Telecommunications in India

Current state of telecommunications in India
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Communications in India
Gross adjusted revenue (2023)229,071 crore (US$29 billion)[1]
Telephony
Total subscribers1,181.13 million (Sep 2023)[2]
Wireless subscribers1,150.15 million (Sep 2023)[2]
Fixed line subscribers30.98 million (Sep 2023)[2]
Monthly telephone additions (Net)-14,20,000 (Sep 2023)[2]
Teledensity84.76%
(Sep 2023)[2]
Urban Teledensity133.54%
(Sep 2023)[2]
Rural Teledensity58.05%
(Sep 2023)[2]
Urban subscriber658.46 Million
(Sep 2023)[2]
Rural subscriber522.66 Million
(Sep 2023)[2]
Broadband subscriber904.54 million
(Dec 2023)[2]
Broadband subscribers (Wireless)866.19 million
(Dec 2023)[2]
Broadband subscribers (Wireline)38.35 million
(Dec 2023)[2]
country code top-level domain.in

India's telecommunication network is the second largest in the world by number of telephone users[3] (both fixed and mobile phones) with over 1.1 billion subscribers as of December 2023.[4] It has one of the lowest call tariffs in the world enabled by mega telecom operators and hyper-competition among them. India has the world's second-largest Internet user-base with over 904 million broadband internet subscribers as of December 2023.[4]

Major sectors of the Indian telecommunication industry are telephone, internet and television broadcast industry in the country which is in an ongoing process of transforming into a Next-generation network, employs an extensive system of modern network elements such as digital telephone exchanges, Network switching subsystem, media gateways and Signaling gateway at the core, interconnected by a wide variety of transmission systems using Optical fiber or Microwave radio relay networks. The access network, which connects the subscriber to the core, is highly diversified with different copper-pair, Optical fiber and wireless technologies. Satellite television, a relatively new broadcasting technology has attained significant popularity in the Television segment. The introduction of private FM has boosted radio broadcasting in India. Telecommunication in India has greatly been supported by the Indian National Satellite System system of the country, one of the largest domestic satellite systems in the world. India possesses a diversified communications system, which links all parts of the country by telephone, Internet, radio, television and satellite.[5]

Indian telecom industry underwent a high pace of market liberalisation and growth since the 1990s and now has become the world's most competitive and one of the fastest growing telecom markets.[6][7]

Telecommunication has supported the socioeconomic development of India and has played a significant role in narrowing down the rural-urban digital divide to some extent. It also has helped to increase the transparency of governance with the introduction of e-governance in India. The government has pragmatically used modern telecommunication facilities to deliver mass education programmes for the rural folk of India.[8]

According to the London-based telecom trade body GSMA, the telecom sector accounted for 6.5% of India's GDP in 2015, or about 9 lakh crore (US$110 billion), and supported direct employment for 2.2 million people in the country. GSMA estimates that the Indian telecom sector will contribute 14.5 lakh crore (US$180 billion) to the economy and support 3 million direct jobs and 2 million indirect jobs by 2020.[9]

In today's period of progress and wealth, technological modernization is increasingly seen as a foreseen necessity for every country. With better technology and more competition from established businesses, telecommunications has entered a new era of development. The continuous rise of the mobile industry is linked to technological advancements in the telecommunications sector. The service providers' primary goal is to build a loyal customer base by measuring their performance and maintaining existing consumers in order to profit from their loyalty. The purpose of the paper is to address these concerns.[10]

History

The beginning

A microwave tower for short distance (~50 km) communication

Prof. S. P. Chakravarti is known as the father of electronics and telecommunications engineering in India.[11][12][13] He started electronics and telecommunications education, training and research in India. Telecommunications in India began with the introduction of the Telegraphy. The Indian postal and telecom sectors are one of the world's oldest. In 1850, the first experimental electric telegraph line was started between Kolkata and Diamond Harbour.[14] In 1851, it was opened for the use of the East India Company. The Posts and Telegraphs department occupied a small corner of the Public Works Department at that time.[15][irrelevant citation]

The construction of 4,000 miles (6,400 km) of telegraph lines was started in November 1853. These connected Kolkata (then Calcutta) and Peshawar in the north; Agra, Mumbai (then Bombay) through Sindwa Ghats, and Chennai (then Madras) in the south; Ooty and Bangalore. William O'Shaughnessy, who pioneered the Telegraphy and telephone in India, belonged to the Public Works Department, and worked towards the development of telecom throughout this period. A separate department was opened in 1854 when telegraph facilities were opened to the public.

In 1880, two Telephone company namely The Oriental Telephone Company Ltd. and The Anglo-Indian Telephone Company Ltd. approached the Government of India to establish Telephone exchange in India. The permission was refused on the grounds that the establishment of telephones was a Government monopoly and that the Government itself would undertake the work. In 1881, the Government later reversed its earlier decision and a licence was granted to the Oriental Telephone Company Limited of England for opening telephone exchanges at Kolkata, Mumbai, Chennai and Ahmedabad and the first formal telephone service was established in the country.[16] On 28 January 1882, Major E. Baring, Member of the Governor General of India's Council declared open the Telephone Exchanges in Calcutta, Bombay and Madras. The exchange in Calcutta named the "Central Exchange" had a total of 93 subscribers in its early stage. Later that year, Bombay also witnessed the opening of a telephone exchange.[17]

Further developments and milestones

Indian telegraph receipt 1912 (front top and back bottom) with additional labels

Development of Broadcasting: Radio broadcasting was initiated in 1927 but became state responsibility only in 1930. In 1937 it was given the name All India Radio and since 1957 it has been called Akashvani.[22] Limited duration of television programming began in 1959, and complete broadcasting followed in 1965. The Ministry of Information and Broadcasting owned and maintained the audio-visual apparatus—including the television channel Doordarshan—in the country prior to the economic reforms of 1991. In 1997, an autonomous body was established in the name of Prasar Bharti to take care of the public service broadcasting under the Prasar Bharti Act. All India Radio and Doordarshan, which earlier were working as media units under the Ministry of I&B became constituents of the body.[8]

Pre-liberalisation statistics: While all the major cities and towns in the country were linked with telephones during the British period, the total number of telephones in 1948 numbered only around 80,000. Post-independence, growth remained slow because the telephone was seen more as a status symbol rather than being an instrument of utility. The number of telephones grew leisurely to 980,000 in 1971, 2.15 million in 1981 and 5.07 million in 1991, the year economic reforms were initiated in the country.

Liberalisation and privatisation

A mobile phone tower in Leh, Ladakh, India, surrounded by Buddhist prayer flags

Liberalisation of Indian telecommunication in industry started in 1981 when Prime Minister Indira Gandhi signed contracts with Alcatel CIT of France to merge with the state owned Telecom Company (ITI), in an effort to set up 5,000,000 lines per year. But soon the policy was let down because of political opposition.[23] Attempts to liberalise the telecommunication industry were continued by the following government under the prime-minister-ship of Rajiv Gandhi. He invited Sam Pitroda, a US-based Non-resident Indian NRI and a former Rockwell International executive to set up a Centre for Development of Telematics (C-DOT) which manufactured electronic telephone exchanges in India for the first time.[24] Sam Pitroda had a significant role as a consultant and adviser in the development of telecommunication in India.[25]

In 1985, the Department of Telecom (DoT) was separated from Indian Post & Telecommunication Department. DoT was responsible for telecom services in entire country until 1986 when Mahanagar Telephone Nigam Limited (MTNL) and Videsh Sanchar Nigam Limited (VSNL) were carved out of DoT to run the telecom services of metro cities (Delhi and Mumbai) and international long-distance operations respectively.[24]

The demand for telephones was ever increasing and in the 1990s Indian government was under increasing pressure to open up the telecom sector for private investment as a part of Liberalisation-Privatisation-Globalisation policies that the government had to accept to overcome the severe fiscal crisis and resultant balance of payments issue in 1991. Consequently, private investment in the sector of Value Added Services (VAS) was allowed and cellular telecom sector were opened up for competition from private investments. It was during this period that the Narsimha Rao-led government introduced the National Telecommunications policy (NTP) in 1994 which brought changes in the following areas: ownership, service and regulation of telecommunications infrastructure. The policy introduced the concept of telecommunication for all and its vision was to expand the telecommunication facilities to all the villages in India.[26] Liberalisation in the basic telecom sector was also envisaged in this policy.[27] They were also successful in establishing joint ventures between state owned telecom companies and international players. Foreign firms were eligible to 49% of the total stake. The multi-nationals were just involved in technology transfer, and not policy making.[23]

During this period, the World Bank and ITU had advised the Indian Government to liberalise long-distance services to release the monopoly of the state-owned DoT and VSNL and to enable competition in the long-distance carrier business which would help reduce tariff's and better the economy of the country. The Rao run government instead liberalised the local services, taking the opposite political parties into confidence and assuring foreign involvement in the long-distance business after 5 years. The country was divided into 20 telecommunication circles for basic telephony and 18 circles for mobile services. These circles were divided into category A, B and C depending on the value of the revenue in each circle. The government threw open the bids to one private company per circle along with government-owned DoT per circle. For cellular service two service providers were allowed per circle and a 15 years licence was given to each provider. During all these improvements, the government did face oppositions from ITI, DoT, MTNL, VSNL and other labour unions, but they managed to keep away from all the hurdles.[23]

In 1997, the government set up TRAI (Telecom Regulatory Authority of India) which reduced the interference of Government in deciding tariffs and policymaking. The political powers changed in 1999 and the new government under the leadership of Atal Bihari Vajpayee was more pro-reforms and introduced better liberalisation policies. In 2000, the Vajpayee government constituted the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) through an amendment of the TRAI Act, 1997.[28][29] The primary objective of TDSAT's establishment was to release TRAI from adjudicatory and dispute settlement functions in order to strengthen the regulatory framework. Any dispute involving parties like licensor, licensee, service provider and consumers are resolved by TDSAT. Moreover, any direction, order or decision of TRAI can be challenged by appealing in TDSAT.[30] The government corporatised the operations wing of DoT on 1 October 2000 and named it as Department of Telecommunication Services (DTS) which was later named as Bharat Sanchar Nigam Limited (BSNL). The proposal of raising the stake of foreign investors from 49% to 74% was rejected by the opposite political parties and leftist thinkers. Domestic business groups wanted the government to privatise VSNL. Finally in April 2002, the government decided to cut its stake of 53% to 26% in VSNL and to throw it open for sale to private enterprises. TATA finally took 25% stake in VSNL.[23]

This was a gateway to many foreign investors to get entry into the Indian telecom markets. After March 2000, the government became more liberal in making policies and issuing licences to private operators. The government further reduced licence fees for [cellular service providers and increased the allowable stake to 74% for foreign companies. Because of all these factors, the service fees finally reduced and the call costs were cut greatly enabling every common middle-class family in India to afford a cell phone. Nearly 32 million handsets were sold in India. The data reveals the real potential for growth of the Indian mobile market.[31] Many private operators, such as Reliance Communications, Jio, Tata Indicom, Vodafone, Loop Mobile, Airtel, Idea etc., successfully entered the high potential Indian telecom market. In the initial 5–6 years the average monthly subscribers additions were around 0.05 to 0.1 million only and the total mobile subscribers base in December 2002 stood at 10.5 million. However, after a number of proactive initiatives taken by regulators and licensors, the total number of mobile subscribers has increased rapidly to over 929 million subscribers as of May 2012.

In March 2008, the total GSM and CDMA mobile subscriber base in the country was 375 million, which represented a nearly 50% growth when compared with previous year.[32] As the unbranded Chinese cell phones which do not have International Mobile Equipment Identity (IMEI) numbers pose a serious security risk to the country, Mobile network operators therefore suspended the usage of around 30 million mobile phones (about 8% of all mobiles in the country) by 30 April 2009. Phones without valid IMEI cannot be connected to cellular operators.[33]

India has opted for the use of both the GSM (global system for mobile communications) and CDMA (code-division multiple access) technologies in the mobile sector. In addition to landline and mobile phones, some of the companies also provide the WLL service. The mobile tariffs in India have also become the lowest in the world. A new mobile connection can be activated with a monthly commitment of US$0.15 only.

Licence cancellation

On 2 February 2012 the Supreme Court ruled on petitions filed by Subramanian Swamy and the Centre for Public Interest Litigation (CPIL) represented by Prashant Bhushan, challenging the 2008 allotment of 2G licenses,[34] cancelling all 122 spectrum licences granted during A. Raja (Minister of Communications & IT from 2007 to 2009), the primary official accused's term as communications minister.[34] and described the allocation of 2G spectrum as "unconstitutional and arbitrary".[35] The bench of GS Singhvi and Asok Kumar Ganguly imposed a fine of 50 million (US$630,000) on Unitech Wireless, Swan Telecom and Tata Teleservices and a 5 million (US$63,000) fine on Loop Telecom, S Tel, Allianz Infratech and Sistema Shyam Tele Services.[36] According to the ruling the then granted licences would remain in place for four months, after which time the government would reissue the licences.[37]

Consolidation

Post starting of the commercial operation of Reliance Jio in September 2016, the telecom market saw a huge change in terms of falling tariff rates and reduction of data charges, which changed the economics for some of the telecom players. This resulted in exit of many smaller players from the market. Players like Videocon and Systema sold their spectrum under spectrum trading agreements to Airtel and RCOM respectively in Q4 2016.

On 23 February 2017, Telenor India announced that Bharti Airtel will take over all its business and assets in India and deal will be completed in 12 months timeframe.[38] On 14 May 2018, Department of Telecom approved the merger of Telenor India with Bharti Airtel paving the way for final commercial closing of the merger between the two companies.[39] Telenor India has been acquired by Airtel almost without any cost.

On 12 October 2017, Bharti Airtel announced that it would acquire the consumer mobile businesses of Tata Teleservices Ltd (TTSL) and Tata Teleservices Maharastra Ltd (TTML) in a debt-free cash-free deal. The deal was essentially free for Airtel which incurred TTSL's unpaid spectrum payment liability. TTSL will continue to operate its enterprise, fixed line and broadband businesses and its stake in tower company Viom Networks.[40][41][42] The consumer mobile businesses of Tata Docomo, Tata Teleservices (TTSL) and Tata Teleservices Maharashtra Limited (TTML) have been merged into Bharti Airtel from 1 July 2019[43][44][45]

Reliance Communications had to shut down its 2G and 3G services including all voice services and only offer 4G data services from 29 December 2017, as a result of debt and a failed merger with Aircel.[46][47] Surprisingly, the shut down was shortly after completion of acquisition of MTS India on 31 October 2017.[48][49] In February 2019, the company filed for bankruptcy as it was unable to sell assets to repay its debt.[50] It has an estimated debt of ₹ 57,383 crore against assets worth ₹18,000 crore.[51][52]

Aircel shut down its operations in unprofitable circles including, Gujarat, Maharashtra, Haryana, Himachal Pradesh, Madhya Pradesh and Uttar Pradesh (West) from 30 January 2018.[53] Aircel along with its units - Aircel Cellular and Dishnet Wireless - on 1 March 2018, filed for bankruptcy in the National Companies Law Tribunal (NCLT) in Mumbai due to huge competition and high levels of debt.

Vodafone and Idea Cellular completed their merger on 31 August 2018, and the merged entity is renamed to Vi.[54] The merger created the largest telecom company in India by subscribers and by revenue,[54] and the second largest mobile network in terms of number of subscribers in the world. Under the terms of the deal, the Vodafone Group holds a 45.1% stake in the combined entity, the Aditya Birla Group holds 26% and the remaining shares will be held by the public.[54] However, even after the merger both the brands have been continued to carry their own independent brands.[54]

With all this consolidation, the Indian mobile market has turned into a four-player market, with Jio as the number-one player, with revenue market share of 34%, Airtel India in second position, with revenue market share of 28% and Vi, with revenue market share of 27%. The government operator BSNL/MTNL is in the distant 4th position, with an approximate market share of 11%[55]

Telephony

Market share of Wireless Mobile operators in India as of 31 December 2023 according to the Telecom Regulatory Authority of India (TRAI)[56]

  Reliance Jio (39.69%)
  Bharti Airtel (32.95%)
  Vodafone Idea (19.25%)
  BSNL (7.94%)
  MTNL (0.17%)
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Market share of fixed-line telecom operators in India as of 30 June 2023 according to the Telecom Regulatory Authority of India[56]

  Jio (34.70%)
  Airtel (26.11%)
  BSNL (19.28%)
  Tata Teleservices (7.03%)
  MTNL (6.95%)
  Vi (2.17%)
  Quadrant (1.18%)
  RCom (0.46%)
  V-CON (0.04%)