CHAPTER-1

INTRODUCTION

1.1 INTRODUCTION

Cellular services from part of the telecommunications

sector in India. Until the mid 1990’s the ownership of a
telephone of India was considered as a luxury even in 1996,
for instance, there was a waiting period of 3-5 years despite
paying sizeable amount as application deposit. Today in
many states, cellular service providers are competing with
each other to gain customers and thus there are no waiting
lists. A luxury service has become a necessity today
because of its convenience, affordability and the value it
delivers to its end users. A recent survey pointed to the fact
that for most customers, mobile phones have become an
extension of their personality.

Some of the major cellular providers operating at national

level are BSNL, Idea, AIRTEL, Vodafone, jio etc. BSNL is
the major provider of GSM cellular mobile services under the
brand name CELLONE. BSNL provides complete telecom
services solutions to enterprise customer including MPLS,
P2P and internet leased lines. It provides fixed line services
and landline using CDMA technology and its extensive
optical FIBER network. BSNL provides internet access
services through dialup connection as prepaid. NETONE as
a postpaid and DATAONE as BSNL Broadband.

2.2 HISTORY
BSNL then known as the department of telecommunications
had been a near monopoly during the socialist period of the
Indian economy. During this period, BSNL was the only
telecom service provider in the country. MTNL was present
only in Mumbai and New Delhi. During this period BSNL
operated as typical state run organization, inefficient, slow,
bureaucratic, and heavily unionized. As result subscribers
had to wait for a long as five years to get a telephonic
connection. The corporation tasted competition for the first
time after the liberalization of Indian economy in 1991.Faced
with stiff competition from the private telecom service
providers. BSNL has subsequently tried to increase
efficiencies itself. Dot. Veterans however, put the ones for
the sorry state of affairs on the government policies, where
in all state-owned service providers were required to
functions as mediums for achieving egalitarian growth
across all state owned service providers were required to
function as mediums for achieving egalitarian growth across
all segment of the society. The corporation, however, failed
to achieve this and India languished among the most poorly
connected countries in the world. BSNL was born in 2000
after the corporatization of DOT. The corporatization of
BSNL was undertaken by an external international
consulting team consisting of a consortium of A. F. Ferguson
and co, JB Dadachanji and NM Rothschild and was probably
the most complex corporatization exercise of its kind ever
attemptedanywhere because of the quantum of assets and
over half a million directly and indirectly employed staff.
Salish Mehta, who led the team later, confessed that one big
mistake made by the consortium was to recommend the
continuation of the state and circle based geographical unit
which may have killed the synergies across regions and may
have actually made the organization less efficient than had I
been a seamless national organization. Vinod Vaish, the
chairman of the telecom commission made a very hold
decision to promoted the older leaders to a role in licensing
rather than in managing the operations of BSNL. The
efficiency of the company has since improved however, the
performance level is nowhere the privet players. The
corporation remains heavily Unionist and is comparatively
slow in decision-making and its implementation which largely
acts at the instances of union without bothering about
outcome. Management has been, reactive towards the
schemes of private players. Continue to notch up better
numbers in all areas, year after year. BSNL has been
providing connections in both urban and in rural areas. Re-
activation mobile connections are available at many places
across India. BSNL has also unveiled cost-effective
broadband internet access plans targeted at homes and
small businesses.
 2007 was declared as "year of broadband" in India and
BSNL announced plans for providing 5million broadband
connectivity by the end of 2007. BSNL upgraded data one
connections for a speed up to 2 Mbit/s without any extra
cost. Tis 2 Mbit/s broadband service was provided by BSNL
at a cost of just US $ 11.7 per month (as of 21 July 2008 and
at a limit of 2.5 gb monthly limit with 0200-0800 hrs. as no
charge ). Further BSNL is rolling out new broadband
/services such as triple pay. BSNL planned to increase its
customer base 108 million customers by 2010. With frantic
activities in the communication sector in India the target
appears achievable. BSNL is a pioneer of ruler telephony
project of government of India

On 20 march 2009 BSNL advertised black cherry services

across its telecom circles in India. The corporation has also
launched 3 g services in selected cities across country as of
December 2011 many other private operators have started
rolling out their 3rd generation services alongside and are
enjoying some Success in their campaigns to get market
share. BSNL announced the discontinuation of its telegram
services from 15 July 2013 after 160 years in service. It was
opened to public in February 1855 in 2010 it was upgraded
to a web based messaging system in 2010 through 182
telegraph offices across India.

BSNL last year launched its first 4G service in Maharashtra

circle.
The commercial launch of the 4G services is expected to
happen in coming months.

BSNL is now conducting its VoLTE services trial run in

Gujarat.

India is seeing a lot of action in its market of 4G connectivity.

After Jio and Airtel, state-owned telecom operator, now
BSNL has also officially started its 4G VoLTE services in
India. The company last year announced that it was pilot
testing its VoLTE services in Maharashtra and Kerala. Now a
fresh report hints at its expansion to few more circles.

According to Telecom Talk report, BSNL is now conducting

its VoLTE services trial run in Gujarat. The report suggests
that several BSNL users in Gujarat have received an SMS
from the company saying that BSNL VoLTE services are
available in their area and that they should enable the
VoLTE option in their mobile phones to enjoy the service.

BSNL last year launched its first 4G service in Maharashtra

circle. The company has been allocated 2,100MHz spectrum
for testing its 4G services in the country. As per the report,
BSNL 4G subscribers in Gujarat will be able to enjoy high
speed internet with speeds up to 20 Mbps.
The company is offering bonus data benefit to users who
upgrade to BSNL 4G SIM as part of the promotion of its 4G
services. The commercial launch of the 4G services is
expected to happen in coming months.

2.3 QUALITY OF SERVICE

BSNL goes by the motto ”connecting India, faster” and
displays the same at their home page. The service quality of
BSNL customer service was severely criticized as very poor.
The mobile service provided by BSNL in almost every part of
the country where and still are criticized for network outages
and frequent call drops. Despite the criticism there is very
negligible or no amount of work been carried out by the
authorities to improve performance and in collaboration with
state forest department
 CHAPTER - 2

REVIEW OF LITERATURE
Studies Related To Growth and Developments of Indian
Telecom Sector in India

Sayder(2006) states that communication is a process that

allows information to pass between a sender and one or
more receivers and the transfer of meaningful information or
ideas from one location to a second location.
Communications is a human process; human communicate
by sending information between them. On the other hand,
telecommunication is the transmission of data or information
over a distance. Tele is a Greek word meaning at a distance,
far off. Thus, it classifies smoke signals, semaphore flags,
lanterns and signal flares, telegraph systems, televisions,
telephones, written letters, and hand signals as capabilities
that support telecommunications. The problems with these
communications forms include reliability, speed of
transmission, and comprehension purposes.

National Telecom Policy (NTP) of India 2012

projected to increase rural teledensity from the current level
of around 39 to 70 by the year 2017 and 100 by the year
2020. The number of telephone connections, at the end of
February 2012, was 943 million, as compared to 41 million at
the end of December 2001. This growth has been fuelled by
the cellular segment (mobile phones) which alone accounted
for 911 million connections at the end of February 2012. The
composition of the telecom sector too has witnessed a
structural change, with the private sector accounting for 88
% of the total connections. It is also projected in NTP 2012
to provide affordable and reliable broadband-on-demand by
the year 2015 and to achieve 175 million broadband
connections by the year 2017 and 600 million by the year
2020 at minimum 2 Mbps download speed and making
available higher speeds of at least 100 Mbps on demand.

Department of Telecommunications (DOT)

Annual Report (2011-12)states that Indian
Telecommunication sector maintained an impressive growth
rate during the current year. Indian telecom network has
926.55 million connections at the end of December11 with
893.86 million wireless connections and it is the second
largest network in the world after China, and one billion mark
also appears achievable. The penetration of internet and
broadband has also improved with 20.99 million internet
subscribers and 13.30 million broadband subscribers across
the country. The future progress of telecommunication in our
country is very encouraging as operators havestarted rolling
out the wireless broadband networks in the country and soon
the services are expected to be available in the entire
country.

Economic Survey of Government of India (2011-

12) has mentioned to make available secure, reliable and
affordable voice telephony and high speed broadband
services to every citizen in India with special focus on rural
and remote areas. It also intends to improve the broadband
experience by enhancing the speed of delivery and to make
India a global hub of manufacturing all electronic products
including telecom equipment with substantial value addition
within the country and safeguard security concerns of the
nation. Economic survey also indicates to achieve One
Nation- Full Mobile Number Portability and to enable free
roaming throughout the country.

Report of the Working Report on the Telecom

Sector for the 12th Plan (2012-2017) suggests that
the Indian Telecommunication sector has witnessed major
changes in the tariff structure. The telecommunication tariff
order (TTO) 1999, issued by the Regulator (TRAI), had
begun the process of tariff rebalancing with a view to
bringing them closer to the costs. Subsequent amendments
to TTO 1999 coupled with enhanced competition has
resulted in gradual and substantial reduction in the tariffs.
Some of the packages offered by operators provide local
calls as low as ½ paisa per second and STD as 1 paisa per
minute. International call charges have also reduced
significantly. During the 11th Plan period, it was projected
that 75% of telecom equipment demand would be met from
indigenous sources; however the actual production was
much lower. During this period, mobile handset
manufacturing began but the production as well as value
addition has been limited in numbers.

Economic Times (November 15, 2012) states that

for the telecom sector it is the regulatory overhang, which
was there, has got partly addressed. One, on spectrum
reframing and the associated cost for the 900 MHz
spectrum, and the second is license fee that the government
will charge whenever the license renewal is completed in two
years time. So the hope for this auction will provide some
sort of benchmark for some obvious things, but does not
look like it is the case. The market is somewhat positively
inclined looking at the fact that there was no irrational
building in the sector. Reliance did not show its stand. So
those issues have got partly addressed and now the market
is probably focusing on the fact that the competitive intensity,
which has been in the industry, could start seeing some
decline. Balance sheet, which was looking very venerable for
most of these companies, is not going to get as much
damaged if the auction had been hugely successful.

Adam Braff, Passmore and Simpson (2003) opine

that telecom service provider even in United States face a
sea of troubles. The outlook for US wireless carriers is
challenging. They can no longer grow by acquiring new
customers; in fact, their new customers are likely to be
migrated from other carriers. Indeed, churning will account
for as much as 80% of new customers in 2005. At the same
time, the carrier’s Average Revenue Per User (ARPU) is
falling.

Dutt and Sundram (2004) identify that in order to boost

communication for business, new modes of communication
are now being introduced in various cities of the country.
Cellular Mobile Phones, Radio Paging, E-mail, Voice-mail,
Video, Text and Video-Conferencing now operational in
many cities, are a boon to business and industry. Value-
added hi-tech services, access to Internet and Introduction
of Integrated Service Digital Network are being introduced in
various places in the country.

T.V. Ramachandran (2005) analyses the performance

of Indian Telecom Industry which is based on volumes rather
than margins. The Indian consumer is extremely price
sensitive. Various socio-demographic factors, rising income
levels, booming knowledge sector and growing urbanization
have contributed towards tremendous growth of this sector.
The instrument that will tie these things together and deliver
the mobile revolution to the masses will be 3 Generation
(3G) services.
Rajan Bharti Mittal (2005) explains the paradigm shift
in the way people communicate. There are over 1.5 billion
mobile phone users in the world today, more than three
times the number of PCOs. India today has the sixth largest
telecom network in the world up from 14th in 1995, and
second largest among the emerging economies. It is also the
world’s 12th biggest market with a large pie of $ 6.4 billion.
The telecom revolution is propelling the growth of India as an
economic powerhouse while bridging the developed and the
developing economics.

ASEAN India Synergy Sectors (2005) point out that

high quality of telecommunication infrastructure is the pillar
of growth for information technology (IT) and IT enabled
services. Keeping this in view, the focus of telecom policy is
vision of world class telecommunication services at
reasonable rates. Provision of telecom services in rural
areas would be another thrust area to attain the goal of
accelerated economic development and social change.
Convergence of services is a major new emerging area.

Aisha Khan and Ruchi Chaturvedi (2005) explain

that as the competition in telecom area intensified, service
providers took new initiatives to customers. Prominent
among them were celebrity endorsements, loyalty rewards,
discount coupons, business solutions and talk time
schemes. The most important consumer segments in the
cellular market were the youth segment and business class
segment. The youth segment at the inaugural session of
cellular summit, 2005, the Union Minister for
Communications and Information Technology, Dayanidhi
Maran had proudly stated that Indian telecom had reached
the landmark of 100 million telecom subscribers of which
50% were mobile phone users. Whereas in African countries
like Togo and Cape Verde have a coverage of 90% while
India manages a merely mobile coverage of 20%.

Marine and Blanchard (2005) identifies the reasons for

the unexpected boom in mobile networks. According to
them, cell phones, based on Global System for Mobile
Communication (GSM) standard require less investment as
compared to fixed lines. Besides this, a wireless
infrastructure has more mobility, sharing of usage, rapid
profitability. Besides this, usage of prepaid cards is the
extent of 90% simplifies management of customer base.
Moreover, it is suitable to people’s way of life-rural, urban,
and sub-urban subscribers.

G.Dhananjayan (2005) conducts a case study on mobile

users of Punjab and concluded that despite the presence of
only four mobile operators in Punjab (against six in most of
other states), due to aggressive market expansion and
segmentation strategy followed by two key operators (Airtel
and Spice), the total mobile population crossed 3.2 million by
October 2004 for a population of just 24.35 million, thus
achieving a penetration level of a whopping 13%. Most
states which are industrially advanced had just 6% mobile
penetration, clearly illustrating the lead achieved by Punjab.