The Republic of India possesses a diversified communications system that links all parts of the country by Internet, telephone,

telegraph, radio, and television. Most of the telecommunications forms are as prevalent or as advanced as those in modern Western countries, and the system includes some of the most sophisticated technology in the world and constitutes a foundation for further development of a modern network. India has the world's second-largest mobile phone users with over 903 million as of January 2012.[1] It has theworld's third-largest Internet users with over 121 million as of December 2011.[2] India has become the world's most competitive and one of the fastest growing telecom markets.[3][4] The industry is expected to reach a size of 344,921 crore (US$68.81 billion) by 2012 at a growth rate of over 26 per cent, and generate employment opportunities for about 10 million people during the same period. According to analysts, the sector would create direct employment for 2.8 million people and for 7 million indirectly.[5] The total revenue of the Indian telecom sector grew by 7% to 283,207 crore (US$56.5 billion) for 2010-11 financial year, while revenues from telecom equipment segment stood at 117,039 crore (US$23.35 billion).[6]

History
Telecom in the real sense means the transfer of information between two distant points in space. The popular meaning of telecom always involves electrical signals and as a result, people often exclude postal or any other raw telecommunication methods from its meaning. Therefore, the history of Indian telecom can be started with the introduction of telegraph. [edit]Introduction The Indian postal and telecom sectors saw a slow and uneasy start. In 1850, the first experimental electric telegraph line was started between Kolkata and Diamond Harbour. In 1851, it was opened for the use of the British East India Company. The Posts and Telegraphs department occupied a small corner of [7] the Public Works Department, at that time. Subsequently, the construction of 4,000 miles (6,400 km) of telegraph lines connecting Kolkata (then Calcutta) and Peshawar in the north along with Agra, Mumbai (then Bombay) through Sindwa Ghats, and Chennai (then Madras) in the south, as well as Ootacamund and Bangalore was started in November 1853. Dr.William O'Shaughnessy, who pioneered thetelegraph and telephone in India, belonged to the Public Works Department, and worked towards the development of telecom throughout this period. A separate department was opened in 1854 when telegraph facilities were opened to the public. In 1880, two telephone companies namely The Oriental Telephone Company Ltd. and The Anglo-Indian Telephone Company Ltd. approached the Government of India to establishtelephone exchanges in India. The permission was refused on the grounds that the establishment of telephones was a Government monopoly and that the Government itself would undertake the work. In 1881, the Government later reversed its earlier decision and a licence was granted to the Oriental Telephone Company Limited of England for opening telephone exchanges at Calcutta, Bombay, Madras and Ahmedabad and the first [8] formal telephone service was established in the country. On the 28th January 1882, Major E. Baring, Member of the Governor General of India's Council declared open the Telephone Exchanges in Calcutta, Bombay and Madras. The exchange in Calcutta named the "Central Exchange", was opened at third floor

of the building at 7, Council House Street, with a total of 93 subscribers. Later that year, Bombay also witnessed the opening of a telephone exchange.

Further milestones and developments

A microwave tower for short distance (~50 km) communication.

Pre-1902 - Cable telegraph 1902 - First wireless telegraph station established between Sagar Islands and Sandheads. 1907 - First Central Battery of telephones introduced in Kanpur. 1913-1914 - First Automatic Exchange installed in Shimla. 1927 - Radio-telegraph system between the UK and India, with Imperial Wireless Chain beam stations at Khadki and Daund. Inaugurated by Lord Irwinon 23 July by exchanging greetings with King George V. 1933 - Radiotelephone system inaugurated between the UK and India. 1953 - 12 channel carrier systemoduced. 1960 - First subscriber trunk dialing route commissioned between Lucknow and Kanpur. 1975 - First PCM system commissioned between Mumbai City and Andheri telephone exchanges. 1976 - First digital microwave junction. 1979 - First optical fibre system for local junction commissioned at Pune. 1980 - First satellite earth station for domestic communications established at Sikandarabad, U.P.. 1983 - First analog Stored Program Control exchange for trunk lines commissioned at Mumbai. 1984 - C-DOT established for indigenous development and production of digital exchanges. 1995 - First mobile telephone service started on non-commercial basis on 15 August 1995 in Delhi. 1995 - Internet Introduced in India starting with Mumbai, Delhi, Calcutta, Chennai and Pune on 15 [9] August 1995

While all the major cities and towns in the country were linked with telephones during the British period, the total number of telephones in 1948 numbered only around 80,000. Post independence, growth remained slow because the telephone was seen more as a status symbol rather than being an instrument

of utility. The number of telephones grew leisurely to 980,000 in 1971, 2.15 million in 1981 and 5.07 million in 1991, the year economic reforms were initiated in the country. While certain measures were taken to boost the telecom industry from time to time, (for example introduction of the telex service in Mumbai in 1953 and commissioning of the firstSubscriber trunk dialling route between Delhi and Kanpur and between Lucknow and Kanpur in 1960), the first waves of [10] change were set going by Sam Pitroda in the eighties. The real transformation in scenario came with [11] the announcement of the National Telecom Policy in 1994.

Modern policies
All villages shall receive telecom facilities by the end of 2002. A Communication Convergence Bill introduced in the Parliament on August 31, 2001 is presently before the Standing Committee of Parliament on Telecom and IT. National Long Distance Service (NLD) is opened for unrestricted entry. The International Long Distance Services (ILDS) have been opened to competition. The basic services are open to competition. In addition to the existing three, a fourth cellular operator, one each in four metros and thirteen circles, has been permitted. Cellular operators have been permitted to provide all types of mobile services including voice and non-voice messages, data services and PCOs utilizing any type of network equipment, including circuit and/or package switches that meet certain required standards. Policies allowing private participation have been announced as per the New Telecom Policy (NTP), 1999 in several new services, which include Global Mobile Personal Communication by Satellite (GMPCS) Service, digital Public Mobile Radio Trunked Service (PMRTS) and Voice Mail/ Audiotex/ Unified Messaging Services. Wireless Local Loop (WLL) has been introduced to provide telephone connections in urban, semiurban and rural areas promptly. Two telecom PSUs, VSNL and HTL have been disinvested. Steps are being taken to fulfill Universal Service Obligation (USO), funding, and administration. A decision to permit Community Phone Service has been announced. Multiple Fixed Service Providers (FSPs) licensing guidelines were announced. Internet Service Providers (ISPs) have been allowed to set up International Internet Gateways, both Satellite and Landing stations for submarine optical fiber cables. Two categories of infrastructure providers have been allowed to provide end-to-end bandwidth and dark fiber, right of way, towers, duct space etc. Guidelines have been issued by the Government to open up Internet telephony (IP).

Emergence as a major player

In 1975, the Department of Telecom (DoT) was separated from [[Indian Post & Telecommunication Department ]]. DoT was responsible for telecom services in entire country until 1985 when Mahanagar Telephone Nigam Limited (MTNL) was carved out of DoT to run the telecom services of Delhi and Mumbai. In 1990s the telecom sector was opened up by the Government for private investment as a part of Liberalisation-Privatization-Globalization policy. Therefore, it

became necessary to separate the Government's policy wing from its operations wing. The Government of India corporatised the operations wing of DoT on 1 October 2000 and named it as Bharat Sanchar Nigam Limited (BSNL). Many private operators, such as Reliance Communications, Tata Indicom, Vodafone, Loop Mobile, Airtel, Idea etc., successfully entered the high potential Indian telecom market. [edit]Privatization The Indian government was composed of many factions (parties) which had different ideologies. Some of them were willing to throw open the market to foreign players (the centrists) and others wanted the government to regulate infrastructure and restrict the involvement of foreign players. Due to this political background it was very difficult to bring about liberalization in telecommunications. When a bill was in parliament a majority vote had to be passed, and such a majority was difficult to obtain, given to the number of parties having different ideologies. Liberalization started in 1981 when Prime Minister Indira Gandhi signed contracts with Alcatel CIT of France to merge with the state owned Telecom Company (ITI), in an effort to set up 5,000,000 lines per year. But soon the policy was let down because of political opposition. She invited Sam Pitroda a US based Non-resident Indian NRI to set up a Center for Development of Telematics(C-DOT), however the plan failed due to political reasons. During this period, after the assassination of Indira Gandhi, under the leadership of Rajiv Gandhi, many public sector organizations were set up like the Department of Telecommunications (DoT), VSNL and MTNL. Many technological developments took place in this regime [12] but still foreign players were not allowed to participate in the telecommunications business. The demand for telephones was ever increasing. It was during this period that the Narsimha Rao-led government introduced the national telecommunications policy [NTP] in 1994 which brought changes in the following areas: ownership, service and regulation of telecommunications infrastructure. They were also successful in establishing joint ventures between state owned telecom companies and international players. But still complete ownership of facilities was restricted only to the government owned organizations. Foreign firms were eligible to 49% of the total stake. The multi-nationals were just involved [12] in technology transfer, and not policy making. During this period, the World Bank and ITU had advised the Indian Government to liberalize long distance services to release the monopoly of the state owned DoT and VSNL; and to enable competition in the long distance carrier business which would help reduce tariff's and better the economy of the country. The Rao run government instead liberalized the local services, taking the opposite political parties into confidence and assuring foreign involvement in the long distance business after 5 years. The country was divided into 20 telecommunication circles for basic telephony and 18 circles for mobile services. These circles were divided into category A, B and C depending on the value of the revenue in each circle. The government threw open the bids to one private company per circle along with government owned DoT per circle. For cellular service two service providers were allowed per circle and a 15 years license was given to each provider. During all these improvements, the government did face oppositions from ITI, DoT, [12] MTNL, VSNL and other labor unions, but they managed to keep away from all the hurdles. After 1995 the government set up TRAI (Telecom Regulatory Authority of India) which reduced the interference of Government in deciding tariffs and policy making. The DoT opposed this. The political powers changed in 1999 and the new government under the leadership of Atal Bihari Vajpayee was more pro-reforms and introduced better liberalization policies. They split DoT in two- one policy maker and the

other service provider (DTS) which was later renamed as BSNL. The proposal of raising the stake of foreign investors from 49% to 74% was rejected by the opposite political party and leftist thinkers. Domestic business groups wanted the government to privatize VSNL. Finally in April 2002, the government decided to cut its stake of 53% to 26% in VSNL and to throw it open for sale to private [12] enterprises. TATA finally took 25% stake in VSNL. This was a gateway to many foreign investors to get entry into the Indian Telecom Markets. After March 2000, the government became more liberal in making policies and issuing licenses to private operators. The government further reduced license fees for cellular service providers and increased the allowable stake to 74% for foreign companies. Because of all these factors, the service fees finally reduced and the call costs were cut greatly enabling every common middle class family in India to afford a cell phone. Nearly 32 million handsets were sold in India. The data reveals the real potential for growth of the Indian [13] mobile market. In March 2008 the total GSM and CDMA mobile subscriber base in the country was 375 million, which [14] represented a nearly 50% growth when compared with previous year. As the unbranded Chinese cell phones which do not have International Mobile Equipment Identity (IMEI) numbers pose a serious security risk to the country, Mobile network operators therefore planned to suspend the usage of around [15] 30 million mobile phones (about 8 % of all mobiles in the country) by 30 April. 56 years the average monthly subscribers additions were around 0.05 to 0.1 million only and the total mobile subscribers base in December 2002 stood at 10.5 millions. However, after a number of proactive initiatives were taken by regulators and licensors, the total number of mobile subscribers has increased greatly to 881 million subscribers as of October 2011. India has opted for the use of both the GSM (global system for mobile communications) and CDMA (code-division multiple access) technologies in the mobile sector. In addition tolandline and mobile phones, some of the companies also provide the WLL service. The mobile tariffs in India have also become lowest in the world. A new mobile connection can be activated with a monthly commitment of US$0.15 only. In 2005 alone additions increased to around 2 million per month in 2003-04 and 2004[citation needed] 05. In June 2009, the Government of India banned the import of several mobile phones manufactured in China citing concerns over quality and the lack of IMEI's which make it difficult for authorities in India to [16] track the sale and use of such phones. In April 2010, the Government was also reported to be blocking Indian service providers from purchasing Chinese mobile technology citing concerns that Chinese hackers could compromise the Indian telecommunications network during times of national emergency. A series of attacks on Indian governmentwebsites and computer networks by suspected Chinese hackers has also made Indian regulators suspicious with regards to the import of potentially sensitive equipment [17][18][19] from China. The companies reported to be affected by this are Huawei Technologies and ZTE. [edit]Regulatory

environment

LIRNEasia's Telecommunications Regulatory Environment (TRE) index, which summarizes stakeholders' perception on certain TRE dimensions, provides insight into how conducive the environment is for further development and progress. The most recent survey was conducted in July 2008 in eight Asian countries, including Bangladesh, India, Indonesia, Sri Lanka, Maldives, Pakistan, Thailand, and the Philippines. The tool measured seven dimensions: i) market entry; ii) access to scarce resources; iii) interconnection; iv)

tariff regulation; v) anti-competitive practices; and vi) universal services; vii) quality of service, for the fixed, mobile and broadband sectors. The results for India, point out to the fact that the stakeholders perceive the TRE to be most conducive for the mobile sector followed by fixed and then broadband. Other than for Access to Scarce Resources the fixed sector lags behind the mobile sector. The fixed and mobile sectors have the highest scores for Tariff Regulation. Market entry also scores well for the mobile sector as competition is well entrenched with most of the circles with 4-5 mobile service providers. The broadband sector has the lowest score in the aggregate. The low penetration of broadband of mere 3.87 against the policy objective of 9 million at then [20] end of 2007 clearly indicates that the regulatory environment is not very conducive. [edit]Revenue

and growth

The total revenue in the telecom service sector was 86,720 crore (US$17.3 billion) in 2005-06 as against 71,674 crore (US$14.3 billion) in 2004-2005, registering a growth of 21%.estimted revenue of FY'2011 is Rs.835 crore (US$ 19 Bn Approx).The total investment in the telecom services sector reached 200,660 crore (US$40 billion) in 2005-06, up from 178,831 crore (US$35.7 billion) in the [21] previous fiscal. Telecommunication is the lifeline of the rapidly growing Information Technology [22] industry. Internet subscriber base has risen to more than a 121 million in 2011. Out of this 11.47 million were broadband connections. More than a billion people use the Internet globally. Under the Bharat Nirman Programme, the Government of India will ensure that 66,822 revenue villages in the country, which have not yet been provided with a Village Public Telephone (VPT), will be connected. However [23] doubts have been raised about what it would mean for the poor in the country. It is difficult to ascertain fully the employment potential of the telecom sector but the enormity of the opportunities can be gauged from the fact that there were 3.7 million Public Call Offices in December [24] 2005 up from 2.3 million in December 2004. The Total Revenue of Indian Telecom Services company is likely to exceed Rs 200000 Cr ( US$ 44 Bn approx) for FY 11-12 based on FY 10-11 nos and latest quarterly results. These are consolidated nos including foreign operation of Bharti Airtel. The major contributions to this revenue are as follows: Bharti Airtel 65,060 Reliance Comm 31,468 Idea Cellular 16,936 Tata Comm 11,931 MTNL 4,380 TTML 2,248 BSNL 32,045 Voda 18,376 TataTeleservice 9,200 Aircel 7,968 SSTL 600 Uninor 660 Loop 560 Stel 60 HFCL 204 Videocon Telecom 254 DB Etisalat/ Allianz 47 Grand Total Rs 201,997 Crs contributed by Sanjay Banka, FCA

Sectors
[edit]Telephones Communications in India

Television broadcast stations (2009)

1,400

Radio broadcast stations (1997)

800

Fixed lines (2011)

33.19 million

Mobile phones (2011)

881.40 million

Internet access

Percent household access (total), 2011

8.5% of households (121 million)

Percent broadband household access

1.0% of households (13 million)

Internet Service Providers (2010)

180

country code top-level domain

.in

The primary regulator of telecommunications in India is the Telecom Regulatory Authority of India (TRAI). It closely regulates all of the industries mentioned below with the exception of newspapers and the Internet service provider industry. The telecommunications industry in India is dominated by private-sector and two state-run businesses. Most companies were formed by a recent revolution and restructuring launched within a decade, directed by Ministry of Communications and IT, Department of Telecommunications and Minister of Finance. Since then, most companies gained 2G, 3G and 4G licenses and engaged fixed-line, mobile and internet business in India. On landlines, intra-circle calls are considered local calls while inter-circle are considered long distance calls. Foreign Direct Investment policy which increased the foreign ownership cap from 49% to 74%. Currently Government is working to integrate the whole country in one telecom circle. For long distance calls, the area code prefixed with a zero is dialed first which is then followed by the number (i.e. To call Delhi, 011 would be dialed first followed by the phone number). For international calls, "00" must be dialed first followed by the country code, area code and local phone number. The country code for India is 91. Several international fiber-optic links include those to Japan, South Korea, Hong Kong, Russia, and Germany. Some major telecom operators in India include Airtel, Vodafone, Idea, Aircel, BSNL, MTNL,

Reliance Communications, TATA Teleservices, Infotel, MTS, Uninor, TATA DoCoMo, Videocon, Augere, Tikona Digital. Telephone Subscribers (Wireless and Landline): 914.59 million (October 2011) Land Lines: 33.19 million (October 2011) Cell phones: 881.40 million (October 2011) Monthly Cell phone Addition: 7.79 million (October 2011) Teledensity: 76.03 % (October 2011) Projected Teledensity: 1 billion, 84% of population by 2012.
[25]

Mobile Telephones
See also: List of mobile network operators of India, List of countries by number of mobile phones in use, and List of mobile network operators

Cellular phone tower atop the roof of a building

In August 1995, Chief Minister of West Bengal, Shri Jyoti Basu ushered in the cellphone revolution in [26] India by making the first call to Union Telecom Minister Sukhram . Sixteen years later 4th generation services were launched in Kolkata. With a subscriber base of more than 851 million, the Mobile telecommunications system in India is the second largest in the world and it was thrown open to private players in the 1990s. GSM was comfortably maintaining its position as the dominant mobile technology with 80% of the mobile subscriber market, but

CDMA seemed to have stabilised its market share at 20% for the time being. By March 2010 the country had 584 million mobile subscribers, up from 350 million just 15 months earlier. The mobile market was continuing to expand at an annual rate in excess of 40% coming into 2010. The country is divided into multiple zones, called circles (roughly along state boundaries). Government and several private players run local and long distance telephone services. Competition has caused [27] prices to drop and calls across India are one of the cheapest in the world. The rates are supposed to [28] go down further with new measures to be taken by the Information Ministry. In September 2004, the number of mobile phone connections crossed the number of fixed-line connections and presently dwarfs the wireline segment by a ratio of around 20:1. The mobile subscriber base has grown by a factor of over a hundred and thirty, from 5 million subscribers in 2001 to over 881 million subscribers as of October 2011. India primarily follows the GSM mobile system, in the 900 MHz band. Recent operators also operate in the 1800 MHz band. The dominant players are Airtel, Reliance Infocomm, Vodafone, Idea cellular and BSNL/MTNL. There are many smaller players, with operations in only a few states. International roaming agreements exist between most operators and many foreign carriers. The government allowedMobile number portability (MNP) which enables mobile telephone users to retain their [29] mobile telephone numbers when changing from one mobile network operator to another. India is divided into 22 telecom circles.

The telecom industry has been divided into two major segments, that is, fixed and wireless cellular services for this report. Besides, internet services, VAS, PMRTS and VSAT also have been discussed in brief in the report. In todays information age, the telecommunication industry has a vital role to play. Considered as the backbone of industrial and economic development, the industry has been aiding delivery of voice and data services at rapidly increasing speeds, and thus, has been revolutionising human communication. Although the Indian telecom industry is one of the fastest-growing industries in the world, the current teledensity or telecom penetration is extremely low when compared with global standards. Indias teledensity of 36.98% in FY09 is amongst the lowest in the world. Further, the urban teledensity is over 80%, while rural teledensity is less than 20%, and this gap is increasing. As majority of the population resides in rural areas, it is important that the government takes steps to improve rural teledensity. No doubt the government has taken certain policy initiatives, which include the creation of the Universal Service Obligation Fund, for improving rural telephony. These measures are expected to improve the rural tele-density and bridge the rural-urban gap in tele-density. Introduction - Evolution Indian telecom sector is more than 165 years old. Telecommunications was first introduced in India in 1851 when the first operational land lines were laid by the government near Kolkata (then Calcutta), although telephone services were formally introduced in India much later in 1881. Further, in 1883, telephone services were merged with the postal system. In 1947, after India attained independence, all foreign telecommunication companies were nationalised to form the Posts, Telephone and Telegraph (PTT), a body that was governed by the Ministry of Communication. The Indian telecom sector was entirely under government ownership until 1984, when the private sector was allowed in telecommunication equipment manufacturing only. The government concretised its earlier efforts towards developing R&D in the sector by setting up an autonomous body Centre for Development of Telematics (C-DOT) in 1984 to develop stateof-the-art telecommunication technology to meet the growing needs of the Indian telecommunication network. The actual evolution of the industry started after the Government separated the Department of Post and Telegraph in 1985 by setting up the Department of Posts and the Department of Telecommunications (DoT).

The entire evolution of the telecom industry can be classified into three distinct phases.

Phase I- Pre-Libralisation Era (1980-89) Phase II- Post Libralisation Era (1990-99) Phase III- Post 2000

Until the late 90s the Government of India held a monopoly on all types of communications as a result of the Telegraph Act of 1885. As mentioned earlier in the chapter, until the industry was liberalised in the early nineties, it was a heavily government-controlled and small-sized market, Government policies have played a key role in shaping the structure and size of the Telecom industry in India. As a result, the Indian telecom market is one of the most liberalised market in the world with private participation in almost all of its segments. The New Telecom Policy (NTP-99) provided the much needed impetus to the growth of this industry and set the trend for libralisation in the industry.

The Indian telecom industry has been an attractive avenue for foreign investors over the years. As per DIPP figures, the cumulative FDI inflow during August 1991 to June 2009 period, in the telecommunication sector amounted to US$ 113 bn. FDI calculation takes into account radio paging, cellular mobile and basic telephone services in the telecommunication sector. In the 2004-05 Budget, the government raised the FDI limit from 49% to 74% in the telecom services segment subject to retention of local management control. According to the new norms, 26% share out of the 74% should be held by an Indian company or an Indian citizen with Indian management. Further, 100% FDI is permitted in telecom manufacturing, category I infrastructure providers, ISPs without gateway, call centres and IT-enabled services. Further, direct or indirect FDI up to 74% is permitted subject to licensing and security requirements for ISPs with gateways, radio paging operators and category II infrastructure providers. The relaxation in FDI norms has attracted many foreign telecom majors to the sector. The presence of foreign players has not only encouraged faster infrastructure development and upgradation but also has opened up the domestic industry to foreign competition. Since 2004, there has been a large inflow of FDI in the sector. During 2004-05 and 2005-06, a period during which the FDI norms were relaxed, the FDI inflow grew by an astounding 300% to US$ 624 mn in 2005-06 from merely US$ 125 mn in 2004-05. The inflow of FDI has provided tremendous impetus to the sector in the past few years and the attractiveness of the sector has kept the FDI inflows growing steadily. During FY09 the FDI in the telecom sector at US$ 2,558 mn was 103% higher than that seen in FY08 at US$ 1,261 mn. Further, the FDI in the sector has already reached US$ 2010 mn for a six month period of FY10 (Apr-Sep 09) and is expected to surpass the total FDI for FY09. The governments liberalised FDI policies have resulted in several foreign companies entering into the Indian markets. The influx of foreign players in the Indian telecom industry has led to capacity creation, and better infrastructure, which in turn has bettered the network quality. The rise in FDI has also enabled technology transfer, market access and has improved organisational skills; going forward, FDI could be used for providing telecom services to rural areas, where teledensity is still very low. The change in FDI policy that has raised the FDI limit from 49% to 74% for the sector has made it more attractive for foreign players. In the long run the growth prospects of telecom players that have foreign partners will improve and other players will get new avenues to raise capital. Growth of IT-ITeS and Financial Sector

India has entered the league of countries with the most-advanced telecommunication infrastructure after the industry was deregulated. Furthermore, deregulation has stimulated Indias economic growth through industry growth and through rise in investments. It is evident that a well-developed communication sector improves access to social networks, lowers transaction costs, increases economic opportunities, widens markets, and provides better access to information, healthcare and educational services. The growth in Indian telecom sector has been concomitant with overall growth in GDP, government revenue, employment et al. Besides, telecommunication has increased efficiency, reduced transaction costs, attracted investments and has created new opportunities for business and employment. The NTP-99 was particularly helpful for the ITeS-BPO industry as it ended the government monopoly in international calling by introducing IP telephony. After the introduction of IP telephony, there was rapid growth in the number of data processing centres and inbound/outbound call centres, which ultimately led to the outsourcing revolution in India. The telecom sector has been instrumental in creating jobs for a vast pool of talented and knowledge professionals in the IT and ITeS-BPO industry, which thrives on reliable telecommunication infrastructure. India has become an important outsourcing destination for the world and the boom in this sector also has transformed Indias economic dynamics. The evolution of telecom sector has brought about a revolutionary change in the way some businesses operate. Another beneficiary of the telecom revolution is the financial services industry, which has been on a growth trajectory. The progress and quality of the financial sector has been a key factor that has driven the pace and diversity of the real economy. India has an extensive and well-developed financial sector with wide and sophisticated banking network. Banking in India has become service-oriented, and has matured greatly from the days of walk-in customers to the present situation when banks have migrated to a 24-hour banking platform to attract customers; however, this disintermediation in the business has led banks to be extremely prudent in terms of their internal operations and has led them to adopt newer products and delivery channels. Further, with introduction of internet & mobile banking the long ques at the banks are slowly becoming a thing of the past. Both the financial and the IT-ITeS segments rely on good domestic as well as international network connectivity; therefore, there is a need for a sound telecommunication network. Factors Facilitating Growth of the Sector The phenomenal growth in the Indian telecom industry was brought about by the wireless revolution that began in the nineties. Besides this, the following factors also aided the growth of the industry. Libralisation The relaxation of telecom regulations has played a major role in the development of the Indian telecom industry. The liberalisation policies of 1991 and the consequent influx of private players have led the industry on a high growth trajectory and have increased the level of competition. Post-liberalisation, the telecom industry has received more investments and has implemented higher technology. Increasing Affordability of Handsets The phenomenal growth in the Indian telecom industry was predominantly aided by the meteoric rise in wireless subscribers, which encouraged mobile handset manufacturers to enter the market and to cater to the growing demand. Further, the manufacturers introduced lower-priced handsets with add-on facilities to cater to the increasing number of subscribers from different strata of the society. Now even entry-level handsets come with features like coloured display and FM radio. Thus, the falling handset prices and the add-on features have triggered growth of the Indian telecom industry. Prepaid Cards Bring in More Subscribers In the late nineties, India was introduced to prepaid cards, which was yet another milestone for the wireless sector. Prepaid cards lured more subscribers into the industry besides lowering the credit risk of

service providers due to its upfront payment concept. Prepaid cards were quite a phenomenon among firsttime users who wanted to control their bills and students who had limited resources but greater need to be connected. Pre-paid cards greatly helped the cellular market to grow rapidly and cater to the untapped market. Further, the introduction of innovative schemes like recharge coupons of smaller denominations and life time incoming free cards has led to an exponential growth in the subscriber base. Introduction of Calling Party Pays (CPP) The CPP regime was introduced in India in 2003 and under this regime, the calling party who initiated the call was to bear the entire cost of the call. This regime came to be applicable for mobile to mobile calls as well as fixed line to mobile calls. So far India had followed the Receiving Party Pays (RPP) system where the subscriber used to pay for incoming calls from both mobile as well as fixedline networks. Shifting to the CPP system has greatly fuelled the subscriber growth in the sector. Changing Demographic Profile The changing demographic profile of India has also played an important role in subscriber growth. The changed profile is characterised by a large young population, a burgeoning middle class with growing disposable income, urbanisation, increasing literacy levels and higher adaptability to technology. These new features have multiplied the need to be connected always and to own a wireless phone and therefore, in present times mobiles are perceived as a utility rather than a luxury. Increased Competition & Declining Tariffs Liberalisation of the telecom industry has fuelled intense competition, especially in the cellular segment. The ever-increasing competition has led to high growth of subscribers and has put pressure on tariffs, which have seen a sharp drop over the years. When the cellular phones were introduced, call rates were at a peak of Rs 16 per minute and there were charges for incoming calls too. Today, however, incoming calls are no longer charged and outgoing calls are charged at less than a rupee per minute. Thus, the tariff war has come a long way indeed. Increased competition and the subsequent tariff war has acted as a major catalyst for attracting more subscribers. Apart from these major growth drivers, an improved network coverage, entry of CDMA players, growth of value-added services (VAS), advancement in technology, and growing data services have also driven the growth of the industry. Outlook The telecom industry in India has experienced exponential growth over the past few years and has been an important contributor to economic growth; however, the cut-throat competition and intense tariff wars have had a negative impact on the revenue of players. Despite the challenges, the Indian telecom industry will thrive because of the immense potential in terms of new users. India is one of the most-attractive telecom markets because it is still one of the lowest penetrated markets. The government is keen on developing rural telecom infrastructure and is also set to roll out next generation or 3G services in the country. Operators are on an expansion mode and are investing heavily on telecom infrastructure. Foreign telecom companies are acquiring considerable stakes in Indian companies. Burgeoning middle class and increasing spending power, the governments thrust on increasing rural telecom coverage, favourable investment climate and positive reforms will ensure that Indias high potential is indeed realised