Last Updated: January 29, 2015
President and CEO, Nokia
Updated: December, 2014
SECTORAL REPORT | October, 2014
Telecommunication services are globally recognised as one of the driving forces for overall economic development in a nation. They are also one of the prime support services needed for rapid growth and modernisation of various sectors of the economy. The Government of India recognises this fact and hence, has taken several major initiatives to provide a business friendly environment for companies in this sector.
Driven by 3G and 4G services, it is expected that there will be huge machine-to-machine (M2M) growth in India in 2016-17, according to UST Global. There is also a lot of scope for growth of M2M services in the government's ambitious Rs 7,000 crore (US$ 1.1 billion) 'Smart City' program
The rapid strides in the telecom sector have been facilitated by liberal policies of the Government of India that provide easy market access for telecom equipment and a fair regulatory framework for offering telecom services at affordable prices. According to a study by GSMA, it has been expected that smartphones will account for two out of every three mobile connections globally by 2020 and India is all set to become the fourth largest smartphone market.
India saw the fastest growth in new mobile-phone connections with 18 million net additions in the third quarter of 2014, according to a report by Swedish mobile network equipment maker Ericsson. The number of smartphones, which account for just 37 per cent of all mobile-phone subscriptions, will reach 2,700 million by 2014, and growing at 15 per cent compounded annual growth rate, will cross 6,100 by 2020. The falling cost of handsets, coupled with improved usability and increasing network coverage, are factors that are making mobile technology a popular phenomenon in the country.
The broadband services user-base in India is expected to grow to 250 million connections by 2017, according to GSMA. It also expects to see increased mobile broadband penetration in India, with over 250 million on either 3G /4G by 2017.
According to the GSMA’s broadband services report card, the month-on-month (m-o-m) broadband growth rate in India was at 4.95 per cent, with 60.87 million subscribers as of March 2014. State-owned Bharat Sanchar Nigam Ltd (BSNL) leads the combined wired and wireless broadband market with 27.54 per cent share.
With daily increasing subscriber base, there have been a lot of investments and developments in the sector. Some of the major developments in the recent past are:
The government has fast-tracked reforms in the telecom sector and plans to clear the proposal allowing spectrum trading and sharing ahead of the year-end deadline as it wants to lift the business sentiment for the forthcoming airwave auction. Some of the other initiatives taken by the government are:
The department of telecommunications (DoT) has agreed to the defence ministry’s demands for a defence band and a so-called defence interest zone (DIZ). This move will free up 3G telecom spectrum for at least three new carriers.
The Government of India has asked telecom firms to implement full mobile number portability by May 2015, a move that will enable subscribers to retain their numbers when they shift to other states or licensed service areas.
DoT has planned to frame a separate exit policy for the country’s telecom sector that will allow companies to leave the business without losing out on the value of the assets. The move is being seen as part of Government of India’s endeavour to make the country’s telecom sector investor-friendly and enhance the ease of doing business in India.
The telecom department is examining a proposal from the National Manufacturing Competitiveness Council to float a US$ 1 billion government-sponsored fund to seed 'Made in India' technologies to boost local gear manufacturing. The proposed telecom manufacturing fund will infuse equity in start-ups promoted by technocrats and scientists of Indian origin on condition that product development and manufacturing happens in India.
India will emerge as a leading player in the virtual world by having 700 million internet users of the 4.7 billion global users by 2025, as per a Microsoft report.
With the government’s favourable regulation policies and 4G services hitting the market, rapid growth is expected in the Indian telecommunication sector in the next few years. Also, with developments in this sector, services such as security and surveillance, remote monitoring of ATM machines, home automation, traffic management, retail, logistics and grid energy could eventually facilitate optimisation of resources.
Exchange Rate Used: INR 1 = US$ 0.0157 as on December 26, 2014
References:Media Reports and Press Releases, Cellular Operators Authority of India (COAI), Telecom Regulatory Authority of India (TRAI), Department of Telecommunication (DoT), Department of Industrial Policy and Promotion (DIPP)
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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