Development &Transformation of Telecom Industry

1. Development &Transformation of Telecom Industry ITU/MII Seminar Shanghai , July 24-25, 2007 D S Mathur Secretary , Department of Telecom and Chairman , Telecom Commission Government of India

2. AGENDA • India : An overview • Growth of Indian Telecom & Role of Regulation • Development &Transformation of market/ Industry • Regulatory Challenges • Conclusion

3. AGENDA • India : An overview • Growth of Indian Telecom & Role of Regulation • Development &Transformation of market/ Industry • Regulatory Challenges • Conclusion

4. Jammu and Kashmir (C) Himachal Pradesh (C) (B) - NORTH EAST (C) Punjab BHUTAN Haryana (B) Sikkim Delhi NEPAL Uttar Pradesh(B) r Rajasthan (B) Assam (C) a Bihar (C) West Madhya Gujarat (A) Bengal B) Pradesh(B) Calcutta BANGLADESH Maharashtra (A) Orissa (C) Bombay (A) m Andhra Pradesh Goa Andaman and Madras Karnataka Nicobar (A) Islands (C) Tamil Nadu Kerala (A) (B) MALDIVES Diverse and Unique India • 28 States & 6 federal territories (UTs) • 37 official languages and 1652 languages & dialects. Most Indians speak either English or Hindi (More Indians speak English than the entire population of USA) • Largest Democracy in the world; very strong legal system • Federal and provincial governments elected by the people. Monetary Unit: Rupee 1 US$ ~ 41 Rupees (INR) 1.1 Billion People 3.3 million sq. kms area

5. Indian Economy • Fourth largest Economy in PPP terms ($2.8 trillion) • India’s GDP grew at 9.4% in FY 06/07

6. India is a Knowledge Economy • The Talent Pool in India Gives it a Significant Edge • 10,000 accredited institutions (38% 10yr CAGR) • Over 3 mn graduates & Post Graduates per annum • 675,000 Technical Graduates p.a which include • 375,000 engineers • ~ 50,000 MBAs • Large pool of English speaking, computer savvy graduates; Second to US in size & availability of skilled and English speaking manpower

7. AGENDA • India : An Overview • Growth of Indian Telecom & Role of Regulation • Development &Transformation of market/ Industry • Regulatory Challenges • Conclusion

8. India - Telecom Unleashed by Wireless! India’s wireless market is growing at ~6-7 Million new subscribers every month • Third largest cellular market in the world • Fastest growing telecom market in the world – 500 Million subs by 2010 • 5 competing GSM and 2 CDMA operators in over 8000 cities & towns • Lowest Tariff compared to other countries Mobile Subscribers 460 400 Millions 330 240 Fixed Line Subscribers 149

9. Phases of Telecom Policy reforms First phase of reform Second phase of reform Third phase of reform Unified Licensing 3GPolicy Manufacturing Sector; Value Added Services NTP 1994 Duopoly / Oligopoly in Basic and Mobile Services; Bidding for Licenses; Independent regulator NTP 1999 Open competition for all services; Revenue sharing license fee Separation of operator and policy maker; Corporatization of incumbent CPP Lowering ADC Unified Access (Fixed & Mobile) Licensing Regime already implemented Lower & simplified ADC regime Unified Licensing Regime/ Licensing under consideration 3G policy to be announced this year

10. Reforms – Phenomenal Growth 22 1.07

11. Exponential Growth • 165 million Mobile Subscribers • Subscriber numbers doubled in 2 years. • Over 120 million new subscribers added in the last two years. • More than 5 million subscribers being added every month. • Highest growth rate in the world. • This growth has facilitated the expansion of BPO industry which employs 0.5 million people - 400 employees added per day.

12. Broadband • Broadband policy announced in October 2004. • Broadband has been defined as ‘Always on’ data connection with minimum download speed of up to 256 Kbps • By end of 2006, 2 million Broadband connections provided • 9 million Broadband connections by 2007 • 20 million connections by the year 2010 • About 50-60% connections envisaged from Public sector companies BSNL/MTNL, Balance tocome from private sector service providers

13. Growth- the way ahead • 500 million Phone connections by the year 2010 • 20 Million Broadband connections by 2010

14. Manufacturing – the way ahead • India to be made a hub for telecom manufacturing by facilitating telecom specific SEZs • Telecom Export Promotion Council set up • FDI of US $4 billion in telecom manufacturing by 2007 • Eight Centres of Excellence in telecom technology in Public Private Partnership (PPP) mode by 2007 • Mobile handset at about US$ 20

15. AGENDA • India : An overview • Growth of Indian Telecom & Role of Regulation • Development &Transformation of market/ Industry • Regulatory Challenges • Conclusion

16. The Transformation From To Competition • Monopoly service provider • Competitive regime with multiple players • STD tariff US$ 1 per minute (1999) • Peak cellular tariff 50 cents per minute • 3 – 4 cents per minute • One India - 2 cents per minute Tariffs • 18 million fixed lines in March 1998 • Less than 0.1 million cellular in March 1998 • About 50 million fixed lines • About 165 million mobiles Subscribers

17. Changing industry structure • The trend is Convergence • The strategy is Alliance • The focus is Services • The future is NGN, Mobile & Broadband

18. The Trend is Convergence • Breaking Industry and Service Barriers • Broadcasting Companies --> Voice and Network Services • Telecom Operators --> data network and financial services • Computing Companies --> Broadcasting (TV services) • Financial Institutions --> Data network access Services • Voice Services provided over data networks (VoIP) • Data Services over broadcasting networks (DVB) • Broadcasting services over data networks (WebTV, Radio)

19. The Strategy is Alliance • No Single entity holds answer to puzzle • Broadcasting Companies + Access Providers = TV-based Internet access • Content Providers + Network Carriers = Distributed Content delivery and Hosting • Mobile Operators + Financial Institutions + Software Firms = Mobile e-Payments • Fixed Operators + Broadcasting Companies = Voice Services via TV Networks • Energy Companies + xSPs = Powerline Internet Access • Operators + Financial Companies = ePayment Solutions • Small Businesses + Big Businesses =Survival

20. The Future is NEXT GENERATION NETWORK (NGN) • NGN for convergent services viz. Video-on-demand, video streaming, internet services, real-time interactive services, gaming etc. besides conventional voice & data services • NGN for generalised mobility to access services anywhere, anytime. • NGN for Fixed and Mobile Convergence

21. AGENDA • Overview of India • Growth of Indian Telecom & Role of Regulation • Development &Transformation of market/ Industry • Regulatory Challenges • Conclusion

22. Regulatory Challenges • Rapidly Changing environment characterized by increased complexity • Convergence of Regulation of different sectors e.g. Telecom, IT and Broadcasting • Need of optimum utilization of radio spectrum due to Multi operator environment and exponential growth of Wireless subscribers

23. Regulatory Challenges – Contd:- • Next generation regulation issues: • Quality of service • Numbering • Emergency services • Interconnection to legacy networks • Security.

24. Conclusion • Development & Transformation is mainly driven by • Technological developments • Reform Policies & Regulation • Globalization of the world Economy • Convergence of different sectors

25. Thank You