In India, Telecommunication is one of the major forces responsible for economic and social development in the country which has resulted in the successful India growth story for more than two decades. Due to Government’s proactive efforts to transform India into a global telecommunication hub; and it’s prudent Regulatory Support like the National Telecom Policy 1994, 1997 and 2012. Today India is world’s second largest telecommunication market in terms of the number of the subscribers with its strong telecom infrastructure. The number reached 9.33Mn in Mar14 from 898mn subscribers in 2013 (both fixed and mobile phone). The call tariffs are one of the lowest call world enabled due to the mega telephone networks and huge competition among the top player. Also the country has third-largest Internet user-base in the world. In our report, we will try to understand the regulations and policy framework prepared by the Government of India and other regulatory bodies which was responsible for such unprecedented growth of the Telecom sector.
The access network connecting the subscriber with the core is extensively diversified with optic-fibre, different copper-pair and wireless technologies. DTH which is a new broadcasting technology has reached significant strength in the Television segment. INSAT system of India which is one of the largest domestic satellite systems across the globe, has greatly been supported the telecom sector. There exists a highly diversified communications system in India, which links the entire country by telephone, television, radio, Internet and satellite.
Pre- Liberalisation 前自由化
Historically telecom network in India was owned and managed by Government as it is considered as a strategic service. At that time the Telecom industry was monopoly in nature. The decade of 1980's saw private sector being allowed in telecommunications equipment manufacturing. Mahanagar Telephone Nigam Limited (MTNL) and Videsh Sanchar Nigam Limited (VSNL) were formed. In the year 1989, a telecom commission was set up to give focus to telecommunications policy formation.#p#分页标题#e#
Post Liberalisation 后自由话
Indian telecom sector underwent a rapid market privatisation and growth since the liberalisation of the economy in 1990s and has become one of the world's most competitive market which is also amongst the fastest growing telecom market. The industry showed unprecedented growth in past one decade ie.it grew 20 times, from 37 mn subscriber base in 2001 to 846 mn in 2011. It had over 243 million Internet user base in June 2014 which is world's third-largest in the world.
Current Scenario 目前的情况
We will like to illustrate the growth story with the key performance parameters which are as below:
Telecom Sector Segmentation 电信部门分割
The telecom market is split into three segments:
Why we need regulation in Telecom Sector?
We need regulations due to following factors:
To avoid market failure
To foster effective competition
To protect consumer interest
To increase access to technology and services
Regulations in Emerging Telecom Sector
In February 2012, India's Supreme Court cancelled all 122 2G licences that were issued under the purview of former telecoms minister A Raja in 2008. The scandal-tainted 2008 2G licence auction reportedly cost the Indian government USD40bn in revenue, according to the Comptroller and Auditor General in December 2010, as the allocation process was said to be wholly arbitrary and failed to adequately value the spectrum. The subsequent investigations have brought a prolonged period of uncertainty to India's telecoms industry, which has in turn hampered foreign investment and jeopardised the decision-making process of existing operators. We do not expect an easy resolution to these challenges in the short term to medium term.
FDI Cap 外商直接投资
In July 2013, the Indian government lifted the 74% foreign direct investment (FDI) cap in the telecoms sector, allowing foreign investors to increase their stake to a full 100%. This is likely to stimulate consolidation in the sector, with companies such as Vodafone quickly moving towards taking full control of their local subsidiaries, and also eyeing out acquisition opportunities. However, although consolidation looks inevitable, BMI expects that the process will not begin in earnest until TRAI issues new M&A guidelines for the sector. Up until now consolidation has been hampered by the 2G concession cancellations and uncertain acquisition rules.
In September 2010, Bharti Airtel was reportedly in talks with rivals to form a strategic alliance to offer3G services on a pan-India level. Vodafone India confirmed in July that it has signed bilateral intra-circle roaming agreements with Bharti Airtel and IDEA Cellular in order to offer nationwide 3G services (bar in the state of Odisha). According to the Hindu Business Line, IDEA Cellular has entered into intra-circle roaming agreements with Vodafone Essar to launch 3G services in the Delhi and Kolkata circles, and Bharti Airtel in the Karnataka circle. Meanwhile, Vodafone Essar has started offering 3G services in the Andhra Pradesh and Kerala circles via its agreement with IDEA Cellular, and will do so in Uttar Pradesh (West) with Bharti Airtel. Lastly, Bharti Airtel would tap into Gujarat by partnering with IDEA Cellular.
Telecommunication Regulatory Authority of India's decision to oppose the arrangement a few months after the operators announced the alliance in July 2011. The regulator could have blocked the agreements at inception instead of allowing operators to build up a base of roaming subscribers. Forcing operators to halt intra-roaming 3G services would harm consumer interest. In February 2012, India's Ministry of Telecoms announced that while spectrum sharing is allowed for 2G, the same will not be applied to the 3G market. In Apr 2014, TDSAT allowed intra-circle 3G roaming for service providers
Uniform Revenue Sharing 均匀收益共享
Indian telecoms companies currently contribute 6-10% of annual revenue (depending on the area of operations) towards their licence fees, with the upper band implemented in more lucrative telecoms circles such as Andhra Pradesh and Maharashtra. However, the Telecom Commission has rejected the TRAI's suggestion of reducing the contribution over the next four years to 6%, which could help the sector save about INR65bn by 2014. Instead, a uniform 8.5% revenue sharing model would be adopted. The potential impact of this policy change is mixed given that increased costs in less lucrative areas would be offset by savings in more profitable circles, which applies to larger operators that have a widespread presence across the country. However, smaller operators that have limited presence would face higher cost.#p#分页标题#e#
Stricter Roll-Out Rules 更严格的转出规则
The Telecom Commission has approved rules to mandate mobile operators to offer services in all areas that have more than 500 residents, which should boost penetration rates in rural regions. According to the TRAI, although the number of rural subscribers grew at a faster pace compared with urban subscribers, the rural mobile penetration rate still significantly lags behind that of the urban. The urban and rural penetration rates at the end of May were 154.2% and 34.1% respectively. That said, the new obligation would have a substantial negative effect on capital expenditure and operating cost. India's Economic Times, citing an internal DoT document, has said incumbents would be given a year to meet the roll-out obligation, while new entrants would be given three years.
M&A Regulation 并购监管
In November 2011, Bloomberg reported that the TRAI had put forward proposals to increase the caps on market share and spectrum holdings for merged entities. The regulator has suggested that mobile network operators be allowed to merge operations if their combined market share is less than 60% in a circle. According to existing legislation, telcos are prevented from tie-ups if the combined share would exceed 40%. As part of the proposals it has also been noted that approval would be automatic for tie-ups which create an enlarged entity, with less than a 35% market share, while a merger creating a company with between 35% and 60% market share will be subject to examination by the DoT. The TRAI meanwhile has also suggested that the cap on bandwidth holdings in a single calling circle be lifted to 25% for merged entities.
SMS Spam & Commercial Calls 短信垃圾邮件和商业电话
TRAI will collect name and address of the subscriber who has not registered as a telemarketer with TRAI and blacklist it for 2 years. It also has set a limit of sending more than 100 SMS per day per SIM or 3000 SMS per month per SIM.
Spectrum Limitation 频谱限制
The Telecom Commission has approved the TRAI's plan of limiting the amount of 2G spectrum that an operator can hold. Operators would be allowed a maximum of 6.2MHz and 5MHz for GSM and CDMA technology respectively, and excess spectrum would be returned when licences are renewed.
Telecom Regulations in India vs. Asia
License Fees, Spectrum Fees, and other Regulatory
The Indian mobile sector is loaded with multiple duties & levies, and that too both at central and the state level. The central levies includes annual license fees such as Universal Service Obligation (USO) fees, annual spectrum usage fees, and service tax. Over and beyond these levies, several states in India are also giving additional taxes/duties like Octroi, stamp duty, VAT, & charges on towers.#p#分页标题#e#
Mobile Market 移动市场
The Indian telecoms market stands out in the Asia Pacific region in light of its significant growth potential. However, opportunities will only pan out in the long run given the market's immaturity, consumers' lower spending power and the constant regulatory uncertainties, which have eroded investor confidence, bringing investments to a halt. Hyper competition also contributed to the high proportion of prepaid subscriptions, which, in turn, has lowered subscribers' price expectations for new services. Consequently, operators have resorted to hefty price cuts in order to spur demand for 3G services, thereby prolonging the time necessary to recoup investments.
Telecom Industry: 2014-15 Budget 电信业：2014-15财政预算
Budget Allocation 预算分配
The finance minister of India has commented that the union budget 2014-15 is for growth and self-reliance of the country. The government had allocated significant portion of the budget to the telecom sector to boost its growth. As according to the government to boost the social and economic growth in the country telecom is one of the key segment to be focused on. The development in the telecom industry will directly and quickly impact the development of the country. Some of the major allocation are mentioned below:
The total Plan outlay for 2014-15 is INR 13,500.65 crore.
Comprising of INR 7,500.00 crore as budgetary support
INR 6000.65 crore as Internal and Extra Budgetary Resources
INR 3537.00 crore for schemes under Universal Service Obligation Fund and National Optical Fibre Network,
including INR 378.00 crore for NER
INR 16.25 crore for TSP
INR 3065.00 crore for OFC based Network for Defence Services
INR 200.00 crore for C-DOT as budgetary support.
The IEBR of Public Sector Undertakings or Autonomous Body comprises
INR 5132.19 crore - Bharat Sanchar Nigam Limited
INR 808.46 crore - Mahanagar Telephone Nigam Limited
India expects to raise Rs 45,471.02 crore in the current financial year through March 31, 2015, from communication services, including proceeds from spectrum auction and one-time charges, as against Rs. 40,847.06 crore it is estimated to have raised in 2013-14.The previous UPA government, in its interim budget in February this year, had expected Rs 38,954 crore till March 2015. In the fiscal year 2014-15, government revenue from communication services will include receipts from spectrum sale, license fees and one-time spectrum charges, according to the budget proposals presented by Finance Minister Arun Jaitley. According to the budget receipts under 'Other Communication Services' mainly relate to one-time spectrum charges levied as per the recommendations of TRAI, auction of 1800 MHz and 900 MHz spectrum and receipts from 800 MHz spectrum," the budget noted.The DoT concluded spectrum auction for radio-waves in the 900 Mhz and 1800 Mhz bands in February that fetched the government Rs 61,162 crore, of which Rs 18,296.36 crore is supposed to have flown into the exchequer in the fiscal year ended March 31, as the government had offered spectrum winners a deferred payment option.The government was initially expecting only Rs. 11,300 crore to come from the spectrum auction in the previous fiscal year. In February, the government had put on the block about 385 MHz of radio-waves in the 1800 MHz band, and 46 MHz in the 900 MHz band. At the base price, that cumulatively amounted to about Rs. 47,933 crore.#p#分页标题#e#
The Government proposed a pan-India program called “Digital India” the 2014 budget to bridge the divide between digital “haves” and “have-nots”. This would ensure broadband connectivity at the village level, improved access to services through information technology (IT)-enabled platforms, greater transparency in government processes, and consumption of local content and a host of other services. The Department of Telecom is expected to finalise a National Broadband Policy within 100 days that would treat high-speed Internet access a basic right like education and health.
The government has decided to take decision on inter circle MNP to enable consumers of mobile services to retain the same number across the country irrespective of geographical location and service provider would be taken. Also Inter-ministerial panel Telecom Commission has in-principle approved full MNP and has sought additional details from telecom regulator TRAI.
For boosting the growth in the country through telecom development the government has taken many initiative recently. These initiatives mainly focuses on increase in investment, increasing connectivity in rural India, NER regions and Andaman and Nicobar islands. These initiatives are as follows:
As an initiative the Government of India has planned to establish a nearly 1,200-km direct subsea optic fibre cable link between the Indian and Andaman and Nicobar Islands to improve telecom connectivity in this strategically located areas.
The Ministry of Communication and Information Technology is preparing to extend basic mobile coverage, f eight north-eastern states with a thought of boosting the growth throughout the country. The project is estimated a cost of approximately Rs 5,000 crore.
The Department of Telecom has planned to set up an application development centre with an outlay of Rs 1,000 crore over a three-year period. The move aims to generate income for the Universal Services Obligation (USO) fund in addition to the revenue share received from telecom operators
TheDepartment of Space plans to waive satellitebandwidth charges payable byBharat Sanchar Nigam Ltd (BSNL)to sustain the state-run telecommunication operations in the Andaman and Nicobar, Lakshadweep archipelagos and strategic border regions across the north-eastern states
A top-level team from DoT has been sent to participate in a global convention in Israel to showcase India as a world-class networks gear manufacturing hub. The team has been sent to showcase India's telecom gear manufacturing abilities and policies, in a bid to boost bilateral trade
The major development which are happening in the country as a sign of development primarily includes use of renewable sources of energy, using better technology, focusing on core activities etc. These notable trends contributes to the growth of the economy and social and economic developments. Some of the notable trends are mentioned below#p#分页标题#e#
Green Telecom : Green telecom is reducing carbon footprints by using renewable sources of energy for the tower and other places hence reducing the carbon content by telecom industry
Expansion to rural markets: There are over 62,443 villages which uncovered yet in India and government has outlay significant funds for promoting telecom infra expansion in the rural area to give boost to the economy.
BWA Technologies: The Broadband and Wireless access technology such as WiMAX & LTE are being promoted and Dot is setting policies for the private telecom players to use theses technology. This trend will put India near to the category f developed countries.
Outsourcing Non-Core Activities: One of the trend which recently have been observed is that telecom operators are outsourcing their non-core activity such as network maintenance, customer service and operation so that they can focus on their core activity to grow at a faster pace.
Rising investments: The government have increased the funds for R&D activity for manufacturing of telecom products to boost the growth. For this it has proposed USD32.2 billion which would be invested in three phases:
Telecom Finance Corporation: One notable trend is to continuously facilitate investment in the telecom sector. To do that The Telecom Commission is about to set up a committee Telecom Finance Corporation (TFC) which would channel funds for telecom projects at competitive.
Mobile Banking: The government is also focusing on mobile banking for which it is trying to make available smartphones at cheaper rate with rise in security level of mobile transactions, so that people get motivated to use mobile phone for transactions for various services.