country reached 806.13 million at
the end of January 2011 from 787.28 million in December 2010, thereby registering a
growth rate of 2.39 per cent. With this the overall tele-density (telephones per 100
people) has touched 67.67. The wireless subscriber base has increased to 771.18
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million at the end of January 2011 from 752.19 million in December 2010, registering
operators added 14.69 million new subscribers in February 2011, taking the all-India
GSM cellular subscriber base to 555.06 million, according to the Cellular Operators
Association of India (COAI). The GSM subscriber base stood at 540.37 million at the
Bharti Airtel
Type Public
Industry Telecommunications
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Bharti Airtel Limited commonly known as Airtel, is an
Africa and the Channel Islands. It operates a GSM network in all countries,
the fifth largest tgelecom operator in the world with over 207.8 million subscribers
across 19 countries at the end of 2010. It is the largest in india, with over 152.5
million subscribers at the end of 2010. Airtel is the 3rd largest in-country mobile
Airtel also offers fixed line services and broadband services. It offers its telecom
services under the Airtel brand and is headed by Sunil Bharti Mittal. The company
also provides land-line telephone services and broadband Internet access (DSL) in
over 96 cities in India. It also acts as a carrier for national and international long
distance communication services. The company has a submarine cable landing station
at Chennai, which connects the submarine cable connecting Chennai and Singapore.
It is known for being the first mobile phone company in the world to outsource
everything except marketing and sales and finance. Its network (base stations,
Network and Huawei business support by IBM and transmission towers by another
company (Bharti Infratel Ltd. in India). Ericsson agreed for the first time, to be paid
by the minute for installation and maintenance of their equipment rather than being
paid up front. This enabled the company to provide pan-India phone call rates of Rs.
1/minute (U$0.02/minute). Call rates have come down much further. During the last
58
History
Sunil Bharti Mittal founded the Bharti Group. In 1983, Sunil Mittal was into an
telephone models for the Indian market. In 1986, Sunil Bharti Mittal incorporated
Bharti Telecom Limited (BTL) and his company became the first in India to offer
advantage allowed Sunil Mittal to expand his manufacturing capacity elsewhere in the
telecommunications market. By the early 1990s, Sunil Mittal had also launched the
country's first fax machines and its first cordless telephones. In 1992, Sunil Mittal
won a bid to build a cellular phone network in Delhi. In 1995, Sunil Mittal
Delhi. In 1996, cellular service was extended to Himachal Pradesh. In 1999, Bharti
Calcutta. Bharti Enterprises went public in 2002, and the company was listed on
Bombay Stock Exchange and National Stock Exchange of India. In 2003, the cellular
phone operations were rebranded under the single Airtel brand. In 2004, Bharti
acquired control of Hexacom and entered Rajasthan. In 2005, Bharti extended its
In 2009, Airtel launched its first international mobile network in Sri Lanka. In
2010, Airtel began operating in Bangladesh and 16 African countries. Today, Airtel is
the largest cellular service provider in India and fifth largest in the world.
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Vision: To be globally admired for telecom services that delight customers.
Mission: We will meet global standards for telecom services that delight
•Being Flexible - to adapt to the changing environment and evolving customer needs
•Making it Happen - by striving to change the status quo, innovate and energize new
ideas with a strong passion and entrepreneurial spirit
BSNL
The foundation of Telecom Network in India was laid by the British sometime
in 19th century. The history of BSNL is linked with the beginning of Telecom in
India. In 19th century and for almost entire 20th century, the Telecom in India was
operated as a Government of India wing. Earlier it was part of erstwhile Post &
In 1975 the Department of Telecom (DoT) was separated from P&T. DoT was
responsible for running of Telecom services in entire country until 1985 when
Mahanagar Telephone Nigam Limited (MTNL) was carved out of DoT to run the
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It is a well known fact that BSNL was carved out of Department of Telecom to
provide level playing field to private telecoms. Subsequently in 1990s the telecom
sector was opened up by the Government for Private Investment, therefore it became
01, 2000 and named it as Bharat Sanchar Nigam Limited (BSNL).BSNL operates as a
public sector.
BSNL
Industry
Telecommunication BSNL
Founded 19th century, incorporated 2000
Products Wireless
Telephone
Internet
Television
largest Indian cellular service providers, with over 86.4 million subscribers as of
March 2011, and the largest land line telephone provider in India. However, in recent
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years the company's revenue and market share plunged into heavy losses due to
BSNL is India's oldest and largest communication service provider (CSP). It had
except for the metropolitan cities of Mumbai and New Delhi, which are managed
by Mahanagar Telephone Nigam Limited (MTNL). As of June 30, 2010, BSNL had a
customer base of 27.45 million wireline and 72.69 million wireless subscribers.
BSNL then known as Department of Telecom had been a near monopoly during
the socialist period of the Indian economy. During this period, BSNL was the only
telecom service provider in the country MTNL was present only in Mumbai and New
wait for as long as five years to get a telephone connection. The corporation tasted
competition for the first time after the liberalisation of Indian economy in 1991. Faced
with stiff competition from the private telecom service providers, BSNL has
subsequently tried to increase efficiencies itself. DoT veterans, however, put the onus
for the sorry state of affairs on the Government policies, where in all state-owned
growth across all segments of the society. The corporation (then DoT), however,
failed miserably to achieve this and India languished among the most poorly
connected countries in the world. BSNL was bom in 2000 after the corporatisation of
DoT. The efficiency of the company has since improved little a bit. However, the
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Bharat Sanchar Nigam Ltd. formed in October, 2000, is World's 7th largest
India: Wireline, CDMA mobile, GSM Mobile, Internet, Broadband, Carrier service,
MPLS-VPN, VSAT, VoIP services, IN Services etc. Presently it is one of the largest
BSNL has installed Quality Telecom Network in the country and now focusing
on improving it, expanding the network, introducing new telecom services with ICT
million line basic telephone capacity, 8 million WLL capacity, 52 Million GSM
Capacity, more than 38302 fixed exchanges, 46565 BTS, 3895 Node B ( 3G BTS),
287 Satellite Stations, 614755 Rkm of OFC Cable, 50430 Rkm of Microwave
Network connecting 602 Districts, 7330 cities/towns and 5.6 Lakhs villages.
BSNL is the only service provider, making focused efforts and planned
initiatives to bridge the Rural-Urban Digital Divide ICT sector. In fact there is no
telecom operator in the country to beat its reach with its wide network giving services
in every nook and corner of country and operates across India except Delhi and
of the country. BSNL serves its customers with its wide bouquet of telecom services.
BSNL is numero uno operator of India in all services in its license area. The
company offers vide ranging and most transparent tariff schemes designed to suite
every customer.
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its rivals, with 35.1 million Basic Phone subscribers i.e. 85 per cent share of the
BSNL has more than 2.5 million WLL subscribers and 2.5 million Internet
Customers who access Internet through various modes viz. Dial-up, Leased Line,
DIAS, Account Less Internet(CLI). BSNL has been adjudged as the NUMBER ONE
infrastructure that provides convergent services like voice, data and video through the
same Backbone and Broadband Access Network. At present there are 0.6 million
Scaling new heights of success, the present turnover of BSNL is more than
Rs.351,820 million (US $ 8 billion) with net profit to the tune of Rs.99,390 million
(US $ 2.26 billion) for last financial year. The infrastructure asset on telephone alone
services and the desire to excel has made BSNL the No. 1 Telecom Company of
India.
infrastructure in its area of operation and to contribute to the growth of the country's
economy.
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Vodafone
November 2010. It operates networks in over 30 countries and has partner networks in
over 40 additional countries. It owns 45% of Verizon Wireless, the second largest
The name Vodafone comes from voice data fone, chosen by the company to
"reflect the provision of voice and data services over mobile phones".
Vodafone
Type Public limited company
Industry Telecommunications
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History
In 1980, Sir Ernest Harrison OBE, chairman of Recal Electronics Pic’s, the UK's
Weinstock of General Electric Company Pic to allow Racal to access some of GEC's
tactical battlefield radio technology. Briefing the head of Racal's military radio
division Gerry Whent to drive the company into commercial mobile radio, Whent
In 1982, Racal's newly formed subsidiary Racal Strategic Radio Ltd under CEO
Whent, won one of two UK cellular telephone network licences; the other going
to British Telecom The network, known as Racal Vodafone was 80% owned by
Vodafone was launched on 1 January 1985. Racal Strategic Radio was renamed Racal
Electronics bought out the minority shareholders of Vodafone for GB£110 million.
Under stock market pressure to realize full value for shareholders (the mobile
unit was being valued at the same amount as the whole Racal group), in September
1988, the company was again renamed Racal Telecom, and on 26 October 1988,
Racal Electronics floated 20% of the company. The flotation valued Racal Telecom at
GB£1.7 billion. On 16 September 1991, Racal Telecom was demerged from Racal
In July 1996, Vodafone acquired the two thirds of Talkland it did not already
purchased Peoples Phone for £77 million, a 181 store chain whose customers were
66
the 80% of Astec Communications that it did not own, a service provider with 21
stores23.
circle; the O's in the Vodafone logotype are opening and closing quotation marks,
suggesting conversation.
Communications, Inc. and changed its name to Vodafone Airtouch pic. Trading of
the new company commenced on 30 June 1999. To approve the merger, Vodafone
sold its 17.2% stake in E-Plus Mobifunk. The acquisition gave Vodafone a 35% share
On 21 September 1999, Vodafone agreed to merge its U.S. wireless assets with
those of Bell Atlantic Corp to form Verizon Wireless. The merger was completed on
4 April 2000.
was rejected. Vodafone's interest in Mannesmann had been increased by the latter
purchase of Orange, the UK mobile operator. Chris Gent would later say
each other's home territory. The hostile takeover provoked strong protest in Germany,
and a "titanic struggle" which saw Mannesmann resist Vodafone's efforts. However,
then the largest corporate merger ever. The EU approved the merger in April 2000.
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On 28 July 2000, the Company reverted to its former name, Vodafone Group
pic. In April 2001, the first 3G voice call was made on Vodafone United Kingdom's
3G network.
company in the Republic of Ireland, from eircom. Eircell was subsequently rebranded
by signing TDC Mobil of Denmark. The new concept involved the introduction of
Vodafone international services to the local market, without the need of investment by
Vodafone. The concept would be used to extend the Vodafone brand and services into
markets where it does not have stakes in local operators. Vodafone services would be
marketed under the dual-brand scheme, where the Vodafone brand is added at the end
in a mobile world.
Vodafone is primarily a user of technology rather than a developer of it, and this
fact is reflected in the emphasis of its work programme on enabling new applications
of mobile communications, using new technology for new services, research for
technology vision and leadership that can contribute directly to business decisions24.
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Idea
Pradesh. When Birla-AT&T brought Maharashtra and Gujarat to the table, the merger
Then Idea set sights on RPG’s operations in Madhya Pradesh which was
successfully acquired, helping Batata have a million subscribers, and the licence to be
In 2004, Idea (the company had by then been rechristened) bought over the
Escorts group’s Escotel gaining Haryana, Uttar Pradesh (West) and Kerala — and
licences for three more — UP (East), Rajasthan and Himachal Pradesh. By the end of
that year, four million Indians were on the company’s network. In 2005, AT&T sold
its investment in Idea, and the year after Tatas also bid good bye to pursue an
independent telecom business. And Idea was left only with one promoter, the AV
Birla group. When the company's stock listed on the bourses in March 2007, its
subscriber base was 13 million with presence in 11 circles. In less than three years,
the subscriber numbers have more than quadrupled. The public issue was
oversubscribed 50 times and raised Rs 2,450 crore.In June 2008, Idea Cellular bought
out BK Modi’s stake in Spice Communications for Rs 2,700 crore adding Punjab and
Karnataka circles. Modi’s joint venture partner, Telekom Malaysia, invested Rs 7,000
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crore for a 14.99% stake in Idea. Just around then, Idea’s subsidiary, Aditya Birla
Telecom sold a 20% stake to US-based Providence Equity Partners for over Rs 2,000
crore.
Idea
Type Public
Industry Telecommunications
Idea
Founded 1995
Products Mobile
History
1995 and granted a certificate of commencement of business on August 11, 1995. its
registered office was in Mumbai, Maharashtra. The company name was changed to
Birla AT&T Communications Limited on May 30, 1996 following the execution of a
joint venture agreement dated December 5, 1995 between AT&T Corporation and
70
Grasim Industries Limited pursuant to which the Aditya Birla Group held 51% of our
Equity Share capital and AWS Group held 49% of our Equity Share capital. The
registered office was transferred from Industry House, 1st Floor, 159 Church Gate
Reclamation, Mumbai 400 020, Maharashtra to Suman Tower, Plot No. 18, Sector 11,
Gandhinagar 382011 Gujarat on October 22, 1996. With effect from January 1, 2001
following our merger with Tata Cellular Limited the joint venture agreement between
AT&T Corporation and Grasim Industries Limited dated December 5, 1995 was
replaced by a shareholders agreement dated December 15, 2000 entered into between
Grasim Industries Limited on behalf of Aditya Birla Group, Tata Industries Limited
on behalf of Tata Group and AT&T Wireless Services Inc. on behalf of AWS Group
following which our name was changed to Birla Tata AT&T Limited on November 6,
2001. Consequent to the introduction of'Idea' brand, our name was changed to Idea
Cellular Limited on May 1, 2002. The AWS Group exited from the Comp, on
September 28, 2005 by selling 371,780,740 Equity Shares of the Company, which
constituted 50% of holding of AT&T Cellular Private Limited in its equity share
Tata Industries Limited. The Tata Group ceased to be a shareholder of Comp, on June
20, 2006 when Tata Industries Limited & Apex Investments [Mauritiuss] Holding
Private Limited [formerly known as AT&T Cellular Private Limiteds] sold all their
acquired 14.60% of its Equity Share capital. Under a Governance and Exit Rights
Agreement dated October 23, 2006 between P5 Asia, ABNL & Birla TMT, so long as
an initial public offering has not occurred and P5 Asia holds no less than 10% of its
Equity Shares, ABNL and Birla TMT are required to procure that [as] Comp.and its
71
Subsidiaries shall not take or pursue any of following actions without P5 Asia prior
consolidation with another Comp, or business; [ii] assuming or permitting to exist any
borrowings of its Comp, and its Subsidiaries would exceed Rs. 6,800 million; [iii]
entering into a new line of business; [iv] increasing our authorized or issued share
capital; or [v] entering into a joint venture and [vi] our Comp, makes available to P5
Asia certain financial information relating to its Comp, and its Subsidiaries such as
monthly management accounts, quarterly unconsolidated balance sheet and profit and
loss Acc. And the annual audited consolidated balance sheets and profit and loss
accounts.
services in the Andhra Pradesh, Delhi, Gujarat, Haryana, Kerala, Madhiya Pradesh,
Maharashtra & Uttar Pradesh [Wests] Circles, and have recently launched services
and as such are in the process of fully rolling-out our network in the Uttar Pradesh
[Easts], Rajasthan & Himachal Pradesh Circles pursuant to licenses issued by DoT.
Reliance
the 16th largest operator in the world with more than 128 million subscribers. RCOM,
Reliance Anil Dhirubhai Ambani Group. The Reliance Anil Dhirubhai Ambani Group
currently has a net worth in excess of ?64,000 crore (US$ 13.6 billion), cash flows of ?
72
13,000 crore ($2.8 billion), and a net profit of ?8,400 crore ($1,8 billion).
Limited and National Stock Exchange Limited. The Global Depository Receipts and
Reliance Communications
Type Public
/V
Industry
Founded
Telecommunications
2004
/\W
mm
ReuANce
Communications
Headquarters Navi Mumbai, Maharashtra,India
73
Vision
to all individual consumers and businesses in India. The company will offer
unparalleled value to create customer delight and enhance business productivity. The
company will also generate value for its capabilities beyond Indian borders and enable
Mission
The successful rolling out of real broadband services across the nation marks the
revolution in India. Reliance Communications is setting new standards for the world
encoding. The mass roll out of broadband being carried out by Reliance
Communications across the length and breadth of the country, offering speeds of up to
entire nationwide network is being conceptualized and built from ground zero.
74
weak infrastructure, and help tide over the challenges of distribution in a vast country
like India.
The company mission of changing lives across India meant that we needed to
time. Dream of helping people create, transfer and apply knowledge challenged the
world.
Tata Indicom
In Nov 2008, Japanese telecom giant NTT Docomo picked up a 26 per cent
equity stake in Tata Teleservices for about Rs 13,070 crore ($2.7 billion) or an
In Feb 2008, TTSL announced that it would provide CDMA mobile services
targeted towards the youth, in association with the Virgin Group on a Franchisee
model basis.
75
Tata Indicom
Type Private
Industry Telecommunications
Products Wireless
Telephone
Internet
Television
Website Tatateleservices.com
History
international voice and data services. Tata Teleservices Limited (TTSL) is a part of
the Tata Group of companies, an Indian conglomerate. It runs under the brand name
Tata Indicom in India, in various telecom circles of India. The company forms part of
the Tata Group's presence in the Telecommunication Industry in India, along with
LTD.
76
TTSL is offering CDMA mobile services targeted towards the youth, in a
robust and technologically superior path and an ecosystem. CDMA has an edge over
GSM as it allows more communication to be carried with the same infrastructure and
also brings costs down. Tata Indicom’s enterprise solutions work on the CDMA 3G-
IX technology that offers superior voice clarity and congestion-free networks. Many
nationwide, which includes 10,000 for TTSL and 2,500 for TTML. This Tata Indicom
is also the most familiar mobile company and it launches the CDMA to the peoples.
This CDMA facility was used by Reliance and TATA Indicom. This CDMA Sim
cannot be used in other mobiles like nokia, soniericsson and etc. This card CDMA can
be used only the CDMA make up mobiles which will be given to the customers at
the GSM platform-arising out of the Tata Group's strategic joint venture with
Japanese telecom giant NTT Docomo in November 2008. Tata Teleservices received
a license to operate GSM telecom services in 19 telecom Circles and has been allotted
spectrum in 18 of these circles, under the brand "TATA DoCoMo". Tata Docomo
launched GSM services on 24 June 2009. It first launched in South India and
77
currently operates in 18 of 22 telecom circles. It has licence to operate in Delhi but
has not been allocated spectrum from the Government. Tata Teleservices is the
country's fifth largest operator in terms of wireless subscribers (including both CDMA
and GSM), after Bharti Airtel, Reliance Communications and Vodafone and state run
player BSNL. Tata DOCOMO offers both prepaid and postpaid GSM cellular
phone network in 18 circles. It has become very popular with its one second pulse
On 5 November 2010, Tata DOCOMO became the first private sector telecom
company to launch 3G services in India . Tata DOCOMO had about 42.34 million
Vision: To represent ourselves as the most preferred Human Resource Supplier in the
corporate sector.
Mission: Service Mission: Provide our clients with the quality and efficiency that sets
the benchmark for the world’s back offices and “Help our clients deliver outstanding
Major Investments
The booming domestic telecom market has been attracting huge amounts of
investments which are likely to accelerate with the entry of new players and launch of
(DIPP), the telecommunications sector which includes radio paging, mobile services
78
and basic telephone services attracted foreign direct investment (FDI) worth US$ 1.33
billion during April-January 2010-11. The cumulative flow of FDI in the sector
end of January 2011. Tele-density being 32.11, rural India holds 33.21 per cent share
in the total telecom subscriber base. The wireless connections have contributed
January 2011, increasing 3.2 per cent from 250.89 million in December 2010.
The number of internet users in rural India is estimated to have risen by 30 per
cent to 5.4 million in 2010, according to a joint study conducted by the Internet &
The private sector has contributed crucially to the growth of rural telephony by
providing 84.5 per cent of the connections as of November 2010. Further, the
as roads, power and electricity are to a nation’s progress. A McKinsey study states
that a 10 per cent increase in tele-density contributes 0.6 per cent of GDP growth. As
the next phase of growth in the telecom sector will mostly come from rural markets,
79
rural India to the outside world through its own and USO (universal service
obligation) initiatives. The company’s slogan is: Go rural and win laurels.
Even as services like music downloads and videos transform mobile phones
into virtual entertainment gadgets, new initiatives like mobile commerce, mobile
money transfer, mobile banking and mobile payments are set to redefine the limits of
mobile telephony in future. Take for instance the facility of money transfer. Imagine
over $25 billion of foreign remittances and over $10 billion of domestic money
transfers happening in real time over the mobile phone. When fully activated, a
migrant laborer from Bihar will be able to send a few hundred rupees from a remote
As one moves into the future, new technologies like 3G are going to open up
the country. Services like high speed internet on the mobile phone will be a reality.
These networks are going to play a critical role across the rural-urban divide. Rural
development initiatives like e-governance, e-health and e-education will receive a big
boost once operators roll out their 3G networks. Here too it is the end use of the
technology and its impact on human lives that is going to hold the key. Indian
telecom has benefited immensely from such a perspective in the past. It will continue
to do so in future as well.
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Today over 65 Indians in a 100 have access to telecom services compared to
less than three in 1999, the country has truly come a long way in just one decade
thanks to the mobile phone. No other sector in post liberalization India has seen such
growth and had such a positive impact on the economy. The government and the
telecom regulator must be commended for this success story, which would not have
been possible without their visionary policies. The other key factor has been the
ability of Indian telecom operators to develop a low-cost model that has made the
model is today being replicated not just in India but in other parts of the world as well.
The second phase of growth empowered Indians to connect and gave them an
opportunity to ‘talk’. Barriers and distances got dissolved as affordability had a new
meaning. This growth on 2G technology was largely led by voice. The third phase,
which is the coming decade, of telecom growth in India will mirror the growth of its
economy. Rural India is the new growth engine of the Indian economy and with a
rural telecom penetration of about 15 per cent there is huge scope for extending
than two cents a minute, the lowest ever witnessed anywhere in the world, the sector
witnessed rapid customer additions. Some of the innovative strategies that opened the
floodgates came in the shape of tariff plans like Life Time Prepaid, which managed to
rope in hordes of lower middle class consumers into the network. Complementing
these tariff plans, prices of handsets too fell significantly bringing down the entry cost
81
for new customers. Today, one can see a maid servant or a daily wage laborer talking
Low tariffs had, however, created a challenge of survival for the operators.
They had to bring in all their innovative skills to stay afloat. It is a tribute to the
industry that the operators have managed to remain profitable despite this low a tariff
regime.
Alongside low tariffs and low handset prices what is fuelling today’s mobile
growth however is the innovative use of the device. It has assumed a much-
diversified role in Indian lives. Selling at village pan shops like pouches of chewing
tobacco, mobile connections constitute modern India’s most powerful movement that
touches the lives of the ordinary and the powerful in the same vein. A service like
SMS has clearly added a new dimension to communication. Value Added Services
like ring back tones and music downloads have transformed the phone into a potent
entertainment and lifestyle device. A mobile phone today obviously is a much more
versatile gadget than the fixed line voice only phone or even the mobile phones of the
early days.
There is going to be a significant shift in the level of customer focus and new
product offerings in the sector in the coming years. Money transfer over the mobile
and m-commerce are tipped to be the next best thing to happen after SMS and Hello
Tunes. Airtel in partnership with the global money transfer major Western Union will
soon launch this service. This will enable millions of Indians working abroad to
easily transfer money to their families backing India via their mobile phones. They
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The expansion of the sector will be driven by new service introductions in the
space of educational content, gaming, music and movies. The urban consumer’s
desire for music, entertainment, sports and games will be fulfilled through new
service introductions.
The industry will not only be able to maintain this rapid pace of penetration but
will also make telephony a more wholesome experience its customers, the Indian
telecom market will also be teaching new ways of working to global operators. The
new business models and the innovative services will create new benchmarks for
others.
(GSM arm of Tata Teleservices), had sounded the war cry in the telecom space. In
the few months since this plan was introduced, Tata DoCoMo became the largest
incremental market-share gainer in the telecom space with four million subscribers
added in September 2009. RCom joined the battle soon, offering Rs.50 paise a
minute for all calls, local and STD. Uninor (a joint venture between Telenor and
Unitech Wireless), a more recent entrant, has offered calls at 29 paisa per minute. In
October, almost all the operators started offering one paisa per second tariffs. This
million subscribers a month in 2008. This makes India the second fastest growth
market for mobile services in the world. But an analysis of the top four private
83
telecom players (Bharti Airtel, Vodafone Essar, Reliance Communications and Idea
Cellular), which account for nearly 80 per cent of the mobile market.
from 0.2 million in 2005 to 6.2 million by end-April 2009 and about to 7.98
penetration and affordability issues due to high cost. The government has issued
which will enhance broadband penetration. Wi-Max has been making headway in
2010 has been set in broadband policy. The auction of BWA spectrum has been
successfully conducted. Newer Access technologies like Broad Band Wireless Access
India, this will encourage further expansion of wireless service with a vision of
• 3G Telecom services: The explosive growth of the telecom industry has kindled
the urge to move towards better technology. One of the key frontiers is the launch
84
opportunity as also foreign players to make an entry into the Indian market and
• Mobile Number Portability (MNP) : MNP allows any subscriber to change his
service provider without changing his mobile phone number. With the
• Value added Services (VASs): Mobile VASs include, text or SMS, menu-based
services, downloading of music or ring tones, mobile TV, videos, streaming, and
education, VASs other than SMS are gaining importance. It is expected that over
the next few years, non-SMS services would become a dominant contributor to
VAS revenue.
currently, the VAS market is worth US$ 2.45 billion-US$ 2.67 billion, which is
around 10 per cent of the total revenue of the wireless industry. The share of VAS
in wireless revenue is likely to increase to 12-13 per cent by 2011, on the back of
increased operator focus on VAS due to continuous fall in voice tariffs, increasing
telecom equipment using state-of-the-art technology. The last few years saw many
85
production of telecom equipment in value terms increased from Rs 41,270 crore
large talent pool in R&D and low labour cost can provide an impetus to the
crore in 2002-03 to Rs 1,10,00 crore in 2008-09 accounting for 21 per cent of the
million rural connections by the end of the Eleventh Five Year Plan. Recognizing
the potential importance of broadband services, the Eleventh Five Year Plan
targets providing broadband to all secondary and higher secondary schools, Public
industry in India is being followed by the urge to move towards better technology
and the next level of service delivery. While the last few years have been
transformational for Indian telecom industry, the next few years look even more
exciting
A key benefit for all service providers comes from reduced costs in operations,
as well as marketing and sales: after all, services can now be advertised, packaged and
delivered under a single brand and on one network. The convergence of multiple
networks allows operators therefore to bundle services and provide them at lower cost
while the business logic of bundling makes the cost of building new, converged
86
The following table illustrates the gradual increase in monthly mobile subscriber
A v erag e M o n th ly
A d d itio n s(in
A d d itio n s(in
S ep tem b er
N o v em b er
D ecem b er
F e b ru a ry
m illions)
m illions)
O c to b e r
J a n u a ry
A n n u al
A u g u st
M arch
A p ril
Y ear
Ju n e
M ay
Ju ly
2002 0.28 0.35 0.41 0.28 0.29 0.35 0.36 0.49 0.37 0.53 0.72 0.8 5.23 0.44
2003 0.64 0.6 0.96 0.64 2.26 1.42 2.31 1.79 1.61 1.67 1.9 1.69 17.49 1.46
2004 1.58 1.6 1.91 1.37 1.33 1.43 1.74 1.67 1.84 1.51 1.56 1.95 19.49 1.62
2005 1.76 1.67 0.73 1.46 1.72 1.98 2.45 2.74 2.48 2.9 3.51 4.46 27.86 2.32
2006 4.69 4.28 5.03 3.88 4.25 4.78 5.28 5.9 6.07 6.71 6.79 6.48 64.14 5.35
2007 6.81 6.21 3.53 6.11 6.57 7.34 8.06 8.31 7.79 8.05 8.32 8.17 85.27 7.11
2008 8.77 8.53 10.16 8.21 8.62 8.94 9.22 9.16 10.07 10.42 10.35 10.81 113.26 9.44
2009 15.41 13.82 15.64 11.90 11.58 12.04 14.38 15.08 14.98 16.67 17.65 19.10 178.25 14.85
2010 19.90 18.76 20.59 16.9 16.31 17.98 16.92 18.18 17.1 18.98 22.88 22.62 227.12 18.93
Telephone statistics
Telephone System-. The country is divided into several zones, called circles (roughly
along state boundaries). Government and several private operators run local and long
distance telephone services. It was thrown open to private operators in the 1990s.
Competition has caused prices to drop and calls across India are one of the cheapest in
87
the world. The rates are supposed to go down further with new measures to be taken
Landlines: In India landline service is firstly run by BSNL/MTNL and after there are
several other private players too, such as Airtel, Reliance Infocomm, Tata
Teleservices and Touchtel. Landlines are facing stiff competition from mobile
telephones. The competition has forced the landline services to become more
efficient. The landline network quality has improved and landline connections are
Mobile Cellular: The mobile telephone network has aggrandized greatly since 2000.
The number of mobile phone connections crossed fixed-line connections in Sept 2004
and currently there are an estimated 791.38 million mobile phone users in India 111
compared to 34.87 million fixed line subscribers [l1. 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 Aircel, Vodafone, Airtel, Tata Indicom, Tata
There are many smaller players, with operations in only a few states. International
roaming agreements exist between most operators and many foreign carriers.
Dialing System: On landlines system, intra circle calls are considered local calls
while inter circle are considered long distance calls. Government is now 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 Delhi, you would dial 011-XXXX XXXX).
For international calls, you would dial "00" or “+” and the country code+area
88
Call Rales Cutting Blows: The rates of Communication in India were one of the
highest in the world, till a few years back. The rates could not be justified by the fact
that rupee is cheaper. In fact the Indian sub continent had shown a calm tolerance
towards the high rate in even in telecom. The rates were also justified as the
government has to feel the high cost involved in the one-time developments like
satellite and telephone tower related charges. But now owing to better technologies
the telecom rates in India are on the verge of becoming cheaper. The time may not be
far when India will have the cheapest communication. One of the enabling
technologies behind this is the brain child of an able Indian engineer Sandipan
reach this goal. The technology is now patented and details are not available. There is
Out of the total 826.25 Million mobile subscribers, 562.98 Million subscribers
were active subscribers in VLR on the last working day of the month i.e, 28th Feb
2011. The total active VLR number excludes the CDMA VLR figure of BSNL, as the
service provider has not provided the VLR figures corresponding to their total CDMA
subscriber base of 5.47 million. The proportion of VLR subscribers is 71.14 % of the
Internet Users: Number of Internet users in India is the 3rd largest in the world next
only to China and the United States of America. Though the number of internet users
is high, internet penetration is still much lower than most countries across the globe. It
89
must also be noted that 40% of all internet users in India are connected to the net only
Internet Service Providers (ISPs) <& Hosts: 86.571 (2004) Source: CIA World Fact
Book
Bharti consolidates its number one position and now has more than 1 /5th of total
Indian Mobile market (20.70 percent). Reliance (16.89) and Vodafone (16.70) are still
running neck to neck. Tata is a distant 4th with 11.44 percent market share followed
by Idea (10.76%).
The battle is vicious because the prize is tempting. The Indian telecom market
is the fastest growing, globally. From 65 million subscribers in 2005, it grew to 146
million by end 2006, and then to 346 million by 2008. In the past few years, an
average of 10 million subscribers was added per month. Since August 2009, 15
million new subscribers are getting added every month. TRAI projects that India will
90
have over 500 million subscribers by end December. (European Union-27 has only
600 million subscribers, says Sharifah Amirah, principal analyst for ICT, Frost &
Sullivan, Europe. Only a million are added a month. The US adds only 2-3 million
subscribers per month on a total base of 280 million. Even China adds only 7-8
Price War: A new front was opened when Tata DoCoMo introduced per-second
billing instead of the earlier minute-based billing. Almost all operators followed, with
lower and lower tariff plans. So much so that questions are being raised on the
Source: BW research
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
91
regulatory framework for offering telecom services to the Indian consumers at
affordable prices. Presently, all the telecom services have been opened for private
participation.
In the rural area teledensity increased from 1.49% in Mar 2003 to 15.11% in March
2009 and in the urban areas it is increased from 14.32% in Mar 2003 to 88.84% in
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
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 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.
More and more entertainment will be delivered through mobility. Indians will
click through the Net more on mobiles and less on laptops. Mobility will move from
voice and SMS to a host of value added services. All services that were delivered
92
from a physical building in the West and in urban India will now be delivered over the
26
air
increasingly use the digitized route to superior governance. Mobility will considerably
reduce the role of the middleman in commerce and the role of unscrupulous elements
of markets and information. This will create a huge pressure on elected representative
to be answerable. Mobility will give marketers the ability to target one consumer at a
through significant policy reforms. The reforms began in 1980s with telecom
equipment manufacturing being opened for private sector and were later followed by
National Telecom Policy (NTP) in 1994 and NTP’1999. Historically, the telecom
natural monopoly and strategic service, best under state's control. However, in 1990's,
quality of service and lower tariffs, led Indian policy makers to initiate a change
process finally resulting in opening up of telecom services sector for the private
sector.
93
References:
94
22. Arunima Mishra, “Wynn Telecom: Winning ambitions” - The Strategist - Sep. 2,
2010.
23. Akhilesh Shukla, “Nokia; Now Last in Customer Satisfaction” Business and
Economy - 25-11-2010
24. Steven Philip Warner, “Motorola - Hard to Ignore, Hard to See!”- Business and
Economy -25-11 -2010.
25. Train, Kenneth E. Daniel L. McFadden, and Moshe Ben-Akiva. "The Demand for
Local Telephone Service: A Fully Discrete Mode! of Residential Calling Patterns
and Service Choices" Rand Journal of Economics 18 (1987): 109-123.
26. Krishna Gopalan, “Knockout” - Outlook Business - June 25, 2011.
95