thc_ctms s390 july '081 dr t.h. chowdary director: center for telecom management and studies...

THC_CTMS S390 July '08 1

DR T.H. CHOWDARYDirector: Center for Telecom Management and Studies

Chairman: Pragna Bharati (intellect India )Former: Chairman & Managing Director

Videsh Sanchar Nigam Limited &Information Technology Advisor, Government of Andhra Pradesh

T: +91(40) 6667-1191/ 2784-6137(O) 2784-3121®F: +91 (40) 6667-1111, 2789-6103

[email protected]@satyam.com

Talk at Rajiv Gandhi University of Knowledge Technologies 23rd July, 2008

‘Telecom & IT Miracle’


From “Apply, Apply………”

• From “Apply, Apply – No Reply” to Supply, Supply – Apply, Apply for more

• From one million phones per year in 1993 to One million phones per month since Y 2007

• From: Prices up and up ever to prices down and down still


Liberalisation Since 1991

• Demonopolisation Private Sector Entry F.D.I.s Competition

• Independent Regulation Corporatisation of DoTs telecom services

• New Technologies – Wireless, Optical Fiber Cables, Communication Satellites & the 8th wonder – INTERNET


Telecom Policies

• While in DoT– Separation of Telecoms from Posts – 1974;

1985– Corporatisation: 1986; MTNL, Videsh Sanchar

Nigam Ltd ; Y 2000 BSNL

• National Telecom Policies & Laws– NTP 1994; NTP-1999– TRAI – Y1997; TRAI & TDSAT – Y2000– Universal Service Fund


While Still P & T/DoT

• People & Service Orientation – Struggles; trials & triumphs– Public telephones – away from Post Offices to – Grocers & Physically disabled– Gali Gali Mein, anywhere, everywhere– Ghar Ghar mein Radio & Gaon Gaon mein

telephone – VPTs (1978-83….) & since– Haath, haath mein telephone; Gaon, gaon

mein Internet


Telecom Overview (1/5)

• 41 licenced private companies besides the state-owned MTNL and BSNL in

23 licenced areas

• Total number of P-Telcos providing services are 12

• Licences for all inland telephone services are state-wide

• National long-distance (NLD) & international subscriber dialing (ISD) are

whole country

• Some P-Telcos operate only cellular mobile telephone services

• Some only in a few states

• State-owned MTNL operators only in 2 cities ( Delhi& Mumbai)

• Some ISPs have taken NSD & ISD licences to cover their VPN services



• Indian Telephone Industries (ITI) is the state-owned manufacturing

company under the administrative control of the DOT.

• The state-owned BSNL/MTNL are having 95% of the local loop for

the 39.5 mln fixed lines

• BSNL/MTNL have a telephone market share of 28% of the 250 mln

phone; their share is declining.

• There are 3 long distance band-width only ( on O.F cables)

providers – National Power Grid Corporation, Rail Tel & ONGC



• ISRO’s INSAT (Indian Satellite) enterprise sells bandwidth for

telecoms ( and TV broadcasters)

• 3 Telcos (VSNL; Bharati & Reliance – all private) own undersea

cables providing global connectivity

• There are 130 active Internet Service Provider (ISPs) offering dial-

up to broad-band; their number can be unlimited; they provide VPN,

NLD & ISD; VOIP etc. services. (more than 400 were licensed but

they are ineffective)

• CDMA using companies have, as of Sept 2004, 54 mil users

• GSM using companies have 152 mln subscribers

• Fixed (wired & wireless) subscribers are 39 mln.



• Optical Fiber transmission systems of 650,000 (520,000 RKH of BSNL) route kms connect about 6000 towns.

• Coaxial ( 6,024 km) and terrestrial microwave and UHF ( 95,330 RKM) are frozen

No more construction since 1997• ISPs are deploying WiFi and WiMAx in cities• Some state governments like Andhra Pradesh and

Gujarat have dedicated State Wide Area Networks ( SWANs) for their e-governances schemes.



• Internet Service Providers (ISPs) - Licences issued >400

• Internet Kiosks: 100,000 • Internet Subscribers: Dial-up: 9.3 million Broad-band: 3.0m(for 256 kbps-2.0 mln & 2MBP -0.5 mln)

• Users: 50 mln [over 35 mln access Internet thro cell-phones]

• Telcos Revenues: $ 31.0 bln/yr (Rs.1,25,000 cr)• Telcos Investments $ 10 bln/yr (Rs.42,000 cr)• BSNL/MTNL share 28% (declining) of telephones


Teledensity*

India Metros

(4 cities)

Other Urban ( about

6000 towns)

Rural

30% 85% 60% 3.5%

*Telephones/100 people


Mobile Subscribers

• Prepaid : 85%• Churn : 15%• ARPU/month

Year 2000 2005 2008

Rs.1,350 Rs.430 Rs.300


Sale of Cell Phones

• PCs sold/year: 7 mln• PCs in use : 25 mln• There are 60,000 retailers of cell phones• A cell phone is changed on eh average in 9 months!• Nokia, Ericsson, Motorola, LG are the leading vendors

Year 2001 ‘05 ‘06 ’07 ‘08

mlns 2 31 74 90 130


• Villages (habited) : 600,000• % Electrified : 87%• (public) telephoned : 92% (545/600,000)

Public Telephones:• Along National Highways : 30,000 • Local only : 1.12 mln• NLD & ISD : 887,000• Total : app: 2.1 mln• Telegraphs – dying : 12 mln/yr• Telex : Dead• Bureau FAX: BSNL : 0.7 mln (declining)• Radio-paging : Dead• Fax : Dying• Post : Declining• E-MAIL : GREATLY LEAPING

INDIA


Internet & Broadband: Growth

Month/Year Internet Broad-band

March 1998 0.14 Non-Existent

1999* 0.28 Non-Existent

2000 0.90 Non-Existent



2003 3.6 0.008

2004 4.5 0.019

2005 5.65 0.180

2006 7.00 1.35

2008 12.4 2.50

* Open to private sector & competition


Amazing Outcomes (1/3)

• Telephones available on demand • 4/5 ( 7 in some states) Telcos canvassing you to take a

phone• 80% decline in long-distance call and lease charges – India

ONE service – @#7.5/month and – call anywhere @ US 2.5 cents per4 mnt. Several price-service

packages to suit customers pocket• Carpenters, masons, electricians, vegetable vendors,

farmers, students …… sporting mobiles • Capital ( for network) cost/line came down by 86%• Return on investment 33 1/3%


Growth of Phones in India

14.54

0.34

17.8

0.88

21.63

1.2

26.79

1.88

32.97

3.58

39.136.43

41.42

10.4846.32

17.4

44.87

48

45

56

48

92

40

210

39

310

0

50

100

150

200

250

300

350

Subsc

ribers

in m

illions

1997 1998 1999 2000 2001 2002 Dec '03 Aug '03 Dec-'04 April-'05 March'06 Mar '07 J uly '08

Years

Cellular mobile phones ( PSU + pvt )

Fixed line telephones including WLL ( PSU + pvt )

Source : DOT Annual Report 2003

Total 278 mln = as of Jan’08


Employment in Indian IT &ITES sectors*,’000

0

500

1000

1500

2000

2500

3000

2000 '01 '02 '03+ '04+ '06+ '07+ '08+

Call-centers (ITES) Software Multinational operations

(* Years ending March; + Estimate@ break-up: NA)


Share of India in GlobalBPO & KPO Markets

Year 2003-’04 2010-’11 BPO 36% 55%

KPO 56% 71% Leaders:

Eng. Design Basic Data Biotech & Search Pharma

Integration &Mgment

400m $ 300m $ 280

Education coming up


Foreign Companies Engaging Indian intellect

• GE – Largest R&D center outside USA is in India in Bangalore with 2300 researchers, double that in Shanghai

• GE put in $ 80 mln in the Bangalore R&D facility• GE’s Bangalore R&D field for 260 patents in the USA (37 already

approved)• Boeing USA is outsourcing Aircraft design to Russia ($ 120/ Hr) • Russians are outsourcing parts of the design to HAL (BG) at $

30/Hr • Gorbachev went to USA to recommend Moscow as Bangalore’s

rival!• An Indian retained does the work of 2 or 3 Europeans;

does not take 6 weeks of holidays & costs one-fourth


Some Foreign Companies’ Employees in India

GE Caps

GE Dev IBM Oracle EDS Texas

16,000 1,800 10,000 6000 3,500 900

Intel JP Morgan

HUWAI Siemens Motorola

1,700 1,200 1,500 2000 1,500


PCI

AX TSP

Time

(a) Affordability

A PCI/ Tele-Service Price- PCI: Per Capita Income- TSP: Telephone Service Price- A: Affordability

Bring down price to increase affordability


Affordability of Telephone

1951 1994 2007

Revenue/Line*at current exchange parity

$ 125 $250 $125

Rev. as% of PCI

2.5 1.0 0.12

Affordability PCI

Tel. Svce.Price


AMAZING OUTCOMES (1/2)

• Tele-density up from under 2% in 1994 to over 30% in 2008 July

• About 120 million mobile phones being added per year

• 270 mln persons use mobiles only• Mobiles exceeded fixed phones in Oct 2004

• Rural demand exceeding Urban demand


AMAZING OUTCOMES (2/2)

• New services• No waiting for phones• Private companies invested $ 40 bln in a 10y period.• Private companies are investing $ 7.5 bln/year• Foreign direct investment (upto 74% of equity)• Transformation into electronic-photonic information

infrastructure for a knowledge society: e-education; e-governance; e-

sevas (services); e-commerce, e-democracy (advocacy, balloting)

• IT & software and outsourced services to the world


Economic Impact (1/2)

• Thousands of BPO; KPO; ITeS & e-Media

Businesses are born

• Job Opportunities for the hitherto educated

unemployed increased fantabulously – well paid

[10 times the per capita income] Over 2.0 mln

engaged growing 20/25% p.a.

• Huge demand for University education-[to go up

from < 8% to 15% in 11th plan 2007-2012


Economic Impact (2/2)

• Exports of IT; ITeS; BPO, KPO growing by 30% p.a.; would go up from $ 40.0 bln in 2007 to $ 60 bln in 2010

• Indian employees of foreign companies (IBM, GE, EDS, Deloitte, Cap Gemini, CSC, Accenture...) are tens of thousands

• Indian companies are recruiting foreign talents-Global bench-marking of talent to sensitise Indians to Excellency

• Indian companies are acquiring BPOs in EU; US; Hungary; Philippines, Sri Lanka, Vietnam...


Missing Link – No More

• Over 585,000 (92%) villages have a public telephone , each attended by helpful, self - employed people .

• 90 % of the territory and 99% of the population has access to telephone

• 38% of territory covered by mobile telephony• STD/ ISD public phones - more than a million in

street afford private subscription. corners, grocer shops and other public places and residential complexes for the not so affluent who can’t


Bridging the Digital Divide

• Internet Kiosks by private companies, ISPs and Bharat Sanchar (SOE) for public use.

• Universal Access/ Service Fund and Administrator

• Government (s)putting subsidised public Internet Kiosks in villages

• Content in Indian languages and machine translation of spoken and written English into Indian languages being developed

• Attendants (physically disabled persons, self-employed young) assist seekers for a fee provide e-mail addresses; browsing; video interviews.


Internationally

• P-Telcos are also laying and using undersea cables

• Thousands of Satellite Earth Stations (SES) including

V-SATs providing global connectivity through

INTELSAT, INSAT and private Comsats.

• Greatest outcome - helping over five thousand

( and increasing ) software BPO and call center

companies serve global companies ( export earning

in the year 2006-’07 : $ 31 billion)


Telecom: Employment Productivity

• Prior to 1994 – 450 K employees &• 1 employee for 15 phones• In 2007 for PSUs 1 employee for 200 phones• P-Telcos: 1 employee for 2000 phones (New

Business Model of Franchisees & outsourcing • For PSUs: 80% Tech & 20% A/C2 Adm• P-Telcos: 80% Fin; Mktg; H R • 20% Technical


Telecom Outcomes contd..

• Cell-phones are now mass consumption appliances.• Their prices came down to one-tenth to one-fifteenth

in eh last 10 years• 85% cell subscriptions are prepaid

- no billing; revenue before costs/ service!- Users control expense

• Affordability increased 15 fold sine 1951; 6 fold in the last decade

• Electricians, drivers, plumbers, carpenters, masons, welders, street-vendors; mazdoors have phones!

• 600k/650k villages have telephones


Telecom Outcomes

Demonopolisation brought • We beat the USA in number of telephones –

China1st; India 2nd; USA 3rd.• New technologies• Capital costs came down (by 90% from

Rs.40,000/line to less than Rs.4,000/-)• Prices came down ( by 97% for ISD calls 90% for

others)• Myriad new services ( on the cell-phone-digital

cameras, Internet Access)• 90% reduction for global tele-links; enabling India’s

software companies to be competitive spread to Tier II cities [like Visakhapatnam, Mangalore, Coimbatore.....]


Telecom Outcomes

Demonopolisation brought contd..• BPO, KPO & Call Center companies

enabled to be born & remain competitive due to drop in band-width price & bandwidth even in II tier cities

• E-governance, e-procurement, e-education, anytime, anywhere banking; e-public relations

• India becoming R&D & design center for the world


Telecom Outcomes

Demonopolisation brought contd..• We are the largest(9.0 mln cell phones /

month) market in the world-larger than China (5 mln/m)

• Rs. 90,000 cr of private investment came into the sector

• P-Telcos are investing about Rs. 40,000/yr

• Telecom revenues are Rs. 1,20,000 cr


Down side of Telecom Liberalisation

• Indian equipment manufacture almost dead• Indian R&D – reduced to “nominal”; hardly

any user• Indian contribution to network construction• Low-end; labour intensive (towers, batteries,

A/C; shelters, trenching & cable –laying…)• All network equipment imported/India

Assembled• Indian R&D personnel creating IPR for

foreign owners ( i/c Chinese!)


Universal Service Fund (USF)

• All companies to contribute 5% of revenues to the USF (Currently Rs. 60 bln ($ 1.5 bln)

• USF Administrator (USFA) in the DOT• District-wise (>700 in India) villages without phones listed;

estimates of capital cost ,maintenance & operations are made for providing the VPTs in designated villages

• USFA invites bids from enterprises; criterion for selection; Least subsidy demanded

• Services to be provided as well as where interconnection is available specified

• Amount available: $ 2.5 bln


USF Objectives

• Telephone (s) in the village; school; library

• Internet connection (s)

• Subsidised service to certain categories ( farmers, welfare institutions-child care & old age home)

• E-governance ( services and information to farmers, job-seekers etc.)


Territorial Coverage• To extend cellular mobile telephone coverage

through out the national territory ( 3.3 mln km2)• 330,000 RBSs are required• 110,000 RBSs exist covering 38% of the

territory• USFA is inviting bids to put up RBS towers,

antennae, shelter, power; A/C and connect by Optical Fiber Cable to the nearest RBS Controller & Mobile Switching Center (MSC)

• USFA would lease them to Telcos


Territorial Coverage (2)

• RBS tower provision is a new business line & many Telcos and non-Telcos are entering this business

• In the Y 2007 program USAF is funding 7,871 towers (RBS) to connect 3.0 mln subscribers.

• 4 companies are engaged now. BSNL, the PSU won 75% of the contracts.

• USF subsidy planned for 20,000 RBSs @ $ 2.5 bln


• A scheme in which BPO work is taken to rural areas to create job opportunities there.

• Broad-band connectivity from infrastructure providers (NPGC, RaiL Tel, GAIL, besides Telcos) to villages

• Selected village graduates, intensively trained in communication skills, English and computer skills & engaged

• Groups of 100 graduates per villages cluster ( within 7 km radius-bicycling distance) assigned BPO work

• Audio-video conferencing in work-places

• Urbanizing the village without moving people to cities• Prosperity to the village-up grades for schools, in health, housing

water and sanitation; roads; electrical power etc. Coastal Villages in Andhra Pradesh show the way led by Satyam computer Services thro’ a philanthropic foundation (By raju)

GRAM IT (IT & ITES)


Foreign Companies Engaging Indian intellect

• GE – Largest R&D center outside USA is in India in Bangalore with 2300 researchers, double that in Shanghai

• GE put in $ 80 mln in the Bangalore R&D facility• GE’s Bangalore R&D field for 260 patents in the USA (37 already

approved)• Boeing USA is outsourcing Aircraft design to Russia ($ 120/ Hr) • Russians are outsourcing parts of the design to HAL (BG) at $30/Hr • Gorbachev went to USA to recommend Moscow as Bangalore’s

rival!• An Indian retained does the work of 2 or 3 Europeans;

does not take 6 weeks of holidays & costs one-fourth


Some Foreign Companies’ Employees in India

GE Caps

GE Dev IBM Oracle EDS Texas

16,000 1,800 10,000 6000 3,500 900

Intel JP Morgan

HUWAI Siemens Motorola

1,700 1,200 1,500 2000 1,500


Dhanyawad:

Thank You

thc_ctms s390 july '081 dr t.h. chowdary director: center for telecom management and studies...

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