Convergence & the Global Information Society

1. Convergence & the Global Information Society Dilip Modi, Chairman, Cellular Operators Association of India June 16, 2004 @ Singapore

2. Importance of Telecommunications • Information is the Key to the Social & Economic Development of a Nation. • Axiomatic that efficient, widespread affordable telecomm services critical for the spread of knowledge & information. • Jipp’s law shows that there is a strong correlation between telecommunication (as measured by tele density) and economic development (GDP per capita)

3. Mobile- The Global Future • Cumulative global cellular subscribers have exceeded fixed lines connections. • India’s mobile numbers to cross fixed lines in 2004 • Mobile subscriber penetration to triple by 2007 in emerging economies. • Wireless devices for data to grow twice as quickly in the developing world than in the developed world by 2010 Source : Telecompetition Inc. • By 2005, in most developed countries, after several years of heady growth, the mobile subscribers additions to plummet to nearly zero. Source : Baskeville’s Global Mobile forecast- 2010 report Asia – vast Potential….China and India set to buck the trend Emerging economies - the growth engines

4. Asia - The Mobile scene By 2005 • In Asia Pacific an 8% penetration of mobile users would translate into 282 million. • In the US, 83% penetration would mean 224 million • In Western Europe, 91% penetration would mean 409 million Source : ARC Group Consultants Asia Pacific - a vast potential - slated to be the largest telecom market by 2005; China & India account for almost 70% of the population Source: Yankee Group research firm 2000-2010 : The Mobile Decade

5. INDIA India – A Large & Vibrant Economy • Population - 1.1 Bn (72 : 28 Rural : Urban divide*) • Literacy Rate - 65.38 % (Rural literacy grown from 22% to 60% over 40 years*) • Purchasing Power Parity # • US $ 10.414 Trillion • China $ 5.792 Trillion • Japan $ 3.481 Trillion • India $ 2.778 Trillion • Geographic Dispersal (Area : 3287263 Sq km) • 18 National Recognised Languages • Young Nation (51% population below age of 35) * Census 2001 # Source – World Bank Data base Demography Matters …

6. India is third largest economy in Asia & one of the fastest growing one. Annual GDP growth rate of at least 6% over next 5-10 years Staggering growth over 10% in 3rd & 4th quarter last year Set to emerge as 3rd largest economy in the world by 2020 9 - 10% real-term economic growth over next 25 years India- a major global hub for IT & IT enabled services Mobile technology transforming people’s lives tremendously India unbound

7. 7th largest network in the world 2nd largest among emerging economies Current worth estimated at US$9 billion Projected to cross over US$100 billion by 2020 2 million new mobile phone subscribers added every month Market for mobile phones projected to double this year Mobile phones growing faster than fixed line phones 103 state-of-the art Networks (GSM + CDMA) on Air Services in over 2000 cities & towns Around 36 million mobile subscribers (GSM + CDMA) - end May 2004 India - Telecom Unleashed!

8. India…Leapfrogging Technology Mobile – Major Contributor to Tele density Total – 8% Fixed – 4.5% Mobile – 3.5% • Mobile – Fixed crossover expected in 2004 • Cellular constitutes 45% of current national tele density – has played an important role in taking overall tele density from 0.8 in 1994 to 8 in 2004

9. India…Leapfrogging Technology • India…Fixed Line Telephone penetration at less than 2% at the time of introduction of Mobile Telephony compared to significant double digit penetration in the developed World.

10. Key Enablers Availability Affordability Increased Coverage Number of Cities & Towns Effective Tariffs – 400 Minute Basket Cents per minute In last 3 years alone, cellular tariffs have plummeted by 80% from 6 cents/minute to 1.2 cents/minute • Need • High Potential for “Connectivity” both in rural & urban areas • Mobility : The “killer” application Falling ARPUs 1USD=Rs. 45 In USD Source: Price Waterhouse, TRAI Quarterly Performance Indicators, Sept ‘03

11. The impact of Mobile • Life Changing • Mobile telephony is changing the very fabric of how we conduct our day-to-day lives • Proximity is no longer key to communication and interaction • There has been a complete shift to a mobile way of life • Mobile phones have revolutionized the world of work, organizing your social life, sourcing information on the move and even dating! • Life Improving • Providing greater access to communication and information to more people, in more places, worldwide • Allowing developing nations to enjoy the same communication access privileges as wealthier countries • Increasing forms of communication and entertainment – SMS, MMS, video messaging and gaming • Life Saving • Mobile technology is offering individuals and health and safety organizations new applications for saving lives • The mobile phone is now a key support application in emergency situations around the globe • A means for parents to keep in touch with their children, particularly teenagers • An increasingly important communication factor in emergency calls, particularly in isolated locations

12. Mobility a bearer of Convergence ? GSM TeleDocs General Practitioners are using GSM-based General Packet Radio Service to deliver healthcare and medical services to rural India Mandi Prices on the Move Mobile Technology being used to remove information barriers & allow the farmers to get best price for their produce Kerala Fishermen Call in their Catch Fisherman pass valuable information on their mobile phones as to where large shoals are available and for calling for assistance when calamity strikes

13. Issues to be addressed • Affordability Content & Application • Availability • Handset cost an entry barrier • All costs are dollar denominated and not in line with Purchasing Power Parity • Difficult for carriers to subsidise in a low / declining ARPU environment • Content needs to be organised and Application developed to cater to the first digital device in the hands of the Indian consumer • Rural coverage to be enhanced – Only 1.5% Rural Teledensity achieved to-date First Phone Mobile Phone First Digital Camera First Computer The real revolution has been the continuous growth of the low income group market

14. Broadband – the Next Frontier • Indian Regulator has identified Broadband as the next focus area & has recommended the following targets: • Year EndingNumbers • 2005 3 Millions • 2007 9 Millions • 2010 20 Million • Expected that broadband will have an even more explosive impact on the market than cellular mobile • Objective is to make broadband extremely affordable in order to drive its growth, affordability target laid down as USD 8 per month – for market to really explode • Indian GSM operators can play a key role in contributing to growth of broadband through 3G services Key Internet and Broadband Indicators ParametersKoreaMalaysiaChinaIndia GDP(US$ Per capita) 10,000 4,000 965 465 No. of Internet connections 26 12 2.5 0.4 (per 100 persons) No. of broadband connections 25 0.4 1.4 0.02 (per 100 persons) Charges for broadband 30 29 16 20 (per month US$) Source : TRAI

15. Drivers & Initiatives DriverFocus Areas Affordability Cost of backhaul & device Need Content & Application Availability Ubiquitous Access/Reach • Initiatives • Lower domestic Bandwidth cost through reduction in levies & duties • Lower International Bandwidth cost through opening up of bottleneck facilities at landing stations • Promotion of National Internet Exchange to reduce reliance on international bandwidth • Reduction in cost of PCs • At State Level • Project Bhoomi - Computerisation of land records & electronic tracking of change of ownership details • Project E-Seva – Providing citizens with services for payment of utility bills, birth certificates & provision of Govt orders online • Unbundled Local loop of incumbent • Incentivization for roll out in rural areas

16. Can mobility be the bearer for Convergence in the Asia-Pacific Region? US-Canada Europe Asia-Pacific 2001 Shifting Pattern of Mobile Growth in the World 2005 With China and India becoming the manufacturing & service bases to the world, the future will witness shifting of wealth, to areas with a higher share of population

17. Thank You Dilipmodi@mcorpglobal.com