Evolution of GSM in India

T V Ramachandran, Director General

September 13, 2005
Status of GSM Industry

 Cellular services started in India in 1995; GSM was the mandated

standard.
 Above Government decision proved to be beneficial for India as
GSM has been established as the dominant standard.
 As of August 2005, there were nearly 50 million GSM subscribers
which constitutes 80% of the total cellular subs.
 The month of July and August witnessed record growth in GSM
subscriber addition of about 2 million.
 75% of the new mobile subscribers in India choose GSM.
 There are 83 state-of-the art Networks of GSM.
 Roll out of services in more than 4,000 town & cities and more
than 60,000 villages.
 Total Private GSM Investments are over Rs 50,000 crores.

GSM-Fixed Crossover achieved in April 2005.

 GSM Growth Through the Years

45

40

35
Sub figures in million

30 CPP
25 3rd & 4th Cellular
20

15
NTP’99
10

0
1997 1998 1999 2000 2001 2002 2003 2004 2005

Year ended April

Several points of inflexion in the past, have given

kick-start to improved cellular growth
 Steeply falling tariffs have ensured affordable
services to a large subs base

Rates per minute have fallen by over 90% in the last

seven years.
Effective charge (in Rs. Per min) Subscriber Base (in mn)

16 Lo w e ring o f A D C f ro m 60
3 0 %t o 1 0 %o f s e c t o r
14 14
N TP ' 9 9 re v e nue
14
50

Mobile subscriber base (in Million)

CPP 51.53
Effective charge (in Rs. per min)

12 Int ro d uc e d
40
10 33.31
3 rd & 4 t h C e llular
Op e ra t o r
8 30
Introduction
6 6 of CDMA
20
4 3.58
13
3.58 2 10
2 1.2 1.88 0.44
0.88 6.5 1.6
0 0.4 0
1998 1999 2000 2001 2002 2003 2004 2005

Source: TRAI Study paper No 2/2005

GSM - the dominant standard in India

GSM constitutes around 80% of the cellular market

in India.
GSM CDMA
60
50
Subs in m n

40
30
20
10
0
2000 2001 2002 2003 2004 2005

Market share of GSM continues to rise steadily

 GSM Increasing its Market Share Globally

Indian GSM industry is in sync with the worldwide

standards; worldwide GSM constitutes 75% of the
subs base and 80% of the monthly additions.
GSM CDMA
1600 GSM CDMA
1400 Launch Launch

1200
Subs in m n

1000
800
600
400
200
0
1992

1994

1996

1998

2002

2004
2000
 GSM Advantages

GSM advantages over other cellular technologies are:

 Dominant global market share of GSM gives benefits:
 Large number of infrastructure and handset vendor’s giving
advantage in terms of price and other commercial terms.
 Innovations ahead of CDMA e.g. single chip handsets.

 Widest choice of handsets with widespread sales and service

distribution network.
 Handset availability in all price segments and ongoing
introduction of wide variety to meet customer requirements.
 Easy subscription process (SIM based)
 Widespread prepaid solutions
 Seamless interoperability between networks and handsets.
 Global footprint for international roaming including SMS, data
and other value added services.
 GSM Overall Efficiency

For Subscribers For Operators

 Low cost entry handsets  Economies of scale due to

 Wide choice and dominant market share:
availability of handsets worldwide and India
 International roaming  Choice of multiple vendors
 Easy subscription  Capex optimisation
 Lower subscriber
acquisition cost
 Seamless interoperability
 Affordable Services for Common Man

Mobile has fast moved from a class service to a mass

service for the common man – fuelled by continuously
falling tariffs and increased coverage.

Better prices
Connectivity
for the
for the produce
farmers
 Affordable Services for Common Man

Affordability has made mobile services the key

plank for economic development.

Mandi Prices Kerala

on the Move Fishermen
Call in their
Catch
NEW REVENUE OPPORTUNITIES – VAS
health Airtel
tips Live portal with games, music, cricket, stock,
news, easy charge facility, logos, range of
voice activated services, games, missed call
alerts, Airtel Live, Hello Tunes etc.
Hutch
Online Yahoo & MSN Messenger, Java based
games, missed call alerts, logos, games,
news, stock, range of voice activated
services, Caller Tunes, etc.
Idea
Daily horoscopes, cellular jockey to send
musical greeting cards, voice activated
services, music, logos, news, stock, movies,
cricket, games, jokes, Dialer Tones, etc.
ringtones
BPL
Ringtones, logos, picture messages, send-a-
song, mobile gaming, etc.
Spice
mobile gaming Ringtones, logos, picture messages,SMS
Chat, mobile gaming, etc.
Aircel
Ringtones, logos, picture messages, games,
music, etc.
 Revenues Form Value Added Services

VAS Revenue as % to Net VAS Revenue composition

Service Revenue
10% 8%
for 2004 (in %)
10% 9%
9%
9% 27% 65%
8% 7%
7%
6%
5%
3%
4%
3%
2%
8%
1%
0%
2003 2004
Postpaid Prepaid Total S MS Clip Ot hers

VAS shows promising trends, share in total net service

revenue increasing continuously

Source: PWC Indian GSM Cellular Benchmarking Study 2004

Potential of the Sector

 Private GSM subscriber base has the potential to

reach 103 million subscribers by Dec’07 from the
present level of 36 million in August’05.
 Projected growth of private GSM sector is as
given below:
In Million

Year ending Dec. 2004 August 2005 Dec 2005 Dec. 2006 Dec. 2007
(Actual) (Actual) (Projected) (Projected) (Projected)
Private GSM 28 36 42 65 103

This will contribute in a substantial manner to overall

target of 250 mn telephone subs (fixed+mobile) by
2007 set by the Government
Push Towards Next Generation

 India represents one of the most exciting

opportunities for mobile services in the coming
decade.
 We are already providing 2G and 2.75G services.
 The next big push would be the introduction of
3G services.

Early and expeditious introduction of 3G services in

India will hold the key to India’s mobile success
and its future dominance in mobile telephony
3G in India

 3G will be introduced in India by 2006.

 3G upgradation for GSM is 3GSM (WCDMA).
 In India GSM constitutes 80% of the total cellular
market; this will form a ripe base for 3GSM
(WCDMA).
 Worldwide also 3GSM (WCDMA) drives the 3G
growth.
GSM - Predominant Global Mobile Standard
for 3G
35
3GSM (WCDMA)
30 CDMA 2000 1xEVDO

25

20

15

10

0
May'04

July'05
July'04

Aug'04

Nov'04

May'05
Jun'04

Sep'04

Dec'04

Feb'05

Jun'05
Mar'05
Jan'05

Apr'05
Apr'04

Oct'04

As of date, 3GSM subscribers have crossed 30 million,

accounting for around 70% of the 3G market. GSM share
continues to rise month after month
Benefits of 3G for India

 3G has a 4-5 times higher voice capacity than present 2G

services.
 An ideal platform to deliver low cost voice telephony
to Indian consumers.
 3G has hi-speed data capabilities
 It will fulfill the content rich mobility experience for
urban Indians.
 3G will help in enhancing India’s competitiveness in the
ITES / BPO segment.
 Extremely effective tool in driving penetration of the huge
addressable market in the rural areas.
 3G will also enable achieving the broadband objectives of
the Government.
3G will integrate India and Indian consumer with the far
reaching developments taking place across the world.
Mobile Broadband – The Next Frontier

 Mobile phone is fast becoming the dominant technology

for voice communications.
 Mobile phone is becoming less & less of a narrowband
device as it evolves through 2G to 2.5G to 2.75G to 3G.
 “the mobile phone has moved beyond being a mere
device to become a key “social object” present in every
aspect of our daily lives”.
Lara Srivastava, ITU

3G probably provides the best ubiquity in broadband

connectivity – always on, fast enough….
India’s Path to Mobile Broadband

 India’s path to Mobile Broadband must be through 3G in the WARC-

92 identified Core Band of 1920-1980 MHz p/w 2110-2170 MHz
because :
 Only band globally harmonized for interference free co-
existence of both GSM & CDMA
 Equipment available for both technologies in this band
 Majority of countries have opted for 3G in the Core Band
 Japan & Korea live examples where GSM & CDMA are co-
existing in the Core Band
 India by choosing this globally adopted spectrum band will be able
to avail of
 Economies of scale – lower tariffs
 Seamless roaming
 Inter-operability
 Interference free operations

 India being a country where both GSM & CDMA co-exist must
choose a 3G path which allows for the co-existence as well as future
growth & development of both technologies
GSM has been the prime growth driver
of Telecom services in India and would
continue to be the same for new
evolving technologies and will
contribute to the growth and prosperity
of the industry.
THANK YOU
tvram@coai.in