The Party Has Just Begun...

Thirteen years back, when Jyoti Basu, the then chief minister of West Bengal,
made the first mobile call from Calcutta (Now Kolkata) to the then union
communications minister, Sukhram, in Delhi, no one could have imagined that
India would have 250 mn mobile subscribers by 2008. Since the times when mobile
phones were huge in size and cost-some would cost as much as Rs 45,000-and call
rates were as high as Rs 16.5 per minute, not to mention that even for receiving
calls one had to pay, India has completed a successful and unimaginable journey.

At that time, the cell phone was a status symbol. Now, it is possible for the
common man to own a mobile phone; the cell phone has, in fact, become a
necessity and will soon become as basic a need as food, shelter, and clothing.
Making a call has become very cheap now; cell phones can be purchased for less
than Rs 1,000, and recharge coupons of Rs 10 are available in general stores.
This kind of transition in the telecom industry definitely calls for
celebration.

The telecom revolution in India is considered to have a greater impact on the
society than any other revolution of our time, be it the green revolution or the
white revolution. And the telecom revolution is still taking place, and there
are enough reasons to affirm that mobile penetration will exceed 500 mn
subscribers by 2010.

The target of reaching the 250 mn mark in telephone connections, including
both fixed and mobile, has been achieved by India, the world's fastest growing
wireless market, two months prior to scheduled-December 2007.

A Boon in Disguise

The Indian mobile success story is quite dramatic. When the first mobile
came to India, the industry accused itself of being a late starter. But
analyzing closely, it was a boon in disguise. India embraced cellular technology
when 2G systems were already in place in most foreign countries, and thus
bypassed 1G technologies, thereby gaining access to a superior technology like
2G. And India did not have to try this technology as most of the lessons learnt
by the European deployments could be transferred to India. India embraced GSM
nearly eight years after it was taken up in Europe. Most of the equipment had
already become very cheap by then. This allowed for mass deployment in the
country. Moreover, India has visionaries like Sunil Bharti Mittal and Dhirubhai
Ambani who embraced certain bold strategies. For example, Bharti Airtel has
outsourced its complete network deployment to Ericsson, and management of
networks to IBM, thus, asking experts to do the job. This outsourcing of its
functions has helped the company to offer quality services to its consumers.

The teledensity has got a fillip from increasing wireless phones across the
country. The money coming from companies that outsource services to India has
made a difference by making items like the mobile phone affordable to Indians.
The liberal economic policies of the Indian government and the financial
restructuring have also raised the level of average disposable income.

Competition driven by regulatory initiatives, technological advancements, and
policy initiatives continue to push the growth to new levels. This trend was
more visible in mobile and long distance services. The competitive pressure has
also made service providers more innovative in their tariff offerings.

Indian consumers have benefited immensely from lower tariffs, which have also
been a major factor for explosive growth in the sector. Considering intense
competition in various segments of the telecommunications sector and a
continuous decline in tariffs, TRAI has gradually moved to a regime of tariff
deregulation.

Concerns Remain

While we are all set to celebrate the mobile revolution in India, there
still remain other concerns like the low Internet and broadband penetration.
Though we have surpassed the 300 mn mark in overall telephone connections,
broadband penetration is as low as 3 mn and the growth rate is not very
encouraging. Most indicators of technology penetrations, such as telephone, PC,
mobile, broadband, have a direct correlation with the increase in GDP and per
capita of a nation. However, India's broadband penetration seems to be extremely
low.

Hopefully, broadband penetration will increase in the next few years and will
catch like a wildfire when suddenly the cost of adoption and network deployment
and maintenance will turn out to be extremely low. Indian telecom operators
usually wake up quite early to realize the potential of the Indian market. They
will definitely gear up for this upcoming broadband revolution.

However, will Indian entrepreneurs, telecom vendors, VCs, and startups wake up
to this? When the Indian mobile revolution happened, foreign telecom vendors
benefited. They supplied the radio access network equipment and the core network
equipment. They also supplied mobile handsets and PDAs. Indian telecom operators
had no choice but buy equipment from these foreign players.

Operators like BSNL, Airtel, and Reliance throw open tenders worth billions
of dollars, and foreign companies take up most of these monies. Almost no Indian
company seems to wake up to capture some of this market share. We could give
ourselves an excuse that the Indian ecosystem was not conducive to create such
suppliers in India. We didn't really anticipate or predict the oncoming mobile
revolution to benefit from it. But, will we give ourselves the same excuse for
missing the broadband revolution, or will we do something about it?

Outlook 2010

The commercialization of cellular mobile telecommunication services began in
late seventies; Japan took the lead in 1979. Many developed countries have
reached a saturation point only now, though developing countries still have to
reach saturation. Similarly, the market for the Internet in developing countries
is yet to mature though the service commenced in the late 1960s; the US took the
lead in 1969. The true potential of the mobile phone, as an integrated
communications, entertainment and positioning device, is only beginning to be
realized.

If the past trends were any indication, it would be reasonable to hope that
by 2010, India would complete its transition into digital switching and
transmission, VoIP, broadband, and 3G.

Telecom will be the springboard of the future expansion of IT heralding into
an information society. ICT will spread among the masses and will spur
innovation, entrepreneurship, and growth. An expanding domestic market will
deepen the synergy between the domestic and the export market and strengthen
India's presence in the high-value segment of global trade and investment. ICT
benefits will spread among all-the rich and the poor, the young and the old, the
organized and the unorganized, and the government and the governed.

Gyana Ranjan Swain

gyanas@cybermedia.co.in