KOLKATA - While the Global System for Mobile
telecommunications (GSM) celebrates over 1 billion
connected customers worldwide (achieved in February) in
just 12 years against 12 decades of fixed lines, with
China and Europe taking credit for most of the growth,
the fact is that India, unexpectedly, is emerging as one
of the fastest-growing mobile markets in the world
today.
"Undoubtedly, most of mobile telephony's
growth has occurred in China," said a recent Deutsche
Bank white paper on wireless telephony called "Brilliant
Past Bright Future", "but India represents one of the
most exciting growth opportunities for mobile." The
paper adds, that with its billion plus people, India is
the second most populous country on the planet, but has
just 33 million wireless/mobile telephone subscribers.
It is expected that the subscriber base will grow to 290
million by the end 2008 and 500 million by 2010. "This
makes India one of the fastest-growing markets of this
decade," Deutsche Bank said.
Indeed, in the
space of less than a decade, with the introduction of
wireless telephony in 1995 when the first mobile phone
call was made at a princely cost (by Indian standards,
because fixed line telephony tariffs were charged at Rs
1 per 5 minutes) of Rs 16.80 per minute (40 cents US),
India's emergence as a global growth story on steroids
is noteworthy. Perhaps no single telecommunication
technology has had as profound an impact on the Indian
society as the "wonder" technology called wireless
telephony. Take for instance Basheer, one of 100,000
fishermen of modest means in the southern state of
Kerala, who uses the mobile phone daily to strike the
best deal once the catch is in his boat and well before
it reaches shore. "Not just that, we feel more secure in
the sea and we can communicate immediately for
assistance in rough weather," Basheer says.
Many
farmers in the Indian state of Punjab, too, depend
solely on mobile telephony to sell their harvest in far
off commodity exchanges called mandis right from
their farms instead of browsing through newspapers or
visiting the mandis first to track rates. And
Jiva Institute, a Delhi-based organization for social
development, uses the mobile phone exclusively for its
TeleDoc, which helps in providing medical attention to
remote Indian villages with no easy access to treatment,
by transmitting diagnostic data to an information
technology-enabled central clinic and then prescribing
medication and treatment.
India is not just the
fastest-growing market, but also the most competitive,
and hence the cheapest. Intense competition in the
telecom sector over the past two years has led to a
crash in prices for everything from handsets to talk
time. Talk time tariffs for instance have come down by
74 percent over the past two years, and handset prices,
which were sold at a premium of as high as 40 percent
over international prices even until a year back, are
now at par. "The telecom service sector has shown
unprecedented growth during 2003-04, mainly driven by
intense competition and aggressive pricing," says the
Telecom Regulatory Authority of India chairman, Pradip
Baijal.
And by virtue of its size, growth rate
and competitiveness, the country is setting the
benchmark for the global telecom industry as well. The
recent deal between India's newest and fastest growing
wireless telephony company, Reliance Infocomm, and
United States-based Lucent Technologies, is a good
example of how India is setting the benchmark for lowest
equipment prices in the world.
Industry sources
say that Reliance Infocomm's negotiating capabilities
managed to bring down the equipment cost of
infrastructure to under US$40 per subscriber from $100
two years back. Equipment rates for Reliance in fact
have slipped even further to come down to $25 per
subscriber - once again, among the lowest in the world.
In another landmark agreement, Sweden's
equipment vendor Ericsson agreed to a revenue-sharing
deal with the Indian mobile telecomm operator company
Bharti Televentures that will allow Ericsson to earn a
percentage of revenues every time a subscriber downloads
video or plays a Java game. This kind of cooperation is
quite unusual in the global wireless world, say global
vendors, admitting that participating in the Indian
market has forced them to radically reduce costs in
their own companies.
But how does the Indian
telecom story compare with that of China, the other
amazing Asian growth story? Although China continues to
lead globally in terms of telecom spending and new
customers, India's initial pace of growth has been more
impressive. In 1996, nine years after China opened up to
wireless telecom, it had 6.8 million subscribers. After
nine years, India had over 30 million subscribers and
was adding 1.5 million more every month, says Vince
Mazzola, president and chief executive officer of Lucent
Technologies India. "China has reached a high level of
teledensity and the wireless spending is relatively
flat. While China has already surpassed 250 million
mobile subscribers, the rate of growth has slowed down
over the past six months."
However, it is not as
if India will become a more important market than China,
just yet. China's spending on telecom last year was $25
billion and the mobile market is still adding 5 million
new subscribers every month. Telecom spending in the
Indian market is going to touch $3.1 billion this year,
although by the end of the year, India is likely to
overtake Korea and Malaysia. Mazzola figures it will
take at least five years for India to catch up with
China, but where India may surpass China is in the
sophistication of the telecom services. Already, some of
the cutting edge data technologies that the world has to
offer are being tested by Indian operators: Qualcomm's
Push to Talk technology by Tata Teleservices, live video
downloads on GPRS by Hutchison and the EVDO wireless
broadband from Lucent Technologies by Reliance Infocomm
are some of these instances. "Innovation in the wireless
world will continue to come from the vendors, but
increasingly, India features among the first ports of
call for rolling out new technological solutions," says
Mazzola.
Nevertheless, despite the scorching
growth prospects that India offers, the road ahead for
wireless telephony players in the country may not be
without hurdles. That's because once the government
raises the bar on foreign investment to 74 percent, a
move that is expected to come through after the ongoing
general elections, the level of competition is likely to
be among the highest in the world.
Interest
among foreign operators is already evident. According to
global consultancy firm McKinsey's, virtually every week
the consultancy firm gets a call from a major operator
evincing their interest in India. Moreover, recent
reports suggest that Singapore Technology Telemedia and
Temasek Holdings (a Singapore-based investment company),
as well as Telekom Malaysia, have shown keen interest in
acquiring the 33 percent stake in India's mobile telecom
provider Idea, of which AT&T wishes to sell out.
Vodafone, the leading European wireless player, too, is
reportedly scouting around in the country for
opportunities "to play the game".
(Copyright
2004 Asia Times Online Ltd. All rights reserved. Please
contact content@atimes.com for
information on our sales and syndication
policies.)
