Indian telecom emerges 2nd largest in the world

Indian telecom continues to register a significant growth in the current fiscal year. This has been due to the impact of economic reforms and pro-active policies of the government.

Today, Indian telecom network with about 364 million connections in October 2008 is the third largest in the world .Indian telecom has achieved another milestone as it has become the second largest wireless network in the world by surpassing USA. With the current pace, where about nine million telephones are being added every month, the target of 500 million connections by 2010 is well within our reach.

Official statistics say: The total number of telephones has increased from 76.53 million on March 31, 2004 to 363.95 million on October 31 2008. While 94.63 million telephones were added during the twelve months of 2007-08, about more than nine million subscribers are being added every month during the current fiscal year. Tele- density has also increased from 12.7 per cent in March 2006 to 31.50 per cent in October 2008. Rural teledensity increased to 13.4 per cent in October 2008 with 109.05 million rural telephone connections. Urban teledensity on the other hand has been 74.61 per cent in October 2008.

The growth of wireless services has been phenomenal, with wireless subscribers growing at a compound annual growth rate (CAGR) of 87.7 per cent per annum since 2003. Today, the wireless subscribers are not only much more than the wireline subscribers in the country, but also increasing at a much faster pace. The number of wireless phones has been 325.7 millions as on October 2008. The share of wireless phones has increased from 24.3 per cent in March 2003 to 89.50 per cent in October 2008. Improved affordability of wireless phone has made universal access objective more feasible.

Government has taken several steps to encourage participation of private players to create a competitive environment in this sector. These measures were directed at removal of state monopolies, reduction in entry barriers to new firms, creation of a level playing field between incumbents and new entrants, and most importantly, forward looking and even-handed regulation which has promoted competition and also effective consumer interests. Consequently, the private sector is now playing an important role in the expansion of telecom sector. The share of private sector in total telephone connections is now 77.44 per cent as per the latest statistics available for October 2008 as against a meager 5% in 1999.

Rural telephones have gone up from 12.3 million in March 2004 to 109.05 million in October 2008 with a teledensity of 13.04%. The target of 100 million rural telephones by 2010 has been achieved well in advance. Out of more than 22.71 lakh Public Call Offices (PCOs) functioning in the country, two lakh are in the rural areas. The Mobile Grameen Sanchar Sewak Scheme providing telephone at the doorstep of villagers in about 12,000 villages is also in place.

To provide infrastructure support for mobile services, a scheme has been launched by the Government to provide support for setting up and managing 7871 number of infrastructure sites spread over 500 districts in 27 states of the country for the provision of mobile services. The infrastructure so created, shall be shared by three service providers for provision of mobile services. Mobile services from these towers are likely to be launched in a phased manner by the end of year 2008. As on 30.09 2008, about 1589 towers have been set up under this scheme. Mobile services from 1517 BTSs installed on many of these towers have also started.

It is also envisaged that internet and broad-band subscribers will increase to 40 million and 20 million, respectively, by 2010. As per the latest available statistics for September 2008, about 5.7% villages have broadband coverage and the number of rural broadband connections is 1.55 lakh.

With the aim to provide e-governance and data services to the rural masses, a proposal is being considered to provide support of broadband connectivity in rural and remote areas of the country in a phased manner. Under this scheme, 5000 blocks shall be connected by wireless broadband and villages coming within a radius of 10 kms. Of the taluk/block headquarters shall be covered by such connectivity.

To achieve the stipulated target, the government has issued guidelines for Broadband Wireless Access (BWA) Services. Introduction of BWA services will enhance the penetration as well as growth of broadband subscribers.

Indian telecom industry manufactures a complete range of telecom equipment using state of the art technologies designed specifically to match the diverse terrain and climatic conditions of the country. Rising demand for a wide range of telecom equipment, particularly in the area of mobile telecom, has provided excellent opportunities to domestic and foreign investors in the manufacturing sector. The last four years saw many renowned telecom companies setting up their manufacturing base in India.

During 2008-09, production of telecom equipment is expected to increase from Rs,412,700 million (2007-08) to Rs. 518,000 million. During 2007-08, highest increase has been recorded in wireless equipment manufacturing including cellular mobile phones where the production has gone up from Rs.105,450 million in 2006-07 to Rs. 286,000 million in 2007-08, recording a growth of 171%.

Foreign direct investment (FDI) is one of the important sources to meet the huge funds that are required for rapid network expansion. The FDI policy provides an investor-friendly environment for the growth of the telecom sector. The policy of the Government of India is to strive to maximize the developmental impact and spin-offs of FDI. At present, 74% to 100% FDI is permitted for various telecom services. The total FDI equity inflows in telecom sector have been 1261 million USD during 2007-08.

The government is now looking forward to achieve the target of 600 million telephone subscribers by the end of Eleventh Plan and to achieve rural teledensity of 25% by means of 200 million rural connections at the end of 11th Plan. It is also envisaged that internet and broad-band subscribers will increase to 40 million and 20 million, respectively, by 2010.