India - Telecoms, Mobile, Broadband and Forecasts

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India - Telecoms, Mobile, Broadband and Forecasts

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India feels more shockwaves from the so-called '2G scandal' India continues to be one of the fastest growing major telecom markets in the world. It is also one of the largest. Sweeping reforms introduced by successive Indian governments over the last decade have dramatically changed the nature of telecommunications in the country. The mobile sector has grown from around 10 million subscribers in 2002 to pass the 900 million subscriber mark by early 2012 and the market was continuing to grow. The boom in the country's mobile industry is expected to continue at least into the medium term, despite the dramatic events surrounding the licensing of mobile operators. By early 2012 the impact of the unfolding scandal over the awarding of 2G licences in 2008 was looking grim for both India and its mobile telephone sector. They cancellation of some 122 mobile licences having been the direction of the Supreme Court decision on the case, the subsequent responses of the industry regulators are key to the future shape of the industry in India.

A number of factors have been responsible for the amazing growth in India's telecom sector; apart from the obvious booming economy and the rapid expansion in the country's middle class, the growth drivers include low tariffs, low handset prices and most notably a highly competitive market created by the government and the regulator. The government has continued to open the market up to more and more competition. Home to a clutch of global operators working with local companies, the government has continued to issue licences to new telecom operators. Competition in the market place has become even more intense over the last year or so. The launch of Mobile Number Portability (MNP) in 2011 added yet another dimension to this intensely competitive market.

While the mobile subscriber base was continuing to grow at an annual rate of around 20% coming into 2012, Average Revenue Per User (ARPU) has been steadily declining as competing operators offer cheaper tariffs; at the same time usage levels have remained reasonably high thus slowing the decline in revenues. There has been a major push in recent years to take mobile services into the poorer and rural areas of the country; this has also weighed heavily on ARPUs.

In 2010 the long-awaited 3G auctions finally took place. This subsequently saw 3G networks being rolled out on a large scale across the country and the operators have started delivering next generation services to customers. Although still struggling with coverage issues, 3G has certainly given yet another boost to the already huge mobile sector. Apart from the impact on the mobile market itself, the 3G spectrum auction earned revenue of US$14.6 billion for the government, an amount that far exceeded expectations and was welcomed by the government as a major contribution to improving the national deficit. All things considered – and despite the 2G scandal and its aftermath - the mobile industry should continue to grow for the time being.

As for the rest of the market, the country's fixed-line sector, having grown strongly for a while, has been experiencing zero and negative growth of late. With less than 3% fixed-line penetration, India has nevertheless achieved a remarkable national coverage, with 98% of the population having some form of access to a telephone. It has been the heavy investment in telecoms infrastructure over the last decade that has seen India's huge population delivered at least some level of telephone service. At the same time major difficulties persist. Fixed-line subscriber numbers stood at just over 30 million by early 2012, but a continuing decline in this segment of the market was evident. The future of fixed lines remained uncertain.

And, in the meantime, there has been a fresh effort made to promote broadband internet access throughout the country; after a period in which broadband development languished - and the government became concerned - there was new hope for a serious expansion phase in this segment of the market. The segment has continued to puzzle the observer – and the government. Despite the obvious enthusiasm for internet access found across the country, India's move into high-speed broadband internet has been noticeably sluggish. The TRAI in describing the situation in 2010 noted that '... the performance so far has not been up to the expectations'. The regulator's reference point was the targets set in the government's National Broadband Policy issued in 2004, with growth falling well short of these targets. By 2011 broadband internet penetration in India was still a low 1%, with these broadband services accounting for about 60% of the total internet subscriber base. In other words, coming into 2012 there were just over 13 million broadband subscribers in a country of 1.2 billion people. In the meantime, somewhat paradoxically, the overall level of internet usage seems to be growing strongly, perhaps boosted by the widespread use of internet cafes and other points of public online access. There were in excess of an estimated 80 million internet users throughout the country by January 2011, this representing a penetration of almost 7%.

With the government continuing to push to complete the restructuring of the telecommunications regulatory regime, the opening up of the market to full scale competition has been dramatic. The Telecom Regulatory Authority of India (TRAI) remains committed to further structural reforms. The adoption of Unified Licensing, a change in the Access Deficit Charge regime, and the encouragement of increased infrastructure sharing, especially towers for mobile networks, were all contributing to ongoing growth. Another important initiative has been the Indian government's revised Foreign Direct Investment (FDI) policy which increased the foreign ownership cap from 49% to 74%. If anything it could be said that the regulation of the market has been overly enthusiastic; there being some signs that the market was starting to suffer from the complexity of the regulatory regime. In parallel with the regulatory change process, there has been a continuing evolution of the market through a series of mergers and takeovers among the mobile operators that has initially resulted in a welcome and productive consolidation.

Key highlights

Through 2011 and into 2012, growth in India's mobile market was continuing, but more modestly than in previous years; By January 2012 the country around 900 million mobile subscribers, for a penetration of 74%;The mobile market was continuing to expand at an annual rate in excess of 20% into 2011;GSM was strengthening its position as the dominant mobile technology with 85% of the mobile subscriber market, as CDMA slipped further behind; The number of broadband Internet subscribers is finally on the increase, reaching 13.3 million for a penetration of 1.1% by population by end-2011;DSL, whilst holding around 85% of the local broadband market, was steadily losing market share to other non-DSL broadband platforms, especially to wireless broadband platforms; After auctioning 3G spectrum licences in 2010, India was finally witnessing the large scale roll-out of 3G networks by operators across the country; The 3G auction delivered US$14.6 billion in revenue to the government and was certainly an unqualified success in this respect; An equally high profile auction of wireless broadband spectrum followed the 3G auction in 2010 and pumped even more energy into an already invigorated wireless broadband market; This auction raised another US$8.2 billion in revenue for the government. India: Key telecom parameters – 2011 - 2012

Category | 2011 | 2012 (e) |

Fixed-line services: |   |   |

Total No. of subscribers | 32.7 million | 32.0 million |

Annual growth | -7% | -2% |

Fixed-line penetration (population) | 2.7% | 2.6% |

Fixed-line penetration (household) | 18% | 18% |

Broadband: |   |   |

Total No. of subscribers | 13.3 million | 16.0 million |

Annual growth | 21% | 20% |

Broadband subscriber penetration (population) | 1.1% | 1.3% |

Broadband subscriber penetration (households) | 5% | 6% |

Mobile services: |   |   |

Total No. of subscribers | 894 million | 1,050 million |

Annual growth | 19% | 17% |

Mobile penetration (population) | 73% | 85% |

(Source: BuddeComm)

1. Key Statistics and Country Overview

2. Country overview

2.1 Background

2.2 Economy

3. Telecommunications Market

3.1 Overview

3.2 Competition

3.3 2G corruption scandal

3.3.1 Allegations

3.3.2 Charges

3.3.3 Court decision, appeal and aftermath

3.4 Analysis: 2G scandal - 2011

3.5 Analysis: India in the aftermath of the global financial crisis

3.6 Third Generation (3G) auction

3.7 WiMAX/wireless broadband spectrum auction

3.8 Further allocation of wireless spectrum

3.9 Foreign investment

3.9.1 Import of Chinese telecom equipment

3.10 Universal service

3.11 Government revenue

4. Regulatory Environment

4.1 Telecommunications authorities

4.1.1 Ministry for Communications (MoC)

4.1.2 Department of Telecommunications (DoT)

4.1.3 Telecom Commission

4.1.4 Telecom Regulatory Authority of India (TRAI)

4.1.5 Telecom Dispute Settlement & Appellate Tribunal (TDSAT)

4.1.6 Telecom Sector Ombudsman (TSO)

4.1.7 Communications Commission of India (CCI)

4.2 Licensing circles

4.3 Subscribers statistics

4.4 Regulatory developments

4.4.1 Overview

4.4.2 Censorship issues

4.4.3 New spectrum policy

4.4.4 Penalties for delayed roll-out

4.4.5 Spectrum 'vacation'

4.4.6 Cancelled licences

4.4.7 Access Deficit Charge (ADC)

4.4.8 Excess bandwidth fees

4.4.9 Unified Access Services Licence (UASL)

4.4.10 Basic Telephone Service (BTS) licensing guidelines

4.4.11 The 'fixed' mobile story

4.4.12 Offshore investment

4.4.13 The Blackberry privacy case

4.4.14 Spectrum charges

4.4.15 Spectrum in 2014

4.5 National Telecom Policies

4.5.1 National Telecom Policies 1999 (NTP-99)

4.5.2 Addendum to NTP-99

4.5.3 New National Telecom Policy

4.5.4 National Broadband Policy 2004

4.5.5 Universal Service Obligation Fund (USOF)

4.6 National security

5. Major Operators in India

5.1 Market overview

5.2 Unified Access Service Licences (UASL)

5.3 Mergers and acquisitions

5.4 BSNL/MTNL

5.5 Operator and market statistics

5.5.1 Mobile market

5.5.2 Fixed-line market

5.6 Operators overview

5.6.1 Aircel/Dishnet

5.6.2 Bharat Sanchar Nigam Ltd (BSNL)

5.6.3 Bharti Airtel

5.6.4 Data Access

5.6.5 Etisalat DB Telecom (Swan Telecom)

5.6.6 Hughes Telecom

5.6.7 Idea/Spice

5.6.8 Loop Mobile (formerly BPL Mobile)

5.6.9 Mahanagar Telephone Nigam Limited (MTNL)

5.6.10 Reliance Communications

5.6.11 Sistema

5.6.12 Spice Telecom

5.6.13 S Tel

5.6.14 Tata Teleservices

5.6.15 Uninor (Unitech)

5.6.16 Videocon

5.6.17 Vodafone Essar (formerly Hutchison Essar Telecom)

5.7 Other operators and service providers

5.7.1 Mobile operators

5.7.2 Fixed network operators

5.7.3 Internet Service Providers (ISPs)

5.7.4 For more information on VoIP services in India, see chapter REF _Ref297719279 \r \h Foreign Exchange transactions

5.7.5 Censorship of social media sites

5.7.6 Internet policy: background

5.7.7 Internet policy: development

5.7.8 National Internet Exchange of India (NIXI)

5.7.9 Censorship and security

5.7.10 International connectivity

6. Telecommunications Infrastructure

6.1 National infrastructure

6.1.1 Overview

6.1.2 Statistics

6.1.3 Network development

6.1.4 Infrastructure sharing

6.1.5 Rural and regional networks

6.1.6 Fibre optic cable projects

6.1.7 Wireless Local Loop (WLL)

6.2 Infrastructure developments

6.2.1 IP networks

6.2.2 Next Generation Networks (NGN)

6.3 International infrastructure

6.3.1 Background

6.3.2 Interconnect agreements

6.3.3 India-Pakistan

6.3.4 International service disruption

6.3.5 Submarine cable networks

6.3.6 Satellite communications

7. Broadband and Internet Market

7.1 Broadband networks and services

7.1.1 Overview

7.1.2 Broadband statistics

7.1.3 Market development

7.1.4 National Broadband Policy

7.1.5 National Broadband Plan

7.2 Broadband technologies

7.2.1 Digital Subscriber Line (DSL)

7.2.2 Cable modem

7.2.3 Wireless broadband

7.2.4 WiMAX

7.2.5 WiMAX spectrum auctions

7.2.6 LTE

7.2.7 Mobile wireless

7.3 Satellite

7.4 Internet market

7.4.1 Overview

7.5 Personal computers

7.5.1 IPv4/IPv6

7.6 Regulatory issues

7.6.1 Foreign Exchange transactions

7.6.2 Censorship of social media sites

7.6.3 Internet policy: background

7.6.4 Internet policy: development

7.6.5 National Internet Exchange of India (NIXI)

7.6.6 Censorship and security

7.6.7 International connectivity

7.7 Voice over Internet Protocol (VoIP)

8. From Broadcasting to Digital Media

8.1 Overview

8.2 Digital media

8.3 Market statistics

8.4 Regulatory issues

8.4.1 Background

8.4.2 Cable Television Networks (Amendment) Bill

8.4.3 Convergence Bill 2001

8.4.4 Foreign investment

8.4.5 Conditional Access System (CAS)

8.4.6 Viacom – Network18 joint venture

8.5 TV and the transition to digital

8.5.1 Overview

8.5.2 Internet Protocol TV (IPTV)

8.5.3 Cable TV

8.5.4 Satellite TV

8.5.5 Major cable and pay TV operators

8.5.6 Free-to-Air TV

9. Mobile Communications

9.1 Overview of India's mobile market

9.2 Mobile statistics

9.3 Mobile market segments

9.4 Development issues

9.4.1 Reporting of revenue

9.4.2 Revenue and ARPU

9.4.3 Pricing and usage

9.4.4 MVNOs

9.4.5 Spectrum allocations and spectrum auctions

9.4.6 Rural expansion

9.4.7 M-banking

9.4.8 Foreign investment

9.4.9 Future growth

9.5 Regulatory issues

9.5.1 Background

9.5.2 Developments in 2011

9.5.3 Developments in 2012

9.6 Mobile technologies

9.6.1 Overview of mobile technologies used in India

9.6.2 GSM

9.6.3 CDMA

9.6.4 Third Generation (3G) mobile

9.7 Mobile voice services

9.7.1 Prepaid

9.8 Mobile data services

9.8.1 Market overview

9.8.2 Short Message Service (SMS)

9.8.3 General Packet Radio Service (GPRS)

9.8.4 Enhanced Data for GSM Evolution (EDGE)

9.8.5 i-mode

9.8.6 BlackBerry

9.8.7 Mobile TV

9.8.8 Mobile content

10. Forecasts

10.1 Fixed-line forecasts – 2015; 2020

10.2 Internet forecasts – 2015; 2020

10.3 Mobile market forecasts – 2015; 2020

10.4 Notes on scenario forecasts

11. Glossary of Abbreviations

Table 1 – Country statistics India – 2011

Table 2 – Telecom revenue and investment statistics – 2009

Table 3 – Telephone network statistics – 2011

Table 4 – Internet user statistics – 2011

Table 5 – Broadband statistics – 2011

Table 6 – Mobile statistics – 2011

Table 7 – National telecommunications authorities

Table 8 – India's GDP real growth rate – 2006 - 2012

Table 9 – Fixed-line services versus mobile services and penetration – 2011

Table 10 – Foreign Direct Investment in telecom sector – 2004 - 2011

Table 11 – Telephone services to villages – September 2011

Table 12 – Number of telecom licences issued by category – 2007 - 2008

Table 13 – Mobile operators and subscribers – September 2011

Table 14 – Total mobile subscribers (GSM and CDMA) by operator and market share – September 2011

Table 15 – GSM mobile operators, subscribers and market share – September 2011

Table 16 – CDMA mobile operators, subscribers and market share – September 2011

Table 17 –Overall mobile ARPU – 2005 - 2011

Table 18 – Mobile ARPU by technology, prepaid/postpaid/blended – September 2011

Table 19 – Mobile ARPU (blended) for selected operators – 2011

Table 20 – Fixed-line subscribers by operator – 2008 - 2011

Table 21 – Aircel mobile subscribers – 2004 - 2011

Table 22 – BSNL mobile subscribers – 2002 - 2011

Table 23 – Bharti Airtel mobile subscribers – 2002 - 2011

Table 24 – Bharti Airtel mobile ARPU – 2004 - 2005; 2007 - 2011

Table 26 – Etisalat mobile subscribers – 2010 - 2011

Table 27 – Idea/Spice mobile subscribers – 2002 - 2011

Table 28 – Idea/Spice mobile ARPU – 2007 - 2011

Table 29 – Loop Mobile (BPL) mobile subscribers – 2002 - 2011

Table 30 – MTNL mobile subscribers – 2002 - 2011

Table 31 – Reliance mobile subscribers – 2002 - 2011

Table 32 – Reliance mobile ARPU – 2007 - 2011

Table 33 – Reliance fixed-line subscribers – 2005 - 2011

Table 34 – Sistema mobile subscribers – 2008 - 2011

Table 35 – Spice Telecom mobile subscribers – 2002 - 2008

Table 36 – S Tel mobile subscribers – 2009 - 2011

Table 37 – Tata Teleservices mobile subscribers – 2002 - 2011

Table 38 – Uninor mobile subscribers – 2009 - 2011

Table 39 – Videocon mobile subscribers – 2010 - 2011

Table 40 – Vodafone Essar mobile subscribers – 2002 - 2011

Table 41 – Vodafone Essar mobile ARPU – 2008 - 2011

Table 42 – Number of licensed ISPs – 2002 – 2003; 2005; 2008 - 2011

Table 43 – ISP market – leading operators, subscribers and market share – September 2011

Table 44 – Fixed-line subscribers and teledensity – 2005 - 2012

Table 45 – Fixed-line subscribers and teledensity – 1995 – 2005 (Historical)

Table 46 – Growth of VPT scheme – 2001 - 2011

Table 47 – PCOs in operation – 2003 - 2011

Table 48 – PCOs in operation and market share by operator – September 2011

Table 49 – Fixed WLL subscribers – 2004 – 2006 (historical)

Table 50 – Broadband subscribers – 2001 - 2012

Table 51 – Fixed broadband subscribers - market share by access type – September 2011

Table 52 – Broadband subscribers and households – 2011

Table 53 – Internet subscribers by access type – September 2011

Table 54 – Broadband and Internet subscriber targets – 2005; 2007; 2010

Table 55 – DSL subscribers – 2001 - 2011

Table 56 – Cable modem subscribers – 2001 - 2011

Table 57 – Wireless broadband subscribers – 2003; 2006 - 2011

Table 58 – Internet users – 1995 - 2012

Table 59 – Internet subscribers – 1995 - 2012

Table 60 – Dial-up Internet subscribers – 2007 - 2012

Table 61 – Internet (dial-up) ARPU – 2005; 2007 - 2009

Table 62 – International Internet bandwidth – 2000 - 2011

Table 63 - Broadcasting market overview - 2010

Table 64 – Number of channels carried by cable operators – 2009 - 2010

Table 65 – Cable and TV households – 1995 - 2010

Table 66 – Total TV industry revenue – 2000 - 2010

Table 67 – Pay TV subscribers by technology – 2002 - 2009

Table 68 – DTH subscribers – 2008 - 2010

Table 69 – Overview of India's mobile market – 2010 - 2011

Table 70 – Mobile subscribers, annual change and penetration – 2006 - 2012

Table 71 – Mobile subscribers (GSM and CDMA) – 2002 – 2010

Table 72 – GSM mobile subscribers and annual change – 1997 – 2011

Table 73 – Mobile penetration urban and rural – 2007; 2009 – 2011

Table 74 – Mobile services revenue – 1996 – 2012

Table 75 – Mobile ARPU by technology, prepaid/postpaid/blended – September 2011

Table 76 – Mobile ARPU (GSM and CDMA) – 2005 – 2011

Table 77 –GSM mobile subscribers by region/circle – 2009 - 2010

Table 78 – GSM ARPU – 2003 – 2011

Table 79 – GSM ARPU by region/circle, prepaid/postpaid/blended – 2011

Table 80 – GSM mobile operators, subscribers and market share – 2011

Table 81 – GSM ARPU by operator grouping, prepaid/postpaid/blended – 2011

Table 82 – CDMA mobile operators, subscribers and market share – 2011

Table 83 – CDMA ARPU – 2003 – 2011

Table 84 – CDMA ARPU by region/circle, prepaid/postpaid/blended – 2011

Table 85 – 3G auction: Number of licences and total fees paid by operators – 2010

Table 86 – Prepaid mobile subscribers: share of total market – 2003 – 2011

Table 87 – Mobile ARPU by technology, prepaid/postpaid/blended – 2011

Table 88 – SMS traffic by technology and subscriber – 2010 - 2011

Table 89 – Forecast fixed line subscribers and penetration rates – 2015; 2020

Table 90 – Forecast internet subscribers – 2015; 2020

Table 91 – Forecast mobile subscribers – 2015; 2020

Chart 1 - Mobile operators' market share by subscribers – September 2011

Chart 2 - Fixed-line operator market share – September 2011

Chart 3 - Fixed-line subscribers and teledensity – 2005 - 2012

Chart 4 – Internet subscribers and market share by access type – September 2011

Chart 5 - Internet subscribers and growth – 2001 - 2012

Chart 6 – Cable and TV households and TV industry revenue – 2000 - 2010

Chart 7 – Mobile subscribers and penetration – 2006 - 2012

Chart 8 – Mobile subscribers by technology and mobile services revenue – 2002 – 2010

Chart 9 – GSM subscribers and ARPU – 2003 – 2011

Chart 10 – GSM mobile operator market share – 2011

Chart 11 – CDMA mobile operator market share - 2011

Chart 12 – CDMA subscribers and ARPU – 2003 – 2011

Exhibit 1 – Operators and licences affected by 2G licensing process cancellation – February 2012

Exhibit 2 – Overview of FDI policy for India's telecom sector

Exhibit 3– Fixed-line basic services by operator – September 2011

Exhibit 4 – Major shareholders in Bharti Airtel – April 2011

Exhibit 5 – Bharti Airtel – mobile operations - key statistics

Exhibit 6 – Idea Cellular – mobile operations - key statistics

Exhibit 7 – Reliance Communications – mobile operations - key statistics

Exhibit 8 – Tata Teleservices – mobile operations - key statistics

Exhibit 9 – Vodafone Essar – mobile operations - key statistics

Exhibit 10 – International submarine cable systems with landing points in India - 2011

Exhibit 11 – ISRO Satellite Network – May 2011

Exhibit 12 – Broadcasting Standard and major broadcasters

Exhibit 13 – Information on FTA turned Pay and New Pay Channels

Exhibit 14 – Overview of major channels available to consumers in India

Exhibit 15 – Operators issued DTH licences – 2011

Exhibit 16 – CDMA 3G commercial deployment in India

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