Communications Industry Overview

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The Communications Industry Overview of India, states that the industry has witnessed astronomical growth over the last decade and half. The Government of India broke away from its traditional out look of monopoly-market to open-market policy. As a result of economic renaissance in India, different Indian industries grew to record heights in record time. The success of India telecommunication industry is also note worthy and its contribution to the overall growth of the Indian economy is well known.

The Indian Communications Industry Overview suggests that although, this industry has matured tremendously over the last fifteen years but huge scope of growth still waits to be explored. The urban India is more or less well connected with basic telephony but the semi-rural area needs immediate attention. Further, the most important and untapped area is the rural- India and huge scope of growth is lying still untapped. The Government of India is focused on the development and faster growth of rural-telephony in rural India and such that it has equipped the latest telecommunication policy with host of fiscal incentives and tax rebates to attract investors, both domestic and foreign investors.

The factors, which contributed for success of Indian telecommunication industry, are as follows -
  • Friendly Government of India economic and telecommunication policies
  • Low operational cost
  • Availability of world class infrastructure at a much cheaper cost
  • Availability of huge English speaking workforce
  • Prevalence of strong technical education amongst the majority of educated Indians
  • Large number of science and engineering graduates
  • Assurance of high quality output
  • Highly skilled workforce
  • Usage of innovative technologies
  • Effective and efficient entrepreneurship skills
  • Good client and service provider's relationships
  • Creation of global brands
  • Huge scope of business across all industries especially, in IT and ITES industries
  • Expansion of existing relationships
  • Ever growing domestic market, especially the rural market
  • Huge success in overseas markets
  • Increased electronics and hardware manufacturing in India
  • Aggressive promotion of R&D in telecommunication
  • Increased penetration of computers
  • Increased utilization of Internet
  • Growth of domestic software market
  • Development of local language software, especially for the use in rural- India
  • Use of Information Technology to increase productivity
  • Use of Information Technology as a means of generating employment
  • Increased number and quality of training facilities across India
With 110.01 million connections, the Indian telecommunication industry is the fifth largest and fastest growing telecommunication industry in the world. The subscriber base of the Indian telecommunication industry has grown by 40% in the year 2005 and is expected to reach 250 million by the end of the year 2007. In the last 3 years, two out of every three new telephone connections were wireless and it accounts for around 54.6% of the total telephone subscriber base in India, as compared to only 40% in 2003. The wireless subscriber growth in India is expected to grow at 2.5 million new subscribers every month in 2007. The wireless subscriber base in India, skyrocketed from 33.69 million connections in 2004 to 62.57 million connections in the financial year 2004 -2005. The wireless technologies those are currently in use in this Indian industry are Global System for Mobile Communications (GSM) and Code Division Multiple Access (CDMA). The Indian telecommunication industry now has 9 GSM and 5 CDMA operators providing mobile service in 19 telecommunication circles and 4 metro cities, connecting more than 2000 towns across India. The Telecom Regulatory Authority of India (TRAI) regulates the Indian telecommunication industry. It has earned good reputation for transparency and competence. Three types of operators function in this industry -
  • State owned companies like - VSNL, BSNL and MTNL.
  • Private Indian companies like - Reliance Infocomm and Tata Teleservices.
  • Foreign companies like - Hutchison-Essar, Bharti Tele-Ventures, Escotel, Idea Cellular, BPL Mobile, Spice Communications etc.
Further, the Indian Communications Industry Overview suggests that the services of this industry are not confined to basic telephony but it also extends to Internet, broadband (both wireless and fixed), cable TV, SMS, IPTV, soft switches etc.

The bottlenecks for the Indian telecommunication industry are as follows -
  • Slow telecommunication reform process
  • Low penetration capability in rural India.
  • Service providers bears huge initial cost for establishment of basic infrastructure and achieving break-even is difficult
  • Huge initial capital investments
  • Limited spectrum availability and high interconnection charges between the private and state operators
The Government of India Broadband Policy 2004 aims at 9 million broadband connections and 18 million Internet connections by the end of financial year 2007 - 2008. The Indian telecommunication industry is expected to contribute nearly 1% to India's GDP.

Last Updated on 27 June 2011