Indian Telecom Industry

Telecommunication has emerged as a key driver of economic and social development in an increasingly knowledge intensive scenario. Today, India is one of the fastest growing telecom markets in the world. Industry had a solid past since the first Experimental Electric Telegraph Line got started between Calcutta and Diamond Harbour in 1850 followed by first Indian Telegraphic Act in 1855. In 1881, for the first time, Licences were granted to Private Companies to operate Telephone Systems at Madras, Bombay, Rangoon and Calcutta. 

 

As on March 31, 1948, there were 7330 telegraph offices, 321 telephone exchanges with 82,895 telephones, and in addition 28,155 telephones were with private and private branch exchanges. After independence Government of India took complete control over the telecom sector and brought it under the Post & Telegraph Department. 

 
The initial phase of telecom reforms started in 1984 when the Centre for Development of Telematics (C-DoT) was set up for developing indigenous technologies and permissions were given to the private sector to manufacture subscriber-equipment. There was de- licensing of manufacturing of telecom equipment in 1991. The new Economic Policy of India was announced on July 24, 1991 and aimed at meeting India's competitiveness in global market; rapid growth of exports, attracting foreign direct investment and stimulating domestic investments. In order to attain the goals of New Economic Policy, telecommunication services of world class were needed and it was considered necessary to focus and give high priority to the development of telecom services in the country. Accordingly, the Government formulated the National Telecom Policy -1994 (NTP 1994-attached). 
 
At the time of formulation of NTP 1994, telephone density in India was 0.8 per 100 persons as against world average of 10 per 100 persons. Today, India’s telecom industry is the world’s second-largest market. Today, the total subscriber base (including wire line and wireless) in the sector has crossed the 1 billion mark. In the last decade, the   penetration levels has risen over 50 per 100 persons, with the mobile segment leading this growth. The advent of NTP 1999 paved the way for aggressive growth in the wireless subscriber base. 
 
To facilitate India's vision of becoming an IT super power and develop a world class telecom infrastructure in the country, a high level Group on Telecommunications (GoT) drafted New Telecom Policy 1999 (NTP 1999-attached)  and after the approval of the Cabinet, NTP 1999 was announced to be effective from April 1, 1999. The NTP 1999 recognized that providing world class telecommunications infrastructure and information, was the key to rapid economic and social development of the country. Further, it was considered critical not only for the development of the Information Technology Industry, but also that it had wide spread ramification on the economy of the country. Added to this, it was anticipated that going forward in this sector would contribute to a major part of Gross Domestic Product (GDP) of the country. 
 
The Policy focused on creating an environment which enabled continued attraction of investment in the sector and allowed creation of communication infrastructure by leveraging on technological development and today India’s mobile market is the second-largest of its kind in the world after China. During the period between FY00 and FY11, the wireless subscriber base in India grew at a Compound Annual Growth Rate (CAGR) of 77.5% to reach 851.7 million subscribers in June, 2011. 
 
Mobile services were commercially launched in 1995 in the country. In the initial years of mobile telephony, the growth in the number of subscribers was very low, with average monthly subscriber additions in the range of 0.05–0.1 million subscribers. Today, the wireless segment adds around 15 to 20 million subscribers each month. Such phenomenal growth can be attributed primarily to the country’s large population, high economic growth, and high-competition in the sector, reduced tariffs and the introduction of positive and enabling regulatory reforms especially facilitating the sharing of infrastructure. 
 
While under NTP 1999, the targets were achieved well in advance yet urban-rural divide needs to be filled-up. The urban subscribers account for more than 66% of the overall subscriber base. Similarly, broadband subscribers are concentrated in Urban Areas primarily on account of affordability. The recent announcement of NTP 2011 would offer many further opportunities in the sector around Broadband, Equipment Manufacturing & Telecom Infrastructure.