A Perfect Mobile Report

India Study
TEKES NETS and FENIX Programs
Vipul Chauhan
Country Manager
Finpro India
10. July 2004

Table of Contents
• Chapter 1: Market Overview

• Chapter 2: Service Providers
• Chapter 3: Internet Service Providers
• Chapter 4: Equipment Manufacturers
• Chapter 5: Content Business
• Chapter 6: Telecom Software Vendors
• Chapter 7: Future Challenges
• Chapter 8: Strategies
• Chapter 9: Finnish Companies in India
• Chapter 10: Conclusions
India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 2
Executive Summary
• Lowered call tariffs are a major industry growth driver

• Wireless Subscriber growth will continue around 10m users/year
• India is primarily a low priced handset market (100-150 Euro)
• Prepaid will continue to dominate in both GSM and CDMA segments
• Operators are experiencing low ARPU because of lowered call tariffs,
thus they are focusing upon content aspect
• Games and content should to be developed keeping local trends and
tastes in mind
• GPRS and MMS are here, but fail to gain subscribers as compatible
handsets are expensive
• SMS based applications, services are most sucessful so far
• Internet penetration is low but the industry is growing at a rapid pace
• Broadband & Wi-Fi are here, but too expensive for general public
• Dial-in is the most preferred mode for internet access
• To sell services to Indian companies, you need a local contact
Chapter One
MARKET OVERVIEW
VIPUL CHAUHAN
Evolution of Communications in India
EDGE
CDMA
2000 1x
Wi-Fi
GPRS
Broadband
GSM
Internet
Cable TV
First
Phone
1882 1990 1995 2001-02 2003 2004 - onwards
Evolution of Wireless communications
in India
No 3G Licenses have been
issued so far W-CDMA
CDMA
3G 2000 1x
EVDO
TD-
SCDMA
CDMA
GPRS
2.5G 2000 1x
MMS
2G GSM SMS WAP
1996 1999-00 2001 2002 -03 2003 2004 - onwards
The first GSM call was made in 1996 on Bharti Cellular Netwrok in New Delhi.
Dual Band GSM 900 & 1800.
SMS service started in the year 2000
Present CDMA standard is CDMA 2000 1X

Circle and License Areas Policy
• Entire Nation is
divided into 4 circles
– Metros, A, B & C
Metro circle – Delhi,
Mumbai, Kolkata &
Chennai
A Circle: States of
Maharshtra, Gujarat,
Andhra, Karnataka &
Tamilnadu
B Circle: States of
Kerala, Punjab,
Haryana, Uttar Pradesh,
Rajasthan & Madhya
Pradesh Circle Definition: Areas
classified on the basis of
C Circle: States of Faded area in the regions shows
subscriber and revenue
Himachal, Bihar, Orissa, potential, where Metro cellular network coverage
Assam, Kashmir and
circle has the highest
North East States
potential and C circle has
the lowest
Each circle requires a different license. As in case of Metro cities, each city license is
sold separately.
Operators can sell their license to any operator in case they are willing to exit from
the license area.
Call Tariffs in India
Call Specifications Tariff Basis Tariffs
Incoming Calls (fixed to • All incoming calls on • All incoming calls are free in Home Network
mobiles are free since (Postpaid & Prepaid)
mobile, mobile to mobile, mobile
April 1 2002
to fixed) • Incoming is not free on roaming, 0,02 Euro – 0,07
• Incoming calls on fixed Euro/minute
line are free
• Distance specific call • M to M outgoing in home network: 0,04 - 0,04

Outgoing Calls tariffs i.e. home network, Euro/minute
(all outgoing calls on all
51 - 200 kms, 200- 500 • M to M outgoing Intercity call < 200 km: 0,04 Euro/minute
networks (roaming,
kms, more than 500 kms • M to M outgoing intercity call > 500 km: 0,07 Euro/minute
interconnected) are priced
and International
between 0,02 – 0,8 • M to Fixed outgoing home network: 0,05 Euro
Euro/minute) • Calling Party Pays
• M to Fixed outgoing < 200 km: 0,06 Euro – 0,08 Euro
• M to Fixed outgoing > 500 km: 0,12 Euro
• M to International: 0,80 Euro – 0,35 Euro
• SMS Receiving: Free
• SMS Sending: 0,03 Euro (domestic) 0,09 Euro
(international)
India presently follows a CPP model, whereby calling party pays.
Incoming calls were made free since April 1, 2002 and that has substantially boosted the subscriber growth rate
in India. However, making incoming calls free also reduced operator ARPU.
For outgoing calls there are multi-level tariffs; (applicable to all Mobile and fixed)
•Mobile to mobile & Vice Versa

•Mobile to fixed & Vice Versa
•Mobile to CDMA & Vice Versa
•Mobile to International & Vice Versa
Roaming is another important aspect when talking about voice revenues
All Indian operators have bilateral agreements among themselves for providing national roaming facility (GSM
+ CDMA operators).
For International roaming, Indian operators have tied up with other operators elsewhere in the world to
provide International roaming services.
Tariffs in India are set as per the distance between the cities. There are four levels for this tariff structuring
based on distance, i.e.:
•Distance upto 51 KM is classified as home network
•Distance from 51-200 KM is the first level for determining inter-city calls, followed by
•200-500 KM
•500 and beyond KM
International calls are tariffed as per the regions like US and Canada, Europe and Pacific rim etc.
Fixed Line Segment Overview
• A monopoly sector controlled by Government until

1996
• Today 6 service providers, 2 State Owned, rest
private
• Subscriber base 43,18 million (May 2004)
• Sector growth slowed since mobile tariffs fell
• Only 1,83 million subscribers are added over last
one year (May 2003-May 2004)
• Increased competition from CDMA Services
Wireless Segment Overview
• 29 million GSM, 9 million CDMA subscribers (June 2004)

• Both GSM 900 & 1800 present
• CDMA operators use 1800 Mhz Band
• Number portability is missing
• Government is yet to make decision on 3G spectrum
• India's telecom sector is carved into 23 circles or zones, classified as
"metro" and "A", "B" and "C" circles, based on subscriber potential
• Unified licensing introduced in 2004
• As a part of Unified license policy, 15% of operator revenues go to
the government
• To operate, each circle requires a different license
• Lowest call tariffs in the world -- as low as one Euro cent a minute on
average
Mobile Value Chain Analysis
Billing
MMS, GPRS
Application Service
Provider (ASP)
Hosted Application
Instant Messenger
Infrastructure Network
Equipment Equipment Network Subscription Handset
Vendors Vendors Operators resellers Resellers End User
Revenue
Sharing
Model
Content Content Provider Content Ringtones, Logos,

Developers Aggregators/ Email, Wallpaper
Portals Downloads
In GSM segment opeartors do not offer handsets along with their subscription, like
in Europe or America. Consumers have to go and buy the handsets of their choice
at numerous handset Kiosks in each city. These Kiosks are multi purpose kiosks
and one can buy not only handset but also a GSM connection, phone accessories
etc.
MMS and GPRS are offered via operators, while majority of other content like
Logos, Ringtines, Picture Messages are offered via portals.
When speaking of revenues, operators are in dominant position. Major share of

revenues goes to operators. For example 80% of revenue from a Ringtone
download goes to operator, rest to the portal.
Road to 3G in India
Digital generations
2G 2.5G 3G
GPRS, CDMA EDGE W-CDMA?
No decision on
Nokia, Ericsson, 3G Spectrum yet !
Motorola have
delivered GPRS
networks
GPRS is widely offered by major operators. BPL was the first operator to Launch
GPRS in India, followed by Airtel, Hutch and Idea.
Recently the two GSM operators- Hutch and Idea, unveiled their EDGE Networks
According to a submission made to the Telecom Regulatory body “TRAI” by T. V.

Ramchandran, director-general of the Cellular Operators Association of India
(COAI), “The allocation of the PCS 1900 band would not only result in a major
interference to the services offered by operators using GSM technology but also
block the progress of 30 million subscribers to 3G.”
There are two important components in a mobile service: uplinking (a call or data
sent from your mobile phone to a base station) and downlinking (receiving a call or
data from base station to mobile phone).
While uplinking, the airwaves in the PCS 1900 band clash with those in 1800 band
(allotted to operators using GSM technology) that downlink the call and data.
While downlinking, the PCS 1900 band interferes with the IMT 2000, which is the
uplinking mode for 1920-1980 MHz paired with 2110 to 2170 Mhz (the core band
identified by the International Telecommunications Union for 3G services).
The interference for the 30 million subscribers using the GSM technology could
range from gurgling noises as heard while tuning the radio stations, call drops,
messages and data not reaching its destination.
ISP Segment Overview
• Internet Services launched in India in August 1995

• 189 operational ISPs as of Dec. 2003
• Total Licenses issued 540
• Over 8.500 leased line customers, growth rate 9,6%
• 8.850 Cyber cafes as of Dec. 2003
• Total Broadband customers: < 150.000 (DSL, ADSL)
• 118 ISPs given permission to offer VoIP
• Minute usage in Q4 2003 for VoIP was 20,1 million minutes, a growth
of 41,5% over last quarter
• ARPU: 5 € approx.
• PC Penetration in India: 11 per 1.000 people
• Internet users: 18 million
• Internet penetration: 1,7 % of the population
• PC sales in 2003-04: > 3m units, 30% growth
•ISP License is one of the most liberal License, wherein no License Fee has been
levied on the ISPs till 31st October 2003.Thereafter, a token license fee of Rs. One
per annum is payable w.e.f. 1st November 2003.
•ISPs have been permitted to set up International Gateways by having business
arrangement with Foreign Satellites Providers and Collaborators.
•ISPs have been permitted to provide last mile access using Radio and Fiber Optics.
•ISPs have been permitted to provide ISP Services through Cable T V
Infrastructure / Operators.
•The Government has initiated an ambitious plan to developed National Internet
Backbone (NIB) in the country.
•100% FDI allowed through automatic route to the ISP (without gateways), 74% in
case of ISPs setting up International Gateways.
•ISP's permitted to set up Submarine Cable Landing Stations either singly or jointly
in collaboration with International Undersea Bandwidth Carriers.
•National Long Distance Services opened to private sector on non-exclusive basis.
•International Long Distance Services opened up to private sector on non-exclusive
basis w.e.f. April 1, 2002
•Internet Telephony Services opened up to ISPs w.e.f. April 1, 2002.

•De-licensing of W-LAN in 2.4 Ghz band using IEEE 802.11b technology
•Reduction of Performance Bank Guarantee by 50% for Category A & B ISPs and
33% for Category C ISPs.
Telecom Software Vendors
• Outsourcing gave boost to the Telecom Software

Industry
• Industry revenue: 1,2 billion Euro (2003-04) a
growth of 18%
• A middle level expert costs < 600 US$ a year
• Big pool of skilled workforce, 50 out of world’s 74
SEI CMM Level 5 companies are in India
• Multi level services
• Device architecture
• Symbian, Series 60
• Content Applications
• Web, GSM, GPRS, CDMA, 3G applications
For the ICT industry and its customers, the primary driver for offshore outsourcing
is the reduction of costs. Some estimate that costs can be reduced by 40 percent
and sometimes by as much as 70 percent for offshore destinations such as India,
China and the Philippines. These cost savings are directly attributed to reduced
labour and other business costs.
A snapshot of average base salaries for programmers around the world shows that a
US programmer cost on average approximately US$ 63,350 in 2002, substantially
more than many of their overseas counterparts. A professional of similar skills
costs US$ 40,000 in Australia, US$ 5880 in India, US$ 6564 in the Philippines, US$
7200 in Malaysia and US$ 8952 in China.
In some cases, like for China, IT and ITES outsourcing may assist global or
overseas firms to establish a presence in the region of the outsourcer (e.g. China or
Asia), hence assisting those companies to expand their businesses globally and
benefiting their home economies.
In the particular case of India, its success first in software development and now in
IT Enabled Services (ITES) is driven by a number of additional advantages. A
focus on demonstrating quality services has proven to be a significant factor in
gaining market share. According to NASSCOM, the Indian software industry
continues to receive international recognition for its quality in software
development. Out of the top 300 companies, more than 216 have already acquired
ISO 9000, SEI or other certification. As far as SEI CMM (Software Engineering
Institute Capability Maturity Model) Level 5 is concerned, the Indian software
industry emerges as the global leader, having 50 companies certified with SEI CMM
Level 5 out of a global total of 74.
Content Business Overview
• Indian content market is mainly SMS driven

• Almost 1 billion SMS per month
• Most of the downloads and service requests are oriented
through SMS
• M-banking also available – SMS based
• GPRS penetration 8-10%
• Overall content market estimated at 5 million Euro
• SMS and MMS account for 10% of operator ARPU
• Downloadable content available through portals, operator
portals
• M-ticketing is missing
Industry Growth Drivers 1(2)
• Fixed Line Segment

• Capacity expansion of fixed line exchanges helped consumers avail quick
connections
• Quick connection availability boosted no. of fixed line connections during 1985
- 1995
• Wireless Segment
• Vast geographic expanse of India acted as a catalyst to boost mobility

• Low call costs since 2002 fueled the wireless segment
• Narrowing gap of call costs between fixed and wireless convinced customers
to subscribe to wireless connections
• Nationwide roaming facilities on GSM
• SMS facility
• Internet + Subscription bundling
• Reduced cost of handsets (affordability factor)
• Customs duties have been reduced from 10% to 5%
• In remote areas where providing fixed line connections was difficult, wireless
did the magic
• CDMA fixed wireless gave customers 3 in one advantage – Mobility, internet
and messaging India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 16
Until 1996, India was a pure fixed line market.

Industry Growth Drivers 2 of 2
• ISPs
• Advanced communication options like instant messenger
• Voice Communication through VoIP and Instant Messenger
• Lowered tariffs
• Broadband availability
• Always on connection availability
• CDMA Systems helped internet spread further
•Over 78% of the Internet Users are in the age group 18 – 39 years and 75% of the
Internet Users are Males.
•The Capital Cities (New Delhi and Other State Capital) accounts for 79% of
Internet Connections of the Country.
•More than 86% of top Corporate Houses have endorsed that Internet and E-
Commerce is an integral part of their corporate strategic framework.
•Over 76 % of the Internet Users use E-mail Services
•Over 61% of the Users Access Internet from school, colleges, place of work and
Cyber Cafes while 27% access Internet from homes.
•Among the career conscious and education driven middle class, Internet is seen as
critical to success in professional life.
•There are approx 59 million telephone connections (including Mobile) and 8.5
million PC base in India.
•There are approx. 47 million Cable T V Connections out of 92 million TV Sets in
the Country
Growth Inhibitors
• Cultural misunderstandings
• Project management difficulties
• Infrastructure failures
• Language barriers
• Political factors
Market Regulations - Telecom
• The industry is governed under National Telecom Policy -

1999
• full competition through unrestricted private entry in almost all service sectors
• end to monopoly in the national and international long distance segment
• Provide a telephone on demand by 2002.
• Achieve a teledensity of 7 by the year 2005 and 15 by the year 2010.
• Increase the rural teledensity from 0.4% to 4% by the year 2010 with greater
reliability.
• Cover all villages by 2002.
• Provide Internet access to all district headquarters by the year 2000.
• Provide high-speed data and multimedia capability using the latest technologies to
all town with a population greater than 200,000 by the year 2002.
• Encourage rural telecommunications through affordable tariffs and imposing rural
coverage obligations an all fixed-service providers.
• Unified Licensing introduced in 2004

• No difference between fixed line and mobile segments
• Operators can provide ”ANY” service(s) to their customers by using “ANY”
technology
The NTP 99 has been a positive milestone for the industry.
After NTP 99, industry attracted foreign investments in form of equity from global
players like Vodafone, BT, AT&T, Warburg, Hutchison etc.
In early 2004, there was a major rift among CDMA and GSM operators because of
licensing conditions. GSM operators blamed that CDMA license holders are not
allowed to offer National roaming as their license permits them to offer service
within a Short Distnace charging area known as SDCA. The matters were taken to
Telecom Dispute Settlement Tribunal TDSAT. The government however
understood it basic mistake in license drafting and as a result offered Unified
Licensing. Now all operators can offer all services using any technology platform.
They will, however be supposed to pay unified license fee deficits.
Market Regulations - ISPs
• Industry governed under Indian Telegraph Act, 1885, Indian Wireless

Telegraphy Act 1933 and TRAI Act 1997
• A Company registered in India under the Companies Act, 1956 will
be eligible to apply for being an ISP
• Licenses area divided into Zones known as “Circles”
• Three categories of licenses
• A: All over India
• B: 20 Territorial Telecom Circles
• C: Remaining Areas
• The validity of license is initially for a period of fifteen years
• Interface Requirements
(i) Subscriber Dial up Access
2 wire access over PSTN for modem interface.
2 wire dial up access on ISDN Basic and Primary rate interfaces.
(ii) Leased Line Interface
64K, N x 64K or 2.048 Mb/s, N x 2.048 Mb/s Leased lines.
Frame Relay.
X.25
ATM
G. 703
• ISPs will be free to fix their own tariff
Since 1995, a number of countries have permitted VOIP as a technology option to

the classical PSTN as well as Internet Telephony so as to provide a cheaper
alternative to classical PSTN calls. In India, the ISPs were allowed to offer Internet
Telephony Services with effect from April 1, 2002. With the choice availability of
Toll Quality (PSTN) and Non-Toll Quality options, Internet Telephony has thrown
open Long Distance Telephony to those sections of Society, which could not afford
the same earlier. Further, Internet Telephony is proving to be a key driver for local
entrepreneurs to set up Community Information Centers / Cyber-kiosks, etc even
in small towns and villages. In fact it has made distance learning, Tele-medicine and
e-governance etc a reality in Indian context.
More than 90 ISPs have been granted license for offering Internet Telephony
Services. There has been a substantial growth in the Cyber Café / offering Internet
Telephony Services. It is expected that Internet Telephony will provide fillip to the
demand for network facilities including bandwidth, last mile access and other
connectivity resources and bridging the digital divide within the Country. However,
an important issue needing immediate attention is tackling the Internet Telephony
Grey Market which is estimated to be about 90 per cent of the total Internet
Telephony market in India and requires concerted efforts by Government and
industry. It is imperative that all leading ISPs including VSNL, BSNL and MTNL
join hand to tackle the menace.
IPR & DRM Issues
• Indian Copyright Act 1957 governs the IPR and Copyright issues
• India recognizes digital signatures and e-documents at par with
paper documents
• Anti Piracy laws are strict but…. wide scale illegal copying of
softwares, music cds, mp3s, DVDs and Video CDs
• Software Piracy is among the highest in the world
• Metro cities like Delhi and Mumbai have Piracy hubs, where almost each and
every software is available
• Software piracy exists beacuse consumers usually buy Assembled PCs having
illegal software copies
• Filesharing (software and music) through Kazaa and Morpheus are
prevalent
• Spam is an offence and it is madatory for operators and ISPs to
deploy spam filters
• Attempt to crack digital encoding of copyright software, music, movie
etc. is an offence ------ BUT ONLY IF YOU ARE CAUGHT !!!!!
Protecting the IPR is a complex issue in India altogether.Software and music piracy
is immense in the country. India is a huge piracy hub in Asian continent. Majority
of piracy is about softwares and Operating System.Though government has strict
laws, it is difficult to completely wipe out piracy.
In India the intellectual property protection with regard to a computer software is

governed by the Indian Copyright Act, 1957 (hereinafter called “ The Act” ). A
person claiming to be a creator of a software programme, can claim a copyright
over it. Unlike in the United Kingdom, which has a separate law governing a
database, be it computer generated or otherwise, called the “database right”, in
India there is no special right apart from the copyright that can be claimed by such
a creator. However under the Act, registration of a copyright is not mandatory, but
advisable. The Act, applies only to works first published in India, irrespective of the
nationality of the author. However the Government of India has the power to
extend the benefits of the Act to works first published in any foreign country.
Any work first published in any country which is a member of the Berne
Convention or the Universal Copyright Convention will be accorded the same
treatment as if it was first published in India. And for this purpose a body
incorporated under any law of a country mentioned in the schedule so brought out
by the Government of India shall be treated in the same manner as if it was
incorporated under the Indian law.
As per the Act, computer software falls under the category of “Literary work”,
which has been defined to include computer programmes, tables and compilations
including computer databases.
The Act also defines a computer programme as being a set of instructions
expressed in words, codes, schemes or in any other form, including a machine
readable medium, capable of causing a computer to perform a particular task or
achieve a particular result
Market SWOT Analysis
Strenghts Weaknesses
• Lowest call tariffs in the world
• Huge wireless subscriber potential
• Market strongly regulated by Govrenment body – Governing
• Fastest growing mobile market in the world
both ISP and Telecom sectors
• Consumers are ready to pay for cutting edge services
• Too many authorities ruling the sector
• Government proposes to hike FDI limit in Telecom to 74%
• Huge potential for low end and cheap handsets
• Unified license regime
• Wide scale Consumer churn in Telecom and ISP
• Wide spread VAS deployment is restricted due to language and
literacy problems
• Primarily a voice based market
Opportunities Threats
• To offer value added services on GSM, CDMA and IP • Low cost service providers – no possibility of breaking even in
short term
• Language independent services
• Weak IPR protection
• Mobile Marketing concepts
• Software and digital content Piracy
• Content influenced bu local culture and Global sucess stories
• Political instability
• M-Commerce
• Regulatory interference
• Unified messaging platforms
• Foreign investment in form of equity or technology
CHAPTER TWO
SERVICE PROVIDERS
Vipul Chauhan
Operators – Fixed, CDMA and GSM
FIXED LINE WLL/CDMA

• BSNL (state owned)
GSM • BSNL
• MTNL (state owned)
• Bharti • MTNL
• Bharti (Touchtel)
• BPL • Reliance
• Tata Telecom
• BSNL • Shyam Telecom
• HFCL
• Hutch • Tata Telecom
• Shyam Telecom
• Idea • HFCL
• MTNL
• Reliance
•Spice Telecom
6 Operators
6 Operators
8 Operators
Telecommunication Segments
Services Entry Policy Players in operation
Basic fixed line • No cap on number of • BSNL in all circles except Delhi & Mumbai held
licences. Separate by MTNL. 5 Private Operators with 31 licences.
licence for each circle.
Mobile • Present cap of 4 • MTNL in Mumbai and Delhi. BSNL in one metro
(GSM+CDMA) operators per circle and and 16 circles. 9 Private companies operating in
metro. 3 private and 23 circles and 4 metros, with 50 licences.
BSNL/MTNL
NLD (National • No cap on number of • Earlier there was a monopoly of BSNL. Now
Long licences. Only all-India Reliance, Bharti and VSNL have been granted
Distance) licences will be granted. licences.
ILD (International • No cap on number of • A monopoly of VSNL until April 2002. Tatas
Long licences. acquired controlling stake in VSNL. Recently
Distance) entry of Bharti, Reliance and Data Access.
The Indian Telecommunications industry is divided into four Service segments:

•Basic Services (Conventional Fixed line + CDMA Fixed line)
•Mobile (GSM + CDMA)
•National Long Distance (NLD) or Subscriber Trunk Dialing (STD)
•International Long Distance (ILD)
•ILD – Voice over internet (VoIP)
The entire country is divided into Telecom License Zones known as “Circles”.
Licenses are awarded to the operators as per the circles, not as per the states.
Each circle requires a different license.

Fixed Line Operators
Fixed Line Operators Subscriber Base
34,862,000
BSNL is a public
sector giant with a
huge market share
Public sector
companies hold
majority market share
in Fixed line telephony
4,475,000
609,047 100,438 160 71,932 371,148
BSNL MTNL Bharti HFCL Reliance Shyam Tata
State Owned Private Operators
BSNL (Bharat Sanchar Nigam Limited) is the public sector giant having majority
market share in fixed line telephony.
BSNL is followed by Mahanagar Telephone Nigam Limited (MTNL) which is again

Government owned. MTNL has licenses to operate fixed line services in the cities
of New Delhi and Mumbai only.
The private operator Bharti operates under the brand name Touchtel. Bharti has
been very lucky in penetrating the so called nest of public sector giants.
Fixed Line Market Share
Shyam
Reliance Tata
HFCL
Bharti
MTNL
BSNL
BSNL is a market leader with a

massive 86% market share
BSNL’s Telephone Network includes:
•Local Switching (as on 30.04.2004)

Total Equipped Capacity 46.3 million Lines
Direct Exchange Lines 35,4 million Lines
•Village Public Telephones as on 30.04.200: 4,50 million
•STD StationsNumber of STD Stationsas on 30.04.200431,733
•Transmission Systems as on 30.04.2004
Coaxial 6024 kms.
Microwave 63249 kms.
UHF 45,130 kms.
Optical Fiber 0,45 million kms.
•Satellite Based Services (as on 30.04.2004)
Total Number of MCPC –VSATs: 301
Number of IDR ROUTES: 71
STD: Subscriber Trunk Dialing (abbreviation for Intercity calls)

Operators
Operator Subscribers Range of Services Service Areas
BSNL 34,86 million Fixed line network, GSM, CDMA All over India
(WLL), Internet, MPLS VPN, Unified
Messaging, IN, ISDN,Leased line,
long sitance calling, international
gateway
MTNL 4.47 million Fixed line network in cities of DELHI Only in New Delhi and
and BOMBAY only. GSM, CDMA Bombay
(WLL), Internet, IN , Unified
Messaging, ISDN,Leased line, long
distance calling
BHARTI 609,047 Fixed line network, GSM, DSL, IN, Delhi, M.P,
VPN, International gateway
HFCL Infotel 100,438 Fixed line, Broadband DSL, CDMA Only in State of Punjab
As already described the entire country is divided into telecom circles and operators
are required to have licenses as per the respective circles.
With the entry of more and more private players in the fixed line telephony, the
competition is becoming fierce, as a result operators are now focusing upon
offering various services to the consumers along with their fixed line connections.
BSNL, which is a market leader in fixed line segment, also offers I-NET, India’s
x.25 based packet Switched Public Data Network is operational in104 cities of the
country. It offers x.25 x.28 leased, x.28 Dial up (PSTN) Connection) and frame
relay services. It had 4661 I-Net connections all over India as of Dec. 2003.
Operators
Operator Subscribers Range of Services Service Areas
Reliance 160 Fixed line network, CDMA (WLL), Gujarat, Haryana, Punjab,
Internet, VPN, Unified Messaging, Delhi, WB, UP(E),
IN, ISDN,Leased line, long sitance
calling, international gateway,
nationwide fiber optic network
TATA 371,148 Fixed line, CDMA, VPN, Centrex, AP, Delhi, Gujarat,
Broadband, ADSL, DSL, Karnataka, Tamil Nadu,
Conference services Maharastra
SHYAM TELELINK 71.932 Fixed line network, International Only in Rajasthan

gateway, CDMA
Fixed Vs. Mobile - Statistics
45
• Mobility is fast catching up with fixed line
Millions
40
35
30 • Mobile subscribers are expected to cross fixed
25 line subscribers by mid 2005
20
15
10
5
0
Fixed GSM CDMA
45
Millions
40
35
In Telecom circles like Delhi, Punjab, 30
Haryana and Mumbai Mobile users have 25
crossed over fixed line users already 20
15
10
Fixed Mobile
The difference between the numbers of fixed line and mobile subscribers is fast
narrowing.
Low tariff structures offered by mobile operators are attracting consumers to switch
over to mobile phone subscriptions. This trend has a two way side effect on fixed
line telephony, first fixed line operators are finding it hard to reduce consumer
churn, second their ARPU has taken a big leap downwards.
Reduced mobile tariffs could be explained as the most prominent reason for
increased mobile subscriber base.
Facilities like SMS, MMS further attract consumers to shift from fixed line services
towards mobile.
GSM Operators
GSM Segment Overview
• GSM introduced in 1995
• One of the fastest growing mobile markets in the World for
GSM
• Subscriber growth rate for Jan. 2003-2004 was 200% approx.
• 35 networks on 900 Mhz, 11 on 1800 Mhz Technology
• Presently, approximately 1 million GSM subscribers are added
every month
• Unified license system introduced by government in 2004
• 3G spectrum decision is awaited
GSM Growth Drivers 1 (2)
• 1st wireless communication standard in India

• Nationwide roaming available in Prepaid and Postpaid
• European and USA roaming widely available
• Wide handset options - high end and low end
• Camera Phones
• Low call tariffs fuelled the growth since 2002
• Large unsatisfied demand
• Affordability: Middle class embracing cheap low-cost services
• Low entry barriers
• Large urban take-up due to aggressive marketing by Telcos
GSM Growth Drivers 2 (2)
Call costs have fallen 0.31

drastically over 90%
Fallen call costs have been a
major growth driver for wireless
industry (especially GSM)
0.16
Call costs in € from 1996 – Present day
Operators are worried over
falling ARPU, therefore a minor
consolidation is seen in costs 0.08
this year 0.06 0.05
0.04
During festivals, special offers
are introduced by operators for
international dialing 1996-97 1997-98 2000-01 2002-02 2003-04 2004-onw ard
Lowered call costs are the major driving force behind the industry growth. It is now
possible for an individual to afford making calls.
On one side where call costs have boosted the industry growth, as a side effect
ARPU has shown a negative growth.
From last year onwards, operators are now looking towards streamlining their
ARPU, therefore one can see minor escalation in call costs towards the end of last
year.
Wireless Subscribers Growth – GSM
India presently is one of the 28,153,674

fastest growing mobile markets in
the World, with Growth rate in
GSM segment during 2003 21,991,743
touching nearly 200%
10,600,000
5,478,932
3,107,449
Dec. 2000 Dec. 2001 Dec. 2002 Dec. 2003 May-04

Tim eline
*Subscribers in Millions
The subscriber growth saw a phenomenal increase from 2002 onwards. This was
mainly due to lowered call tariffs and full scale implementation of SMS services all
over India. December 2002, where India touched the 10 million mark could be
defined as a milestone for Indian wireless industry.
Subscriber growth continued from 2002-03 and there were close to 22 million
subscribers as of December 2003.
Two main elements for this phenomenal growth are 1. lowered call tariffs & 2.
Free incoming calls
Consumers who were once reluctant to subscribe to mobile subscriptions founded

feasible and convenient to avail as now there was hardly any difference between the
monthly bills compared to fixed line, and mobility was definitely a crucial element.
The above phenomena in India is taking shape because of the presence of huge
middle class population. On an estimate there are some 300 to 350 million people
belonging to this group in India. Unlike a car or a television set (where one is
enough in the family) with the lowered call tariffs it became possible even for family
members to own a mobile phone each.
Indian GSM Industry Revenues
1.56
1.18
Industry revenues show a

increase of over 30% over
last year Revenues in billion €
2002-03 2003-04
The increase in revenue reflects the new subscriber additions.

Market Developments since 2001
in 2001 in 2004
Bigger operators
acquired small
players to
18 GSM consolidate their 9 GSM
subscriber base
Operators and to be able to Operators
counter low tariff
CDMA operators
India is a vast country with over 3000 Kms of distance from north to south and
similarly from east to west. Covering this huge scope of land became a challenging
task for the operators, as a result many failed and vanished from the business
because the industry demanded huge capital investments and some of them were of
course unable to do so.
The above scenario triggered two situations:

•Smaller operators sold their licenses to big players
•The bigger players seeing an opportunity to expand, acquired smaller operators
Mobile Operators Subscriber Base -
GSM
Bharti is the undisputed 6,761,367

leader among GSM
operators
5,254,117 5,148,048
Bharti was the first
mobile operator in India
3,721,773
1,882,754
1,208,890
1,026,377
850,831
230,550
Bharti BSNL Hutch Idea BPL Spice Aircel MTNL Reliance
Aircel is recently acquired by HUTCH for an estimated amount of 223 million

Euro.
Market Share – GSM operators
Big private operators like Bharti and Hutch each

have recently acquired 2 other smaller operators
State Owned
25%
MTNL Reliance
1% 3%
Aircel
4% Bharti
Spice 26%
5%
BPL
7%
Private
Idea 75%
14%
Hutch
20%
Private
BSNL
operators lead the GSM business
20%
Operator ARPU for 2003-04
9.90
ARPU dropped by 17% in 2003-04
8.43 8.36
Q4 compared to 9,9 € in Q1 8.05
7.32 7.35 7.60
Subscriber base of monthly ARPU 6.80
9,25 € or less has gone up to 46%
in 2003 compared to 28% in 2002
ALL INDIA
BPL
Hutch
Idea
Reliance
Bharti
Spice
Aircel
Amount in €
During the days when incoming was not free, operator ARPU was almost twice as
that of today.
Despite of offering various data services over their networks, operators have been
unable uplift the ARPU. This shows that India still is mainly a voice market.
On an estimate 80% of operator revenues are voice based and the remaining 20%
constitute of all the data traffic.
In such a scenario, operators have a big challenge not only to introduce more and
more attractive content but also to see that they add new subscribers on the basis of
content not voice. This however will be a big challenging task for Indian operators
as promoting data services where roughly 45% of the population is still completely
illiterate. To add to the complexity is the language scenario in India. There are 18
languages and 844 dialects and offering streamlined data services in all of these
languages is by no means a simple task.
SMS is the only thing which is available in different languages.

ARPU vs. Subscriber Statistics
29
24.43
ARPU
Subscribers
8.36
1.6
1999 2004
*ARPU in Euro
*Subscriber in Millions India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 42
Indian consumer is extremly cost conscious.
The cost syndrome is visible in the above figure, as call costs fell, no. of subscribers
rose! In a way, as operator’s ARPU declined, they experienced a surge in subscriber
additions.
PrePaid vs. PostPaid Subscribers
PostPaid
33%
The growth in Prepaid has
been 26.7% during 2003—04,
while postpaid segment has
just grown some 6%
Prepaid rules in India PrePaid

67%
Prepaid is a big phenomena in India. Although detailed statistics are not available
for each operator but on an estimate 60-70% of the subscribers (of all the
operators) are prepaid customers.
The reasons for prepaid being so successful in India are:

•During the days when incoming calls were not free, it was difficult to control the
individual expense limit which prepaid easily solved.
•To avail a postpaid connection one needed documentation like address proof etc.
•Roaming on prepaid further boosted the prepaid subscriber base.
•Teenage users whose parents wanted them to exercise restrain, founded easier to
give them prepaid connections.
•Retail channels earned good commission selling prepaid coupons to consumers
and therefore, they invested more on promoting prepaid
GSM Operators Business Model
Portals In India, third party billing doesn’t

Revenue Sharing
exist
Revenue share model is the
most prevalent mode of doing
ASP business
Revenue Sharing
Operator Billing End User

Revenue Sharing
TV Channels
Royalties
Movies
Content Revenue Sharing
Developers
The billing relationship in India exists exclusively between the operator and the
consumer. All the other contributors (value added service providers, ASPs, TV
channels and movie production houses maintain revenue sharing or profit sharing
relationship only with the operator.
Operators in India get to keep a major share of the revenues coming from all the
other services besides voice.
When a consumer downloads a ringtone or a logo from a website, operator gets to

keep 60% of the earnings, similarly;
•Almost 60-70% of the revenues for services hosted by ASP
•80% of the revenues for SMS based TV opinion polls
•75% incase of downloading a movie clip or a movie ringtone
M ticketing is missing in India, however, one can request for a ticket for an event
through an SMS but one cannot actually complete a transaction over his mobile
phone.
VAS Awareness in India
Basic VAS Advanced VAS
90
While roaming is well known, 76
MMS is surprisingly less
known, similar to M-Banking 62
56
Operators have to promote
awareness now, instead of 39
introducing any more new 33
27
services 21
10 7 5 4
Email
MMS
Roaming
M-Banking
Call Waiting
Messaging
Data services
Voicemail
Internet
Services
conferencing
Access
Call forward
Dial in
Voice
Call
Source: Voice and Data

As described earlier, literacy is a big factor which determines the success of value
added services especially, advanced services like email, M-banking and MMS.
Roaming, voice mail, call waiting, call forward are some of the services which
consumers are well aware of. Advanced services like call conferencing, email and
M-banking have so far been unable to penetrate.
One critical aspect to be considered here is the share of relevant consumers for
relevant services. Housewives and teenagers of course do not have any immediate
value added for advanced services. Operators here face a challenge to market their
services exclusively for corporate consumers.
GSM OPERATOR- BHARTI
• Brand Name: AIRTEL

• Network: GSM 900, 1800, GPRS, EDGE
• Network Coverage: 17 Telecom circles
• Subscriber base: 7,062,443 (May 2004)
• Market Share: 26%
• ARPU (Mar. 03-04): 8,4 €
• Subscriptions: Post Paid, Pre Paid
Bharti was the first mobile operator operational in India. India’s first GSM based
phonecall was made on Airtel network.
BHARTI
Services Business Model and Revenue Sources

• VOICE BASED • Content and Data Downloads
• Voice mail
• Offers Java games, logos, ringtones through their content
• Dial a service portal
• SMS BASED • Also in agreement with Yahoo India for basic content
download
• Info messages
• SMS Chat • Advertising Campaigns
• Email access via SMS • Latest movie ringtones, wallpapers available at their content
• Ringtones and Logo downloads portal
• Instant Messenger • Hosting third party campaigns like Coke and Master Card
• GPRS • SMS Polls on TV
• Mobile office • Users can vote through SMS for polls organized by TV
• Content Portal Channels
• Revenue sharing agreements with TV channels
• OTHERS
• Prepaid Recharging
• MMS
• Fax & Data, CLIR, Prepaid Roaming, • Subscribers can recharge either at ATMs using their ATM cards
Or
• Itemised billing,
• Location based services • Direct debit facility with the subscriber’s bank account (SMS
based service)
HUTCHISON TELECOM
• Brand Name: HUTCH

• Network: GSM 900, GSM 1800, GPRS, EDGE
• Network Coverage: 14 Telecom Circles
• Subscriber base: > 5 million
• ARPU (Mar. 03-04): 9,9 Euro (Highest in GSM segment)
HUTCHISON TELECOM

• Voice mail • Offers News, Java games, logos, ringtones over GPRS in partnership with
• Dial in services ( Dial a Pizza etc.) MSN and Mauj
• Voice Response • Also in agreement with Yahoo India for basic content download
• SMS BASED
• Info messages • SMS Polls on TV
• SMS Chat • Users can vote through SMS for polls organized by TV Channels
• Yahoo Email & Messenger access via SMS
• M-Banking
• Ringtones and Logo downloads • Mobile Banking
• Instant Messenger • HDFC and Bank of Punjab customers can access their accounts by SMS
• BBC News
• GPRS
• E-Mail and communications
• MSN & Yahoo email
• Users can access their office emails through GPRS or SMS
• Content Portal
• Hotmail and MSN Messenger
• OTHERS • Yahoo email and Messenger
• MMS
• PUSH TO TALK over GPRS
• Fax & Data, CLIP, Call forward, CLIR,
Prepaid Roaming,
• Location based services
• Unified messaging (UMS)
IDEA
• Brand Name: IDEA

• Network: GSM 900, 1800, GPRS, EDGE
• Subscriber base: < 4 million
• ARPU (Mar. 03-04): 8,05
IDEA

• Voice mail (Voice Courier) • Offers News, Java games, logos, ringtones over GPRS
• Voice response
• Also in agreement with Yahoo India for basic content download
• Dial and Buy
• SMS BASED
• SMS Polls on TV
• Info messages
• Users can vote through SMS for polls organized by TV Channels
• Chat – SMS, GPRS and PC
• Web and POP3 Email access
• M-Banking
• Global and Group SMS • Missing
• Language SMS
• City Guide
• GPRS • Web Mail and POP3 Access through SMS
• Surfing
• Content Downloads
• OTHERS • Prepaid recharging
• MMS • In agreement with Banks for Prepaid recharging through ATMs or
• Fax & Data, CLIP, Call forward, CLIR, through SMS (account debit)
Prepaid Roaming,
BPL Mobile
• Brand Name: BPL

• Network: GSM 900, 1800, GPRS
• Subscriber base: < 2 million
• ARPU (Mar. 03-04): 7,85
BPL Mobile

• Voice mail • Offers News, Java games, logos, ringtones over GPRS
• Dial and Buy Services
• SMS BASED
• SMS Polls on TV
• Info messages
• Chat – SMS, GPRS
• Web Email access
• M-Banking
• City Guide • Customers of HDFC Bank and ICICI Bnak can access their accounts (SMS
Based Service)
• GPRS
• Surfing This August 2004, BPL has introduced its first
• Content Downloads own manufactured handset in India
• OTHERS
• MMS
• Fax & Data, CLIP, Call forward, CLIR,
Prepaid Roaming,
BPL is a leading player in consumer electronics like TV, Fridge, Washing machines
etc. BPL has produced it’s own handset this August. Priced at around Euro 90, the
BPL handset will compete with the likes of Nokia, Motorola, Sony-Ericsson and
Siemens for a pie of the Indian handsets market. Industry sources said that the
handset will be part of the BPL consumer durables stable and will be manufactured
at its Bangalore unit.
Sources said that the company had tied up with Japanese electronics major Sanyo
for providing lithium batteries for the handset. The company is also planning to
launch handsets at higher price range.
Expansion Strategy of GSM Operators –
d
“Acquisition”
ire ire
d
c qu qu
A Ac
Sterling Cellular Airtel Hexacom

Hutch
Hutchison Essar
Aircel Digilink
With stiff competition in sight, bigger operators
Hutchison Max Telecom
are consolidating their subscriber base by
Aircel* acquiring other smaller operator licenses
d
re d
ui ire
Ac
q
c qu
A
Aircel* RPG Cellular Idea Escotel
*Aircel was recently acquired by HUTCH

As explained earlier, operators are constantly seeking to consolidate their standing

in the market. Indian telecom regulations limit the number of operators in each
circle to four but it does not limit operators acquiring each other. Airtel and Hutch
have been very active in this mergers and acquisition activity.
Hutchison Telecom (Hutch) recently acquired Aircel which operated in state of

Tamil Nadu.
Similarly, Airtel acquired Hexacoms licenses for states of Rajasthan and few north-
eastern states.
CDMA Operators
Understanding WLL(F) & WLL (M)
WLL (M) = Wireless in Local Loop (Mobile) WLL (M) = Wireless in Local Loop (Fixed)
• Classified as fixed
line telephones
• No Roaming
• Works within a city
limit
• SMS
• Data Baud for
Internet
• Mobile Handset (Just • Two options:
like GSM)
• FWP
• Roaming
• FWT
• MMS
• SMS
• Java
• Data Baud for
Internet
Understanding WLL services and how they are classified has been a big confusion not only for
consumers but even to an extent some services providers have taken a long time in understanding
the services completely.
CDMA in India is known as WLL (Wireless in local loop). This WLL is further divided into two
categories fixed and mobile. However, the technology standard is similar in both cases i.e. CDMA
2000 1X
WLL fixed refers to handsets which can replace the existing fixed line sets.
WLL mobile refers to handsets which have all the features like GSM handsets.
WLL fixed works within a city while WLL mobile functions similarly as that of GSM mobile.
There are 2 categories to choose from in WLL Fixed:

1. WLL- FWP: Fixed Wireless Phone (without wires)
2.If consumers are willing to keep their old phone set then they have an option to opt for WLL
(FWT) Fixed Wireless Terminal. FWT is connected to existing telephone set.
Both the phones come with a data port which can be connected to a PC/Laptop serial port through
a special data cable. The data cable comes along with an installation CD and it is available in the
open market for five to ten Euros.
Presently LG, Samsung and Nokia are the leading equipment suppliers for WLL mobile in India.
For WLL fixed, LG and Samsung handsets dominate the market.
WLL fixed phones have an option to send SMS.

CDMA Segment overview
• Present Standard: CDMA 2000 1x

• Started in March 2003
• Offered by 6 operators
• LG and Samsung hold majority device
market share
• Streaming media options
• Always on internet connectivity @ 114 kbps
CDMA growth drivers
Growth in Fixed line in 2003 (much due
to CDMA fixed wireless)
• Nationwide roaming
• Bundled internet facility
• CDMA phones come with a
data port where consumers
can connect to internet at
114kbps
• Easy subscription availability,
starting from Euro 10 only
• Huge variety of content
• Online bill view
• SMS based service activations
• Aggressive launch
Source: IDC Asia/Pacific Semiannual Telecom Fixed-
Line Services Tracker (2H 2003), March 2004
There was a big debate in India just before the launch of CDMA services that will it
succeed or not? Recent trends reveal that CDMA is here to stay, but that doesn't
mean that it is going to overpower GSM.
Nationwide roaming helped to boost subscribe base, option of connecting to

internet using a simple data cable proved as a catalyst in promoting CDMA services
in India.
The call tariffs over CDMA were initially lower as compared to GSM but today
CDMA and GSM call tariffs are moreover same.
The calls are tariffed again on the distance parameter which is already explained
earlier.
CDMA Operator Subscriber Base
6,414,047
Statistics include WLL(M) and WLL (F)

Reliance, a CDMA 2000 1x
operator, is a undisputed
market leader
Both WLL(F) and WLL (M)

have been immensly
sucessful in Indian Market 800,000
625,267
29,908 27,632 130,000
Reliance Tata HFCL Shyam BSNL MTNL
Private Operators State Owned
Reliance Infocomm was the first private operator to start with the CDMA services
in India. However, BSNL and MTNL offered CDMA before Reliance they were
unable to tap subscribers.
Reliance’s strategic alliance with LG and Samsung to offer their handsets along with
their subscriptions proved to be a catalyst in the process. Tata Indicomm which
was the second private operator to offer CDMA services initially failed to attract
consumers but since early 2004, it has revived its strategy and has been able to gain
some market share.
CDMA Operators Market Share
State Ow ned
12%
BSNL MTNL
Shyam
10% 2%
HFCL 0%
0%
Tata
8%
Private
88%
Reliance, having introduced its service in March
Reliance
80%
2003 has emerged as market leader with a huge
80% market share
CDMA Operator Business Model
Similar to GSM model, third party

Movies billing is also missing from
CDMA operators business model
Royalties
Due to spectrum availability,
operators find it feasible to offer
high end content themselves
TV Channels
Internet surfing facility over
Revenue Sharing
CDMA is catalyst in boosting End User
subscriber growth
Billing
Operator
Services hosted Content Downloads

and offered by
operator Java Games
Internet accessIndia Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES // 61
Due to spectrum availability it is feasible for the operators to introduce enhanced

data services over their networks. This includes streaming media, JAVA games etc.
The possibility for offering enhanced data services has proved to be a catalyst in
promoting CDMA services in India.
Reliance Infocomm floated a company by the name of Paradox Studios which

develops interactive content for Reliance’s subscribers. Following the trend Tata
Indicom also formed an alliance with Nokia and some major content developers to
offer 1000 games to its subscribers.
The revenue sharing percentage between TV channels, movie production houses,

websites is moreover similar to GSM operators.
As mentioned earlier the sets come with a data port for internet connectivity, these
CDMA operators also function as a internet service provider. Consumers have to
dial in a specific number to activate their phone as a modem and they can use 114
Kbps internet almost everywhere in India.
CDMA Operators - RELIANCE
• Brand Name: RIM- Reliance India Mobile

• Network: CDMA 2000-1x
• Subscriber base: > 6,8 million
• ARPU (Mar. 03-04): Euro 13
Reliance

• Voice mail • Offers News, Java games, logos, ringtones
• Call forward
•Reliance has formed a new company called PARADOX
• 3 Way Call conferencing STUDIOS, which develops content for its network
• SMS BASED • View Bills
• Info messages
• Streaming media
• International SMS
• New songs from movies, Live News channels
• M-Banking
• Ringtones
• SMS Polls on TV
• Language SMS
• City Guide
• Movie info
• Song clips
• Mobile Banking
• OTHERS
• with HDFC bank
• CLIP, Call forward, CLIR, Prepaid Roaming,
• Itemised billing
• R-CONNECT – Users can use their
phones to connect to internet. Reliance • Missing
also serves as an ISP in this model.
• Users need a data cable to connect to their
PC serial port and configure the dial in
settings
TATA INDICOM
• Brand Name: TATA or TATA Indicom

• Network: CDMA 2000-1x
• Subscriber base: > 2 million
• Market Share: 8 – 10%
• ARPU (Mar. 03-04): Euro 10-12
TATA INDICOM

• VOICE BASED • Content and Data Downloads from their portal
• PUSH TO TALK • Offers News, Java games, logos, ringtones
• Voice mail
• View Bills
• Call forward
• Streaming media
• 3 Way Call conferencing
• New songs from movies, Live News channels
• SMS BASED
• Info messages
• International SMS • SMS Polls on TV
• Ringtones
• Language SMS
• City Guide
• Mobile Banking
• OTHERS
• Missing
• CLIP, Call forward, CLIR, Prepaid Roaming,
• Itemised billing
• SMART WIRELESS – Users can use their
phones to connect to internet. TATA also • Missing
serves as an ISP in this model.
• Users need a data cable to connect to their
PC serial port and configure the dial in
settings
CHAPTER THREE
INTERNET SERVICE
PROVIDERS
Priyanka Kapoor
Vipul Chauhan
Growth Drivers
• Falling tariffs
• Availability of acess options:
• Dial in
• Cable
• DSL
• ADSL
• Leased Line
• ISDN
• Internet subscriptions offered as freebies along with other hardwares

i.e phone connection, PC, mobile phones, office equipment etc.
• Content downloads – mp3, pirated software, movies etc.
• Yahoo and MSN Messenger voice feature lured consumers to
subscribe to internet
• Mobile and IP convergence – data downloads
Internet made its entry in India in the year 1995 when VSNL (Videsh Sanchar
Nigam Limited) started with dial-up connections. The first five years of internet in
India could be defined as an incubatory stage where speeds were limited to
maximum of 64 Kbps ISDN. Initially and even today most of the home users used
to access internet over 28.8 K and 56 K modems.
Using internet over phone connection with a modem has two disadvantages, first
the phone line is blocked and then one is subjected to pay the regular call charges.
This syndrome still exists today with the home users but they still prefer using
internet through 28.8 K-56 K modems at home. This situation means that there is
a huge potential for broadband service providers to attract customers for their
services but only at prices which are affordable. Always on connectivity will help
users (both home and corporate users) to keep their phone lines free and avoid call
charges.
Present day internet subscriptions are available as freebie item along with purchase
of a desktop PC, printer, fax machine etc. This is possible due to reduced prices.
Price range for internet subscriptions is as follows:
•For a dial-up connection: Euro 5 for the installation CD and then
consumers have to pay call charges for their minute usage, which is 0.02 Euro per
minute.
•Lease lines: Euro 9000 per year
•Broadband @ 128 K: 18 Euro/350 MB/3 months validity
•Broadband @ 128 K: 35 Euro/750 MB/6 months validity
•Broadband @ 256 K: 51 Euro/1 GB/6 months validity
Industry Developments
3G Broadband
Wi-fi
Smart
Wireless
DSL/ Wi-Fi
ADSL
2G
Net over
Cable
TV
64k
1G 28.8k 56k ISDN
1995 1997 1999-00 2002 -03 2003 2004 - onwards
There is a big way to go for the Indian internet industry still. Although it has been
almost 10 years since internet came to India there has been less progress on the
bandwidth front.
Cyber cafes initially chose 64 Kbps ISDN connection to run multiple PCs. Today
these cyber cafes are opting for either smart wireless or DSL broadband. Home
users in metropolitan cities have chosen between regular 56 K modem connection
or internet over cable TV. Cyber café business is not doing well at least in
metropolitan cities because the home users which used to visit their cafes earlier to
access internet now have option to access internet either over cable TV connection
or through smart wireless or subscribe to a 64 Kbps always on connection (not
over phoneline). From Euro 1.8 per hour in 1996 to Euro 0.04 per hour today, the
prices have come down in a big way. Similarly, it is feasible now for the home users
to go for their own connection rather than visiting a cyber café.
The connectivity options followed by consumers as of today are:-

•Home users: mainly dial-up, smart wireless or always on connection
over cable TV
•Small businesses: dial-up, smart wireless or always on connection upto 128
kbps
•Large businesses: DSL, ADSL, lease line
Wifi has a long way to go in India. There are two main reasons for this, first high
prices of wireless for routers and second consumer illiteracy towards wireless
internet. Many large business houses today have Wifi networks but Wifi hotspots
are missing in a city at places like cafes, restaurants etc. Hotels and convention
id b db d i h h hEh bl Wifi A f h
Access modes
others
DSL 8%
10%
ISDN
10%
Dial Up
55%
Leased lines
17%
Dial up is the first preference of
household users, while
corporate world is emerging as
the lead customer for ISDN
and DSL
As explained earlier dial-up is still the first preference for accessing internet in India.
Out of the entire dial-up segment almost 80% are home users. The rest 20% is
shared by small businesses.
In a small internet population of 6 million subscribers majority of the market share

is still with the dial-up connections.
Internet Usage
90
50
43 41 % of Users
35 38
27 23 % of Time
9 9 11 6 4 4
M u s ic / M o v ie s /
Chat
E m a il
A c a d e m ic In fo
E n te rta in m e n t
D o w n lo a d s
Jo bs
In fo rm a tio n
E d u c a tio n /
The above slide shows which features of internet are used most in India. Almost
90% of users subscribe to internet just because of emails, while only 27% access
internet for entertainment purposes.
This clearly shows that although India is now having exposure to latest technologies
in internet, the consumers are not infact ready to experience the advanced features
of internet and high bandwidth. Their main objective of subscribing to internet is
to be able to read emails.
Users are yet to experience the thrill of high speed internet where they can
download huge data volumes in lesser time and experience streaming media
features. Therefore, at such a crucial stage ISPs offering broadband have a big
challenge to lure customers for subscribing to broadband connections.
Broadband in India
• Available Data download bandwidth: 64 kbps – 2 Mbps

• Internet over cable TV is the latest trend in metropolitan cities
• Internet through ethernet cable is capturing market
• Intensive investments in Fiber optic networks have enabled
ISPs to offer broadband services
• CDMA ”Smart wireless” enables individual home users to
connect at 114 kbps
• Cyber cafes opting for ”smart wireless” or DSL instead of Dial
in connection
• Home users prefer dial in services (upto 56k) and business
houses go for ISDN and above
• Huge market for Cable and DSL/ADSL modems
Access Modes as per Customer
Segments
SEGMENTS PRESENT CURRENT PRICES FUTURE
Present Access Preference • Dial in: 0,28 Euro/Per minute FUTURE
Households • Cable: 20 Euro/64 kbps/monthly
• Dial-in, Cable, Smart Wireless • Smart Wireless,
• Smart Wireless: 0,3 Euro/minute Ethernet Cable, ADSL
FUTURE
Present Access Preference • Wi-Fi: 15 Euro/ 24 hours
Hotels • Wi-Fi Broadband
• Ethernet Cable, Wi-Fi • Ethernet Cable: 10 – 15 Euro/24
hours
Present Access Preference • DSL: 30 Euro/256 kbps/1 GB FUTURE

Small Businesses Download • DSL, ADSL
• Dial in, Smart Wireless, Ethernet
Cable
Present Access Preference • DSL: 180 Euro/128k/10 GB FUTURE

Cyber Cafes • DSL: 200 Euro/256k/6 GB
• Dial-in, Ethernet Cable, DSL • DSL, Wi-Fi Hotspots
Present Access Preference • ADSL: 10,000 Euro/Leased FUTURE

Large Businesses line/Yearly
• Cable, Leased Line, DSL • DSL, ADSL, Wi Fi
Broadband
Subscriber base of leading ISPs
1,004,246
691,717 686,642
629,411
354,596
174,606
73,872
BSNL MTNL Sify Ltd. VSNL TATA Internet Data Infosys Touchtel
Services Ltd. Ltd.
Market Share of Leading ISPs
Others
Extensive infrastructure investments by Data Infosys
14% BSNL
BSNL has helped them to retain No. 1 4%
25%
position among ISPs Dishnet DSL
4%
TATA Internet
Services Ltd
4%
MTNL
VSNL 17%
15% Sify Ltd.
17%
Major Service Providers
Company Services Broadband Main Target Customers
Sify • Internet, VPN, VoIP, Enterprsie

Solution, Web Hosting, e-Business,
Yes Corporate clients and households
Web Conferencing, Wi-Fi, Cyber

cafes, International gaeway
Bharti • Internet, VPN, VoIP, Wi-Fi, Centrex,

ISDN, Leased Line
Yes Corporate clients
Touchtel
MTNL • Dial in, ISDN, Leased Line, VoIP,

ADSL, VPN, Managed Bandwidth
BSNL • Dial in, PSTN, ISDN, VoIP, OFC,

Web conferencing, Managed
Bandwidth, international gateway
Spectranet • VPN, VoIP, DSL, ADSL, Ethernet , Yes Households

Web conferencing
E-Commerce in India
• Only 5 million credit card holders in India

• Online transactions with credit cards are looked
upon as a security threat to consumer privacy
• Instead of Credit Card transactions, Cash on
Delivery is practised widely
• Online movie ticket booking, Air tickets and
database downloads are just some of the e-
transactions practised in Metro cities
INDIA is expected to log the highest compounded annual growth rate (CAGR) of
83.7 per cent among Asia-Pacific countries in e-commerce revenues between 2003-
08, even exceeding the growth rate displayed by neighboring China in the five-year
period, according to research firm IDC.
"On a country-by-country basis, India is expected to show the highest CAGR of

83.7 per cent in e-commerce revenue from 2003 to 2008, thus marginally exceeding
the CAGR of 81 per cent expected in China," according to IDC's forecast on Asia
Pacific internet market.
However, China's e-commerce revenue is projected to represent one third of the

Asia/Pacific market excluding Japan by 2008.
The total E-Commerce transaction value in India is estimated to be around 8,7

billion USD in 2003-04
In 2003, the Central Government proposed total outlay of US$560 million for
national plan on e-governance
CHAPTER FOUR
EQUIPMENT
MANUFACTURERS
Vipul Chauhan
India Equipment Market (in billion €)
2.74
1.80
Network equipment market slowed down in 2003-04
showing a fall of 34,3% over last year
2002-03 2003-04
1.55
Netw ork Equipment
Mobile handsets market swelled to 1,55 billion Euro during

Mar. 03-04 showing a growth rate of 568% over last year!
0.23
0.05 0.05
Fixed Line handsets market remained moreover constant
2002-03 2003-04
showing consumer interests has shifted towards mobility
Fixed Line Phones Mobile Phones
Market Growth Drivers
Handset Market
• Low call tariffs made it possible
to afford a phone
• More and more wide variety in • Major network expansion
handsets activities by operators to capture
subscriber base
• Camera and multimedia enabled
phones Primary factor • Huge geographic expanse made
network business lucrative
• SMS services
• Long term business, as remote
• Content downloads areas in India are still untapped
• As operators are incapable of
maintainence, companies offered
AMC
Network Equipment
As a local cultural trend consumers are very much concerned about cost v/s utility
factor. Handsets which are priced beyond 150 Euro do not sell equally well as
compared to the ones priced between 100-150 Euros. Buying a handset is one
thing, to be able to use (afford) is another. Phone tariffs which have fallen over
90% during last four years have made it possible for a person to afford a
subscription. Handsets with colored screen also prompted consumers to switch
over.
Camera and multimedia enabled handsets are slowly making their way into the
Indian market. Although there might be only 3% of total mobile population using
camera phones. The similar syndrome is also applicable to GPRS enabled handsets,
GPRS penetration in India is estimated to be somewhere between 8-10%
maximum. Entertainment features on a phone like ringtones, logos etc. further lure
customers towards owning a mobile phone.
On the network side, both GSM, CDMA and fixed line operators are planning
major network expansion all across India. Operators expects the tele density to rise
in India and therefore, it is required that all of these operators have network
coverage to tap new consumers.
The dynamism seen today in the Indian communications market is very much
because of the affordability factor, which means low call costs prompt consumers
to buy handsets or to subscribe to operators and this subscriber addition prompts
operators to behave in an optimistic way and invest towards network expansion and
other related activities.
Major Global Players in India
Companies Type of Activities Since Locations
• R&D setup, Country office • 1990 • New Delhi, Bangalore &
Nokia • Nokia Ventures recently opened • Nokia Ventures-2004
Hyderabad
• Nokia Ventures in Pune
• R&D setup, Software Development,

• 1986 • New Delhi, Gurgaon,
Design
Motorola Bangalore & Hyderabad
• Manufacturing Radio Products
• Manufacturing Network Equipment, • 1903 • New Delhi, Bangalore,

Ericsson OF Cables, AXE Switches Rewa, Kukas &
Hyderabad
• R&D setup • 1995 • New Delhi & Noida

Samsung • Manufacturing TVs, Refrigerators,
Aircon.
• R&D setup • 1997 • New Delhi, Noida &

LG • Manufacturing TVs, Aircon &
Bangalore
Refrigerators
Indian Equipment Manufacturers
Companies Business Groups
• Colour TVs, Washing machines
BPL • Mobile Phones (first handset launched in Aug. 2004)
• Mobile Phone manufacturing (phones are

manufactured by VK Coproration in Korea and they
VK Munoth are imported)
• Manufacturing Network Equipment, Switches

ITI Ltd. • Fixed line telephone sets
• CDMA systems
HFCL • Wireless Network equipment, Optic fiber cables
• Telephone sets for fixed line, PBX systems

TATA
Handset Market Players in India
US Companies European Companies Asian companies
Low cost Handset

Vendors
Asian companies are aggressively following the Indian market because they know
that cheaper and affordable goods move faster than the sophisticated and expensive
goods.
LG, Samsung, Panasonic, Benq phones are available within a range of 100-200
Euros and handsets available in this price range move faster in the market.
Although, other players like Nokia, Motorola and Siemens also have cheaper
handset models, the overall situation in the low end phone market looks very
promising for the low cost Asian handset manufacturing companies.
Consumers first need quality and reliability, but at the same time they also need
variety. This situation makes the handset market appear lucrative for the low cost
handset manufacturers.
Ericsson is in a very critical state in India as they have been unable to capture any
major market share. The same situation also applies on Siemens.
Handset costs vs. Handset sales
65
Around 65% of all handsets

sold are priced below 150
Euro
C ons um er %
High end phones with
multimedia, colur screen,
GPRS, Bluetooth, Camera 20
are yet to make their
penetration felt in the Indian 10
market 5
100-150 200-250 200-300 300 & more
Handset Prices in Euro
Equipment Vendors - NOKIA
Nokia India Total Sales for Mar. 03- 426.11

04 was 590 million Euro
GSM Handset sales were 426
million Euro alone! Nokia is the India Sales figures in million €
leader in GSM Year March 2003-04
The company also made its mark in
CDMA category
120.37
Nokia Introduced 17 new phones in
Indian Market
Nokia has won 250 million Euro 33.33
9.26
worth of orders already
GSM Phones Netw ork CDMA Phones Enterprise
Nokia is the market leader in GSM phones. Nokia is also trying hard in the CDMA
handset segment, 50% of Nokia’s upcoming models for the Indian market are
CDMA models. This shows Nokia is aggressively trying to penetrate into the
CDMA segment. There 2280 model has been quite successful in the CDMA
segment.
Nokia’s 3310 and 3315 have been very successful models in the Indian market. The
latest 6600 with camera phone is the latest attraction for consumers willing to spend
over 350 Euros.
Nokia has been able to deliver quite well on the network side also. They have
delivered core network for Idea Cellular and recently won a huge contract worth
250 million Euros for network expansion with Bharti.
Equipment Vendors - LG
418.33
India Sales figures in million €

Year March 2003-04
92.22
7.41
CDMA (M) CDMA (F) New GSM Sets
•Total India Sales were 518 million Euro

•CDMA (Mobile) handset sales were 418,33 million Euro
•RD-2030 CDMA handset was the highest selling Mobile handset in India !!!!
•CDMA (Fixed) sets also made their way into Indian homes, LG Sold 700,000
CDMA (F) sets
Besides wireless, LG is also a leading player in Consumer Electronics.
LG has a manufacturing facility in Noida India where they manufacture

Airconditioners and other consumer durables
Equipment Vendors - Samsung
117.04
82
Total Handset
Revenues in
2003-04 were
close to 200
million Euro
CDMA Sets GSM Sets
Samsung is a formidable player in CDMA segment. Its CDMA Mobile handset

constituted of most of its revenues in CDMA Segment.
Both LG and Samsung dominated the CDMA market in 2003, until Nokia cut
some of their market share,
Samsung is also a leading consumer durables brand in India. They are into TVs,
Washing Machines, Refrigerators etc.
Equipment Vendors - Ericsson
458
Ericsson won a huge order with
Bharti for Network Outsourcing India Sales figures in million €
worth 335 million Euro!
The company is also engaged in a
EDGE pilot project with Bharti 269
Network Equipment & maintenence
2002-03 2003-04
Sony Ericsson made sales of 0,4 million Euro in 2003-04. Sony Ericsson is
marketing their model T105 aggressively, priced below Euro 95.
Equipment Vendors - Motorola
Total India sales were 305,6 million

Euro 187.22
A growth of 36% in revenues over India Sales figures in million €

last year (2002-03) Year March 2003-04
Made a deal worth 256 million
Euro in Feb. 2004 for network 80.56
expansion services
36.67
Netw ork GSM Phones CDMA Phones
Motorola is very aggressive upon the Network side, they delivered the EDGE
network for Hutch. In GSM category the company is heavily marketing its C200
Model which is priced at 65 Euro (with an Airtel connection)
Equipment Vendors - CISCO
194.4
India Sales figures in million €
Year March 2003-04
Around 80% of their business consisted of
Switches and Routers, rest included IP 107.4
Telephony, W-Lan, Storage and Optical
Sw itches/Routers Advance Technologies

301.9
205.4
172.2
Company made a 47% jump in revenues in
2003-04 over last year
2001-02 2002-03 2003-04
Equipment Vendors - Lucent
Revenues saw a sharp 26,6% dip in

2003-04 because company got out
of GSM business 373.1
Revenues
About 70% of revenues in 2002 -
2004 came from Reliance CDMA
network deal, for which Lucent was 274.1
a single vendor
138.9
2001-02 2002-03 2003-04
Handset Market Share - GSM
64.8
Nokia is the undisputed

leader with 64,8%
market share in GSM
handsets India handset market share % - GSM Handsets
Samsung and Panasonic

have eaten some share 9.9
6.3 6.7 4.3 4.3
into Nokia’s market 1.3
1 1 0.5
share during last one
year
Nokia
Samsung
Motorola
LG
Hyundai
Panasonic
Ericsson/Sony
Siemens
Others
Kyocera
Handset Market Share - CDMA
37.3
LG & Samsung market 30.1

leaders with 37.3% and
30.1% market shares
respectively
15.8 India handset market share % - CDMA Handsets
Nokia is trying hard to
penetrate into the CDMA
segment 4.3 4
3.5 2.5 2.5
Nokia has introduced 4
hadsets so far for CDMA
Nokia
Hyundai
Samsung
Motorola
LG
Ericsson/Sony
Others
Kyocera
market
Handset Market Share GSM+CDMA
56
Nokia is the undisputed

leader with 56% market
share
India handset market share % - includes both GSM and CDMA handsets
13.5
7.6 6 5.6 4.1 3.7
1.5 1 1
Nokia
Samsung
Motorola
LG
Hyundai
Panasonic
Ericsson/Sony
Siemens
Others
Kyocera
Challenges for Handset Vendors
• Retain market share?

• How to build upon brand value?
• Win consumer trust….and retain
• Building up supply chains to reach into all parts across the
country
• To continue in handset business, one needs to be present in
both CDMA and GSM segment
• Face price threats from low cost manufacturers
• Ensuring sales of high end phones in the market while
pushing low end phones
• Speed up the integration of latest technology into phones and
introduce into the market – Time to market !!!!
Challenges for Network Equipment
Vendors
• How to increase number of repeat customers?

• How to have exclusive customers
• Win contracts for network expansion in remote
areas
• Penetrate equally in CDMA and GSM business
• Local R&D is a good idea, how about Local
manufacturing?
CHAPTER FIVE
CONTENT BUSINESS
Vipul Chauhan
India Media market structure
Text Sound Pictures New media
Film &
Dailies Magazines Radio Records TV Formats Portals Access
• Times of India • India Today • AIR MW • Universal • Star TV • Indiatimes • Sify
Leaders • AIR FM • Bremen • Sony
• Columbia Tristar
• NDTV
• Hindustan Times • Outlook • Universal • Mantra
• Rainbow FM
• T-Series • AXN • Zee Network
• The Hindu • Frontline • Twentieth century
• Radio CITY
• Arista • DD (State Fox • Touchtel
• Indian Express • Newsweek • Radio Mirchi • Sify
• BMG Crescendo owned) • Mukta Arts • VSNL
• Radio Wave • Indiainfo
• Asian Age • Femina • HMV • ZEE
• Red FM • Vishesh Films • Tata Indicom
• Deccan Herald • Cosmopolitan • MTV India • Indya.com
• Local stations • Tips • HBO Asia
• Dainik Jagran • Filmfare • Music Today • V-India • Zeenews • Reliance
(Hindi) • Gladrags • Archies • Star Sports • V India • Data Access
• Malayala • Times Music • ESPN • Yahoo India
• Sarita
Manorama • NDTV
• Vanita
(Malayalam) • AAJ TAK
• Mid-Day • HBO
Till early 90s, India was a pure paper based information market where dailies and
magazines were the only source of information which was available to consumers
through retail channels.
After newspapers and magazines, TV channels are the next major source of
information. Roughly on an average an Indian household has access to over 40
channels through cable television. News channels are mushrooming almost on
monthly basis, there are some 25 news channels on air. The reason for so many
news channels on air is perhaps best known to their promoters but ever since
September 11 attacks, delivering the latest news has become a competition platform
for the channels. India is also a big market for Hollywood films, global channels
like Star and HBO have today reached the common households in India. With
over 1 billion of population, India is a huge market base for FMCG
companies and the TV channels are encashing this opportunity very well.
Television is the most commonly used medium for advertisements and
commercials. From luxury cars to suitcases and from mobile phones to tablet PCs,
all the commercials can be found today on Indian TV channels.
When it comes to advertising, FM channels have now made their presence felt as a
strong competitor to TV channels. Times FM was the first FM services to be
launched in India during early 90s, today there are more than four FM channels in
each of the metropolitan cities in India. FM channels are a major source of
information in form of news and updates. FM licenses are available for 400,000
Euros.
Speaking of content downloadable for mobile users, internet portals like yahoo,
MSN and indiatimes have emerged as market leaders.
Content Value Chain in India (Compressed)
Content & Application

Content providers Developers (Embedded/
Content Aggregators/
External) Vendors
• NDTV • Yahoo
• ZD-Net
• CNN • MSN
• E-Zest
• BBC • Indiatimes
• Enable
• ESPN, Star
• Indiagmes
• Channel 9
• Ruksun
• AXN
• Aaj Tak
Network Operators Device Manufacturers Value added resellers
• Hutch • Nokia • Matrix

• Airtel • Motorola • Priority Dealers
• Idea • Samsung • Sanchaar Hat
• BSNL • Ericsson
• Panasonic
Content Players
Property
Developers Publishers Aggregators Operators Portals
Activity owners
Leaders • Ten Sports • Mauj • Microsoft • NDTV • Airtel • Indiatimes

• DD • Raptor • BPB Mult. • Yahoo India • Hutch • NDTV
• NDTV • Indiagames • Yahoo • MSN India • BSNL • Aaj Tak
• PTI • VCL • Google India • Tata • Zee Network
• Paradox Studios • DD India
• Bombay Stock • Reliance • Yahoo
Exchange • CDAC • Indiatimes
• Idea • MSN
• Jadoo Works • Zee Network
• Sharekhan • Spice • Indiainfo
• Dhruva • Indiainfo
• Milestone Inter. • Sify
• BPL • Sify
• Lumen Phon • Mantra
• Octoplus
Top Content Downloads
Wallpapers Games
11% 6%
On all wireless networks, ringtones are
the hot favourite among consumers
Logos
17%
Games are new entrant, but slowly Ringtones
gaining market share 66%
Ringtones are the most downloaded form of content over wireless networks.
The ringtone market in India is estimated to increase from $17 million in 2002 to
$400 million by 2005. Cellular subscribers in India account for nearly 200,000
downloads a day. Almost 20% of these are forwarded ones.
Downloading a ringtone costs between 0.12 to 0.18 Euro while downloading a

JAVA game costs between 1-2 Euro for each game.
As a cultural aspect, Indian people are very much fond of music and the local
movie industry called BOLLYWOOD is a big source for content, which includes
ringtones based on movies soundtracks, wall papers of celebrities and logos
depicting musical instruments and movie stars.
While downloading a ringtone, a major share of revenue goes to operator and the
rest is shared between the portal and the performing arts association of India which
protects the rights for artists, musicians and other works of art.
SMS Market Size
• Approximately over 1 billion SMS are sent per

month (over all GSM and CDMA networks)
• On an average, each user sends 40 SMS per
month; this amounts to 27 million Euro of revenues
per month (only through SMS)
• SMS and MMS accounts for 8-10% of Operator
ARPU (Average)
• Almost 80% of service request like Ringtone
download, logo download, MMS download, City info
etc. are developed on SMS platform
SMS based content (1 of 2)
• SMS over fixed line is offered by

CDMA operators and Private
fixed line operators
• SMS polling for TV Channels is
the one of the most prominent &
latest business model for
operators
• Operators get to keep 80% of
the revenues arising from such
polls, rest goes to TV Channels
• Other SMS based content
includes:
• Chat
• Weather
• Dating
• News, Stocks etc.
SMS is the leading form of content overall. When fixed line operators saw
consumers shifting to mobile services because of additional facility of SMS over
voice, they found it moreover mandatory to introduce over fixed line to be able to
retain consumers.
A big boost in SMS in India is driven by TV channels. The TV channels organize

public opinion polls whereby users are requested to send their answers by SMS.
This syndrome has given a phenomenal boost to amount of SMS sent in India. FM
channels also organize these opinion polls which asks users to send SMS, but as FM
channels are only limited to metropolitan cities, SMS growth owing to FM is not as
big as compared to TV channels.
Services like city info, weather, sports, news, dating, ringtones, logos, bank account
info, timetable info are all build upon SMS platform. The cost of an SMS is 0,02 –
0,03 Euro.
SMS based content (2 of 2)
• SMS in regional languages introduced by

almost all GSM operators
• Sending SMS via ICQ, MSN and Yahoo
messengers is unreliable (delayed arrivals)
• SMS interconnectivity over CDMA and GSM
networks had problems until recently
• Instant messaging service not yet
operational (operators are equipped
however)
SMS in regional language is introduced by most of the operators but users have to
first write the message in English which gets converted into a picture message (of
local language) at the receiver’s end. Some handsets in the market are offering SMS
and menus in a local language called Hindi but as users are more familiar using
English, this particular facility has not been so successful as expected.
SMS Spam
• Numerous service messages are received if one is traveling by

road and has national roaming on the phone
• On an average 7-8 SMS are received (switching between 2-3
networks) like:
• “Dear Subscriber….thank your using XXX, while in Delhi call our
Helpline at XXX”
• “Welcome to XYZ Tel, our helpline no. is XXXX”
• “welcome to ABCTel, enjoy cost saving on roaming”
• “Welcome back to home network”
• “Wish you a happy journey”
• Marketing and advertising SMS do not exist

• Operators send their own marketing SMS like:
• “Download the latest Latin ringtone, SMS “RT Salsa to XXX”
• “Send MMS to your friends, check out our latest wallpapers”
SMS spam is so far not a great problem in India. Though location based services
exists over GSM and CDMA networks, operators have not yet utilized the full
potential of these services for their own or third party services marketing. Rarely
one gets a unwanted SMS saying that 10% discount is available on Cola bottles.
However, if one has national roaming and he is traveling by road to another city,
numerous network service messages are received which sometimes block the
memory capacity in low end phones.
Operators however do market their services and offers through SMS. This feature
is mainly for post paid consumers where operator is certain (to a limited extent)
about consumer loyalty.
Content Over Various Networks
GSM GPRS CDMA

• Content mainly offered through
portals (Content aggregators • Browsing • Online bill view
like Yahoo) • MMS picture downloads
• Content is mainly related to • Wallpapers • Java enabled games
Bollywood or local festivals e.g.
• Polyphonic ringtones (arcade, simulation,
glamorous and ethical content goes together
• Java enabled Games puzzles)
• Ringtone downloads are next to
SMS, followed by flash SMS (arcade, action) • Ringtones
and picture messages
• Yahoo email • Picture messages
• Yahoo India portal allows user
to create customized picture • MSN • Movie clips, promos
messages, logos, SMS etc. • M-Banking
• Other portals like Indiatimes • Chat sessions • Live News clips
offer:
• movie info, • City entertainment info • Game updates
dating, chat • Game replays • Stock updates
• polls
• Stock updates
• WAP was a flop in India
• Long download
periods
• Improper launch
• Confusion over
tariffs
Speaking of content over various networks:

•SMS and ringtone downloads dominate the GSM segment
•SMS, ringtones, logos and MMS are mainly to be seen with users having color
screen handsets.
•Some 1 million games are downloaded daily over all networks, the share of JAVA
games (paid) is estimated to be some 30%
•M-banking over GPRS and CDMA is mainly SMS based
•Yahoo and MSN emails are also available through GPRS
•Streaming media is available in GPRS but it is more quick to download and view a
moving clip in CDMA network
•Financial services like M-banking and loans for cars and homes are again build
upon basic SMS platform.
•Dial a service is a very common model offered by almost all operators where
consumers dial a fixed number and can order a pizza, flowers or request a bank to
open an account.
The range of content available over CDMA is more varied and consists of lot of
options. Subscribers can watch promotional movie clip and news headlines live
(streaming). The range of games available over CDMA is also very huge and mainly
it consists of JAVA based games.
Content offered by ISP and TV
Channels
Channel
TV
+ ISP ISP
Channel
TV Signal TV Signal + Internet +

(Digital + Hosted
Analog) Content + Braodband
Internet
Cable TV
Service
Provider
Subscribers are
offered TV
Channels +
content +
internet
When it comes to content, the above slide shows the business models for ISPs and
TV channels.
Cable service providers pay a set-fee to channels and collect monthly fees from
consumers. For providing internet, they collect separate fees from consumers.
The role of cable TV service providers is a very crucial one in the whole context.
Cable TV service provider is actually a reseller for TV channels but in the recent
scenario these cable TV service providers have a more crucial role to play even for
the ISPs. These service providers have their networks in residential as well as
financial and city centers (RF cable networks). Therefore, they can easily carry both
TV signals and internet to the home and business users. Although this trend is not
visible elsewhere except metros but we foresee that these service providers will
have a huge role to play in coming years because it might not be feasible for ISPs to
make investments themselves in building a distribution infrastructure in each and
every town, but these service providers exists in almost all metros and cities and
towns all across India. However, the bandwidth offered over such network is
presently limited to 64 kbps but that is good enough for the consumers who are
planning to switch over from dial-up connections.
Content Costs (in Euro)
1.9
With the ARPU falling,

operators have to
concentrate on introducing
more and more cost viable
content to ensure optimum The price range for
revenue level Java games starts
from 0,9 €
0.18 0.18
0.12 0.12 0.1
0.03 0.05
MMS
Games
SMS
Message
Ringtones
Polyphonic
Logos
Wallppers
Ringtones
Picture
Java
SMS costs a very penny amount in India and therefore is the most successful. MMS
has not been able to gain potential because most users are unaware on how to
configure MMS settings on a phone.
Content Portals in India
• Logos
• Picture messages
• Ringtones
• Flash SMS, Blink SMS • Ringtones
• Wallpapers • Screen Saver
• Java Games • MMS
• Polyphonic ringtones • Picture messages
• M-Cards • Ringtones • Hotmail on SMS
• Dating • Dating • Logos
• Astrology • Astrology • News
• Game News • Game News Accessible to Orange and Hutch
customers only
• Group SMS • Email on SMS
• Jokes
Downloadable for subscribers of
HUTCH, AIRTEL and SPICE • Movies
only
Downloadable over all GSM Networks
Yahoo, Indiatimes and MSN are leading content portals in India offering range of
services like Emails, Chat, Dating, Matrimonials etc. For mibile users these portal
act as a source for downloading content like ringtones, logos, wallpapers and Java
Games etc. Users who download content are billed by the operator, not by the
portal.
Leading Content Developers
Company Development Platforms Products Alliances
J2ME, BREW, Smartphone, Games, logos, wallpapers, Content management for

Mauj Symbian, SS7 ringtones HUTCH GPRS users on
MSN portal
J2ME, BREW, Smartphone, Games, ringtones, logos Not Known

Octoplus Pocket PC, Palm, SMS and
WAP
WAP, SMS, Symbian Ringtones, logos, flash Content creation for

Phoneytunes SMS, ASCII SMS numerous operators and
portals in India and
outside
Indiagames Symbian, BREW, Smartphone Content creation for

Games for consoles, PC
and Java, I-Mode operator portals, GPRS
and Mobile. Also
networks, advisory to
Advergames.
Nokia (one of the eight
companies worldwide)
Exclusive games for Content development
Paradox J2ME, J2EE, BREW, Java
Reliance CDMA for Major CDMA
Studios Subscribers operators worldwide.
Gaming Market in India
• Industry size < 1 million Euro

• Piracy industry: thrice as big
• Venture capital funded industry
• Hollywood franchising is becoming popular
• Spiderman and The Day after Tomorrow
• Low development costs, between 50,000 US$ - 100,000 US$,
compared to almost 200,000 US$ outside
• Some 1 – 1,3 million game downloads each day, more than
50% of these are freebies
• Developers get 35% of revenues, rest goes to the retailer
(operator or Portal)
The conventional PC gaming has grown into a huge market but the biggest stumbling block for this
industry is the piracy market. In almost all metropolitan and semi-metropolitan cities, one can find
markets where almost each and every game is available at almost 10% of the original price. These
piracy hubs have existed ever since the computers came into India and it is virtually impossible to
eradicate such a huge piracy network completely.
Mobile gaming market in India is still in its infant stage. There are good developer companies but
they lack the vision about what to create? Here is a big potential for companies who can give
visionary insights to the local developers and get the product made in almost half the cost.
Developers get only 35% of revenues under revenue share model rest goes to the game retailer.
Downloading a Java game costs from 1-2 Euro while a simple game costs some 0,3 – 0,5 Euro.
Most of the downloaded games are free, offered by operators to gain consumer loyalty.
The local gaming developers has so far produced only few of their games as their original products
as most of the time they are doing work upon projects which are actually designed by foreign
companies for foreign operators. It is estimated that it will take next 3-5 years for Indian gaming
industry to fully mature and to be able to produce content based on local culture.
Current products, opportunities and
needs
Product category Current products Opportunities and needs
• Rintones, Flash SMS, Blink SMS, • SMS content market growing
SMS content Prank SMS is very popular • Operators seeking services which render revenues in bulk
Ring tones and graphics • Teenagers form main customer group like mobile marketing
Trivia and games • Location based services exist without
Information services marketing channels!
• Operators have outsourced their • Independent portals offering A-Z content is missing
MMS and WAP content content management to portals like • Poly’nic ringtones are hit but people would like to compose
Polyphonic tones, music clips… Yahoo India their own-and as much as possible in local music
Wallpapers, screen savers… • MMS available, GPRS downloadable • Services running on GPRS are in demand
content available
WAP-based services
• WAP based services failed to kick off
• All main operators have games • Games segment is expected to grow in coming years
Games offering • Multiplayer games are expected, not existing
J2ME, Symbian… • New opportunity space for business • Developers are available in plenty, concepts are missing
Multiplayer games… • Multiplayer games missing • Present development on J2ME, J2EE, Symbian etc.
Cross-media games… • Games cost 1 – 2 € each
• Mainly games only • Consumers need to be taught upon usage
Applications
• Email (Yahoo and VSNL) • A whole world of applications needs to be introduced and
Apps for media editing explored
Communication • Email access on hig end phones is possible but consumer
Personal productivity is unaware
• Voice mail services need to be refined
Other • Video clips available on CDMA and
GPRS • Unified messaging needs to be introduced in a
Video clip services etc. comprehensive manner
• Long download and buffering times
Voice services etc. make consumer reluctant to subscribe • Operators need m-ticketing applications.
SMS/MMS TV apps • Complexity in usage of high end
phones
Cable TV Networks in India
Digital and
Analog
Signal PURE ANALOG
Relay TRANSMISSION
Cable TV
Service
Provider Digital Decoder
In India, the cable TV transmission available for users is an analogue transmission.

Most of the TV sets in India are analog. Government is urging channels to start
broadcasting in digital formats (and some TV channels like Zee and Star have done
so) but as the TV sets are not digital, the cable service provides have to install
digital signal decoders and forward analog signals to consumers.
Digital TV in India
• Amount of TV sets in India: 92 million

• Almost 98% of TV sets are Analog, 2% of available
digital sets are imported ones
• Digital broadcast is available, digital TV sets are not
• Cable service provider keeps digital decoders,
which turns digital signal into Analog and forwards
to consumers
• High prices of Digital TV sets make consumers
hesitant
Equipment that supports digital transmissions is not made in India, which is

struggling to establish an electronics-manufacturing base, and therefore must be
imported. Currently, import duties for much digital transmission equipment are
51% percent, making import non-feasible.. "The lack of electronics manufacturing
in the country is the biggest problem”
What is Missing in Content
• M-Banking
• Although leading operators like Reliance, Bharti and Hutch have
introduced mobile banking, consumers need to be sure about security
aspect
• M-Banking usage needs to well communicated
• Data Services
• Enterprise solutions build upon UMS platform needs to be developed and
marketed
• Local content
• Instead of replicating foreign content models, indigineous content
cultures need to be followed
• Local film industry BOLLYWOOD is a huge source for content
• Most of the local ringtones, wallpapers are influenced by Bollywood
• M-Content portals (like KEMOPETROL in Finland) hold a huge market
potential depending upon introduction and marketing models
• Basic Services
• Train timetables
• Train and flight reservations
• Advertising and campaigns build upon location based services
Chapter Six
TELECOM SOFTWARE VENDORS
Vipul Chauhan
Industry Overview
1221.67
Industry revenues saw a growth of

almost 18%
Industry growth largely driven by top
three companies:
• TATA CONSULTANCY SERVICES
1031.48
• WIPRO
• INFOSYS
Telecom Software
industry revenues in
2002-03 Million Euros 2003-04
Top 20 Software & Service Exporters
Source: Nasscom
The combined revenue of the top 20 software and service exporters in the area of
IT Services, Products & Technology services is US$ 5.77 billion in 2003-04 and
have witnessed a year-on-year growth of 31.6 per cent (in dollar terms) compared to
the total combined revenue in 2002-03. The software and services exports industry
(excluding the ITES-BPO sector), recorded revenues of US$ 8.9 billion in 2003-04,
registering a growth of 25 per cent over the revenue of US$ 7.1 billion in 2002-03.
North America, which accounts for over 55 per cent of the global IT spend,
represented 69 per cent of Indian software exports in 2002-03, with Europe ranking
second at 22.25 per cent of total exports. North America remains the dominant
market for ITES-BPO (call Center and back office operations) services, accounting
for over 80 per cent of the ITES-BPO business in India. Domain-specific offerings
and end-to-end solutions from Indian services providers continues to drive the
value and duration of the ITES-BPO contracts
Indian companies have been gradually able to increase the European share in total
software and services exports. Indian companies increased their efforts to train their
employees in various European languages and business culture. In addition,
companies are increasingly recruiting local executives in these countries
Over the next few years, the Asia-Pacific region will emerge as a key target region
for the Indian software and services industry as it will be important for Indian
players to expand to new regions
Industry Growth Drivers
• Outsourcing
• 50 – 60% cost savings
• A medium level expert costs 300 € per month to hire (all inclusive)
• 97% on time delivery, compared to global average of 16%
• SEI CMM 4 & 5 level companies (around 25)
• Presence of over 3.000 IT companies
• Skilled manpower
• Over 100.000 IT graduates each year
• Over 200 Fortune 500 companies already outsourcing to India
• Excellent communication networks operational
• International Gateways
• VoIP
• Leased Line
• Undersea Cable
• Terrestrial Networks
• Broadband
Strong Case for Offshore Outsourcing: The offshore model promises to be one of the most important issues confronting
the IT services sector. Offshore’s popularity has been on the rise for several years (ever since Y2K), but it seems to be
pushing further into the mainstream now.
Several factors have helped demand:

•Customers are growing more familiar with offshore and the experiences thus far have been generally very positive
•The business case for offshore is extremely strong - customers can save 25-75% of the cost by moving work offshore
(referring to India)
•Credibility of offshore pure play service firms has risen as a result of their size
•Customer interest in cost cutting remains very high
More Customers to Adopt Offshore Outsourcing: The offshore outsourcing industry is still in early stages development
with lots of room for growth. Forrester Research estimates that only 3-4 percent of the Fortune 500 companies offshore
more than 10 percent of their IT services spending.
Supply Side Factors (Talent Pool) are Favorable: NASSCOM estimates that 250,000+ students graduate annually with
engineering degrees (both 3-year and 4-year degrees). Additionally another 500,000 graduate with non-engineering degrees,
suggesting a total pool of tech-ready or ‘tech trainable’ students of 750,000+. The number of students entering 2003’s class
for engineering or technical degrees (and will graduate in 3-4 years) jumped to roughly 375,000. The growth resulted from
increased student interest (tech industry compensation is easily in the middle/upper-middle class arena and well above the
country’s average), but also a surge in education institutions geared toward the technology industry.
North America, which accounts for over 55 per cent of the global IT spend, represented 69 per cent of Indian software
exports in 2002-03, with Europe ranking second at 22.25 per cent of total exports. North America remains the dominant
market for ITES-BPO (call Center and back office operations) services, accounting for over 80 per cent of the ITES-BPO
business in India. Domain-specific offerings and end-to-end solutions from Indian services providers continues to drive the
value and duration of the ITES-BPO contracts
Indian companies have been gradually able to increase the European share in total software and services exports. Indian
companies increased their efforts to train their employees in various European languages and business culture. In addition,
companies are increasingly recruiting local executives in these countries
Over the next few years, the Asia-Pacific region will emerge as a key target region for the Indian software and services
industry as it will be important for Indian players to expand to new regions
TATA CONSULTANCY SERVICES
Company Range of Services Clients and Partners
India’s first • Banking • Nokia

billion dollar
• Telecom • Peoplesoft
company
• Shipping • IBM
No. 1 exporter
of services in • Business Process • Ericsson
2003-04
• Healthcare • Fujitsu
• Insurance • American and Candian
Banks
• Accounting
• Symbian
• CAD/ CAM
• Adobe
• SimTech
WIPRO
A billion dollar • Banking • Nokia

company
• Telecom • Fujitsu
Some 400
• Shipping • Nortel
cleints
worldwide • Business Process • Sun
More that 100 • Healthcare • Morgan Stanley
clients belong to
• Insurance • Telia Sonera
Fortune 500
• Accounting • OTIS
• CAD/ CAM • Corel
• Energy sector • GM
• Mobile devices • Allliannz
• Government • ABN Amro
• Storage Technologies • Microsoft
• Media and Entertainment • Ericsson
• Seagate
Infosys
A billion dollar • Manufacturing • Cisco

company
• Energy • Lucent
More than 350
• Retail • Nortel
clients worlwide
• Financial Services • Siebel
• Logistics • Schlumberger
• Telecom • Toshiba
• Dell
• Monsanto
• Siemens
• Toshiba
• Microsoft
Other Major Telecom Software Vendors
Mahindra British Telecom
Axes Technologies
Hughes Software
Chapter Seven
FUTURE CHALLENGES
Vipul Chauhan
What Future Holds?
Sectors Present Trends Future Challenges
GSM • Intensive subscriber growth • Ensure consistent subscriber additions

• > 60% subscribers (new+old) are • Sustain ARPU growth
Prepaid
• Reduce Customer churn
• ARPU has fallen more than 50%
• Face competition from CDMA services
over last 3 years
• Introduce more and more SMS based services
• Majority of revenues are from
voice based service • Get new subscribers on the basis of content
services
• Compatible handsets pushing
Java Games and GPRS usage • Maintain Service standards
• Low GPRS usage
• Content services mainly SMS
based
• A huge market for low end
phones (>100 Euro)
What Future Holds?
CDMA • Rapid Subscriber additions • Maintain rapid consumer addition rate
WLL(F) & • 30% are PrePaid, rest Postpaid • Maintain balance between Prepaid and
WLL (M) Postpaid customers
• ARPU is > 10 Euro
• Correct Billing Problems, ensuring low bad
• Handsets are available for as
debt ratio
low as 10 Euro (with
subscription) • Lower the chances of customer churn towards
GSM
• Smart Wireless internet Access
• Migrating to EvDO technology
• Billing Problems (for Data
usage) • Introduce content with rich user experience
• SMS over fixed line (WLL-F) • Use spectrum availability for introducing higher
content levels
What Future Holds?
Fixed • Intense consumer shift towards

mobile services
• Reduce customer churn towards mobile
services
Line • Low call tariffs • Enhanced data services on fixed line
• SMS over fixed line available • Offer ADSL, DSL services to existing
customers
• Fluctuating ARPU
• Low subscriber additions
• Private operators market share
increasing
Challenges facing Operators
Counter Competition
• Increase subscriber base without lowering tariffs
Enterprise Solutions
Subscribers
• Design and offer cost effective
• Avoid consumer churn enterprise solutions
• Retain consumers How to? • Introduce VPN, Unified
• Boost ARPU by giving more richer Messaging as services to corporate
content users
Content Business
• What to offer and what not
• How to touch consumer tastes
• Boost subscriber base on the
basis of content
Present day, all mobile and fixed operators face four major challenges:
•Reduced customer churn
•Boost ARPU
•Offer enterprise solutions
•Introduce new and exciting content
In a country where the prepaid accounts for more than 65% the total mobile population it is
somehow very difficult to monitor consumer churn and retain customers over a long time period.
This particular problem could only be solved where operators introduce new and exciting content
for their subscribers. In a situation where mobile call tariffs have fallen almost by 90% in last 4
years, there is a little room to add subscribers on the basis of call tariffs as all the tariffs offered by all
operators are moreover similar. Content and value added services are the only weapons available
with the operators to manage to survive.
On the enterprise side, operators need to have more corporate customers (where the entire
organization subscribes to one single operator). Services like unified messaging, VPN and M-
banking are needed to boost their subscribers base among the urban population. WAP was a flop in
India, GPRS faces a challenge in a situation where much of the non-urban population is
technologically illiterate and additionally handsets should be available at affordable prices.
For fixed line operators it is necessary to market SMS facility wisely. Comparing to almost 10
million mobile phone subscriber addition during April 2003 and April 2004 fixed line operators (all
over India) were able to add only 1.83 million subscribers in the twelve month period. This trend of
consumer churn needs to be corrected in a proper time by fixed line operators and SMS facility over
fixed line is one of the available options among other like DSL services, ADSL services etc. for
home users.
Challenges for ISPs
Counter Competition
• How to leverage the first mover advantage?
• Increase ROI
Enterprise Solutions
Household Consumers
• Offer bandwidth solutions
• Lure customers into availing
broadband solutions for home How to? • Secure networks, VPN
• Leverage VoIP based services
• Web conference usage
Although the internet population in India is growing, the ISPs on the other hand
face a tough competitive situation where they need to have more subscribers to
break even on their network investments and at the same time also introduce new
and better services (content and value added services).
Operators like Bharti, Reliance and BSNL have made substantial investments
towards laying an optic fiber network across the country to offer high bandwidth
for corporates as well as home users. These huge investments make it mandatory
for operators to market their services aggressively. Operators are presently
evaluating corporate users and households at the same level because they have a
huge pressure on themselves to add more and more subscribers by whatever way
possible.
Voice over internet has been allowed in India since April 2002 but it has not been
able to take off very well as the internet and PC penetration in India is still very very
low. ISPs now have to focus upon using VoIP as a marketing tool. Cyber cafes
and household consumers are new target groups for ISPs who would like to
promote VoIP. Web conferencing and high bandwidth availability are two of the
major products for the corporate users. ISPs also need to build upon their
subscriber base by way of luring household consumers to avail broadband options
for home use.
Chapter Eight
STRATEGIES
Vipul Chauhan
Where are the Players active?
Present focus Area
Fixed line Operators Value added services on fixed line like SMS. ADSL access
GSM Operators Raising ARPU through content downloads like tones, MMS, wallpapers,
Java games, online TV polls, boosting GPRS usage
CDMA Operators Raising ARPU through content, Pre Paid roaming, ISP model
Content Multiplayer games, J2ME, J2EE, Rich user experience

Developers
Content Portals Boosting content downloads and service request messages
ISPs DSL and ADSL connections mainly for corporate users

Presently fixed line operators are mainly focused upon reducing customer churn
and marketing their value added services over fixed line. Fixed line operators are
looking forward to market the SMS facility over fixed line phones in a big way,
perhaps this is the main reason for consumer churn in the industry whereby
consumers tend to shift towards mobile services.
GSM and CDMA operators are facing a tough challenge to stabilize and increase
their ARPU. Boosting the ARPU is only possible through content services and not
by hiking voice call tariffs because tariffs are regulated by the Government.
India is still a very small player if we talk about some 24 billion USD gaming
industry worldwide. There are good content development companies who are
presently focusing upon game development for symbian, Java, handhelds and smart
phones. These content development companies are now focusing upon taking a
next step towards game development for playstation, xbox, gameboy and other high
level gaming.
Content portals are making their presence felt in a big way. The variety of content
available at their portals is immense, some of them are downloadable over GSM
and CDMA networks like ringtones, logos, wallpapers etc. These content portals
are focusing upon introducing next level of services over mobile networks such as
M-ticketing, M-auctions, hotel reservations etc.
Cooperation with external parties
Foreign
company selling
value added
services,
technology,
hardware, Operators
solutions
Indian buyers prefer
buying from local
Local contact. Payment is
made in local
Content Portals
Direct
Partner currency, easy to
follow up and register
complaints
Approach
Don’t necessarily need
a local contact to sell ISPs
or buy
Content
Developers
Telecom Software Vendors
Indian companies (operators, ISPs etc.) prefer buying from a local contact. There
are various reasons for doing so:-
•Easy to follow up
•After sales
•Easier to communicate with
•Possibility of paying in local currency (INR)
•Local partner is subjected as to local legal laws (Indian legal system is based upon
the English one)
The need for a local partner exists in all three business segments i.e. operators,
content portals and ISPs.
In a situation where the Finnish company is looking for outsourcing of software

and application development, a local partner is not needed. However, it is
recommended that an intensive background check is done before signing any
cooperation agreements. Having a good legal firm to protect your interests will be
an asset.
A Good Partner
Evaluation Parameters How to begin the Partner Search
Financial Health Get the

background
Customer Report
References
Background of the Reference Check

Directors
Credit Information
Bankers
Business
Human resources Intelligence
Legal Litigation Does he walk the

talk or just talk
It is infact quite a challenging task to define that what is actually meant by a good
partner?
Financial health of the partner is the most essential element in the evaluation
parameters. A partner who can invest his own resources in marketing and
promoting is an asset. In a huge country like India, marketing and promotion
activities cost a huge amount of money as the domestic transport systems are not
cheaper (airlines etc.) so it is must to get a partner who has enough resources to
spend towards these things. Financial health is also correlated to having a country
wide network, as a part of local business culture, people feel good to join hands
with a financially sound company.
Checking the background of the company is also equally important. Information

about bankers, balance sheet, founders and profits is critical while making a
partnership decision. Finpro provides background check and various other
facilities for the Finnish companies.
Cooperation parameters
TRANSACTIONS
I don’t want to buy Dollars or Euro
to pay you, can you accept local
COOPERATION currency?
BASICS
REFERENCES
Your solution might be excellent,
but who are your existing
customers?
SYNCHRONIZATION AFTER SALES

Are you selling something which is Whom shall I contact in case of
too advanced for present times? breakdown or servicing? Do you
We might need it tomorrow but not have a local contact
today!
COMPETITIVE EDGE
Will I be able to sell my services
better after I buy your solution? CRITICAL
COST SUCESS
How affordable is your FACTORS
solution? Is there anybody
selling cheaper than you?
The most critical success factor in India is the cost of your solution.
Several companies from SEA region like Singapore and Malaysia have started to
offer cheaper and cost effective solutions to operators and ISPs, this situation
deteriorates the chances for the European and other companies to be able to sell
their services and solutions in India.
Even if someone manages to sell, the next big question is how to handle the after
sales services and maintenance? In such a situation a local service provider
(partner) is needed. Similarly, if the European company is willing to sell then they
should be ready accept the local currency towards payments for their services, this
further emphasizes on having a local partner.
It is advised to the companies who are coming on a business trip to India to

carefully prepare themselves for answering the COST, AFTER SALES AND
PAYMENT ISSUES.
Chapter Nine
FINNISH COMPANIES IN
INDIA
Vipul Chauhan
Finnish Companies in India
Companies Since Activities
2000 - • Agent in New Delhi
• Plans to Start manufacturing operations towards

ELCOTEQ
ELCOTEQ 2004 - end of 2004, Plant location will be in Bangalore
1990 - • HQ in New Delhi, 2 R&D Centres- in Bangalore &

Hyderabad
• Nokia Ventures, Nokia Networks, Mobile Phones
• Agent in Bangalore, marketing for Nethawk

2003 -
1999- • Own office in New Delhi

• Selling solutions to Mobile Operators
Chapter Ten
CONCLUSIONS
Vipul Chauhan
Doing Business with Operators -
opportunities
Enterprise solutions, VPN, Secure M- Commerce, Mobile

Virgin Territories Marketing, Location based services, Tracking systems
Potential Areas M-Banking, MMS, M-Ticketing,

Applications on GPRS, CDMA,
Streaming media, Telematics, Instant
messaging
SMS, MMS gateway, one touch

services, SMS chat,
Entertainment guides, online bill
Saturated Areas view, TV Poll synchronization
Doing Business with Content
Developers and Portals
Content for basic low-end phones, richer content like Java

Virgin Territories games etc. for latest handsets, content and applications
downloadable over GPRS, multiplayer gaming, SMS
ticketing, Content Portals like Kemopetrol
Potential Areas Content hosting, ASPs, Stock quotes,

M-Banking, Weather updates,
streaming mp3s, air tickets, games
having local touch
SMS Chat, dating, news, TV polls

sync. MMS, Group SMS
Saturated Areas
Niches for Finnish Companies
Content
Business
Business • Development
with platforms J2ME, ISP Business
Operators J2EE, BREW,
Smartphone, PDA
• Multiplayer • Value added
• ASP model games service on ADSL
• Instant messaging • Streaming media • Wi-Fi broadband

over GPRS and solutions
• Mobile Marketing CDMA (Streaming • Wi-Fi secure
• M-Commerce, players) access
banking
• VoIP services
• GPRS applications
Indian operators prefer application service providers who can host the application themselves and
the operator pays a monthly fee. ASP models therefore is one of the most simplest way to start
business with the operators. Instant messaging is another potential area where Finnish companies
can contribute so far only Airtel has instant messaging installed (provided by ACL Wireless). Mobile
marketing is another big concept which operators would like to know more about. M-banking is
offered by leading operators (SMS based) but there is plenty of room to offer enhanced applications
for M-banking. Operators are offering downloadable content and news services over GPRS but
there is a lot more to be offered under content and applications built upon GPRS platform.
In the content business, India has the resource availability (software and application developers) but
the companies lack vision about what to develop? Finnish companies can very well contribute here
by bringing along their vision and concepts to these development companies and use their resources
to build a user application (games). India is preparing itself for migration to 3G in next 1-3 years,
this means there is a huge potential especially on the content side which needs to be exploited.
Streaming media, multiplayer games, M-Commerce are just some of the examples of potential
business segments.
For the ISP businesses, there is of course an option to enter into the Indian market as a foreign
investor (the FDI limit is 74%). Other then that ISPs presently lack on the content side. Games,
puzzles, city guides, air and train timetables are just some of the content types which are needed by
the consumers.
Stumbling Blocks
• Political instability
• Change in taxes and duty structures
• Change in foreign direct investment rules
• Lobbying between CDMA and GSM operators
Political instability is the main cause of policy changes in the Indian business
environment. Although, Governments are concentrating upon uplifting the basic
infrastructure facilities there is a great deal of opposition to each and every move
made by the Government because since 1990, no single party has got any majority
in the elections and present day Government constitute of various small parties. All
these allies of the Government are difficult to predict and therefore, their
opposition can affect any future plans.
Above scenario also implies on taxes and customs duty aspect. Any rise in taxes
(on operators, service providers etc.) can have negative implications on the entire
industry. Similarly, hike in customs duties can also boost the gray market
(handsets).
Presently the FDI limit in telecom is 49% and as per the new budget announced in
July 2004, it is proposed to hike this upto 74%. These positive developments are
very much welcomed by the industry and the outside world but any negative move
by the Government might result in a drastic situation where investor confidence is
brought down.
THANK YOU
For Further information please Contact:
Markku Vantunen
Senior Consultant, Finpro Helsinki
Markku.vantunen@finpro.fi
Vipul Chauhan
Country Manager, Finpro India
Vipul.chauhan@finpro.fi
References
• Cellular Operators Association of India

• Department of Telecommunications
• Association of Basic Telecom Operators
• Voice and Data
• IDC
• Gartner
• Cybermedia Research
• Tele.net
• Telecom Regulatory Authority of India
• Nokia
• Naavi.org
Mobile Operator Contacts
Hutchison Max Telecom Limited Mahanagar Telephone Nigam (MTNL)

Hutch House Jeevan Bharti – Tower 2,
Peninsula Corporate Park, Connaught Place
Ganpatrao Kadam Marg, New Delhi
Lower Parel,
Mumbai - 400013
Spice Telecom
Bharti Tele-Ventures Limited C 105, Industrial Area, Phase VII, Mohali 160055,
Qutab Ambience (at Qutab Minar), Punjab
Mehrauli Road
New Delhi-110030 BPL Telecom Private Limited
11th K.M., Bannergatta Road,
Bharat Sanchar Nigam Limited Arekere, Bangalore - 560 076
Statesman House, B-148 Karnataka, India
Barakhamba Road
New Delhi-110 001 Reliance Infocomm Ltd.
Dhirubhai Ambani Knowledge City
Idea Cellular Limited Navi Mumbai 400709
A-30,
Mohan Co-operative Industrial Estate
New Delhi
Fixed Line Operator Contacts
Bharat Sanchar Nigam Limited Reliance Infocomm Ltd.

Statesman House, B-148 Dhirubhai Ambani Knowledge City
Barakhamba Road Navi Mumbai 400709,
New Delhi-110 001 India
Mahanagar Telephone Nigam (MTNL) HFCL

Jeevan Bharti – Tower 2, 8, Commercial Complex Masjid Moth,
Connaught Place Greater Kailash-II
New Delhi New Delhi - 110048
Bharti Tele-Ventures Limited

Qutab Ambience (at Qutab Minar),
Mehrauli Road
New Delhi-110030
CDMA Operators Contact
Reliance Infocomm Ltd. Bharat Sanchar Nigam Limited

Dhirubhai Ambani Knowledge City Statesman House, B-148
Navi Mumbai 400709, India Barakhamba Road
New Delhi-110 001
HFCL
8, Commercial Complex Masjid Moth, Mahanagar Telephone Nigam (MTNL)
Greater Kailash-II Jeevan Bharti – Tower 2,
New Delhi - 110048 Connaught Place
New Delhi
TATA Telecom
DLF Square, II Floor, M-Block
Shyam Telecom Limited
Jacaranda Marg, DLF City Phase-II,
A-60, Naraina Industrial Area,
Gurgaon - 122002
Phase-I, New Delhi 110028
Customs Duty on Handset Import
• The duty stands @ 5%

• There is no dicrimination on the country of origin
Customs Duty on Telecom Equipment
• The duty stands @ 35% on all hardware equipment

• The duty on unfinished goods like RF cables is 15%
Foreign Investment Guidelines
• FDI limit is proposed to be hiked to 74% from

existing 49%
• Proposals are to be cleared by Foreign Investment
Promotion Bureau
Abbreviations Used in the Slides
• BSNL – Bharat Sanchar Nigam Limited (State owned Operator)

• MTNL – Mahanagar Telephone Nigam Limited (State owned Operator, offering fixed, mobile, ISP
services in New Delhi and Mumbai only)
• STD: Subscriber Trunk Dialing
• ISD: International Subscriber Dialing
• ILD: International Long Distance
• NLD: National Long Distance
• ISP: Internet Service Providers
• DSL: Digital Subscriber Line
• ADSL: Asymmetric Digital Subscriber Line
• VoIP: Voice over Internet Protocol
• FDI: Foreign Direct Investment

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India Study

TEKES NETS and FENIX Programs

10. July 2004

• Chapter 1: Market Overview

• Lowered call tariffs are a major industry growth driver

1882 1990 1995 2001-02 2003 2004 - onwards

2G GSM SMS WAP

1996 1999-00 2001 2002 -03 2003 2004 - onwards

Dual Band GSM 900 & 1800.

SMS service started in the year 2000

Present CDMA standard is CDMA 2000 1X

Call Specifications Tariff Basis Tariffs

• Distance specific call • M to M outgoing in home network: 0,04 - 0,04

India presently follows a CPP model, whereby calling party pays.

•Mobile to mobile & Vice Versa

Roaming is another important aspect when talking about voice revenues

• A monopoly sector controlled by Government until

• 29 million GSM, 9 million CDMA subscribers (June 2004)

Content Content Provider Content Ringtones, Logos,

When speaking of revenues, operators are in dominant position. Major share of

GPRS, CDMA EDGE W-CDMA?

According to a submission made to the Telecom Regulatory body “TRAI” by T. V.

• Internet Services launched in India in August 1995

•Internet Telephony Services opened up to ISPs w.e.f. April 1, 2002.

• Outsourcing gave boost to the Telecom Software

• Indian content market is mainly SMS driven

• Fixed Line Segment

• Vast geographic expanse of India acted as a catalyst to boost mobility

Until 1996, India was a pure fixed line market.

• The industry is governed under National Telecom Policy -

• Unified Licensing introduced in 2004

The NTP 99 has been a positive milestone for the industry.

• Industry governed under Indian Telegraph Act, 1885, Indian Wireless

Since 1995, a number of countries have permitted VOIP as a technology option to

In India the intellectual property protection with regard to a computer software is

FIXED LINE WLL/CDMA

Services Entry Policy Players in operation

The Indian Telecommunications industry is divided into four Service segments:

Each circle requires a different license.

609,047 100,438 160 71,932 371,148

BSNL MTNL Bharti HFCL Reliance Shyam Tata

State Owned Private Operators

BSNL is followed by Mahanagar Telephone Nigam Limited (MTNL) which is again

BSNL is a market leader with a

BSNL’s Telephone Network includes:

•Local Switching (as on 30.04.2004)

STD: Subscriber Trunk Dialing (abbreviation for Intercity calls)

Operator Subscribers Range of Services Service Areas

SHYAM TELELINK 71.932 Fixed line network, International Only in Rajasthan

In Telecom circles like Delhi, Punjab, 30

Haryana and Mumbai Mobile users have 25

crossed over fixed line users already 20

• 1st wireless communication standard in India

Call costs have fallen 0.31

India presently is one of the 28,153,674

Dec. 2000 Dec. 2001 Dec. 2002 Dec. 2003 May-04

Consumers who were once reluctant to subscribe to mobile subscriptions founded

Industry revenues show a

The increase in revenue reflects the new subscriber additions.

The above scenario triggered two situations:

Bharti is the undisputed 6,761,367

Bharti BSNL Hutch Idea BPL Spice Aircel MTNL Reliance

Aircel is recently acquired by HUTCH for an estimated amount of 223 million