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SITM ANNUAL TELECOM FORECAST 2010
Message From Faculty In-Charge
With events like the 3G spectrum auction,
Mobile Number Portability and the proposed
Mobile Virtual Network Operator license, I feel
we are heading for an exciting time ahead, both,
as a country and as an industry, In this year's
Prévision we have made an attempt to analyze
the impact of these three key events and how it
would change the competitive landscape of the
Indian telecom industry.
We are fortunate to have the continuous support
from Deloitte Haskins & Sells in the business and
research domains.
“We believe that the “Three Way Impact”
of MNP, MVNO and 3G could change the
competitive landscape of the Indian
Telecom industry.”
SITM is the first educational institution in Asia
imparting management education to aspiring
telecom managers. SITM has consistently
endeavoured to take up new initiatives in both
business and research domains.
Through this publication I would like to thank the
entire telecom fraternity for its support and
encouragement.
Mr. Giri Hallur
Asst. Professor & Faculty In-Charge
SITM Annual Telecom Forecast.
One such effort is Prévision, SITM's Annual
Telecom Forecast. Prévision is in its 7th year and
aims at providing the industry a neutral and
insightful single point of view regarding the
emerging trends in the telecom sector for the
forthcoming year.
This involves accumulating inputs from detailed
res ea rch into co ntemp o ra r y teleco m
technologies, telecom business and other
determinants of change and meticulously
analyzing them and forecasting future trends.
It is the only effort of its kind in the telecom
domain being attempted by a business school,
which provides comprehensive coverage over
various domains in the telecom sphere. It is a
culmination of the collective endeavour of SITM
students with 1500 man hours of efforts put in
by them. The student forecast team is guided by
the SITM faculty and some of our esteemed
alumni.
© 2009, Symbiosis Institute of Telecom Management, Pune
Executive Summary
INDIAN TELECOM
TELECOM TECHNOLOGIES
The Indian Telecom market is proving to be an
attractive avenue for many new players. Though the
fixed line subscriber base will reduce to 35.95 mn in Q3
2010 with a decrease of 4.2% over Q2 2009, mobile
subscriber base is expected to reach 590 mn in Q3 2010
with a growth of 38.08% over Q2 2009. The total
subscriber base is expected to reach 625.95 mn
witnessing a growth of 34.66% over 2009. Overall
teledensity is going to cross 52% mark in Q3 2010. With
the launch of 3G we are going to see a considerable
growth in the data market. TRAI has recommended the
entry of MVNOs in India but its success will largely
depend on 3G services and MNP.
As WiMAX licenses are not issued in India, this provides
the fixed line operators with an opportunity to stem the
losses in fixed line operations by providing data services
using DSL/ADSL technology, resulting in further growth
of the technology in India. We expect the global DSL
subscriber base to cross 300 mn by the end of 2010.
Constant improvement in edge-routing techniques
along with the ability of IP/MPLS platforms to efficiently
integrate with the existing legacy network is driving
MPLS to become the most preferred data technology.
Response to 3G services, launched by BSNL and MTNL,
poses a big question mark on success of the technology
after spectrum allocation. There is also a special
mention of the emerging technologies that are
expected to address the issues of current bandwidth
crunch and inefficient operating model.
ECONOMY
The world economy is stabilizing, helped by
unprecedented macroeconomic and financial policy
support. Asian economies are expected to spearhead
the global economies while major economies of west
are still expected to show negative growth. With global
economy looking positive oil prices have stabilised and
expected to remain so for the coming year which would
help in the development of key sectors like automobile,
manufacturing and real estate. The Indian economy
being the second fastest growing economy of the world
is expected to post a growth of 6.0% to 6.8% whereas
US economy is expected to post a negative growth.
GLOBAL TELECOM
Telecom remains a silver lining in the dark clouds of
recession hovering above the global economy. In Africa
the lack of fixed line infrastructure is forcing operators
to use wireless technology broadband, M-Payment is
growing in Kenya and Nigeria. WiMAX, FTTX, smart
phones in U.S.A and IPTV in Canada will be the driving
forces for telecom in North America. In Eastern Europe,
e-governance will drive broadband subscription in
Czech Republic, Hungary is moving towards converged
services and Russia is still awaiting 3G licenses. UK is
seeing femtocell solutions starting to be deployed, high
IPTV signups in France and LTE in Germany are drivers
for Western Europe, Australia is seeing huge
deployment of fiber for NBN(National Broadband
Network). 3G in Vietnam and the fast growing telecom
market in China are things to keep an eye upon in Asia.
The Middle East market is poised for wireless
broadband growth with 3G/ HSDPA and WiMAX
competing for market share. The South American
region sees Brazil struggling with IPTV, WiMAX
deployment in Mexico and bundling of services in
Argentina are key trends.
TELECOM SOFTWARE
The Telecom Software industry is eyeing a potential
recovery after recession. North America and Europe is
expected to see a rise in spending on OSS/BSS. Though
the next level of growth will come from emerging
markets. Almost all, Service fulfilment, Billing &
Mediation, BI, CRM will see some rise in growth while
Service Assurance will take some more time before
spending increases on Service Assurance. Mobile OS
will be dominated by Symbian but its share is fast
declining. It will take 2-3 years before a clear winner
emerges out of the number of Mobile OS Platforms.
Mobile social networking, mobile gaming and location
based services will be highly used mobile client
applications with new users coming from mainly from
India and China.
COMMUNICATION INFRASTRUCTURE
Telecommunication Infrastructure has seen major
collaborations in the tower segment in FY 2008-09 with
passive sharing being instrumental in converting CAPEX
into OPEX for operators. Green energy is also another
area which is gaining acceptance due to rapid rural
deployment of incumbents as well as new entrants. The
pace of establishing local data centers has picked up
and is expected to cross Rs. 2700 cr in the next three
quarters. However, owing to negative profits of
networking giant Cisco, the routers and switches
segment will slowdown whereas network integration
will maintain its rate of growth to reach Rs. 9821.01 cr.
Government initiatives like the CSC program for rural
India will be an enabler for VSAT which will find major
applications in BFSI, retail, stock trading.
© 2009, Symbiosis Institute of Telecom Management, Pune
CONSUMER ELECTRONICS
MOBILITY
In the world full of electronic gizmos and gadgets,
consumers increasingly prefer mobility, better
portability, compact yet powerful and better aesthetic
look and feel to the device. We have already seen the
laptop sales overtake the desktop sales, the trend
seems certain with further decline in desktop sales
expected. Smartphones have come up the evolution
curve and there is increased competition in this space.
With launch of LED-TVs it marks a new step in the
Television sector, from old time CRTs to LCDs, now
LEDs paving the path for AMOLEDs. Gaming, a $40bn
industry worldwide by next year has grown with users
preferring to download the content hosted online
rather than purchase DVDs.
The Indian mobile industry has grown by leaps and
bounds and is expected to register a subscriber base
of 590 mn in 2010, with B and C circles showing
maximum growth. Metro, A, B and C circles will
contribute 14%, 36%, 37% and 13% of the total
subscriber base. MoU, which has been increasing, has
shown a negative trend of late and will continue its
downward trend to reach 462 minutes in 2010.
Wireless internet, on the other hand is expected to
grow exponentially, owing to latent demand and
emergence of newer technologies. MVAS will be the
only way to increase ARPU. Mobile gaming, mobile
advertising and m-commerce will be the main
revenue earners. Social networking on mobile will
emerge as a new trend and locally relevant content
will be the key to success in rural areas. 802.11n and
WLAN are emerging trends in the enterprise segment.
BROADBAND
Indian Broadband market has shown a decent and
steady growth with the subscriber base increasing at a
rate of approximately 60% in the year 2008-2009.
Though there has been a substantial growth in the
adoption of broadband by the users however, there is
a long way to go. Despite the efforts made by service
providers and various initiatives taken by the
government to make broadband a commodity, the
price and data rates have been a hindrance in the
growth of Broadband. Increase in rural penetration
can play an integral role in enhancing broadband
penetration in India. Subscriber base is expected to
grow exponentially provided 3G and BWA auctioning
takes place. We expect subscriber base to surpass the
8.9mn mark by June '09. Reasonable pricing clubbed
with promised service levels will drive the growth of
Broadband.
MANAGING SLOWDOWN
Slowdown in 2008-2009 did affect Telecom Sector
though not at a large extent. The operators are going
strong in terms of addition of number of subscribers
but have reduced their CAPEX and IT Budgets. The
operators are developing new business models and
going for Infrastructure sharing to reduce cost in a big
way. Green IT and Green Telecom are being adopted
by the companies not just out of social obligation but
also to reduce OPEX. VAS providers are moving away
from traditional SMS based VAS. VAS providers are
gearing up for post 3G. Telecom retail, both organized
and unorganized will see the next cycle of growth
beyond slowdown.
© 2009, Symbiosis Institute of Telecom Management, Pune
Methodology
Prévision - SITM Annual Telecom Forecast is in its
7th year, initiated in the year 2003, with the
purpose of providing the industry a neutral and
insightful single point of view regarding the
emerging trends in the telecom sector for the
forthcoming year, after accumulating inputs from
detailed research into contemporary telecom
technologies, telecom business and other
determinants of change.
Prévision is a culmination of the collective
endeavor of SITM students with 1500 man hours
of efforts put in by them. The student forecast
team is guided by the SITM faculty and some of our
esteemed alumni. It is the only effort of its kind in
the telecom domain at this level, which provides
comprehensive coverage over various domains in
the telecom sphere.
Exponential Smoothing
In statistics, exponential smoothing refers to a
particular type of moving average technique
applied to time series data, either to produce
smoothed data for presentation or to make
forecasts.
Extrapolation
This model statistically extrapolates established
pattern and/or existing relationship in order to
predict their continuation, assuming that such
pattern relationship will not change during the
forecasting phase.
Linear Extrapolation
Linear extrapolation means creating a tangent line
at the end of the known data and extending it
beyond that limit.
Polynomial Extrapolation
A polynomial curve can be created through the
entire known data or just near the end. The
resulting curve can then be extended beyond the
end of the known data. The resulting polynomial
may be used to extrapolate the data.
Trend Analysis
When a series of measurements of a process is
treated as a time series, trend estimation is the
application of statistical techniques to make and
justify statements about trends in the data.
STATISTICAL MODELS USED FOR FORECASTING
Time Series Analysis
A time series is a sequence of data points,
measured typically at successive times, spaced at
(often uniform) time intervals. Time series analysis
comprises of methods that attempt to understand
such time series. Time series forecasting is the use
of a model to forecast future events based on
known past events: to forecast future data points
before they are measured.
Regression Analysis
Data regression analysis is a technique used for the
modeling and analysis of numerical data consisting
of values of a dependent variable (response
variable) and of one or more independent
variables (explanatory variables).
Linear Regression, y = a(x) + b
Non-Linear Regression, log(y) = log(a) + x*log(b)
© 2009, Symbiosis Institute of Telecom Management, Pune
SITM ANNUAL TELECOM FORECAST 2010
SITM Annual Telecom Forecast 2010 provides a holistic and equitable
view of the forthcoming developments in the telecom sector taking into
account all the macro and micro economic factors. The essence of this
forecast report lies in the fact that it keeps us in sync with the changing
dynamics of the telecom ecosystem which is transforming itself and has
already stepped into third generation technologies.
Faculty In Charge
Giri Hallur
Faculty (Telecom), SITM
Prevision Pioneers
Student In Charge
Kundan Das - Starent Networks
Rahul Sharma - Tech Mahindra Ltd.
Aniruddha Harne - Tech Mahindra Ltd.
Priyesh Ranjan
Alumni Mentors
Rajeev Jha - Tata Communications Ltd.
Ananda C - Protiviti Global
Sohag Sarkar - KPMG
Nikhil Suhaney - Protiviti India
Rohit Mishra - TTML
Saurabh Sinha - Idea Cellular Ltd.
Hiren Rupani- Tata Communications Ltd.
Anuj Nagori - Tech Mahindra Ltd.
Harikrishnan AB - ICOMM TELE Ltd.
Ajay Raghav - Batch 2007-09
Industry Mentors
Sumant S.V. - Deloitte Haskins & Sells
Anantalakshmi Prasad - Deloitte Haskins
& Sells
Student In Charge (Technology)
Praveen Asati
Ankit Parikh
Suresh Kumar
Mohit Malik
Student In Charge (Statistics)
Ashish Harkare
Pooja Sheth
Samruddhi Dadhe
Nidhi Sharma
Student In Charge (Marketing)
Bavneet Singh Sandhu
Ashima Verma
Sachin Joglekar
Rohan Patil
Student In Charge (Design)
Soumik Solanki
Amol Tode
Jitender Singh
Hemant Gavali
Disclaimer:
In no event shall Symbiosis Institute of Telecom Management, Pune; hereafter referred to as
SITM, be liable for any indirect, punitive, incidental, special or consequential damages
arising out of or in any way with any content (or any material provided here under) whether
biased or on contract, tort, strict liability or otherwise even if SITM has been advised of the
possibility of the damages.
I
N
D
E
X
INDIAN TELECOM.........................................................1
THREE WAY IMPACT.....................................................4
ECONOMY....................................................................7
GLOBAL TELECOM......................................................11
TELECOM TECHNOLOGIES..........................................21
TELECOM SOFTWARE.................................................25
COMMUNICATION INFRASTRUCTURE.......................31
CONSUMER ELECTRONICS.........................................35
BROADBAND..............................................................39
MOBILITY....................................................................43
SPECIAL FEATURE - MANAGING SLOWDOWN............47
© 2009, Symbiosis Institute of Telecom Management.
All rights reserved. This document is the sole property of SITM.
No part of it maybe circulated, quoted, copied or otherwise
reproduced without the written approval of SITM.
Indian Telecom
SCOPE
The Indian Telecom vertical comprehends the entire market which consists of fixed and wireless communication,
NLD&ILD services, issues pertaining to 3G, WiMAX and Rural Telephony. The goal is to predict the fixed and wireless
subscriber base, overall tele-density, rural and urban tele-density, projections for WiMAX, and Telecom retailing.
By
Student Team
ANALYSIS
SUBSCRIBER BASE & TELEDENSITY
Mahesh Jangale
Prashant Gaikwad
Coney Dongre
Kushal Gupta
With the addition of more than 9-10 mn subscribers
each month, the Indian Telecom market is proving to
be an attractive avenue for many new players to
enter into the Telecom wagon wheel. As the existing
players are trying to take the advantage of their
experience, the new entrants with their innovative
ideas are giving them a run for their money. Cut
throat competition has made customer the king, due
to which the operators are constantly vying to adapt
to the change and at the same time meet the
customer's expectations.
Decision for auctioning of the much awaited 3G
spectrum by the end of 2009 has given a new lease of
life to operators. This will ensure efficient utilization
of the spectrum and network management to boost
QoS to meet the ever growing demand.
© 2009, Symbiosis Institute of Telecom Management, Pune
2
CDMA operators are now acquiring the licence to roll
out their own GSM services which has made the
competition even tougher. It has proven to be a
blessing for a customer who is witnessing a
continuous fall in the rates of different services. The
reduction in interconnection charges will have a
negative impact on the revenues of incumbents like
Airtel, Reliance and Vodafone as most calls terminate
on their networks owing to their massive reach. Along
with the above factors, the reduced handset prices
and low tariff rates with surreal real time activation of
services has boosted the subscriber base along with
the rural and urban teledensity.
spectrum will force telecom operators to skim the
market and offer premium content. Many operators
would be happy to use the 3G spectrum to beef up
their voice offerings. We are going to see a
considerable growth in the data market. As
infotainment content will be in demand, dependence
on Astro, Bollywood and Cricket would decrease.
With the launch of 3G, social networking on mobile is
going to be one of the stars for the 3G revolution.
Though 3G seems to be a very promising technology,
there still remains a question mark on its acceptance,
which would directly depend on factors such as userreadiness to pay an extra fee for handset prices and
value added services. Hence, as of now one can't be
sure as to how fast Indian mobile users will adopt 3G.
MVNO
The government has finally woken up to the potential
of Mobile Virtual Network Operators (MVNO), TRAI
has recommended the entry of MVNOs in India.
Many foreign players are keenly following the
developments in India, and do not want to miss the
opportunity. This business model is expected to open
new vistas for players who intend to offer mobile
services, but do not have the UAS license to do so.
Telecom players who see MVNO as a route to gain
footprint, in the absence of an MNO license are
Telcos will reduce prices to retain customers; bundled
Telekom Malaysia, BT, Verizon , France Telecom ,
services will be the major focus and more userMobile ESPN, and Topaz Telecom. Success of MVNO
segmented VAS will be provided along with better QoS
in India will largely depend on 3G services and mobile
to the end users.
number portability. 3G will stimulate this wave of
MVNOs after its launch. Hosting MVNOs could be the
Taking into account the above considerations, we
only viable strategy for 3G new entrants to achieve
forecast that:
profitability quickly and avoid unsustainable levels of
!
Fixed line subscriber base will reduce to 35.95 mn
subscriber acquisition costs. If materialized, MVNO
in Q3 2010 with a decrease of 4.2% over Q2 2009.
can help regional MNOs enter other regions and thus
!
Mobile subscriber base is expected to reach 590
eliminate the expense of investing in a new license or
mn in Q3 2010 with a growth of 38.08% over Q2
acquiring a local MNO. MVNO model is successful in
2009.The total subscriber base is expected to reach
European countries because MNP existed there
625.95 mn witnessing a growth of 34.66% over 2009.
before the introduction of MVNO. There is clearly a
!
Overall teledensity is going to cross 52% in Q3
direct link between MVNO success stories and MNP.
2010.
In Latin America where MNP is unavailable, MVNO is
a failure. With over 100 MVNOs launched in Western
3G SERVICE & APPLICATION
Europe and over 25 due in USA, mobile operators
cannot ignore the impact of MVNOs.
Indian telecom market is going to see a major
transformation with the launch of 3G, where an array
NLD/ILD
of content will be available on the mobile platform.
With new phones coming in along with more
The Indian NLD market has shown tremendous rise
spectrum availability, the subscriber is equipped to do
during the FY 2008-09, clocking a whopping 48.3%
more with his device than just calling.Cost of the 3G
© 2009, Symbiosis Institute of Telecom Management, Pune
growth to touch Rs 14,432 cr. The NLD arena has become
bigger and many new players are vying for their own piece
of the pie of this potentially huge NLD market. Swan
Telecom, SingTel and Orange Business Services have
jumped in the fray and obtained the license to operate
both NLD/ILD services. DoT has finally given the nod to
carrier selection code, paving the way for reduced long
distance tariffs for consumers. This decision will have a
major impact on the long distance segment and the
industry is expecting some revolutionary changes in NLD
and ILD space. It is expected that with continuous efforts
of operators, entry of new players along with the
encouraging initiatives of the regulatory bodies, the
Indian NLD market will scale new heights.
TELECOM RETAILING
India may have been adding 8-10 mn new mobile users
every month but when it comes to business, mobile retail
still remains a low margin segment. Thus, retailers need to
ensure high number of repeat users. India with over
30,000 mobile retailers of varying size and shape has a
market size of Rs.250 bn and is expected to grow at 30%
CAGR. Companies are adopting cross-advertising model
that is earning considerable amount of revenue. Now
telecom retailers are exploring new avenues and have
started launching their own mobile-phone brands,
offering a complete range of handsets to bring better
value to their customers. An example of this is Mobile
Store which has launched its low- cost 'RAY' handsets. By
next year more and more telcos will come into the
telecom retailing picture to optimize the potential
telecom penetration to fulfil the customer needs.
USO
With only 34.44% utilisation of the total Rs.20,404.4 Cr
USO fund collected till March 2009, the industry is urging
for the USO fund to be transparently disbursed to all
operators for the expansion of telecom services into rural
and uncovered areas. At present, telcos setting up
infrastructure in rural India are provided a subsidy from
the USOF through a bidding process. But TRAI has
proposed that all operators who go rural be given a
subsidy provided they share their infrastructure. Since the
amendment in USO charter in 2006, the USO subsidy can
now be provided to wireless broadband projects, which in
turn will encourage more private operators to roll out their
services across the length and breadth of the country.
WiMAX
We anticipate WiMAX auction to take place at the start of
2010 after the 3G launch. Although the Indian
Government is promoting WiMAX as a technology to
connect the country with broadband services, with huge
cost of 3G auctioning and low PC penetration in the rural
India, a nationwide rollout of WiMAX is cost prohibitive.
WiMAX will start working commercially by mid 2010. For
a sustained business scenario the only deployment will
be to bring WiMAX broadband rural centres in villages,
schools, hospitals and so on. From the access point,
individual access will then be available via a Wi-Fi mesh.
In urban areas, WiMAX will be used to offer mobile and
semi-mobile broadband to consumers and enterprise
customers. Main operators who are investing in WiMAX
technologies include Bharti Airtel, Tata Communications,
Idea, Aircel, Reliance, BSNL, and MTNL. High frequency
data will be offered through WiMAX but transfer of voice
will take some time due to the current market scenario in
India. For the Indian market, WiMAX will be a new
experience. CSPs are already providing broadband so one
of the biggest challenges with WiMAX will be end-useraffordability. In case of rural areas, growth rate will be
slow due to the high OPEX involved. The timeline,
bandwidth & permission for mobility in the WiMAX
licence will influence the growth of WiMAX in India.
CONCLUSION
Despite the slowdown the high monthly subscriber
additions have not abated. With the economy on the
road to recovery, the Indian telecom market is raring to
touch new heights. With clear policies for rural market
and incentives for operators to go rural, the government
can extend this boom to rural India which will bridge the
huge urban-rural digital divide. 3G and BWA auctioning at
the end of 2009 will boost the overall growth. Factors like
MNP and MVNO which India will witness in the near
future are going to change the competitive landscape of
the Indian market. However spectrum crunch and
allocation related issues need to be addressed at the
earliest to achieve the possible growth which will not only
make things better but usher a new era in Indian telecom.
RECOMMENDATIONS:
!
A combination of better services, innovative
applications, and smart handset bundling coupled with
right pricing can attract a large base of users to 3G.
!
Operators should move to rural market with new rural
VAS, since the rural base is expected to double in few
years. VAS like Automation of Agro & Irrigation services,
water level monitoring, data gathering for milk & agricooperatives, fisheries, poultry, and soil analysis.
!
The incomes in India have higher disparity than in the
US and other Western countries. For higher customer
reach WiMAX service providers should come out with
low cost services.
© 2009, Symbiosis Institute of Telecom Management, Pune
4
Three Way Impact
India would be the only country where we could see the deployment of MNP, MVNO and 3G at round
about the same time. We would classify this as the “Three Way Impact”. We could have all of the three
models deployed during our forecast period till 2010 or may be some of them. Keeping this in mind, we
at SITM give the industry the various combinations which could change the competitive landscape and
how the markets, players and the customers could behave to this ever changing dynamic market. We
have found seven such possibilities which have been talked about in this report.
© 2009, Symbiosis Institute of Telecom Management, Pune
© 2009, Symbiosis Institute of Telecom Management, Pune
6
© 2009, Symbiosis Institute of Telecom Management, Pune
Economy
SCOPE
The financial turmoil that spawned the U.S. Subprime mortgage market during the summer of 2007 has developed
into world economic crisis followed by major recession. This had a large impact on the major economies of the world
making them shrink, thereby resulting in slow growth. This vertical aims to analyze, forecast the growth rates of major
economies and the key drivers which are expected to significantly influence the economy.
By
Student Team
STABILIZATION IS UNEVEN AND RECOVERY WILL
LIKELY BE SLUGGISH
Rohit Singhi
Ankush Agarwal
Neha Kumari
Anshul Jain
The world economy is stabilizing, helped by
unprecedented macroeconomic and financial policy
support. However, the recession is not completely over
and the recovery is likely to be sluggish. Global
economic activity is expected to contract by 1.2% to
1.5% in 2009 as compared to previous year and then
see a positive growth in 2010.
RUSSIA We expect the Russian economy to
contract by 5.7% to 6.7% in 2009-10.
The negative dynamics of Russian economy in 2009-10
is actually preconditioned by a whole number of
steady factors starting from the stock market fall that
© 2009, Symbiosis Institute of Telecom Management, Pune
8
Influenced the real sector of economy. The second
factor is the decrease in worldwide prices of primary
commodities of Russian exports as a result of which
it may experience fall in exports. The inflation is
expected to be 12% to 13% during Q1 Fiscal Year
2010. We expect domestic demand to decline in
2009-10 led by lower consumption and investments.
Household consumption is expected to drop in 2009
and we expect fixed investment to fall this year as
well. Industrial production declined in 2008, and we
expect it to drop in 2009-10 as well. This will
contribute to weaker labour market conditions,
resulting in higher unemployment and decline in
wage rates. Consequently we expect the current
account balance to turn negative in Fiscal Year 2010.
TURKEY GDP is expected to contract by 4% to
5%.
The recession in 2009 is the result of plunging
external and internal demand, limited credit
availability and less foreign capital inflow. External
demand is hit by negative growth in Turkey's main
export markets. Private consumption, which
accounts for 70% of GDP, is expected to decline in Q1
2010 on grounds of low consumer confidence, rising
unemployment, stagnating wages and limited credit
availability. We expect GDP to fall by 4% to 5% in
2009, before picking up moderately in 2010. But a
steeper and a more prolonged slump cannot be ruled
out as the inflation rate is likely to hover around 6.7%
to 7.6% during the same period.
INDONESIA We expect the GDP to grow by
3.5% to 4.2%, down from 6% last year.
Indonesia is expected to experience slow growth as
compared to the previous year as private investment
is expected to decline in the face of subdued
domestic and external demand and lower profits.
Further, banks generally have been more cautious in
lending after the economy has started showing signs
of slowdown. Some investment projects are likely to
be postponed. With major trading partners like The
European Union, Japan, Korea, Singapore and The
United States showing signs of improvement, yet
merchandise exports is expected to fall in the initial
quarters of Fiscal Year 2010. For this period, average
prices of most export commodities will be below last
year's levels. Due to weaker domestic demand and
lower prices of fuel and commodities, annual
average inflation is expected to be 3% to 4%.
VIETNAM We expect the GDP to grow by 4.7%
to 5.5%.
In Vietnam the average annual inflation is expected
to be 5% to 6% in Q1 2010, since GDP is likely to be
below its potential level and world commodity prices
are expected to be substantially lower than last
year's average levels. The global financial crisis did
not directly affect Vietnam's banks but contributed
to the decline in foreign portfolio investment inflows
and stock prices. The gloom in the real estate market
along with slowdown of economic growth might lead
to increase in Non-performing assets of bank's loan
portfolios.
JAPAN The world's second largest economy is
expected to contract by 5.3% to 6.3%.
We are expecting Japan's economy to shrink by 5.3%
to 6.3%. This is majorly due to continuous fall in
exports. All major countries like US, China and EU saw
a fall in exports by 40%, 27%, and 46% respectively
for the month of July 2009 as compared to the same
period last year. Japan experienced negative inflation
in Q2 2009 and might continue to do so till Q1 2010.
UNITED KINGDOM GDP is expected to contract
by 4.2% to 4.8%.
UK's dependence upon financial services and public
sector to drive growth and jobs could be a problem
during the downturn as neither of the sectors is
expected to perform well. Consumer spending is
expected to show a negative trend in 2009 as well as
in the next year. Economic activity is slowing in all key
sectors of the economy. Falling house prices and tight
credit conditions have dented consumer spending.
The economy will shrink in Q1 and stagnate in Q2
2010. There is not much change expected in the
interest rates which is going to be 0.5% to 0.6% in Q3
2009. LIBOR has been falling so we think this will give
boost to the financial sector and will help in reviving
the growth of the United Kingdom.
CANADA GDP is expected to contract by 2.4%
to 3.1%
The slowdown of U.S. economy coupled with turmoil
in the global financial market has put downward
pressure on the Canadian economy resulting in
current account deficit with sectors like automobile
© 2009, Symbiosis Institute of Telecom Management, Pune
and oil sector experiencing a major setback. The inflation is
expected to be 1.2% to 1.8% during the Financial Year 200910.
along with negative inflation. The exports are also
expected to fall as international demand is reducing
which is likely to put pressure on YEN. Dollar/Yen rates
are expected to be in the range of 88-94 in Q4 2009.
UAE GDP to grow by 2.8% to 3.7%
The country's huge oil, trade and banking industries are
vulnerable to external factors. The slowdown in the major
economies of the world has resulted in slow growth
because of the fall in the demand of oil, so we are
expecting a growth of 2.8% to 3.7% with the inflation rate
hovering around 6.1% to 7.2%. Exports will see some
contraction due to low demand in key economic sectors.
The foreign direct investment is going to show slow
growth in the Financial Year 2009 -10.
SOUTH AFRICA South African economy is
expected to contract by 0.3% in 2009, followed by
growth of 2.9% in 2010.
South Africa will experience significant decline in real
export growth, and will struggle to attract sufficient levels
of foreign capital to finance its current account deficit. On
the positive side, strong private investment is the run-up
to the 2010 FIFA World Cup and it will remain a key driver
for growth in 2009. Tourism industry is expected to
experience an upward trend. The inflation rate is
expected to be around 5.8% to 6.5% in Q1 2010 and could
see a regular trend for the remaining quarter.
Nigeria GDP to grow by 2% to 3%
We expect Nigeria to post a relatively strong GDP growth
rate of 2% to 3% in Fiscal Year 2009. The country is
exposed to a host of structural problems which are likely
to threaten growth over the medium term. In particular,
Nigeria's banks could face domestic credit crunch which
can undermine their solvency and lending capacity.
What is next for oil?
Fluctuations in the oil price can make the goods we buy
more or less expensive and can determine the profits that
companies make for their shareholders. We expect the
price of crude oil to be $65 to $75 per barrel during Q2
and Q3 Financial Year 2009-10 after seeing a huge dip due
to slowdown of economic activity. However, the decline
rate in consumption is expected to be moderate later this
year because of the projected gradual global economic
improvement in economies like INDIA and CHINA.
Exchange Rates
YEN Vs DOLLAR
The slowdown in the Japanese economy continues
EURO Vs US DOLLAR
The European economies will face a setback with
negative growth, creating less economic transactions.
As both domestic and international trade have shown
negative demand, The European Central Bank is
thinking of restructuring the monetary policies that
would help the economies to revive. The US economy is
also facing a similar situation of low demand, so we
expect that the EURO/US DOLLAR rates to be around
1.39 to 1.48 by the end of the Financial Year 2009-10.
FED RATES
Fed rates will remain on hold for a prolonged period as
US economy is yet to recover. The big financial houses
are still not confident of raising capital, so this may force
the federal bank to keep the rates at the current level.
LIBOR
With financial market looking gloomy in European
countries, we expect that there will not be much
change in the LIBOR rates. We expect LIBOR to be
around 0.20 to 0.30 for a monthly transaction.
CHINA GDP to grow by 6.8% to 7.8%
China's GDP growth is expected to be 6.8% to 7.8%,
acknowledging the boost to the economy from Beijing's
stimulus plan of 4 trillion Yuan ($586 bn). The fund
would help to increase the private consumption but the
cause of concern is negative inflation and high interest
rates which might hamper the growth.
US GDP to contract by 2.0% to 3.0 %
We expect US's GDP to contract by 2% to 3% in the
Financial Year 2010.The macroeconomic indicators
continued to be negative in Q3 2009 with
unemployment rate rising to 9.5% in June 2009
accompanied by a dip in wage growth, industrial
production, capacity utilisation and consumer
sentiments. Retail sales and consumption continue to
be weak as households are still engaged in repairing
their balance sheets ruptured by the fall in asset prices
making the financial sector weaker. This condition is
likely to persist for some more time.
© 2009, Symbiosis Institute of Telecom Management, Pune
10
INDUSTRIAL SECTOR
Industrial sector grew by 2.7% in the Q1 2009-10 due to
the election spending as well as the stimulus given by
the government. As the Indian economy is moving out
of slow down, we can see major industries showing
positive growth. We expect that the Indian industrial
sector might grow by 5% to 6% in the Financial Year
2009-10.
DISINVESTMENT POLICY
EU GDP to contract by 3.7% to 4.7%
European economies are struggling to beat the heat of
recession. The fiscal deficit is expected to rise during
the Fiscal Year 2009 and 2010. This is primarily due to
contraction in key sectors like finance, oil, exports but
the fall in the growth among the member nations is
unequal. UK, which forms a major part in EU's
economic prospects, is looking dim because of
restrictive credit conditions, global demand weakness,
asset price fall and subdued confidence levels amongst
households and businesses. So, we expect EU's GDP to
contract by 3.7% to 4.7%.
VENEZUELA GDP is expected to contract by 1% to 2%
Oil being the driving sector of the Venezuelan economy,
it contributes around 90% of the total export. The
recent fall in the demand of oil may lead to some
contraction in the economic growth and we expect that
the GDP might contract by 1% to 2%. The inflation will
be on the higher side.
The government may raise as much as Rs 100 bn by way
of disinvestment in this Fiscal Year alone by off-loading
its stake in public sector undertakings (PSUs).
Companies such as Neyveli Lignite, Rites, Coal India,
NMDC, Rashtriya Ispat Nigam, REC and BSNL have been
considered for disinvestment by the UPA government
which will help to lower the fiscal deficit.
INFLATION
As on 03/08/2009 India was experiencing negative
inflation. The negative WPI inflation largely reflects the
statistical effect of the high base of last year and should
not be interpreted as structural deflation arising from
demand contraction. So we expect the inflation to be
around 4% to 5% by the end of Financial Year 2009-10
and it may follow the same trend in the next year.
MONETARY POLICIES
The reserve bank of India has already adjusted the
monetary policies frequently so it is expected to be
stable in the near future.
INDIA GDP is expected to grow by 6% to 6.5%
India's GDP grew by 6.1% in Q1 Financial Year 2009-10,
making it the second fastest growing economy of the
world. The impact of slowdown is reducing and the
economy is reviving. We expect the GDP to grow by 6%
to 6.8% in the Financial Year 2009-10. There might be a
slight fall in the expected GDP due to drought
conditions. Liquidity is ample in the economy as
domestic demand didn't experience much fall. We
expect that ample liquidity is going to put competitive
pressure on banks to reduce their lending rates.
FINANCIAL MARKET
The Indian financial market continued to function
normally and exhibited stability with lower volatility
and higher volumes in Q1 2009-10.
CONCLUSION
The global economy is showing signs of stabilisation.
The pace of decline in economic activity in several
major advanced economies has slowed, frozen credit
markets have thawed and equity markets have begun
to recover. Recent months have witnessed revival of
industrial activity in a number of emerging economies
such as China, Korea, Brazil and India. With oil price
stabilising and regaining business as well as consumer
confidence, the business activity is expected to grow
leading to the revival of all major economies of the
world by 2010-11.
© 2009, Symbiosis Institute of Telecom Management, Pune
Global Telecom
By
Student Team
Saurabh Guleria
Saurabh Prasad
Jaspal Singh
Punyasloke Bandyopadhyay
SCOPE
Telecommunication is fast becoming the backbone of every economy and it remains the silver lining in the dark clouds
of recession hovering above the global economy. In this vertical we endeavor to study the global telecom business
environment and the key driving factors for telecom growth in regions viz. Africa, APAC, Eastern Europe, Western
Europe, Middle East, North America and South America.
MIDDLE EAST
BAHRAIN
Bahrain is the smallest market in the Middle East by
population but it is also one of the most competitive
with 16 fixed line operators and 3 mobile operators.
Even after liberalization of the fixed line market the
new entrants have failed to make any impact.
However, contrary to the global trend, the fixed line
subscriber base is increasing. We predict that the fixed
line subscriber base will cross 0.27 mn by mid 2010. In
January 2009 the incumbent Batelco rolled out NGN,
which will drive converged services (double and triple
play). The mobile penetration was 138% as of April
2009. The mobile subscriber base will continue to
grow at the same pace, primarily because more than
50% of population is expat causing high population
turnover. On the broadband front, DSL with 80% market
share is the leader. Wireless broadband is slowly gaining
momentum with 3G/ HSDPA and WiMAX. 15% of
broadband subscribers use WiMAX. It is expected that
fixed broadband will continue to outpace wireless
broadband.
KUWAIT
Kuwait is one of the wealthier members of the GCC,
ranking third in GDP per capita behind Qatar and the
UAE. But the telecom sector of Kuwait suffers the lack of
liberalization and absence of an independent
regulatory body. The fixed line subscriber base has been
stagnant for the last three years at 0.517 mn. We
predict that the wired line subscriber base in the Year
2010 will reduce due to Fixed Mobile Substitution
© 2009, Symbiosis Institute of Telecom Management, Pune
12
Broadband contributed only 9% to the total internet
subscriber base of 0.28 mn at the end of 2008.
WiMAX is being used by ISPs to provide broadband to
the underserved broadband market but the MOC
(Ministry of Communication) has deemed them
illegal and has threatened to cancel the licenses of
such ISPs. The Ministry is planning to hold fresh
tenders for the wireless Internet and WiMAX
services. As most of the ISPs have WiMAX
infrastructure in place, there will be faster market
service. We expect partial roll out to be completed by
early next year. With Iraq's Kalimat Telecom entering
into a joint venture with Hong Kong's PCCW to launch
IPTV and Mobile TV services in both Iraq and Kuwait,
we expect Commercial launch of IPTV by early 2010.
QATAR
Qatar is the richest country in GCC with GDP per
capita twice as high as Saudi Arabia, the next nearest
GCC country. Qatar was the last country in the region
to liberalize its market. Vodafone now has presence
in all the sectors (Fixed Line, Mobile, Internet)
thereby directly competing with the incumbent QTel. This has enabled service and tariff competition,
which is beneficial to customers. The fixed line
market has shown strong growth in the last few years
with subscriber base reaching 0.263 mn by end of
2008 from 0.184 mn in 2004. We expect the wire line
subscriber base to surpass 0.275 mn by the end of
2009, driven by Qatar's growing population, its
expanding economy, legalization of VOIP and the
promotion of bundled services by Q-Tel and
Vodafone Qatar. An example of this is MOSAIC, a
triple play service by Q-Tel. By the end of 2008, 90%
of all internet connections were broadband, with
ADSL as the principal access technology. We expect
broadband subscribers to cross 0.16 mn by Q2 2010,
driven mainly by the bundled services, low tariff and
the availability of mobile broadband (3G/HSDPA). As
of now mobile broadband contributes a mere 5% of
the total mobile market. This is a good opportunity
for Vodafone in the already saturated mobile
segment with 160% penetration. The IPTV market is
expected to show strong growth on account of
growing bundled services market.
SAUDI ARABIA
Saudi telecom sector with good competition in all its
segments is one of the most developed in the region.
The fixed line sector has shown growth of about 2%
per annum in the past few years to reach a subscriber
base of 4.1 mn by the end of 2008. We predict that
the fixed line subscriber base will experience a
negative growth for the first time in 2009 on account
of consumers preferring wireless over fixed line for
both telephony as well as internet. The mobile
market has grown at a healthy rate with mobile
connection contributing 90% to the total telephone
market by 2008 end. With the demand for mobile
broadband and higher bandwidth-intensive
applications going northwards, the first HSUPA
network was launched in March 2009. We expect the
3G mobile market to show a robust growth in the
coming year. The broadband market has shown a
growth of over 60% in the last couple of years,
reaching a subscriber base of 1 mn by end of 2008.
We predict the broadband subscriber to cross 2 mn
by Q2 2010, mainly driven by the launch of WiMAX
and the heavy investment being made by Mobily to
cover 20 cities with 1800 WiMAX base stations by
the end of 2009. Work on FTTH deployment was
started by STC (Saudi Telecom Company) in early
2009. We expect this to drive the broadband and
converged services market in late 2010.
TURKEY
The fixed line subscriber base has been decreasing
since 2006. However, it is expected that it would not
go below 16 mn till Q2 2010. ADSL is driving
broadband growth. The footprints of alternative
technologies are also showing. Leading mobile
operator, Turkcell, is investing in its own fiber
network. Another potential boost to the broadband
market comes from the government's decision to
drop some of the special communications tax from
internet services as part of its large stimulus
package. We predict that the broadband subscriber
base will cross 8 mn by Q1 2010. 3G services have
been launched by all the 3 mobile operators. In July
2009, Vodafone broke the mobile internet speed
record with 28.8 Mbps. Vodafone is planning to
deliver video call, mobile TV and high speed mobile
internet access for both phones and notebooks
through the 3G/HSPA MIMO (Multiple Input
Multiple Output) technology. Thus we anticipate
that 3G mobile market in Turkey will be driven
primarily by wireless broadband services.
UAE
UAE has a well developed telecom market. However,
the market is not liberated as both fixed and mobile
sectors are being served by only two operators
E t i s a l a t , t h e i n c u m b e n t o p e r a t o r, a n d
© 2009, Symbiosis Institute of Telecom Management, Pune
Du, which Started service in 2007. The fixed line
subscribers in UAE have grown at a slow but steady
rate to reach 1.5 mn by the end of 2008. Growth in the
fixed-line sector has been driven partly by continued
demand for fixed-line services among businesses and
partly by the absence of a growing market for VOIP
services. We predict that the number of fixed line
subscribers will cross 1.6 mn by mid 2010. The mobile
market is saturated with over 200% penetration. 3G
services have been launched by both the operators
and this has seen a good start with about 25% uptake
among mobile subscribers. Despite high penetration,
we expect the mobile market to grow strong on
account of high population turnover. The broadband
subscriber base has increased year on year reaching
0.52 mn at the end of 2008. Growth in the broadband
market is driven by lower prices, deployment of higher
speed services and expansion of FTTH infrastructures.
All these factors will also enable the delivery of new
services such as IPTV. We predict that the broadband
subscriber base will cross 0.75 mn by mid 2010.
AFRICA
EGYPT
The global financial crisis has had an impact on Egypt's
telecom sector, leading to the postponement of two
major events: licensing of a second fixed network
operator and the sale of a second tranche of shares in
Telecom Egypt (TE). However, both these processes
have received strong interest from the capital market
and are expected to take place by 2010. The fixed line
market is experiencing growth and has managed to
remain insulated from mobile substitution. Even
though VOIP is legalized, we predict that the fixed line
subscriber will cross 13 mn by mid 2010. With a
progressive and forward-looking government, Egypt
has become one of the leading internet markets in
Africa with a steadily growing broadband uptake.
Nevertheless the high cost of both computers and
broadband subscriptions is still a prohibitive factor for
many. Broadband connection sharing through Wi-Fi
modems is common among neighbours. Here, two or
more households share the monthly bill leading to a
disproportionate increase in the number of
broadband users as compared to that of subscribers.
With the new international submarine cable reaching
the shores of Africa, the cost of international
bandwidth will decrease, subsequently reducing the
subscription rate and boosting the broadband
subscriber base. Broadband market has been
dominated by ADSL until now. However following the
first successful WiMAX Deployment in the country,
there will be an apparent shift towards wireless
broadband. Mobile sector is well developed with
3G/HSPA services with a market penetration of 53%
by January 2009. Several companies are rolling out
NGN which will lead to growth of converged IP-based
voice and data services.
KENYA
The fixed line infrastructure in Kenya is poor which
may lead to the continued negative growth in 2010. In
2008 the duopoly in the mobile market was broken
with licenses given to Econet and Telecom Kenya
(under France Telecom's Orange brand). This
competition has led to escalation of price war which
has resulted in reduced ARPU for the operators. To
overcome this, operators are looking at providing
bundled services. The launch of 3G has given operator
access to hitherto untapped broadband market. The
3G prepaid USB modem has seen great growth here.
Wananchi, an ISP, has introduced triple-play services
under the brand 'Zuku', offering TV, Internet and VOIP
services. Although most services are currently offered
via cable, Wananchi and other ISPs are rolling out
WiMAX base stations to meet the increasing demand
for broadband and a hybrid fiber-coaxial network.
NIGERIA
Nigeria's fixed-line incumbent owns a limited fixed
line infrastructure which is not in good shape owing to
high percentage of non functional exchanges.
Although Globacom has emerged as a potential
buyer, the government has been putting it on hold
which has given its specially appointed committee a
chance to turn the business around. Amidst such
gloomy condition of fixed line operation, we predict
the fixed line subscriber base will continue to
decrease, going below 0.9 mn by Q1 2010. Mobile
market is expanding and has overtaken South Africa
to become the largest mobile market in the African
continent. With the success of M-Pesa in Kenya, need
for cashless transaction using mobile in Nigeria is felt
as well. Moreover relatively slow uptake of MPayment provides huge opportunity. There has been
consolidation in the ISP market from 400 ISP 2 years
ago to 150 of them today. Broadband contributed just
over 5% to the total number of internet subscribers by
end of 2008, mainly due to the high cost of
subscription. This scenario is set to change on account
of huge foreign investment in the internet space,
© 2009, Symbiosis Institute of Telecom Management, Pune
14
Including WiMAX, and the new submarine cable
landing stations in Africa lowering the cost of
international bandwidth. With VOIP getting
legalized and carrying majority of international voice
traffic, broadband will grow further. We predict that
the rate of growth of broadband will outpace that of
conventional internet. There will be growth of
converged services on account of NGN network
deployment.
SOUTH AFRICA
With mobile penetration crossing 100%, the mobile
sector is saturated and operators are looking at
alternate revenue streams. The launch of 3G/ HSPA
provides them with an opportunity of service
differentiation by providing mobile broadband,
combined with media content. The fixed line
segment is experiencing a negative growth but with
new national fixed line operator Neotel providing
FWA (Fixed Wireless Access), it has been able to
insulate some of the effect of fixed mobile
subsitution. However, we expect the fixed line
segment to remain stagnant and continue
experiencing the negative stride in 2010. In March
2009 the mobile operator Vodacom had joined
forces with MTN and Neotel to construct a 5,000km
national fiber-optic network. The fiber-optic
network will provide the three companies with
additional bandwidth capacity and enable them to
bypass the infrastructure of fixed-line incumbent
Telkom SA. This will reduce their dependency on the
latter and will also prove beneficial for overall profit
of the operators. WiMAX has been deployed but not
on a nationwide basis. Hence, we expect that
WiMAX deployment will pickup in the coming years.
EASTERN EUROPE
CZECH REPUBLIC
Czech Republic is an open, export-driven economy
with Germany as its main trading partner. Due to the
global financial crisis the demand for Czech export
decreased, impacting its GDP growth. But the
telecom sector has fared well due to the essential
nature of the service. The fixed line subscribers
reduced from 3.6 mn in 2004 to 2.3 mn by the end of
2008 an average decrease of over 9% per annum. We
predict the fixed line subscriber base to be below 2
mn by Q1 2010. As in most of Europe, mobile
subscriber penetration is at saturation levels. Mobile
operators are looking at content and application
through HSDPA based mobile broadband and mobile
advertisement as future growth option. The
broadband market has healthy competition. DSL is
leading with 40% of market followed by fixed
wireless and cable as access technology; FTTH is in
nascent phase. The mandate by the government that
all business and legal entities must use egovernment services by 2010 will increase usage of
online services thereby driving broadband growth.
We predict that the broadband subscriber base will
cross 2 mn by mid 2010. IPTV has been launched but
is still a small portion of digital TV market. However
we expect IPTV to pick up in coming years with
broadband services becoming more affordable.
HUNGARY
Hungary has been one of the most developed
telecommunications markets in the East European
region. Competition between the operators has
resulted in broad coverage of advanced technologies
such as HSDPA, digital cable and IPTV and the
development of next generation networks including
Fiber-To-The-Home (FTTH) and DOCSIS 3.0. The fixed
line segment has been experiencing negative growth
in subscriber base. It stood at 3.094 mn by the end of
2008 and the decline was driven by fixed-to-mobile
substitution as well as customers dropping their
fixed lines in favor of VOIP and VoCable services. We
predict fixed line subscribers to be below 2.9 mn by
Q2 2010. The mobile sector shrank in Q1 2009 on
account of subscribers ceasing to use multiple SIMs
and operators discounting inactive SIMs.
Nevertheless we expect the mobile subscriber base
to grow, albeit at a slower rate. Hungary's broadband
market is moving towards double and triple services
forcing the operators to concentrate on the content,
driving the growth of market for content providers.
Two WiMAX licenses have also been issued in the
past with a view to boost broadband coverage in
previously uncovered areas of the country.
POLAND
By 2008 end the fixed line subscriber stood at 10.336
mn, a 3.6% decrease during the year which is slower
as compared 2007. More competitive tariffs and
improved bundled service offerings are helping to
stem the fall in the sector. We expect the fixed line
subscriber base to fall further to 9.5 mn by end of
2010. In the broadband space, the fixed broadband
(ADSL, Cable) operators are increasingly looking to
double and triple-play packages to help create a new
revenue stream, resulting in a number of IPTV
deployments. Competition is increasing for
© 2009, Symbiosis Institute of Telecom Management, Pune
Wireless broadband (WiMAX, CDMA) as they are
expanding network in the areas with under developed
copper infrastructure. This expanding wireless
broadband network coupled with Polish government's
commitment (EUR 300 mn) to invest in broadband
infrastructure will boost the growth in broadband
subscriber base. Value-added services (VAS) are
becoming an area of focus as the mobile operators
look to diversify their revenues away from the
traditional voice market into mobile data services in
order to lure new subscribers. Mobile TV (DVB-H)
license has been issued and the services are expected
to start once the frequency spectrum is allotted.
RUSSIA
The financial crisis has slowed consumer spending and
operator’s network expansion in Russia. Coupled with
the popularity of VOIP, this has led to a stagnant fixed
line market. Russia's mobile sector is characterized by
a huge disparity between rural and urban penetration
rates. A significant number of inactive SIMs and the
prevalence of multiple SIM ownership will result in
sustained subscriber growth opportunities. Full 3G
commercial services are still to be launched as Russian
military has still not vacated the required spectrum.
The delay will allow WiMAX to grab additional market.
Russia's broadband sector presents huge growth
opportunities as the services are majorly concentrated
in urban centres and there is a huge underserved
region at their disposal. Despite a growing interest in
WiMAX, the most prominent broadband technology in
Russia is ADSL. FTTH is very popular and is gaining
momentum. IPTV, though at nascent stage, will grow
on account of growing bundled services like triple play.
UKRAINE
With 13.17 mn subscribers by end of 2008, Ukraine's
fixed line market was one of the few to see growth.
However, we do not expect this to continue in 2010. On
the other hand, the broadband market almost doubled
during 2008 with subscribers growing form 0.8 to 1.6
mn. Competition is increasing in this space in terms of
number of operators as well as the access technology
(ADSL, WiMAX, and CDMA) which is currently riding on
low broadband penetration combined with high PC
penetration. A number of advanced services such as
high-speed broadband over ADSL2+ networks and
IPTV have been launched and demand for high-value
services is expected to grow. The mobile sector
stagnated in 2008 due to MTS Ukraine discounting
close to 1.9mn inactive SIMs from its subscriber base.
But we expect the mobile subscriber number to grow
In 2010. The lack of 3G services due to only one 3G
license being issued to Ukrtelecom has given the CDMA
operators a great opportunity. These operators are
expanding their networks to serve the latent demand
for mobile broadband.
WESTERN EUROPE
BELGIUM
In Belgium, the newly introduced bundled services are
contributing to additional decrease in fixed line
subscriber base which reached 4.45 mn in 2008. The
deployment of DOCSIS 3.0 by cable operators
compelled DSL operators to deploy fiber/VDSL hybrid.
With broadband penetration of only 29% by end of
2008, we expect it to grow at a rapid rate in 2010. This
will mainly be driven by improved infrastructure,
demand for converged services and good coverage of
mobile broadband. The mobile subscriber base has
been increasing on account of increased competition
and reduced price. The wide spread availability of HSPA
network has encouraged consumers to take up mobile
broadband and data services. Belgium has the highest
IPTV penetration in EU and this is expected to remain
high in 2010 on account of improving ADSL and fiber
infrastructure.
FRANCE
DSL is the dominant access technology for broadband
followed by fiber and cable. A decreasing fixed line
subscription has led the operators to focus more on
broadband thereby providing naked DSL for converged
services and promoting VOIP. The DSL players are
upgrading to ADSL 2+ to provide required bandwidth
for new applications. France is one of the top three
European countries in fiber deployment (FTTH/ FTTN).
The increased investment in broadband infrastructure
along with increased competition and reduced price is
driving converged services (Dual and Triple Play) and
boosting IPTV subscriber base, making France a leading
IPTV market in Europe.
GERMANY
In the mobile space, operators have upgraded to
HSDPA. This has led to 23% of total mobile subscribers
using 3G. Bundesnetzagentur has approved LTE
services and has allocated spectrum in May 2009.
However, with EU raising issues like support for voice
services, the impact on backhaul capacity, intellectual
property rights, and the lack of spectrum, the road
ahead for LTE looks unclear. The fixed line subscriber
© 2009, Symbiosis Institute of Telecom Management, Pune
16
base will continue to fall, reaching 46 mn by the end of
2010. The broadband market has good competition
between DSL and cable with cable operators going in
for Euro DOCSIS 3.0. As regulators have ordered that
LLU be provided at lower charges, number of players
in DSL market is increasing. This will lead to reduced
subscription charges and hence will drive broadband
and bundled services (triple play) market. By early
2009, about 20% of population subscribed to bundled
service. Vodafone Germany having discontinued its
IPTV service until mid 2010, we expect IPTV
subscription to take a hit. Mobile TV (DVB-H) has not
been a success. Mobile3 withdrew services soon after
its launch due to operators providing handsets that
can receive free to air DVB-H services. FTTX is also
growing rapidly and by the end of 2008 there were
0.28 mn households covered by FTTX. NGN being
deployed by Deutsche Telekom will further aid growth
of converged services.
ITALY
There was 20% decline in the number of fixed line
subscribers, a trend that is expected to continue
through 2010. The mobile market has reached a
subscriber base of 88.6 mn and a penetration of over
150%. We expect the growth in the subscriber base to
continue on account of popularity of multiple SIM
usage. 3G is very successful having 38% of total mobile
subscribers. We predict the 3G subscriber base to
contribute about 40% of the entire market by Q2
2010. Broadband has strong competition between
DSL and fiber. Cable has almost negligible market
share. Italy has one of the most advanced fiber
infrastructure, second in Europe in terms of fiber
deployment with about 3.1 mn households having
FTTX connection. Investments are still being made in
both fiber and ADSL 2 + infrastructure. This will give an
impetus to the already growing broadband market of
11.3 mn subscribers by end 2008. The extensive
broadband infrastructure of the country will support
converged media market and IPTV which is still in
infant stage.
SPAIN
The telecom market in 2008 contributed 4% to Spain's
GDP. However, due to the economic crisis, the growth
in 2009 has been hampered and has led telecom
companies to take the consolidation path. After
stagnation of fixed line subscribers in 2008, 2009 saw
the subscriber base hit a negative growth. This will
continue in 2010. Although the mobile sector has not
experienced such negative growth, there has been
slow growth during the past 2 years. In 2008 mobile
sector grew just by 1.4% in terms of subscriber base.
This is despite the fact that 3G/HSPA was well
accepted contributing 24% to the overall mobile
subscriber by end 2008. As a result, wireless
broadband uptake has increased. However the data
usage has not increased on similar lines. Broadband
access speed in Spain is much lower than the
benchmark access speed in EU (30 Mbps). Broadband
growth has also slowed down owing to economic
crisis but we expect a strong growth in 2010 due to
easing financial crisis and investment in high
bandwidth links (recently Telefonica launched 30
Mbps services). FTTX has seen huge growth in 2008
clocking about 3 mn FTTX subscribers by end of 2008.
Hence we expect good response for FTTX to continue
in 2010. The ever improving access speed has led to
the growth of bundled services market; by mid 2009,
87% of the Telefonica's subscribers took bundled
services. This will also drive growth in the IPTV
market. In mid 2009 government resurrected Mobile
TV (DVB-H) although uncertain business model will
pose considerable challenges in future.
UK
UK is one of the most mature telecom markets in the
world. UK's telecom sector is gearing up to attract
higher value customers to advanced services such as
3G, super high-speed broadband and IPTV. This will
help in countering the competitive and economic
pressures on ARPU. As a consequence of the
popularity of prepaid mobile services in the UK, we
believe that the market holds a large number of
inactive SIMs which leaves some growth
opportunities. Besides, the popularity of multiple
SIMs will drive the mobile market growth albeit at
slower pace. UK's fixed-line sector is in a steady state
of decline as it continues to suffer from Fixed-toMobile Substitution (FMS) and the growing popularity
of VOIP services. The only factor stemming the decline
is the popularity of ADSL broadband. Once naked
ADSL is provided, we expect sharp decrease in fixed
line subscriber. In the broadband space, investment is
© 2009, Symbiosis Institute of Telecom Management, Pune
being made to upgrade infrastructure. Virgin Media
has invested in cable to provide 50 Mbps and BT is in
the process of upgrading its ADSL network to ADSL 2+.
Wi-Fi deployment is gaining momentum and recently
BT has launched FEMTOCELL services using their Wi-Fi
network. This will give a push to the broadband uptake.
By upgrading the broadband infrastructure we expect
the quad play market to mature in 2010.
NORTH AMERICA
CANADA
Difficult economic condition, unemployment and
worsening credit condition have hit the telecom
industry with ARPU reporting a decline in the last
quarter of 2008. However the overarching theme from
operators seems to be encouraging subscribers to use
their mobile as they would use a PC. Email, social
networking, instant messaging and mobile TV have
made the mobile handset more than just a calling
device. The mobile gaming industry grew in North
America by nearly 19% in 2008. Meanwhile, traditional
console games have suffered five consecutive months
of decline in America. We predict that this would usher
in lot of opportunities for small Canadian video game
developers in the time to come. The internet
penetration has crossed 75%; 95% of these are
broadband users. To cover the untapped broadband
market the federal government has set aside $225
million, to be spent over 3 years in order to bring highspeed internet to areas that are un-served or
underserved. Besides, the increasing demand for VOIP
and fiber deployment for FTTX services is expected to
drive the broadband market. With Rogers Wireless
announcing its Canada-wide deployment of a 21 Mbps
high-speed HSPA+ wireless network, we expect the
growth of smart phones, application stores, mobile
internet sticks and embedded laptops and net books to
be substantiated. Bell and TELUS having decided to
moved to GSM, we predict that the Canadian market
will undergo a significant shakeup. More GSM
competition would mean Canadian consumers will see
the cost of wireless voice and data service drop.
USA
The effects of the slowing US economy became more
predominant with all operators reporting a decline in
ARPU in the final quarter of 2008. However the
prevalence of more sophisticated high end handsets
has helped drive growth. An increased reliance on
mobile content will be the defining trends of the US
mobile market in next one year although the range
of services on offer will be operator specific. While the
economy is already negatively impacting the
infrastructure and handsets segments, consumers have
not yet begun cutting their overall mobile data
spending. Nevertheless some sub-segments like data
card subscriptions and downloadables are starting to
feel the squeeze. The confluence of 3G, high-end
devices and the evolving applications ecosystem was
responsible for the strides made by mobile data in
2008. The fixed-line market has been declining for a
few years now and this may accelerate further owing to
economic downturn. Broadband has been identified as
a key area for boosting economic growth. January
stimulus package has reserved US$7.2bn to develop
broadband services in underdeveloped areas.
However, no company had been awarded funding till
date.
SOUTH AMERICA
ARGENTINA
Argentina's telecom market is one of the most
advanced in Latin America. Despite the economic
slowdown, telecom revenues are expected to continue
growing in 2009, albeit at a reduced pace. This growth
will be primarily driven by mobile telephony and
broadband. The country has a highly urbanized
population which contributed to the growth of
Argentina's telecom services. The country is
characterized by a significant income inequality which
leaves a reduced market segment with higher
purchasing power to be targeted with value-added
services. Therefore, Argentina operators should also
focus on alternative strategies in order to attract and
retain subscribers in a cost sensitive segment of the
population with lower purchasing power. As the market
is reaching saturation, operators are realizing the need
© 2009, Symbiosis Institute of Telecom Management, Pune
18
for innovative services. We predict that greater
o p e r a t i o n a l e f f i c i e n c y, b l e n d e d w i t h
smart/differentiated branding and an enhanced
customer experience are essential to avoid the risk of
getting eliminated. In the fixed segment we predict that
Argentina's fixed-line incumbents will face additional
competition with cable TV operator Cablevision already
started to offer voice services. In terms of mobile
penetration, Argentina is the leader in South and
Central America. Despite reaching maturity and
crossing the 100% penetration threshold, the mobile
market still has potential for growth once the financial
crisis lifts. Mobile and fixed number portability is
expected by Q3 2010. Argentina's broadband market is
one of the most developed in South America.
Competition has driven prices down and broadband
has become cheaper than most other Latin American
countries. Broadband subscribers are likely to grow
even during the global economic downturn, albeit at a
much slower rate than previous years.
BRAZIL
The telecom market of Brazil saw a net growth in the
year 2008. This is inclusive of the fixed line market
which had previously reported a decline. Incumbents,
Telefonica and Oi, reported continual decline in their
subscriber base. However, cable operators and smaller
companies such as Embratel and CTBC have played a
crucial role in bringing back growth to the fixed market.
In the broadband market, growth remained higher in
2008 as compared to the previous year, reaching 10 mn
subscribers. Although ADSL remains the favoured
technology, there is a growing interest in cable modem
connections with triple play driving subscriptions. The
competition is pushing down the ARPUs of these
players. We predict that ARPUs would increase in the
long run as subscribers would require greater
bandwidth for future applications. IPTV has been
launched but with limited success as the service
providers are only providing VoD and not the traditional
broadcast version owing to restrictions imposed by the
local legislation on broadcast services over IPTV.
MEXICO
The Mexican fixed line market grew at a healthy rate in
2008 as compared to 2007. However, incumbent
Telmex which holds around 80% of the market has seen
its market share fall dramatically. Mexico remains the
last country in the OECD yet to unbundle its local loop.
Cable TV operators with the help of dual play and triple
play packages have seen great success
of their bundled services and we anticipate that it will
drive ARPUs in the time to come. Despite the broader
economy posting negative growth, revenues from
broadband continued to record double digit growth
for the fourth quarter of 2008. In fact broadband is
one of the highest growth sectors in Mexico's
telecommunications market. There still remains a
huge scope for growth in the broadband market. Low
penetration levels, high prices, foreign investment
restrictions and lack of local loop unbundling could be
inhibitors of growth. Telmex will be the dominant
operator for broadband in 2009. WiMAX and fiber
optics are two technologies which would foster more
competition and drive down prices although this
could be limited by the cost of PC ownership. Cofetel is
planning to auction WiMAX spectrum to increase the
competition in the broadband market. We expect the
auctions by the end of 2009 or the beginning of 2010.
ASIA
CHINA
The restructuring of the Chinese telecom market has
changed the competitive landscape of the country.
With the largest mobile and broadband subscriber
base, the market has stayed relatively insulated from
the global meltdown. Post restructuring and the
awarding of 3G licenses in December 2008, the
market is poised for yet another boost. The regulatory
regime is a key issue where political and commercial
considerations are intricately inter-related. The year
2009 will test the newly established operators,
vigorously competing for market share amongst cashconscious consumers after the global financial crisis
peaked last year. We predict that with the
restructuring, there will be a level playing field in the
mobile segment. However, China Mobile would try to
increase its dominance in the fixed line segment
endeavouring to be perceived as a “Quadruple play”
provider. China Mobile can afford scale economies
from its current and future capacity to control not just
the mobile telephone services but also the fixed lines,
internet and television. The restructuring will create a
three-way struggle for supremacy in the next two to
three years, bringing huge market opportunities to
communications equipment manufacturers and thus
accelerating the all-round upgrade of telecom
operation support systems.
JAPAN
Entering 2009, Japan had over 30 million broadband
lines in place, making it the third largest country in
© 2009, Symbiosis Institute of Telecom Management, Pune
the world after the US and China in terms of broadband
users. Much of the success of broadband in Japan is
owed to the stunning growth surge that occurred back
in 2003 on the back of DSL broadband technology.
Other broadband services such as FTTH have since
attracted even greater interest in the Japanese market.
This is largely due to favourable government policies
resulting in a major impact on broadband pricing. To
boost performance even further, the government
mandated a switch from BPON to Gigabit Ethernet PON
(GE-PON) architecture. We predict that the main
growth engine in Japan, in both the fixed and mobile
sectors, will be data services. Revenue from mobile
data will be primarily driven by increased mobile
internet usage. In the fixed sector, migration to fiber
from DSL and VOIP uptake will be the key drivers for
revenue growth. With regard to IPTV and spectrum
licensing, the Japanese telecommunications regulator
will have to make some important decisions in 2009.
Content sharing and distribution is a make or break
issue for IPTV players and the regulator must find a
stance that can effectively address the concerns of the
interested parties. When it comes to Mobile TV, Japan
is the largest subscriber base globally. However,
carriers are facing losses on account of providing low
cost Mobile TV services. There is a huge fight between
ISDB-T and Media Flo as broadcast standards. All three
operators are therefore pushing for the introduction of
dedicated broadcast technologies. We anticipate that
this would enable them to provide the quality and
content differentiation which is important for future
growth. It would also relieve pressure on their mobile
networks, freeing up capacity for other data services
such as WAP/Internet browsing, ringtones and music
which make up two thirds of Japan's data revenues.
KOREA
South Korea led the world market in quickly
commercializing 3G cellular services like CDMA2000, a
faster version of the CDMA network. Like the United
States, South Korea is one of the few nations to use the
cellular CDMA network more prominently than the
more widespread GSM. The home-grown wireless
broadband platform Wi-Bro has not been a resounding
success. KT and SK Broadband announced that they
had just 220,000 subscribers as of May 2009. The poor
coverage has been attributed to the slow uptake. Korea
Communications Commission (KCC) has assured that
Wi-Bro mobile services will be available by the end of
2009, to provide a fillip to the technology. The South
Korean fixed line market has been showing a decline.
By the end of 2009, we estimate a total of 21.1mn fixed
lines, representing 43.6% penetration. IPTV has seen a
slow subscription rate, primarily attributed to customer
dissatisfaction with the bland and patchy service owing
to lack of content. Operators have announced their
intentions to raise the number of available channels.
Innovative bundled ser vices like the first
heterogeneous bundle of IPTV and satellite TV will
make their way into the Korean market. We predict that
the number of subscribers will increase at an even
faster rate since negotiations about retransmission fees
between IPTV providers and terrestrial broadcasters
have been settled. The government has lifted the
requirement for WIPI (Wireless Internet Platform for
Interoperability), a local wireless access standard, in all
handsets. This has opened up South Korean market to
other global handset manufacturers and has put an end
to the long wait for iPhone.
VIETNAM
Vietnam has become the target for an energetic new
round of investor interest and the recent move to allow
an increased level of privatization has opened doors for
foreign investors. The continuing government
involvement in the telecom sector, however, raises
major questions about its commitment to deregulation
and liberalization. The mobile market continues to grow
strongly on the back of increased competition. By early
2009, Vietnam's mobile phone market had 70 mn
subscribers, representing a national penetration of
80%. Four new 3G licenses were issued by the
government in May 2009 and services are expected to
be launched by early 2010. Broadband is relatively
under developed with only 10% of household
connected by 2009. Nonetheless there has been a
steady growth in this sector which is expected to
continue through 2010. Fixed wireless services are
thought to have accounted for much of the recent fixedline growth in Vietnam. However, faced with a high
penetration rate in key urban centres and the
increasing popularity of mobile services in rural
regions, there are signs that fixed-line growth in
Vietnam is starting to wane. This poses a challenge to
the expansion of ADSL broadband services. As a result,
the country's authorities are pushing plans to license
WiMAX as a platform to deliver fixed wireless
broadband services to the rural regions.
AUSTRALIA
The mobile market in Australia is already saturated with
penetration reaching 104% by end 2008. Due to
declining call charges, operators' revenue growths will
continue to taper off in 2010. However, the revenue
© 2009, Symbiosis Institute of Telecom Management, Pune
20
growth rate will remain well above the subscriber
growth rate, largely due to the increased revenue
streams that the mobile operators are getting from
3G/HSPA mobile data/mobile broadband. Owing to
the large geography and underdeveloped fixed line
infrastructure, the fixed line subscriber is seeing
decline for the last 4 years and this trend is expected
to continue in 2010. ADSL has witnessed strong
growth in subscriber base in recent years. However,
limited coverage and high price of subscription are
pushing subscribers to increasingly opt for wireless
broadband services. Due to the constant delay in
WiMAX launch, the technology has lost out to
3G/HSPA in the currently booming wireless
broadband market. VOIP is still in its infancy but is
expected to play a key role in broadband and video
communication. There is agreement that FTTH is the
future-proof infrastructure needed for the digital
economy which will propel growth. The Australian
government has undertaken A$43 bn initiative of
National Broadband Network (NBN) which will be
utilized for e-health, e-education, smart grids etc. It
also promises to deliver FTTH to 90% of the
population in next 8 years which will see a converged
communications industry is in the offing for Australia.
CONCLUSION
Fixed Mobile Substitution (FMS), provision of bundled
services and increased concentration on wireless
broadband is the global trend presently. The Middle
East region shows a balanced approach towards
wireless broadband with a few countries going for
3G/HSPA and the rest for WiMAX based services. In
Africa broadband penetration is increasing due to
cheaper subscription on account of new submarine
cables reaching its shore and rollout of WiMAX
services. In Western Europe, FTTX is the buzzword and
all operators are trying to increase their share by
offering bundled services. The telecom industry in
North America has taken a hit as a result of the
economic meltdown and reduced consumer spending
while in South America, the operators are constantly
looking to innovate by providing video-on-demand
and other bundled services in order to increase the
number of subscribers. Asia is a booming market with
countries like Japan and South Korea implementing
new technologies while the Chinese market is poised
for growth after restructuring and 3G license
auctions.
© 2009, Symbiosis Institute of Telecom Management, Pune
Telecom Technologies
By
Student Team
Arpit Sharma
Gaurav Shukla
Aakshi Suri
Gurvinder Singh
SCOPE
In the hypercompetitive telecom environment it is imperative for all stakeholders (service providers, equipment
vendors, regulatory bodies, customers etc.) to select the pertinent technology after due-diligence. This holds true
especially for service providers, as any step in this regard would have a vital impact on their business. Keeping this in
mind the Telecom Technology Vertical encompasses all the current technological trends for Core Technology, Access,
and Transmission in the market.
CORE TECHNOLOGY
ETHERNET
Carrier Ethernet has evolved into a reliable and scalable
technology helping the transition to next-generation
networks for fixed-line, cable and mobile operators.
Carrier Ethernet deployment has gained momentum
worldwide as mobile operators are increasing their
focus on HSDPA and beyond, with Carrier Ethernet
playing a greater role as a backhaul technology. In 2008
Service providers spent $17 bn on carrier equipment.
The spending is set to increase rapidly over the next 5
years as emerging markets round the world will be
making investment to upgrade their network
infrastructure from the present legacy network to NGN.
The global financial crisis has had an impact on Carrier
Ethernet market in 2009 but with the economy fast
recovering, we predict that the Carrier Ethernet market
will cross $25 bn in 2010 and the driving factors will be
fast growing traffic, low cost, scalability, and ubiquity of
the Ethernet technology.
MPLS
Constant improvement in edge-routing techniques
along with the ability of IP/MPLS platform to efficiently
integrate with the existing legacy network. This
combined with its ability to be deployed fast and
qualities like high QoS, reliability, efficiency and ability
to handle high speed data has seen MPLS develop as
one of the most accepted data technologies. All this
coupled with its ability to provide secure transaction via
IP/MPLS VPN, has made IP/ MPLS the most accepted
data technology amongst enterprise customers. The
enterprise data market for MPLS in India was Rs.48 cr in
2006 and we expect it to reach Rs.217 cr in Q1 2010
which shows more than 40% CAGR growth. In 2008 the
MPLS segment contributed 33.8% to the overall data
services market, making it a contender for the fastest
growing technology connectivity solution in India.
© 2009, Symbiosis Institute of Telecom Management, Pune
22
3.0, and WiMAX licenses still not been issued has
given an opportunity to fixed line operators to utilize
their existing infrastructure to provide ADSL and ADSL
2+ services. This will help to stem, to a certain extent,
the losses incurred by fixed line operators. This proves
to be an incentive that will help further deployment of
ADSL services in India. We expect the global DSL
subscriber base to cross 300 mn by 2010.
IMS
Developed to fill the gap between the traditional
telecommunications technology and Internet
technology, IMS (IP multimedia subsystem)
technology allows service providers and network
operators to offer innovative services to their
customers independent of the access platform. IMS,
however still is a niche for operators. Only a hand full
of operators globally have implemented it and many
more are still testing the technology, but IMS still
remains the most preferred Next Generation
Architecture. With operators looking to go beyond 3G,
with technologies like LTE, the quest to sustain their
medium to long term growth and reduce competitive
threat will provide the much needed drive for uptake
of this technology by the operators. The other driving
factors for IMS are scalability, flexibility and ease of
deployment. We expect this to propel the IMS
equipment (HSS and CSCF Server) market to reach
$600 mn in revenues by 2010. The initial growth
during 2010 and 2011 will come from North America
and Europe. Middle East, Africa and APEC will lead the
growth in later years.
ACCESS
DSL
DSL remains a leading broadband access technology
worldwide and currently accounts for 65% of all
broadband subscribers. But with ever increasing data
rate requirement for bandwidth hungry applications,
there is a gradual shift towards alternate access
technologies such as FTTX, WiMAX, and DOCSIS 3.0.
With DOCSIS 3.0 giving ADSL tough competition
especially in Europe, WiMAX is gaining momentum in
African continent due to its limited fixed line
infrastructure, and FTTX is being deployed by major
operators round the world especially in US, South
Korea, Australia and European counties. In India, due
to no major investment being made in FTTX, DOCSIS
WCDMA
With mobile markets approaching saturation round
the world, coupled with falling ARPU, operators are
looking for new revenue stream. WCDMA comes
across as a viable option with its high data rate
capability and provides the natural evolution path for
a GSM operator towards new service offerings as
EVDO/ EVDV is for CDMA operator. Few CDMA
operators are now making a move towards GSM with
LTE in mind. In Canada, Bell and TELUS are upgrading
their network to GSM and at the same time in India
Reliance and Tata have already rolled out their GSM
networks. This will further boost the growth of GSM
technology. By mid 2009 there were 290 commercial
operators in 120 countries providing WCDMA
technology, with Western Europe and APEC leading
the way. In India, 3G licenses have not been issued,
but the kind of response 3G services have got,
launched by BSNL and MTNL in February 2009, was
not very encouraging. BSNL just registering over
10,500 customers in first four months after the
launch, mainly on account of high prices but with
prices slashed it reached 40,000 customers in next
two months. How the operators handle highly price
sensitive Indian market, once they are awarded 3G
licenses, is something that will determine the success
of 3G technology in India. We expect the WCDMA
global subscriber base to surge past 450 mn by the
end of 2010 from the base value of 287 mn
subscribers as in 2008.
© 2009, Symbiosis Institute of Telecom Management, Pune
HSDPA
After WCDMA, HSDPA is next in line of GSM evolution
wherein it will deliver even higher data rates. There are
various versions of HSDPA like HSDPA, HSUPA and HSPA
where each incremental version having higher uplink or
downlink speed or both from the previous version. The
high data rates along with minor alteration
requirements to existing WCDMA Architecture to
upgrade to HSDPA, will be the biggest driving factor for
adaptation of this technology by operators. By mid
2009 there were 274 HSDPA and 87 HSUPA enhanced
uplink capable commercial operators globally, with
Western Europe leading the way in HSDPA deployment.
It is expected that all operators will deploy HSDPA and
its upgrade to HSUPA, continuing the GSM evolutionary
path and improving the customer experience with
more content rich and interactive services.
WiMAX
WiMAX licensing activity continues unabated around
the world, as does the ongoing battle between WiMAX
and 3G/LTE proponents. We believe 2009 will be the
critical make-or-break year for WiMAX and its ability to
capitalize on a first-mover-to-market window over LTE.
Though impact of economic crisis on WiMAX is unclear,
it is increasingly becoming clearer that the regulatory
factors will present significant risks for WiMAX with
issues like, delays in licensing procedures, imposition of
service restrictions, and spectrum scarcity. Mainly on
account of artificial constraints imposed. But
encouragingly over last two to three years, WiMAX has
gained a strong foothold in developing countries where
there is an ever increasing demand for broadband, but
the fixed infrastructure is still poor. However the
deployment and uptake has been very slow as
compared to the hype created about it, owing mainly to
the fact that the end user, mainly the rural population,
where there is lack of fixed line infrastructure, for whom
the WiMAX is likely to be deployed as a broadband
access technology have low disposable income. We
predict the global WiMAX subscribers will cross 750 mn
by 2010. In India, more than 50% of household are not
connected via a fixed line, and hence no last mile cable.
This provides a huge growth opportunity for WIMAX as
access technology. But having said this, again the policy
issues of government will play a huge role before
WiMAX can become a success in India.
TRANSMISSION
DWDM
With ever increasing bandwidth requirement and
operators investing heavily in the fiber backbone
infrastructure to support the bandwidth need of the
customer; has propelled the DWDM equipment market
in recent years. Dense Wavelength Division
Multiplexing (DWDM) enables service providers to
accommodate many hundreds of aggregated services of
any sub-rate protocol without installing additional dark
fiber. It is, therefore, the choice for the highestbandwidth applications, such as 10GbE, 4G Fibre
Channel, 40 Gbps and 100 Gbps in the future. Even with
new technologies coming in like 3G, HSPA and expected
4G/LTE, DWDM remains the preferred technology for
transmission.
EMERGING TECHNOLOGIES
NFC
Near Field Communication (NFC) is a standard that
works on a short-range (a few centimeters) wireless
technology which enables simple, safe and high speed
two-way communication among electronic devices.
Near field communication represents a long term
opportunity for banks to monetize the mobile channel
but the lack of defined business model, available
handset and point of sales infrastructure has delayed its
commercial launch for years. Though, things have
started changing with first commercial NFC launch in
Malaysia by Maxis fast trap system in April 2009, and
commercial launch expected in France by the end of
2009 on account of collaboration among the stake
holders. We believe that it will still take about 5 to 6
years before we can see a global coverage by the
technology. Also, NFC can overtake plastic money as the
most popular means of payment in about 8 to 10 years
on account of its added security over credit card. NFC as
a technology has also shown its superiority over
Bluetooth Technology with features like less time
required for the connection between the devices,
reliable connection, higher speed and simplicity of use.
According to an estimate, about 700 mn users will have
NFC-enabled phones within next 5 years with major
drive coming from North America, Western Europe and
APAC.
LTE (Long Term Evolution)
LTE is an IP based access platform using combination of
technologies like OFDM, SDR and MIMO to offer high
data speeds, high capacity and low latency. Service
providers today are struggling globally with exploding
growth of data services, and in many cases mobile
broadband service is not proving to be economically
viable for them. In response to the growing demand for
data service, Network evolution to LTE has become
inevitable for service providers. However, the time for
LTE migration is determined by various factors like the
© 2009, Symbiosis Institute of Telecom Management, Pune
24
availability of adequate spectrum (20 MHz for full
service), robustness of the device and services and
application that drive the demand for mobile
broadband. On account of all these factors we dont
see the technology having global foot print before
2013. But the future looks bright for LTE with Verizon
in USA announcing LTE deployment in 700 MHz band
followed closely by other US operators. In Japan, NTT
DoCoMo has already made provision for the spectrum
and also 39 LTE network rollout commitments
globally. We predict that the global LTE subscriber
base to reach 29 mn by 2012, driven mainly by North
America and APAC region.
FEMTOCELL
Femtocell is considered by many technology
evangelists as the cure for the poor indoor coverage
and exploding mobile data growth. Femtocell is
creating a new paradigm for service providers who are
searching for optimal 3G and 4G network
architectures based on actual customer behavior.
Femtocell will provide the traditional
fixed line
service providers with an opportunity to retain
customers by providing them with converged services
like broadband, IPTV, fixed & mobile telephony. The
mobile operators will have an opportunity to make a
significant shift away from just relying on traditional
cellular network, in turn reducing their CAPEX and
OPEX helping them evolve into a converged service
provider. The scope of femtocell is not only limited to
the end consumers but can also be extended to
enterprise customers with solutions such as Fixed
Mobile Convergence (FMC) and indoor coverage.
Dozens of femtocell trials are being conducted round
the world. In UK BT and Vodafone have already
launched commercial services, in US Sprint has
launched commercial services and AT&T is expected
to roll out services by the end of 2009. In Japan
SoftBank.
Has launched commercial services and in Singapore
StarHub has launched commercial services. All these
are reminiscent of the fact that the advantages
offered by femtocell are immense and will be the
growth driver for this technology. But the fact
remains, until femtocell vendors and service
providers figure out how to create winning business
model along with scalable technology and at the same
time establish zero-touch life cycle management,
femtocell growth will remain curbed.
CONCLUSION
The growing demand for higher bandwidth
applications and faster time to market is putting
immense pressure on the whole gamut of telecom
technologies from core to access. This ever growing
demand for bandwidth has seen operators upgrade
from 3G to HSDPA and is now forcing the operators to
look at LTE as a possible solution. NGN deployment is
gaining momentum world over. IMS with its ability to
bridge the gap between traditional
telecommunication and internet technologies,
provides access to independent services and faster
service deployment capabilities is becoming the most
preferred NGN architecture.
RECOMMENDATIONS
!
Telecom operators, along with active and passive
infrastructure sharing, and outsourcing should now
increasingly look towards virtualization as a means of
cost reduction.
!
The fixed line operators should seriously look at
technologies like femtocells. This can provide them
with opportunity to offer bundled services and move
to mobile telephony, to help them revive the
unfruitful fixed line business.
© 2009, Symbiosis Institute of Telecom Management, Pune
Telecom Software
SCOPE
Telcos are increasingly relying on software for their operations, performance and provisioning of new services. This
vertical talks about the trends and predicts business scenario in telecom software markets like OSS/BSS, Revenue
Assurance, Mobile OS and Mobile Security Software for the following year. This year we are covering OSS/BSS in detail
with focus on Service Fulfillment, Service Assurance and BSS like CRM, Billing & Mediation and Business Intelligence.
By
Student Team
Mohit Malik
Vivek Deshpande
Gaurav Wadhwa
Sanjit Kumar
OSS/BSS
The year 2008 and 2009 saw a huge impact on major
OSS/BSS transformation projects, particularly on long
term and risky ones; companies started conserving cash
and optimizing most critical functions on priority basis.
Now, the OSS Industry is eyeing a potential economic
recovery in the year 2010. So after recession it is likely
to be in a continuous demand for investments in
OSS/BSS, with different geographical regions
experiencing different demand patterns and growth
levels. Global revenues from OSS/BSS is expected to
cross $20 bn in 2009 with a growth rate of 6-7%.The
biggest buyers of these ready-made solutions will be
emerging markets like India.
Focusing on the regions, demands in the emerging
© 2009, Symbiosis Institute of Telecom Management, Pune
26
Emerging markets, particularly the BRIC countries,
will continue, albeit at slightly reduced levels than prerecession period. India and China, though, will follow
a different pattern with both showing a higher level of
demand. Vietnam, with the new 3G license awarded
will see a considerable investment in OSS/BSS.
Due to the preference of world leading telecom
carriers to source their core BSSs from handful of
Independent Software Vendors and System
Integrators, BSS market is expected to see
consolidation. We anticipate that Amdocs will
continue to lead the BSS market in 2009.
EMEA, particularly Middle East will have an increased
level of growth in this segment. Developed economies
like Belgium, Sweden and Australia will see a relatively
higher growth in the OSS/BSS market with tier-1
companies making huge investments in telecom
software consolidation and involved in multi-year,
multi- billion $ transformation projects.
The operators will invest to upgrade their OSS/BSS
infrastructure to retain their high quality conscious
customers. Increasing competition in the market will
drive the investment in OSS/BSS. We expect preintegrated solutions to become an important offering
of OSS/BSS and SI Vendors in India. This is because
incumbents are trying to reduce time to market.
Similarly, new operators are set to soft launch their
services in less than 6 months of establishment of
their infrastructure.
In the domestic market, the OSS/BSS segment is
already growing at 10-12% CAGR compared to 6-7%
CAGR of worldwide growth with revenues expected to
go beyond $550 mn in 2009-10. Driving factors for
growth will be the new GSM operators coming into
foray and the MNP initiative. We expect the number of
strategic outsourcing deals to go northwards. In fact
strategic outsourcing seems to be the most favorite
business model followed by Business Transformation
and Application Maintenance Services.
The service providers will invest to close the gaps
between OSS and BSS as well as Service Assurance and
Service Fulfillment functions. We also expect
Managed Services to become a key portfolio of almost
all the leading OSS vendors.
SERVICE FULFILLMENT
The growth in the service fulfillment market is
projected to be relatively less affected but will
definitely be subdued due to the economic meltdown
during FY 2008-09. Global service fulfillment market
size is expected to reach close to $2.4 bn with the
growth rate of 8- 10% in the next year. Order
Management, Inventory Management and Activation
will have double-digit growth while growth of
engineering tools will be flat. The convergence of
networks such as the addition of Internet Protocol
and data-centric networks to conventional systems is
providing a driving force to the service fulfillment
market. Globally, Service Activation will grow at 12-
© 2009, Symbiosis Institute of Telecom Management, Pune
15% with a global market size of $550 mn. Global
market size of Order Management and Inventory
Management will collectively go beyond $1.2 bn.
India's state owned telcos have made considerable
investments in Service Fulfillment, particularly in the
Order Management, Inventory and Provisioning. We
expect similar investments in fulfillment solutions from
private players, especially the greenfield operators.
(E)
Oracle. Market leader in Advanced Analytics, SAS
Institute, would give tough competition to SAP in terms
of growth rate in BI. SAP, market leader in Query,
Reporting and Analysis (QRA) will remain market leader
in overall BI market. We expect growth of open source
and lack of differentiating features in proprietary BI
softwares which can shift the spending from licenses.
Also, we expect a rise in web based (SaaS) Business
Intelligence components in the coming year.
(E)
SERVICE ASSURANCE
Service Assurance market size will stand at $2.2 bn with
a decline rate of 2.3% in 2009-10. This is mainly
because American and European Service Providers
have cut their CAPEX and reduced their assurance
expenditure. Economy will start to show signs of
improvement during Q3 2009. However, increase in
spending will only come in effect from 2010. The silver
lining of growth however is from EMEA, primarily from
Eastern Europe and Middle East. It will be followed by
other emerging markets like Central and Latin America.
BUSINESS INTELLIGENCE
Worldwide Business Intelligence market is expected to
touch $8.2 bn in 2009 with a growth rate of 5-8%.
Query, Reporting and Analysis will touch $6.4 bn and
Advanced Analytics market is expected to be valued at
$1.6 bn. The growth rate of overall BI is expected to fall
down further from the previous year. Advanced
Analytics is expected to grow at a higher rate than
Query, Reporting and Analysis (QRA). Asia Pacific and
EMEA are the emerging markets for BI vendors. About
the Individual Vendors, there is definitely more to
Business Intelligence rather than just SAP and
CRM
Despite the economic slowdown, CRM market has seen
a continuous trend of high growth. CRM remains as one
of the most important tools for telecom companies as it
helps them manage the complexity of pricing,
promotion and personalization of telecommunication
services. Around 15% of the total CRM application
revenue comes from the telecom vertical. Also, the
demand of CRM is higher in telecom vertical because of
their requirements, complaints, ever increasing
customer base etc. We expect CRM application
revenues from telecom sector to go beyond $1400 mn.
CRM application will also have a pivotal role to play in
the growth of BI market. As data grows, the need to
analyze it also grows. We also expect revenues from
web based CRM (SaaS) implementations to reach to a
quarter of all CRM application revenues. The share of
emerging markets in the total CRM market is set to
increase from 16% in 2008. Also, India would witness a
double digit growth of CRM during next year and we
expect Indian CRM market to go beyond $90 mn.
BILLING, MEDIATION AND RATING
The global telecom billing market will grow moderately
over the next year to reach above $5 bn. Major
components of this will be mobile postpaid and fixed
line enterprise billing. Both are slated to capture close
to 40% of entire telecom billing market with mobile
© 2009, Symbiosis Institute of Telecom Management, Pune
28
prepaid charging, convergent charging, fixed line
consumer billing, cable and satellite billing combined
cornering another 40%. Billing outsourcing covers
more than 85% of total billing revenues and 45% of
the total BSS outsourcing.
Region wise, although North America and Europe
have been important sources to telecom billing
market, but proportion of emerging markets has
grown significantly. We expect this trend to continue.
We also expect rise in demand for online rating and
charging systems, at least in the long term. As telecom
service providers increase their content along with
voice, they will push for convergent billing and
eliminate their legacy systems. Thus, we see growth in
telecom billing licenses, deployment as well as
maintenance of billing systems.
MOBILE OS
The Mobile OS market has been one of the most
dynamic and fiercely competitive markets in telecom
domain. Last few years have seen developments in the
open source platforms like Symbian becoming open
source, launch of Android; and developments in the
proprietary mobile OS like launch of iPhone with its
tightly coupled iPhone OS X.
During last year Mobile OS industry grew by 13.2%,
with the last quarter growth being just 3.7%.
The total market share of Symbian has been on the
decline. So much so that it has declined from 67% in
2007 to 52% in 2008. In Q4 '08, it further reduced to
47%. It is mainly attributed to low sales of Nokia
phones and manufacturers looking at other OS like
Android. We expect Symbian market share to further
go down unless something miraculous happens. The
biggest beneficiary is RIM with increased phone sales
and iPhone OS X though its growth has been impacted
by economic turmoil.
their mobile phones. Although, shipments of smart
phones are higher in EMEA than North America,
North America leads in mobile security client market.
With advancements in Smart Phones and usage of
phones as PCs, mobile security market is ready to
grow exponentially. Revenues from mobile security
client application saw a growth rate of more than
100% last year and are expected to see an equally
strong growth this year. We expect an increase in the
trend of mobile client security software bundled with
smart phone products.
MOBILE CLIENT APPLICATION
With data services gaining prominence with users,
different mobile client applications have created a
space for themselves. As predicted last year, more
companies have joined the bandwagon and have
launched their own mobile app stores after the much
talked about success of Apple app store. We expect
the content distributed through these app stores to
be the final deciding factor of success or failure for lot
of these stores. The total number of downloads from
the app stores crossed 1.5 bn in April 2009 and is
slated to grow exponentially. Talking about Mobile
Social Network users, Asia will outgrow Western
Europe in the number of users. We expect the total
number of users to reach close to 200 million. There
will be a rise in Mobile GPS tracking applications with
huge growth coming from almost all the regions. The
market size will cross €250 mn in 2010. Mobile
Gaming with an estimated market size of $9 bn is
another arena which is drawing heavy number of new
users from India and China. Mobile Banking market
size is expected to cross $9 bn globally.
SOA
Android market share would definitely increase as
more and more manufacturers go on to adapt it on
their product lines. Microsoft is banking on its OS
upgraded version 6.5 which has a redesigned UI
similar to its music player, Zune. As a major upgrade
we won't see Windows Seven in next one year.
Service Oriented Architecture is universally accepted
as the best approach to build and integrate enterprise
applications. The SOA approach was first adopted by
the telecom industry, given their much higher need of
integration. Apart from lowering cost, SOA can help in
deploying new business applications quickly, thus
providing the organizations with much needed agility.
The SOA global market size is expected to touch $33
bn. TM Forum has defined certain standards which
we expect to be widely taken up by Service
Integrators and Telecom Service Providers.
MOBILE SECURITY
REVENUE ASSURANCE
In North America more than 50% users access the
websites that require passwords and one out of three
people access their banking information through
Revenue Leakage from all voice and simple data
ranges from 3-8% globally. With newer IP services in
© 2009, Symbiosis Institute of Telecom Management, Pune
the offering, the figures are expected to go even higher.
Add to it the complexity of accessing any service from
any platform at any given place and the risk of revenue
leakage becomes manifold. Losses of domestic telcos
with estimated 2.5% of revenue leakage could touch as
high as $2 bn. Clearly, Revenue Assurance strategies
could be the difference between survival and death.
The main reasons for high revenue leakage are loosely
coupled OSS and BSS application systems, multiple
trading partners, vendors and complex processes. With
new service partners outside the telecom domain
(retail, banking, gaming etc) and new billing systems to
account and bill for the services, we recommend open
billing and OSS architecture. As Revenue Assurance
requires advanced analytics capabilities to analyze data
like CDRs, IPDRs, mediation records and other events
handling like billing, charging etc, we expect Revenue
Assurance to play a much bigger role in the growth of BI
applications.
CONCLUSION
Indian Telecom is going to make huge investments in
OSS/BSS. Growth will come from all segments with
incumbents investing to gain a strategic edge over
others and greenfield operators rolling out services.
Most of the projects awarded will be on a fixed price
model or on a revenue sharing basis. The global
OSS/BSS market is expected to grow by 6-7% with the
Indian market to grow by 10-12%. Service Fulfillment
market will grow at 8-10% and we expect some more
time before growth in Ser vice Assurance
picks up. The growth rate of overall Business
Intelligence is expected to fall down further from the
previous year. We expect rise in growth of Web based
Business Intelligence applications (SaaS) and open
source Business Intelligence applications. We expect
CRM application revenues from telecom sector to go
beyond $1400 mn. The global telecom billing market
will grow moderately over the next year despite
economic slowdown. It will take 2-3 years before a clear
winner emerges out of the current mobile OS
platforms.
RECOMMENDATIONS
!
We recommend System Integrators to rise beyond
application development & maintenance and go for
strategic outsourcing deals. Also, focus should be
brought to the Indian Market from the traditional goglobal approach.
!
Applications like gaming, social networking and
location based services demand heavy bandwidth and
are experience driven. Only 1 out of 5 non- iPhone users
has ever installed an application on their mobile phone
while 8 out of 10 have done the same for iPhone. We
recommend mobile content developers to focus on
user friendly applications which can be easily installed.
!
We recommend that vendors should focus on
providing OS with better development kits which have a
shorter learning cycle. This will become an important
factor in deciding the success of a mobile OS. This
should be complemented with OS being integrated
with hardware in a better manner.
© 2009, Symbiosis Institute of Telecom Management, Pune
Communication Infrastructure
By
Student Team
Purnendu Patra
Suresh Kumar
Laxmi Priya Budek
Tanmay Nanda
SCOPE
Communication Infrastructure has a direct impact on state of telecom industry. It is the platform on which operators
make the biggest capital investments and all their services depend on the amount, pace and effectiveness of the
infrastructure deployed. Moreover in the current situation where after making huge investments in the 3G-enabled
infrastructure, players have been a little apprehensive about the spectrum and licence costs. Ultimately operators
would be left with little choice but to consider passing on the cost to heads where corners can be cut and efficiencies
can be increased. But in a highly price-sensitive colossal market, it is going to be a huge gamble to pass on the cost to
the subscriber. So we have analyzed incumbent Red Ocean scenarios, expansion strategies, scenarios for entrants and
technology mass-uptake.
PASSIVE INFRASTRUCTURE
Sharing passive infrastructure gives an opportunity to
convert CAPEX to OPEX and lends an additional
flexibility. Over a period of time the cash requirement
will come down. Hiving off the business, development
and maintaining infrastructure will see O&M activity to
go up and bring down the cost.
Number of Towers YoY
With close to 10-15 mn net additions in cellular
subscriber base every month, there will be close to
150,000 more towers needed from the present base of
roughly 258,000 towers in the next two to three years.
Currently, the tenancy ratio for the overall tower
industry is about 1.7 and we predict that this will surge
to 2.0 by mid of 2010 due to entry of new players like
Swan telecom, Unitech Wireless etc. This is backed by
the recent Etisalat-Reliance Infratel and Telenor-Tata-
Quippo deals. Analysis show that a passive
infrastructure site needs at least a tenancy ratio of 1.5
to breakeven and a 2x tenancy with significant leverage
to generate a 15% Return On Equity (ROE).
We have observed that sharing of a tower by 2
operators has brought down the operator's TCO by
almost 40%. In case the tower is shared by 3 operators,
the cost reduces further.
Infrastructure sharing is used by operators to get rid of
their non-core activities and have an asset-light balance
sheet so that they can focus on their core business. Not
only does it help in reduction of CAPEX as well as OPEX,
it also plays a pivotal role in reducing management
bandwidth for non-core activities as the operation is
now taken up by IP-1 players. Consequently we foresee
more service providers hiving off their towers into
separate subsidiaries as they plan to unlock
shareholders’ value and also focus on core
© 2009, Symbiosis Institute of Telecom Management, Pune
32
competencies. Hiving off also helps the subsidiary as
they can start with a sizable number from day one as
was the case with Indus Towers. But the buck still
stops at the controlling stake holder (in case of Joint
Ventures) and pricing will be dictated especially since
a major chunk of roll-outs is being witnessed in the
hinterland, where incumbents have the upper hand.
Tower Valuation
Given the present state of the equity markets, it's not
surprising that valuations of telecom tower
companies have also crashed. At its peak, when tower
companies like Reliance Infratel Ltd and Bharti Infratel
Ltd offloaded their minority stakes, valuations were as
high as Rs.1.6 cr/tower. Earlier this year, when Quippo
Telecom Infrastructure Ltd merged its tower business
with that of Tata Teleservices Ltd's, the enterprise
valuation/tower was around Rs.45 lakhs/tower. Also,
recently Boston-based American Tower Corporation
has agreed to buy Xcel Telecom Ltd for a reported
valuation of Rs.700 cr resulting in a valuation of Rs.41
lakhs/tower. We predict that this decline will continue
in 2009 as new entrants will look for collaborations.
Power Sources
The need for diesel generators holds true for both
urban and rural areas as multiple power cuts daily are
commonplace even in Indian metros, and require
generators to run several hours every day. In fact, it's
not uncommon for these generators to run 24/7/365,
since shutting down and powering up a generator
wears more (and costs more) than leaving it running.
So, we predict that operators will switch to greener
sources rather than asking Government to lower
down fuel prices. Some telcos are taking Kyoto
protocol and carbon trading seriously which not only
is helping them economically but also helping the
environment. Bharti Airtel and ACME Tele Power are
the companies making use of Carbon Trading.
Recently BSNL's $1 bn passive infrastructure project
for rural India has attracted as many as six companies
including GTL Infra, ACME, Spanco, Aster, Icomm and
KEC. Now when oil price has become a huge problem,
it is time to turn towards green telecom, hence power
savings. We believe that North-Eastern states will
require special consideration in this regard owing to
rough weather and improper terrain.
ACTIVE INFRASTRUCTURE
There have been amendments in the UASL/CMSP
policies to allow active infrastructure sharing limited
to antenna, feeder cable, Node B, Radio Access
Network (RAN) and transmission system. Also, it will
allow Backhaul Sharing from BTS to BSC. But spectrum
sharing has not been given the green signal as of now
and will not change for the year to come. The
Department of Telecommunications (DoT) has
approved TRAI's recommendations to allow service
providers to share active infrastructure. We forecast
that this move would enable the operators to cut
costs in network roll out, hence enabling them to pass
on the savings to consumers by way of cheaper tariffs.
Especially in the Indian context, where there is a lot of
competition, consumers can be attracted by reducing
the tariffs and this can be done by active
infrastructure sharing.
BACKBONE
IP-adoption
The convergence of fixed and wireless networking in
future requires more solutions for transporting real
time application data to IP enabled mobile devices
and mobile networks. Even if the general mobile IPv6
protocol performs sufficiently in macro environments
with non-real time requirements, seamless mobility
demands some more enhanced protocol procedures
in between the mobile client and the involved
network entities. We observe that the effects of handover process can be limited efficiently by
implementation of IP in the Backbone. This will be
reflected in terms of reduced latency and packet loss.
Bundling of services
For telecom operations, an IT infrastructure is
required to support multiple applications and at the
same time ensure the access of personnel to these
applications from a fixed location or while being
mobile. But there is a cost factor involved in this.
Managed MPLS services can be used in keeping a
check on CAPEX and reducing OPEX in the form of
connectivity required to access the IT infrastructure. A
managed services partnership will include all end-toend activities - service rollout, installation, fault
repair, service continuity and transformation. It will
also support operators' transformation to Next
Generation Networks by offering advanced services
like high-speed Internet, triple play, media-rich VAS,
MPLS, VPN for both retail and business customers.
Quad play is still a relatively new concept for many
service providers around the world. Consequently a
variety of new quad play and triple play services are
emerging, whilst others weigh up the pros and cons of
© 2009, Symbiosis Institute of Telecom Management, Pune
entering this market. With the appropriate setup, price
structures and marketing in place, bundling services
can prove to be successful in a number of ways. The
bundled market is said to expand in the future with
companies looking to increase its service portfolio as
operators increasingly look to provide customers fully
converged solutions.
A level playing field with no outright winner and ample
projects in hand. The Indian network integration
market was in excess of Rs.8500 cr in 2008-09. Markets
are expected to reach Rs.9821.01 cr by 2010. Market
growth stems from the convergence of voice and data
networks in to an Internet Protocol infrastructure.
DATA CENTRES
VSAT
YoY growth
Improved storage, access technologies and increased
pressure of competition is pushing all companies to
have their data centres in proximity to their areas of
operation. Thus we see a rush in the data centre market
in India. Some of the market trends triggering a growth
in the switch market are: Data Center/Server
Consolidation, virtualization and automation are some
of the key innovations that enable efficient utilization of
data center space, power, cooling and IT resources.
The primary drivers for the VSAT growth in India have
been the Common Service Center (CSC) program in
rural areas, banking and SMB segments. Enterprises in
the BFSI segment have also pushed the VSAT business.
We predict that growth in the next 12 months will be
primarily from e-governance, BFSI segment, stock and
commodity trading, defence, distant education, and
retail. Satellite has and would continue to play a big role
in the CSC initiative taken up by the Government of
India. Despite the growth there are certain hurdles like
dearth of Ku band space and slowdown of key VSAT
segments like stock broking.
The network storage market grew by 25% during FY
2008-09 to reach Rs.1,834 cr Growing data demands
will see the market grow to at least Rs.2270 cr in FY
2009-10 even by conservative estimates.
NETWORK INTEGRATION
ROUTERS AND SWITCHES
Network integration is one segment which has shown
no signs of slowdown for a long time now. This is fueled
by long-term contracts which have been able in tiding U
or V curves very effectively. Also relatively fewer
mergers bear testimony to the fact that there has been
It is observed that the market value of switches is
showing an increasing trend although the rate of growth
has reduced. However the performance of networking
behemoth Cisco in the nex t two quarters
© 2009, Symbiosis Institute of Telecom Management, Pune
34
Vertical will see consolidations happening between
tower arms of Cellular Service Providers. The Network
Integrator and Data Centre markets will continue their
northward march as operators will make long term
investments in data de-centralization and aggressive
expansion. Up-surge in Tenancy will convert CAPEX
into OPEX but tower valuations will continue to fall.
Routers segment will grow, albeit slower and the
Switches market will take a dip.
RECOMMENDATIONS
will be very crucial for this segment. We hence forecast
that the Routers market will see a growth, nevertheless
at a slower pace and the Switches market will take a
subtle dip owing to the negative growth of Cisco in Q1
2009.
CONCLUSION
Crucial as it is for all businesses in the entire telecom
value chain, the Communication Infrastructure
!
“Collaboration” and not competition is the way to
go for the greenhorns in the Infrastructure vertical,
particularly in the tower segment.
!
Green energy is a viable proposition although R&D
is yet to produce plausible solutions for utilization in
monsoon.
!
IP adoption in the backbone will enhance call
quality and will mark an opening for IT players to
partner telcos investing in data centers is a wise
proposition looking at global cues.
© 2009, Symbiosis Institute of Telecom Management, Pune
Consumer Electronics
SCOPE
This vertical aims to enlighten the readers with modern trends prevailing in the Personal computing, Mobile phones,
Television and Gaming consoles, and provides an insight as to what can be expected in the upcoming years. This year
we also introduce a crystal gaze section where in the next generation features and technology which will make the
consumers drool are observed. These trends or features are on the evolution curve and can be seen as the focal points
in the coming years for breakthrough strategies by the major players.
By
Student Team
PERSONAL COMPUTING
Uma Shankar Jamdagney
Navin Bajaj
Rahul Kanhake
Bavneet Singh
With the global slowdown and worldwide cost cutting,
analysts predicted 2009 to be the worst year for PC
industry in terms of volume of sales. Slower GDP
growth affected the demand, putting brakes on new
penetration and vendors lengthening the PC lifetimes
by holding back replacements. The trend was visible in
© 2009, Symbiosis Institute of Telecom Management, Pune
36
the first quarter; however with second quarter the
industry seems to have made a slight recovery.
Experts are highly positive of a recovery by the fourth
quarter of 2009. It was earlier estimated that the PC
industry will suffer a decline of close to 11-12%,
similar to the decline expected in 2000-01. However
with better results in the second quarter, we see the
decline to be in the range of 7-8%. Our analysis predict
that the industry will recover in 2010-11 to post sales
figures of approx 297 mn units worldwide, posting a
positive growth of 6-7%.
HCL Infosystems is a strong player in the Indian Market
and holds its third position at a market share of 9.6%
ahead of Acer at 7.7%. The top 2 players remain HP
Compaq and Dell. We see the Indian PC industry rising
by 6.3% for the year 2010 with approximately 7.8 mn
units being sold. Relevance of computing in the lives of
the people, affordability of devices and simplicity of
use and segments such as government and education
remain the key drivers of growth.
The growth of computing industry will be propelled by
the high demand of mobile computers (laptops) and
net books. Laptops are expected to grow at 18%
whereas net books will continue posting positive
numbers close to 48% growth. Although there has
been a steep decline in the desktop sales, as
forecasted in the last
edition of Prevision, laptops or mobile PCs have
overtaken the desktop sales. There was a 31% decline
in desktop sales down to 101 mn units from 148 mn
units in 2008 whereas the laptops sales grew by 9%
and Netbook sales figures by a phenomenal 78%, up
to 21 mn from 12 mn in 2008. We foresee strong
growth in the mobile computing market as the
economies of mature markets revive. Infrastructure
investment by the upcoming industries and
governments, moving towards better IT and
infrastructure facilities will be the face saving reasons
for sale-volumes of desktops.
HP maintained its market leader position in terms of
worldwide market share with 19.8% market share
primarily due to stronger focus on consumer PCs and
Dell has lost market share and just about managed to
cling to the second spot at 13.1% market share. This
has been attributed to the fact that a bulk of its
revenues comes from businesses, government
agencies and institutions. Acer is closing in rapidly at
13% of the market share due to its advantageous
position in the Netbook market.
CRYSTAL GAZE
!
Solid State Hard Disk Drive: For the first time Hard
drive technology is seeing a major upgrade in decades.
As the capacity of USB flash drives increases, the Solid
State HDD equipped laptops instead of traditional
mechanical based ones will be adopted. Solid State
HDD's are available in the market but are very
expensive; by 2011-2012 we see this trend being
adopted by major laptop players albeit in premium
segment.
!
Slot Load Blue-Ray Optical drive instead of DVD
drive: Less mechanical, more aesthetic and natural
evolution.
!
Increased battery life: This increase in battery life
has many contributors like Intel releasing the Core 2
Solo low voltage processor, LED screens, etc. The
battery life will not make a substantial jump
immediately, rather as the technologies mentioned
above are adopted by the vendors the battery life
improve up to the mark of providing 7-8 hrs of backup if
combination of above technologies are implemented.
MOBILE HANDSETS
We see the next phase of evolution as consumers are
appreciating larger screens, better applications, more
memory and faster processors in hand-held wireless
devices. This leads to the industry treating
Smartphone as a separate category altogether in the
commodity market. Nokia still remains the market
leader in worldwide sales with 38.6% of market share
which includes close to 470mn units sold of the total
© 2009, Symbiosis Institute of Telecom Management, Pune
1200 mn mobile handsets sold worldwide. LG overtook
Sony Ericsson to grab the fourth spot behind Samsung
(market share of 16.3%) and Motorola (market share of
8.7%). Some reductions in inventory helped Motorola
finish the year in third position with sales that were close
to 107 mn units.
Office'07 being launched soon, open source and Linux
based MAEMO systems will find it tough to eat into the
Windows Mobile OS pie. Windows Mobile OS provides a PC
experience on mobile with facilities to sync your outlook
contacts, office files etc, and with Windows holding close to
90% of the PC market it is here to stay even in the mobile OS
market.
If we look at the Indian Market then Sony Ericsson lost
the second spot to Samsung with a -49.6% growth
whereas Samsung grew by 72.7% to claim 10% market
share. Nokia remains the leading player in the Indian
Market with 64% market share. Our analysis shows that
globally the handset market will grow in the range of 810% for the year 2009-10 whereas the Indian handset
market will grow by 10-15%.
With Electronics becoming more and more commoditised
the organised retail industry for consumer electronics is
picking up steam. Indian consumer electronics market is
currently pegged at $13.3 bn and growing at 10% a year. Of
this organized retail accounts for 7.3%. Tata Chroma will
emerge as a heavy weight in this segment.
SMARTPHONES
The Smartphone category accounts to 12% of the total
mobile handsets sold worldwide. Though these are
mobile handsets, the market dynamics for smart phone
devices, features and the segmentation differentiate the
product to this category. Nokia with 41% market share,
RIM with 20% and Apple with 10.8% market share are
the big players in this category. Apple witnessed slow
growth in 4th quarter of 2008 but overall it had a growth
close to 220%. This would seem a phenomenal figure;
however the sales have shot up primarily because
operators in the American region such as AT&T are
offering close to 70% subsidy for iPhone. The sales
figures have shot up as USA contributes to close to 54%
of the worldwide iPhone sales.
Mobile entertainment, VAS and internet connectivity are
the key drivers of the handset market. Handset
manufacturers satiating the customers' demand for
greater capacity in terms of battery life, memory and
multimedia will be the future market leaders.
CRYSTAL GAZE
RETAIL STORES
Ezone (a venture of Future Group), Reliance Digital Store
and Next (a venture of Videocon) are few other electronic
specific retail chains. Vijay Sales has the first mover
advantage and with good marketing strategies is a very
strong player in the western region having captured the
markets across Mumbai, Pune, Surat and Ahmedabad
region. The electronic organised retail has picked up steam
and we predict a deeper penetration in the forthcoming
years with players following the Tata's style of opening up
mini stores with the very first “Croma Zip” launched at the
Delhi International Airport. Mobile Store (mobile handset
retailing) is another retail chain which has utilised this
concept of mini stores extensively.
The Mobile Store with more than 1200 outlets has the
maximum number of telecom retail outlets across the
country. Our analysis shows that mobile sales will continue
to grow from such stores with Mobile Store foraying into a
tie-up with BSNL, a win-win situation for both. Mobile Store
is also set to launch its private label handsets across India in
the next year, targeting the low-end consumer segment.
TELEVISION
With launch of LED TVs, OLEDS and AMOLED (Active Matrix
!
QWERTY keypad v/s Touch screen keypad: Business
Organic LEDs) the television sector has seen innovation of
class phones like Blackberry and Nokia E-Series etc. will
technology being put into business use. Samsung, Sony and
push handsets having dual keypads, touch screen as well
LG have been quick to take up the cue and have launched
as slider QWERTY keypad. This will have a ripple effect on
new LED models. Though the price range is on the higher
the lower end phones, with QWERTY keypads phasing
side, however with increasing demands and more
out the standard keypads with T9 dictionary. Whereas
competition slowly but surely LEDs technology will replace
Smartphone will take the Touch Screen path with better
LCDs as a substitute.
technologies like SWYPE coming up in this domain.
!
Battle of Operating Systems rather than Hardware in
CRYSTAL GAZE
Smart phones: Coming years will see the battle intensify
A LED TV (Series 7 models) having a plug n play movie
for the applications platform portability and open source
facility from the inbuilt USB port, the latest breakthrough
software. With launch of Windows mobile ver 7.0 and for
achieved by Samsung, the global leader
the very first time entire suite of Microsoft mobile
© 2009, Symbiosis Institute of Telecom Management, Pune
38
In the display technology. Earlier USB ports only
supported pictures and MP3 access and not movie
access. We see this trend being an instant hit in the
market and will be soon adopted by others.
GAMING CONSOLES
With the downturn hitting the industry the biggies of the
Gaming Console industry (Nintendo Wii, Sony
PlayStation, and Microsoft XBOX 360) had to redefine
their strategies and design different approaches to the
worldwide market. Globally the sales figures of Gaming
industry have taken a hit, however revival is on cards
with people looking for cheaper entertainment options
during recession.
Nintendo Wii (50.39 mn as of 31 March 2009) has
acquired no 1 position in this segment. In the handheld
products segment also Nintendo DS (101.78 million, as
of 31 March 2009) is the market leader leaving behind
Game Boy Advance and PlayStation Portable.
In January 2009, the Wii hit a market share of 46.48%,
which is up from 37.27% a year ago. The Xbox 360
currently stands 35.84%, down from 45.61% in January
2008. The PS3 is losing market share as well, but at a
slower pace, currently holding 17.68%, down from
17.70% one month ago, but up from 17.12% in January
2008. In the face of these statistics, overall industry
growth in 2009 will be tough, but increase in sales is
expected since some big titles set are to be released over
the next several months. The combination of broadband,
installed home networks, bluetooth and pervasive Wi-Fi
in gaming devices, is fuelling online gaming subscriber
growth. The world gaming market is expected to reach
$43 bn by 2010. India has emerged as a one-stop
destination for game development with outsourced
services constituting 80% of total market. The market for
gaming development in India is expected to witness a
growth of 37% p.a. and reach INR 14 mn by 2012. Seeing
the gaming industry in India which consists of mobile,
console, and PC & online gaming, console gaming market
recorded the highest growth in 2008-09. The console
gaming market in India, is expected to reach $125 mn by
2010. An analysis of drivers reveals that increase in
disposable income, favourable demographics, cost.
Competitiveness, increase in hardware base, increase in
software sales, proliferation of internet, increasing PC &
mobile penetration and growth in mobile value added
services are major drivers in this sector. The biggest
challenge to the industry comes from the grey market as
the custom duties are fairly high. Other challenges
include poor broadband quality, high piracy rate and
manpower management. Future trends identified
include localization of content, new payment
mechanisms, rise in popularity of Massively Multiplayer
Online Game (MMOG), Creation of gaming zones (on
lines of ZAPAK) / Organized Cyber Café chains and
investments by gaming firms in India.
CRYSTAL GAZE
!
Episodic content and progressive downloadsQualcomm is planning to launch its very own gaming
console Zeebo in 2010, which will see adoption of this
trend wherein there would be progressive downloads
for games from the internet repository rather than
purchasing DVDs.
!
Distribution would move to digital- distribution of
games through internet space and later on when 3G or
Edge networks are implemented, using a virtual
currency. Steam Cloud where variable data such as saved
games and settings are stored in the cloud and users can
log on from any terminal with the game installed and
carry on from where they left off.
!
Social networking has been realized in gaming and
gaming communities - FM integration into Xbox Live,
and Nintendo DSi's ability to send images captured and
edited directly to a Facebook account over WiFi. Sony
has been developing its own social landscape, Home,
into a gaming avatar hub for the Ps3.
CONCLUSION
With increasing PC and mobile penetration consumers
are more responsive to better technology which
provides ease of use. Laptop Sales have globally
outclassed Desktop Sales but Desktop vendors can take
solace from the fact that laptops are not capable as of
now in providing the scalability which desktops can
provide. Smart phones are on the zenith of the current
evolution curve in the electronic device segments. Also
with multimedia enabled phones and multitasking
phones the single purpose devices such as MP3 players,
walkmans, recorders, radios etc have become
redundant. These mobile phones are also seen as an
ever increasing threat to the lower-end segment of the
digital cameras with higher resolution and more efficient
cameras being incorporated in these gizmo phones.
© 2009, Symbiosis Institute of Telecom Management, Pune
Broadband
By
Student Team
Harshita Yadav
Vikram Negi
Amrit Kulshreshtha
Paridhi Sarna
SCOPE
In India, achieving an unprecedented growth in Broadband, as witnessed by the mobile industry, still seems to be a
distant dream. Although a substantial change in the adoption of broadband by the end-user has been seen in the
previous year, there is still a long way to go. This vertical provides an insight into the way the broadband market will
react to consumer dynamics and government regulations in the forthcoming year. It majorly covers wired and
wireless broadband with a focus on the prime and the supporting technologies that will affect the future of
Broadband in India.
SUBSCRIBER BASE
Broadband has been the power packed agenda but the
market is yet to witness its hard-line results. The Indian
Broadband market has shown high growth in the last
year, increasing to 6.22mn in March 2009 from 3.90mn
in March 2008. There has been an increase in the
demand for services which need broadband
capabilities. The urban region is witnessing mass
consumption of entertainment-centric applications
like games, online movies and music whereas services
like e-health, e-learning and e-choupal are proving out
to be of great significance in rural areas.
In the years to come broadband penetration will
continue to increase with the growth of bandwidthhungry applications. Analysis shows that ADSL is the
most preferred access technology; however, fiber
deployment is now gaining momentum on the back of
growing demand for bandwidth. It is seen that the
broadband uptake is relatively slow and the major
factors which are deterring this growth are lack of
awareness, lack of PC knowledge, below par PC
penetration, government regulations, cost of CPE, cost
of availability of services etc.The year 2009-2010 will
witness the auctioning of 3G and BWA licenses which
would provide momentum to the broadband market in
India. Our analysis shows that the Broadband
subscriber base will surpass 8.9 mn mark by June 2010.
© 2009, Symbiosis Institute of Telecom Management, Pune
40
ADSL/DSL WIRED BROADBAND
ADSL utilizes the existing copper-wire networks to
deliver internet that telephones have worked on for
the last several decades. It also takes care of a major
problem of last mile connectivity, as it substantially
brings down the cost of setting up a dedicated internet
delivery system. In India, the delay in roll out of 3G
services and WiMAX operations has given a chance to
fixed line operators to upgrade existing lines to
ADSL2+ standards. ADSL2+ is likely to remain the
primary DSL technology in the next 2 years.
The market has also seen the launch of WIMAX
enabled Netbooks and Notebooks. With the above
discussed enablers, operators and OEMs are betting
on WiMAX more than 3G technology for providing
wireless broadband services and the market can
mature significantly in years to come. Once BWA
auctioning happens, WiMAX services will also start
being offered on the 2.3 GHz and 2.5 GHz bands which
are considered superior to the current 3.3 Ghz
spectrum.
Wi-Fi
Broadband needs to come up with value-added
services that can potentially help operators to
increase their bottom-line. Certain players have come
with bundled VAS services along with broadband
connection. However, they have not been
aggressively marketed and, hence, unsuccessful.
Voice NGN, IPTV, VOD, and distance education would
be the major services over Broadband that may help in
increasing the acceptance amongst the users.
iAN8000 MSAN (Multi Service Access Node) solutions
are being provided by many companies in about 962
cities across India which in order to boost broadband
speed. Taking into consideration the above factors,
ADSL and ADSL2 + technology will prevail in market.
WiMAX
Copper is the best way to reach out to the end user.
However, in order to provide connectivity to the
remote areas and to provide better coverage, WiMAX
can be used as an option. Although WiMAX requires
significant investments and infrastructure upgrades
on the air interface as well as core network, it is an
attractive option which will eventually provide costeffective, high-speed wireless broadband coverage to
larger rural and sub-urban areas. The operators are
heading towards rural destinations and are working
together to deploy WiMAX networks and are heavily
investing in mobile WiMAX space, especially for
providing services like m-care, m-commerce, mlearning & m-governance. BSNL has opened bids for
rural WiMAX, and plans to roll out WiMAX in three
phases. The growth of mobile WiMAX will be
accelerated by rural penetration.
WiMAX equipment market has experienced a
remarkable growth from 8% to 239% in 2008-2009
and carrier shipment has increased by 27% which has
taken the revenue earned to Rs.320 cr from Rs.94.5 cr.
Wi-Fi has proved to be a better technology and has
better scope in India because it is inexpensive and
globally deployed, thus having many takers. The
growth is due to increasing laptop adoption and
decline in desktop sales. There have been 90-95% of
notebooks shipping with built-in Wi-Fi during the
FY'09. Wi-Fi has become more secure and with the
emerging trend of IEEE802.11n, 2.0 draft access
points, the Wi-Fi market is expected to grow
exponentially in 2010. Installation of new access
points, ease of installation and low maintenance cost
has increased the use and popularity of Wi-Fi
hotspots in enterprises railways, educational
institutes etc. We predict the WLAN market to
increase in revenue to approx Rs.320-330 cr in the
year 2009-2010 from Rs.270 cr in the year 2008-2009.
The growth in IT and telecom sectors is driving WLAN
growth.
The challenges being faced are high bandwidth
backhaul and wireless management. However, with
the recent government move to de-license 2.4 GHz
and 5.1 GHz band, the Wi-Fi enabled business
applications would increase for sectors like hospitals,
hospitality, manufacturing and educational institutes,
inventory management, real time data access and
asset tracking using 802.11n technology.
VSAT
VSAT market has shown a growth of 24% and will
continue to grow further as the installed base. The
BFSI segment and government sector have been the
major driving factors of the VSAT industry and would
be the key growth drivers in the year 2009-2010.
Bharti group has shown a phenomenal growth,
becoming the market leader which it will continue to
be in the coming fiscal year. VSAT would play a major
role in providing connectivity to SWAN (State Wide
Area Network) and the CSC initiative taken by the
© 2009, Symbiosis Institute of Telecom Management, Pune
government. Major players are using DVB-S2
technology which would help the industry to overcome
the space segment crisis and to compete with the
terrestrial players in the access market. VSAT is a driving
factor for higher speed services like 2-way videoconferencing, VOIP and other real time applications.
The cellular backhaul system can be easily and
effectively deployed using VSAT where satellite
provides a backhaul to locations that are not reachable
by microwave or fiber, thereby increasing rural
penetration. VSAT would also play an important role in
providing last mile connectivity, connecting remote
and inaccessible areas, disaster management, egovernance, offshore connectivity, SWANs, distance
education, trading, defense and retail. VSAT has issues
regarding Ku band, prone to interference on rainy days,
high cost, bandwidth sensitive and has an average
latency period of 800 msec. Current stringent
regulatory framework, temporary shortage of Ku band,
cap-ex for VSAT network, high operating cost are likely
to put pressure on the industry but there would be high
acceptance of VSAT as broadband access medium by
SMEs, BSFI sector, traditional enterprises and
Government segments. We predict the VSAT market
size to grow up to Rs.698-710 cr by June 2010.
RURAL BROADBAND
With the government announcing allocation of
massive funds of Rs.2,400 cr to the rural sector from
the USO funds, plan to subsidize construction of 11,000
telecom towers across 2.5 lakh villages and invitation of
bids to setup 28,000 wireless broadband exchanges
and 6000 satellite sites there would be a growth in
internet penetration in rural India. VSAT connectivity
would be used to accelerate rural broadband as fiber
connectivity is difficult. DAMA and PAMA would be
widely used in satellite communications. BSNL would
provide 8,61,459 wire-line broadband connections
from rural telephone exchanges with subsidy from USO
Fund. Rural Broadband penetration remains confined
mainly due to absence of last mile connectivity. WiMAX
can be used to increase rural broadband provided BWA
auction takes place. VSAT would mainly provide rural
connectivity, e-governance applications, e commerce,
tele-medicine and e-education which are going to
contribute to substantial growth of telecom industry in
the next phase of inclusive development in the 11th
Five Year Plan period up to 2012.
MOBILE BROADBAND
Mobile broadband or “Broadband on the move” would
become the buzzword in the coming year and would
bring in a revolutionary change in the broadband
scenario. Some companies have rolled out high speed
mobile broadband services using CDMA-EVDO. MTNL
and BSNL have already rolled out 3G services. With the
auctioning of 3G spectrum the subscriber base of
mobile broadband is likely to rise exponentially.VAS
usage by users will enhance the revenues for operators.
Download limits with mobile broadband can be
restricted due to the higher cost of transferring data
across 3G networks. Government regulations and 3G
auctions will decide the future of Mobile Broadband.
DTH/IPTV
DTH is in its nascent stage in the country with 91%
market still remaining untapped. DTH industry has
experienced 300% growth in FY 2008-2009. DTH and
IPTV video on demand, pay-per-view (PPV), personal
video recorder (PVR) and interactive information
services offerings would open new avenues. Decrease
in the license fees from 10% to 6% has provided an
impetus to growth. Interactive services, such as
interactive banking services, would lead the market.
High Definition technology would be a potential
differentiator. DTH is a low margin and high volume
industry. High initial set up cost of satellites,
transponder, other high tech equipments and high
competition are the challenges for DTH industry. We
predict DTH subscriber base to be around 17 mn.
Although IPTV has been rolled out by MTNL and BSNL, it
has not been successful in the market as it requires
sizeable upfront for setting up network operating
centers for content delivery. Last mile local loop
unbundling, government policies, Right of Way
permission and lack of high quality service are the main
challenges. IPTV would have to compete with the
existing cable TV and DTH services, which are growing
at a much faster pace. TRAI has discussed the rates and
packaging of channels for IPTV services in order to
facilitate faster growth of IPTV in India. Price points
similar to that of DTH and Triple play applications would
lead to IPTV growth.
BACKHAUL
The wide landscape of India remains an impediment for
providing backhaul connectivity. The existing ADSL/DSL
infrastructure will continue to provide the backhaul
connectivity. Using GPON as a backhaul technology will
provide higher speeds to users enabling applications
like video conferencing and thus will help in maintaining
the growth of the wired market.
© 2009, Symbiosis Institute of Telecom Management, Pune
42
Providing connectivity to the remote and inaccessible
areas and to applications like distance learning and
mobile BB services, VSAT is a viable backhaul option for
cellular networks and rural broadband.
High capacity, point-to-point microwave links and relays
are also used for backhaul connectivity by service
providers. Carrier Ethernet can be used as backhaul.
WiMAX is also a preferable option; however, due to the
spectrum issues there has been delay in using the
services of the technology. As soon as the government
allocates the spectrum to the operators, a larger usage
of WiMAX will be witnessed for providing backhaul
connectivity.
HSDPA
As the much awaited 3G auction is only few months
away, the future of HSDPA looks bright in India. HSDPA
with increased data rates and greater system capacity
is next in line of evolution from WCDMA. NTT
DoCoMo and Sony Ericsson have already launched
HSDPA enabled mobile handsets. DELL announced
that future laptops would be integrated with HSDPA
technology. The HSDPA card launched by MTNL will
support data download speeds up to 3.6 Mbps. Other
major players have been using High Speed Internet as
backbone technology for their offerings, providing 3.1
Mbps as downlink and 1.8 Mbps uplink.
CONCLUSION
DOCSIS
DOCSIS 3.0 standard is giving a tough competition to
ADSL in the European markets as it provides high data
rates of 100 Mbps and uses the existing cable networks
for its operations. Before DOCSIS 3.0, practically every
new service offering had a large investment price tag
attached to it (both time and money). The pleasant
change for MSOs with DOCSIS 3.0 is the fact the
inherent flexibility and scalability of the specification, as
well as the years of previous investment in physical
plant, will allow operators to apply a much simpler set of
business rules to new service offerings. Time Cable
announced in April 2009 that it will deploy DOCSIS 3.0 to
the New York City; the city will also have competing
super-fast broadband offerings from all three providers
in the near future.
FEMTOCELL
FEMTOCELL represents an opportunity for wireless
carriers to cut network and service costs on a multitude
of levels. It provides core infrastructure at a lower price
than other alternatives which could be seen as a
possible challenge to Wi-Fi. The main trigger for growth
of FEMTOCELLS will be the demand from advanced
markets of Europe, America and Asia Pacific. Growth of
FEMTOCELLS could potentially drive demand among
wireless carriers for wholesale VoIP services, including
VoIP peering.
In India, operators in the top league have joined FEMTO
Forum, but haven't started deployment. Here the major
impediments for the adoption are high cost CPE,
converged billing, converged network, technical
challenges such as radio interference between
FEMTOCELLS and the core network, and also broadband
which provides the backbone to FEMTOCELLS is itself in
the growing stage and is still not widely available.
From 4.38 to 6.80 mn, the Indian Broadband market
has grown at a much faster rate than ever before;
however, penetration still remains abysmally low.
Rural Broadband market still remains largely
untapped. Increase in rural penetration can play an
integral role in enhancing broadband penetration in
India. Challenges like cost and access problems,
unawareness and lack of PC penetration cannot be
overcome overnight. SME & SOHO will be the key
driving sectors for broadband services. Providing
managed services to large scale enterprises will also
add to the growth. Bundled services will provide
adoption and growth of fixed broadband. Mobile
based information is an extremely practical and
attractive value proposition. VSAT can be used to
provide cellular backhaul and rural connectivity.
WiMAX would be more promising provided the BWA
spectrum is allocated to players who are serious about
rural broadband penetration and is auctioned at an
affordable price. Government should take initiative to
bridge the digital gap by providing incentives to the
operators so that the dream of bringing about the
broadband revolution turns into a reality.
RECOMMENDATIONS
!
Government should provide aid to the people to
start cyber cafés in remote areas to enable rural
penetration.
!
WiMAX /Wi-Fi post mobility needs to concentrate
on roaming to match LTE.
!
Efforts should be made to make VSAT less costly to
increase broadband penetration.
!
Returns on retail segment especially in rural areas
is very poor due to power issues, subscriber base etc.
So operators should focus on retail segment.
© 2009, Symbiosis Institute of Telecom Management, Pune
Mobility
SCOPE
The wireless industry in India has shown a growth unparalleled by any in the world. This report is an effort to
present an insight into the future of this highly dynamic market, taking into account the key drivers of
Mobility; predicting the Revenue, Subscriber base, ARPU, VAS and future trends in wireless internet and the
enterprise market.
By
Student Team
COUNTRY TRENDS
Pooja Sheth
Apeksha Thombre
Ashima Verma
Samruddhi Dadhe
© 2009, Symbiosis Institute of Telecom Management, Pune
44
The mobile subscriber base is expected to cross 590
mn by Q3 2010. The maximum growth is expected in
'B' and 'C' circles as Metros and A circles reach
saturation levels. The subscriber base of METRO, A, B
and C circle are expected to cover 14%, 36%, 37% and
13% of total subscriber base respectively by Q3 2010.
This is mainly due to the high latent needs of the
Indian internet market driven by the ability to get
critical, real-time information while being mobile.
ARPU and MoU
The approval for auctioning 3G at the end of 2009 will
definitely bring a sigh of relief to the service providers,
but still its effect will not be seen till Q3 2010 and
ARPU will continue to fall. It has been estimated that
the blended ARPU for GSM and CDMA would decline
to a value of Rs 155 and Rs 62 respectively by Q3 2010.
Till the end of next year it is expected that data
services will see a decent growth with the acceptance
of 3G services. With the increasing number of
subscriber base, operators have to maintain QoS in
order to retain customers and at the same time keep a
check on falling ARPU.
The increasing trend in MoU seems to be over as it has
registered a fall in three consecutive quarters. This is
the effect of increase in Circle C subscribers who have
lesser talk time on mobile phones. This effect will
continue with the growth of rural segment, and we
predict that the MoU will fall to 462 minutes by Q2
2010.
TRAI has identified wireless technologies like Wi-Fi
and WiMAX to increase internet penetration in rural
areas and is set to auction spectrum in the 2.3 GHz and
2.5GHz bands for BWA.
The proliferation of Wi-Fi end points has driven
demand for ubiquitous wireless points of presence.
We shall see a high growth in the number of wireless
hotspots all over the country.
Applications and demand for new services will drive
Wi-Fi to bring voice, data and video into the space of
various offerings. Wi-Fi is evolving from a WLAN
application to a broadband wireless service with a
great deal of opportunities on a global scale.
Wi-Fi SIPs are beginning to make their way into the
market place for low duty cycle applications, but it
remains to be seen if they will meet the cost and
power requirements of many applications.
Multi-band Wireless Mesh for outdoor deployment is
another technology that holds promise for
applications requiring monitoring or tracking of
widely distributed assets.
WIRELESS INTERNET
In stark contrast to the cellular services, the
broadband sector continued to be filled with
alternating moods of despair and hope as the
government announced and postponed spectrum
auctions with remarkable deftness. Despite this, the
number of wireless internet subscribers is expected to
grow to 272.07 mn in Q3 2010 from 117.82 mn in
March 2009.
MVAS
In the wake of changing industry markets, telecom
operators are looking at Mobile Value Added Services
(MVAS) as the next growth, and a large chunk of
revenue is expected to flow from VAS in the near
future. The MVAS revenue for FY'09 was Rs. 6000 cr
which is further expected to reach Rs.20,000 cr by
2010. The major drivers of growth in MVAS will be
declining ARPU, need for differentiation, growing
© 2009, Symbiosis Institute of Telecom Management, Pune
demand for entertainment and related content,
personalization of content, devices and cheaper
handsets. As has been the trend, SMS (both P2P
and A2P) continues to be the major revenue
generator. SMS revenues are expected to be Rs.
8400 cr by 2010. MVAS currently contributes to
10% of operator's revenue and is expected to
contribute 15% by 2010.
and commercial services due to maturity in MVAS
and the support of RBI to mobile banking.
Social networking and blogging on mobiles will be
on the increase, owing to the tie-ups between
operators and social networking sites combined
with the availability of cheaper handsets and the
popularity of social networking sites.
The popularity of high-end informational and
transactional activity will increase the bargaining
power of content providers. Multiple small content
aggregators will consolidate and grow stronger,
and will thus be in a position to demand a higher
revenue share.
Entertainment, especially music and cricket, has
always been highly popular in the Indian VAS
market and will continue to do so. However,
operators will have to look at other options in
order to differentiate their services and to
generate revenue and arrest falling ARPU.
Mobile application stores will be launched by
operators, owing to their popularity and revenue
earning potential.
Global trends show that success of 3G depends on
the introduction of mobile internet specific
content. Handset bundling will be adopted by
service providers in order to subsidize handset
cost for the subscriber.
The rollout of 3G will give an additional boost to
the gaming industry, with interactive games and
mobile gaming contests being introduced.
Advertising, which is majorly SMS and IVRS based,
will see a shift towards video in the coming years.
Mobile content customized to a certain target
region is also being looked at as a source for higher
mobile penetration and revenues in both rural as
well as urban areas. The diversity in languages and
dialects in India creates a large potential market
for regional content. IVR systems in local language
would be more popular as it provides ease of use
to rural subscribers. Mobile will become an
important means of providing remote financial
ENTERPRISE MOBILITY
There will be adoption of enterprise mobility
technologies and applications to increase business
efficiency and deliver an enhanced level of
customer experience. Enterprise will implement
Voice over WLAN to improve responsiveness and
reduce cost. Newer mobility applications will be
created by combining various technologies. The
increasing WLAN environment will trigger the
need for intrusion detection and prevention over
wireless medium. 802.11n is creating a lot of buzz
with WiFi-certified equipment which indicates that
it is time for businesses to get ready for this
inevitable change, whether they invest in prestandard equipment or wait for the final standard
to come out.
With the emergence of virtualization and
software-as-a-service (SaaS) model, there is
increased focus on services and applications over a
r o b u s t i n f ra s t r u c t u r e . H o s t e d u n i f i e d
communications solution on a service providers'
network will lead to the Communications-as-aService (CaaS) model.
Integration of MVAS content coming from various
operators and innovative billing solutions for
enterprises leveraging VAS will be seen.
The audio-video conferencing industry continued
to be on a growth trajectory and became a popular
mode of communication in the enterprise
segment. Telepresence and 3G will give a further
boost to the popularity of conferencing solutions.
Public telepresence rooms will give individuals an
additional flexibility. Adaptive communication
© 2009, Symbiosis Institute of Telecom Management, Pune
46
tools will become increasingly popular to create
collaborative experiences on a variety of devices.
3G and WiMAX will enable the BPO industry to
explore high quality video-based call centers and
hire work-from-home agents. Education and
healthcare segments will also show an inclination
towards visual collaboration technologies.
!
Operators must look at innovative and locally
CONCLUSION
!
In order to increase acceptance of 3G services,
Regional content, mobile internet and locationbased services will emerge as applications of the
future. Enterprises will explore the VAS market
for both internal as well as external
communications. 3G will play a crucial role in
shaping the wireless industry. WLAN and related
handset bundling and mobile internet related content
should be the focus areas.
!
Enterprises will have to choose whether they will
settle for existing WLAN equipment or wait for
802.11n enabled equipment to hit the market.
!
Network security should be the prime focus area
for providing any services.
Applications will see an increasing uptake.
Communication-as-a-service (CaaS) will emerge
as a logical extension of SaaS.
RECOMMENDATIONS
relevant content as the tool to increase ARPU.
© 2009, Symbiosis Institute of Telecom Management, Pune
Managing Slowdown
SCOPE
Even though the dreaded 'R' word did not spread its wings in India so much, calling it an economic slowdown would
not be an understatement. Most of the big economies in the world are facing a slowdown with all the major industries
being affected by it. India being the second fastest growing economy is also going through a slowdown but the most
astonishing fact is that most of the Telcos are still doing very well. The resilience of the Indian telecom industry
coupled with the ever growing opportunities in the telecom business is the focus of our Special Feature this year. This
year we have covered how telecom companies across the whole value chain of the industry has coped with this
slowdown and managed to survive during these testing times. Telecom Industry has again proved that “Crisis brings
out the best in the best of us and the worst in the worst of us”.
By
Student Team
Sumit Verma
Ashish Harkare
Raminder Rajpal
Diptesh Sinha
OPERATORS
Till the end of this year we expect India to have about 11
telecom operators spread across the country. And so
the stage is set for the all-encompassing Red Ocean.
With the industry still going strong adding about 8-10
mn subscribers per month during FY 2008-09,
operators will have to come up with various innovative
and differentiating strategies to retain existing and
obtaining new customers. Additionally the slowdown
has impacted every domain in some way emphasizing
the need for operators to put an impetus on reducing
costs without adversely affecting quality.
© 2009, Symbiosis Institute of Telecom Management, Pune
48
Some of the major impacts seen on operators due to
this economic slowdown are :
Differentiation will be on various parameters like price
offered to customers, services offered, brand loyalty.
New and innovative services, like per second billing
!
Reduction in IT budgets- Although the trend could
and other attractive tariff plans, would be adopted by
be the same for CAPEX programs, the rollout of 3G and
almost every new entrant in the market to garner
MNP may see an increase in CAPEX. Some operators
customer’s attention. Also, as teledensity increases
have gone ahead with long term commitments to
day by day, superior service quality and CRM will play
vendors whereas some have shown reluctance.. This
a pivotal role. However this year we at SITM predict an
might also be a result of an opportunity which
influx of media and life style related services to be
operators foresee for their future plans.
rolled out to the customers who are otherwise
!
Operators are forced to increase operational
accustomed only to telecommunication products.
savings.
!
Reduction in size of deployments and eliminating
New Models for growth - New information
non performing services.
consumption models, mobile broadband, and
!
Develop more consumer centric plans.
internet applications will become the highlights of
!
Telcos moving their expenditures and focus from
growth.
CAPEX to OPEX.
Rural Challenges Educating rural customers about
the services the operator is offering will be an uphill
The operators have also come out with various
task. Also, traditional distribution channels might not
measures to thrive in this scenario and will have to
be efficient enough for rural markets. Innovative
continue doing so to survive in this Red Ocean.
services like micro financing and barter system will be
seen in the coming times to penetrate the rural
Micro Segmentation - Operators are now creating
market along with a much more efficient distribution
smaller and more manageable segments of customers
channel.
to serve them better. We predict that this will be the
new trend as telecom operators start segregating
AMPU Over the past few years the industry has
their customers into niche user groups to target their
expressed some concern over ARPU as the prime
services in saturated markets. The presence of new
indicator of profit, partly because a declining ARPU is
players, who may focus on individual circles, will also
assumed to imply a loss. Operators could focus more
pave the way for niche segmentation. The Grameen
on AMPU (Average Margin per User) rather than
Packs (where a recharge of Rs.50 gives a talk time of
ARPU,
as AMPU gives a clearer picture of operators'
Rs.75 over a period of 9 months), Night calling cards,
efficiency
and profitability. AMPU gains an upper
operators offering free roaming in certain circles and
hand as revenue and cost, are considered together to
even special tariff for calling to certain countries, are
showcase
profitability.
all products of this Micro-Segmentation drive by
AMPU
=
ARPU
Average Cost per User
operators. Moreover, hyper segmentation of
AMPU comes from optimizing cost.
customers is also taking place with operators coming
up with offers like women special SIM-cards and
special offers for sports fans.
Infrastructure Sharing - While most of the incumbent
GSM players have the spectrum in 900 MHz, the new
operators have got spectrum in 1800 MHz. This would
result in new operators having double the number of
towers to cover a service area. Infrastructure sharing
of both active and passive components would be seen
as a savior to surpass this technological hurdle.
Differentiation - With so many operators staring in
the face of the customer and still more ready to roll
out their services, differentiation will be the key.
While most of the telecom analysts are more focused
on ARPU, a comparative analysis should make things
much clearer. Let us take a hypothetical situation of
two operators with a subscriber base of 1, 00,000 and
varied revenue and cost.
This example shows how AMPU is a much better
© 2009, Symbiosis Institute of Telecom Management, Pune
decision making tool than ARPU. Thus by cutting costs
and stressing on margin produced per unit sold one can
have a healthy growth.
VENDORS
The Equipment vendors have also been facing testing
times although not in India where the growth rate has
not slowed down for the equipment industry. There are
some scars that the slowdown has left but they are not
very deep and companies are managing them quite
well. Operators are now negotiating much more as
they themselves face credit crunch and companies are
shying away from long-term contracts as the dynamics
of the industry changes so often. Pricing competition
will make vendors go through difficult times ensuring
them to focus on increased operational savings.
Marketing and advertising expenditure would also
witness a downturn.
The enterprise vendors would see sluggish growth in
the traditional PABX and voice telephony markets. The
enterprise equipment vendors on the voice and VoIP
segment would find their sales dwindling over another
year as videoconferencing and telepresence solutions
would see a sharp increase.
Vendors would look to venture into greener pastures
and turn their attention to managed services model
rather than just concentrate on manufacturing
business. This would ensure that the vendors get
additional recurring revenue streams that would make
up for the lower spending on the network. We at SITM
suggest that the vendors can also try to develop new
business models based on revenue share rather than
fixed costs where the payments are linked to the
benefits that the customer gets from the solution.
The handset vendors are still going very strong, thanks
to the ever growing telecom subscribers. Handset
vendors need to focus on the costs and supply chain.
Vendors may need to shift their high-cost
manufacturing units to locations where the cost of
production is lower. We at SITM predict that the
handset vendors, post the 3G launch would be looking
forward to integrate preloaded applications,
customized content and enter into locking periods with
incumbents to further boost their sales.
GREEN TELECOM
As telecoms traffic increases, the impact of the telecom
industry on the environment is getting magnified.
Consumers are demanding more advanced and powerhungry services. As high as 30% of the telecom service
provider's OPEX is spent on power and diesel.
Telecommunication industry is pipped to be the second
largest consumer of energy to throttle their power
guzzling towers. When the growth of subscribers will
slowdown, reducing this portion of OPEX will
determine telco's profitability. Rural areas are
witnessing most aggressive roll-outs by telcos and
getting power in these areas is a difficult proposition.
Hence energy efficient solutions can save a lot of energy
cost for telcos which will reflect on their balance sheet.
Solar powered GSM is receiving a warm welcome from
operators in India. Additionally, operators would form
separate energy departments within the organization
(started by Airtel and Vodafone). Which would help
limit OPEX. Replacing legacy central-office switches
with MetaSwitch soft switches and media gateways can
yield energy savings of up to 91%. We expect spend on
green solutions to go up especially in power cut prone
areas like Bihar, UP, MP Maharashtra and North East.
Most of green power BTS will run on wind and solar
energy. With most of the operators and infra providers
looking to deploy green BTS with high energy cost in
future fuelling the investment, we see triple digit
growth rate in Green Telecom Solutions Industry.
GREEN IT
The downturn has resulted in green IT trends for data
centers, client devices and asset lifecycle management,
as well as re-shaped return on investment (ROI) models.
IT budgets are likely to remain flat in 2009, which means
cost-effective green IT is likely to increase in demand. As
such, organizations no longer regard green IT with costeffective IT being regarded as mutually exclusive. While
the global economy has tanked, spending for Green IT is
soaring. The $500 mn spent on Green IT services in
2008 is expected to grow to $4.8 bn by 2013. Flat IT
budget growth also means that organizations that face
critical data center limitations, such as a shortage of
floor or rack space, are looking to software or
outsourcing alternatives to build new data centers or
upgrading existing facilities. Those alternatives include
IT leasing, managed services, virtualization software,
cloud computing and software-as-a-service (SaaS).
Virtualization - Virtualization has emerged as one of
the most critical IT concepts in the global as well as
Indian context as it improves utilization. Virtualization
provides significant IT flexibility, reduces data center
space requirements and can reduce system
© 2009, Symbiosis Institute of Telecom Management, Pune
50
management costs. The savings in energy costs
becomes significant (up to 50%) on top of an already
robust business case for virtualization without even
considering reduction in electricity costs.
Virtualization in India is expected to see a growth of
85% by 2011 from the current 19%.
Cloud Computing - Cloud Computing, the latest
growing trend in IT industry, is the tech industry’s
equivalent of a Toyota Prius hybrid running on bio
diesel whilst the traditional on premise computing is
comparable to the Hummer running on baby seals.
Cloud computing is virtualized information services
available on demand over the internet which is
dynamically scalable to be equipped with usage based
pricing and service level agreements. It allows you to
use the infrastructure, platform and software
available on servers on the internet for all your normal
computer uses. The argument in favor of cloud
computing is not only that it helps to save costs and
reduce carbon footprints but the main benefit is
better efficiencies and utilization for IT and thus the
business, actually being green is just a by-product.
Costs of developing future applications can be
drastically reduced as there would be no need for the
developer to market and sell these new applications.
Developer would just make it available to the cloud
computing service provider who in turn would put it
on his servers and make it available to everyone at the
same time. Computers would not require high
capacity hard drives as the need for this will be taken
care of by the service providers. This could greatly
reduce the cost of setting up information technology
departments, which again need their own service
setups. As this would make outsourcing very easy, the
costs of developing new software will reduce
drastically. One can also see the development of
services providing huge resources for parallel
computing which could be just a part of this cloud
computing idea.
VAS
The Indian MVAS industry has matched all
expectations and has continued to climb up and ever
since it gained momentum along with mobile phone
subscriptions. The mobile VAS market has grown by
around 60% year on year and is estimated to touch INR
200 bn in FY 2009-10. This trend is expected to
increase in future, as VAS will become a major source
of revenue for telecom operators in India. At present
mobile VAS in India accounts for 10% of the operators'
revenue, which is expected to reach 15% by FY 200910. With ARPUs decreasing on a consistent basis,
there is little doubt that data and VAS services will be
the emerging cash cows for maintaining the
operator’s revenue.
UPCOMING TRENDS
!
Operators and VAS companies will focus more on
high-end VAS applications.
!
Mobile VAS will be seen expanding more in rural
areas where more VAS in banking and gaming will be
seen which will increase the profit margins of the
service providers from the current SMS based VAS.
!
The market too has now shifted from monthly
subscriptions to weekly and daily subscriptions of VAS
products to fight the slowdown as sachet packaging
serves well in tier II and tier III cities.
!
VAS companies will emerge to create direct-tocustomer services and focus exclusively on VAS, like
bundling VAS with handsets. They can also have
multiple streams of revenue, from subscribers,
advertisements and businesses.
!
Flat rate mobile data plan as followed by USA can
be implemented.
!
Mobile payments and commerce will come into
vogue.
!
Religious content is coming in a big way and has
begun accounting for almost 12-15% of the total VAS
industry. This trend will continue to grow as Indians
continue to reflect their faith, even through their
mobile phones.
!
Once the 3G services are launched, social
networking, blogging on mobile and advanced use of
mobile radio will become more popular.
!
More 3G like applications and services would be
seen on 2G.
MEDIA
The Media industry has also been adversely affected
by the slowdown. The Telecom Industry is witnessing
the highest growth and is also one of the biggest
advertisers along with FMCG. The convergence of
these two industries will continue to scale further for
mutual benefits.
Digital Media - Online advertising, including display,
search-based and other methods increased from
Rs.425 cr in 2006-07 to Rs.700 cr in the current year.
The 250-mn mobile user population too makes
mobile marketing a lucrative communication channel
for brands. At a time when the global meltdown has
© 2009, Symbiosis Institute of Telecom Management, Pune
forced companies to slash their marketing and
advertising budgets, internet marketing companies are
also devising new strategies to make every marketing
rupee count and thus, woo clients. Internet advertising
in India is a Rs 300 cr market and tapping this requires
deeper relationships between stakeholders.
Mobile Advertising - The Indian media industry is
valued at US $5 bn; while the mobile ad industry gets
around US $10 mn of the entire pie. While SMS
advertising will continue to lead revenues for mobile
advertising, the trend now is to create personalized ads
for a specifically defined target audience. Innovative
ways of advertising through mobile medium like ads as
dialer tones, where consumer gets paid for keeping
them, will also be seen more in the future. One of the
most important characteristics that a mobile has is its
interactivity to enable reach to all kind of customers
using this proposition; even to an uneducated person
using Voice SMS based advertising.
Media companies will also collaborate with operators
and VAS players to directly provide content which will
give them an additional source of revenue. Already
mobile games on various celebrities and movies are
floating in the market and the trend is expected to
continue. Companies in the media and entertainment
business should learn and adopt partnership models
from the telecom sector to tide over the ongoing
impact of the financial crisis. Like telecom companies,
media firms can also outsource information
technology systems to a professional service provider
to reduce costs as their scale grows bigger and they
contribute to more and more subscribers.
MERGERS & ACQUISITIONS
The telecommunication sector has been a significant
driver of mergers and acquisitions (M&A) in India
accounting for the highest share of deals at 18.6% and
22% during the last two years with values of $5.7 bn
and $11 bn in 2008 and 2007 respectively. Not only the
operators but M&A is also heating up in the
communication infrastructure domain with companies
looking to have their presence in the whole telecom
domain from towers to services.
other players from across the globe, especially Africa.
!
Over the period, smaller players with presence in
only few circles will find it difficult to compete with pan
India players and eventually the industry would see
consolidation.
!
3G and WiMAX license auction will spur M&A and
partnership activity. Introduction of MVNOs, post MNP
will boost M&A activities in India.
TELECOM RETAIL
With an ever growing telecom industry and booming
retail business, telecom retail has carved an important
segment for itself in the value chain of telecom
business. Currently only 2% of the entire telecom retail
sector is organized which leaves organized players like
Mobile Store and Hot Spot and other new players with a
large untapped market. Mobile Store, the biggest
player currently has over 1400 stores nationwide and
the Hot Spot-RPG CelluCom merger has over 720 stores
nationwide. Mobile Store plans to increase this
number to 1800 by March 2010, 2500 by March 2012
and Hot Spot plans to set up around 1500 new
company-owned stores in the next 18 months. In future
mobile retailers would also foray in to the handset
business.
While the big players in the business are on an
expansion spree, the regional telecom retailers are also
doing pretty well in their respective areas thanks to
some aggressive and clever local marketing strategies
adapted by them like UniverCell's touch-and-feel
concept of buying. UniverCell Live stores divide the
showrooms into different zones-Listen (radio), Shoot
(camera phones), Play (gaming and video phones) and
connect (business phones). The strategy could be to
target right customers at the right time and deliver
relevant content to them which is possible using Blu-Fi.
CONCLUSION
The telecom sector is an enabler for the wider
economy. However, its ability to act as a catalyst for an
economic recovery is closely linked to three factors:
!
The ability of regulators and policymakers to
effectively fulfill their various functions,
!
The level of integration between governance of the
telecom sector and governance of media and
technology,
!
The level of maturity of regulatory practices.
Some of the trends observed for the industry are:
With
all these factors, complementing each other, the
!
Telecom players are also looking to tap into global
Indian Telecom Industry isn't slowing down anytime
funds to finance their aggressive growth plans. This
soon.
We at SITM see this slowdown as a blessing in
will result in aggressive partnership / joint ventures and
disguise and hence predict that the telecom sector will
equity sellout to foreign players following acquisition of
see a new sunrise in growth, beyond slowdown.
© 2009, Symbiosis Institute of Telecom Management, Pune
References & Abbreviations
Abbreviations
ADSL - Asymmetric Digital Subscriber Line
AGR - Adjusted Gross Revenue
ARPU - Average Revenue Per User
BRIC - Brazil,Russia,India,China
BI - Business Intelligence
BSS - Business Support System
BWA - Broadband Wireless Access
CAGR - Compound Annual Growth Rate
CAS - Conditional Access System
CDMA - Code Division Multiple Access
CRM - Customer Relationship Management
CRR - Cash Reserve Ratio
DVB-H - Digital Video Broadcasting-Handheld
DWDM - Dense Wavelength Division Multiplexing
ERP - Enterprise Resource Planning
EU - European Union
EVDO - Evolution Data Only
FDI - Foreign Direct Investment
FMC - Fixed mobile Convergence
FMS - Fixed Mobile Substitution
FTTH - Fiber To The Home
GCC - Gulf Corporation Council
GDP - Gross Domestic Product
HDTV - High Definition Television
HITS - Head end In The Sky
HSDPA - High Speed Downlink Packet Access
HSUPA - High Speed Uplink Packet Access
HSPA - High Speed Packet Access
ILD - International Long Distance
IPTV - Internet Protocol Television
IUC - Interconnect Usage Charge
LLU - Local Loop Unbundling
LTE - Long Term Evolution
MNP - Mobile Number Portability
MPLS - Multi Protocol Level Switching
NGN - Next Generation Networks
NMS - Network Management Solution
OFC - Optical Fiber Cable
OFDM - Orthogonal Frequency Division Multiplexing
OSS - Operational Support System
RA - Revenue Assurance
SaaS - Software as a Service
SOA - Service Oriented Architecture
USO - Universal Service Obligation
VAS - Value Added Services
VISTA - Venezuela, Indonesia, South Africa, Taiwan,
Argentina
VOIP - Voice over Internet Protocol
VPN - Virtual Private Network
VSAT - Very Small Aperture Terminal
W-CDMA - Wideband Code Division Multiple Access
WIMAX - Worldwide Interoperability for Microwave
Access
WPI - Wholesale Price Index
References
News Services
Times News Network
Press Trust of India
Reuters
Business Standard
Websites
www.altera.com
www.billingworld.com
www.business-standard.com
www.cn-c114.net
www.convergedigest.com
www.deloitte.com
www.economictimes.com
Www.economist.com
www.ednindia.com
www.expresscomputeronline.com
www.financialexpress.com
www.ftthcouncil.org
www.gulfnews.com
www.heavyreading.com
www.ibef.org
www.idc.com
www.infonetics.com
www.indiabudget.nic.in
www.ispai.in/Stat3-InternetsubsTechnologywWise.php
www.ispreview.co.uk
www.livemint.com
www.lightreading.com
www.mait.com
www.ossobserver.com
www.ossnewsreview.com
www.oecd.org
© 2009, Symbiosis Institute of Telecom Management, Pune
About SITM
We are a techno-management business school that has
remarkably evolved into a center for learning excellence in
the Information and Communication Technology (ICT)
domain. We have a short history of no less than ten evolving
years which had made our presence felt in the ICT industry.
Over nine hundred of our alumni are tirelessly contributing to
the growth of organizations throughout the ICT value chain
in India and abroad.
The intensive course framework designed to equip future
managers with the knowledge of General Management,
Telecom Technologies, Finance, Software, Marketing,
Branding and a deeper understanding of Market Dynamics
so that we evolve in perfect managers with ability to handle
the work effectively. The learned and eminent members of
our Board of Studies keep our curriculum contemporary
through biannual revisions.
The gurus of SITM are a potent mix of academicians,
domain experts and practicing professionals. The future
managers are endowed with experiences beyond
knowledge by being exposed to workshops, moral
rearmament camp, industry exhibitions and various
national level events. Apart from academics, our students
and faculty work closely together for various committees.
Every student has an active exposure to committee
activities. Hence we have ample opportunity to refine
crucial managerial and organizational skills like
accountability, teamwork, work breakdown / allocation,
business communication, contingency planning, and
change and crisis management. This ability is put to test
and refined to the utmost in all SITM events.
© 2009, Symbiosis Institute of Telecom Management, Pune
SYMBIOSIS INSTITUTE OF TELECOM MANAGEMENT
SYMBIOSIS KNOWLEDGE VILLAGE,
NEAR LUPIN RESEARCH PARK , VILLAGE LAVALE,
MULSHI TAHSIL , PUNE, MAHARASHTRA,
INDIA 411 042
+91 20 3911 6170 / 80
+91 20 3911 6176
[email protected]
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