The Indian Telecom Story

Posted: September 5, 2010 in Shubham's Posts
Tags: , , , , , , ,
I am thoroughly enjoying the insights being given by Professor Anand Ramchand regarding the role of ICT in society.

His lectures have been extremely engrossing & informative and I have been motivated towards studying the growth of telecommunication in India. There are two prime reasons for this:-

  1. The TED talk by Mr. Iqbal Quadir focuses on how cell phones have been instrumental in drawing a large number of teeming millions out of poverty in Bangladesh in particular and the developing countries in general. This made me focus on telephones.

  2. I belong to India, which is a developing country with a large rural population and millions of people living below the poverty line.

The above mentioned TED talk is given here

The history of the growth of telecom in India is very long and dates back to the times when India was a colony of the mighty British empire.

1851 First military landline from Fort William to Lalbazar (Kolkata) by the British government.
1881 First civilian landline service introduced for the British Viceroy and his team. License granted to the Oriental Telephone Company Limited of England for opening telephone exchanges at Kolkata, Mumbai, Chennai (Madras) and Ahmedabad and the first formal telephone service was established in the country.
1882 Opening of Telephone Exchanges in Kolkata, Chennai and Mumbai. The exchange at Kolkata named “Central Exchange”.
1902 First wireless telegraph station established between Sagar Islands and Sandheads.
1907 First Central Battery of telephones introduced in Kanpur.
1913-1914 First Automatic Exchange installed in Shimla.
1927 Radio-telegraph system between the UK and India, with beam stations at Khadki and Daund, inaugurated by Lord Irwin by exchanging greetings with the King of England.
1933 Radio-telephone system inaugurated between the UK and India.
1953 12 channel carrier system introduced.
1960 First subscriber trunk dialing route commissioned between Kanpur and Lucknow.
1967 First Crossbar Trunk Automatic Exchange commissioned in Chennai.
1967 Telecommunications Consultants India Limited (TCIL) set up to provide Telecom Consultancy.
1971 The Earth Station ARVI Introduced the first operator dialled service to International Subscribers.
1973 First Intercontinental Telephone Exchange Commissioned.
1975 First PCM system commissioned between Mumbai City and Andheri telephone exchanges.
1976 First digital microwave junction introduced.
1976 First International Subscriber Dialing (ISD) introduced between Mumbai and London.
1978 First Satellite Station for domestic communications established at Secunderabad.
1979 First optical fibre system for local junction commissioned at Pune.
1980 First satellite earth station for domestic communications established at Secunderabad, A.P..
1980 First Mobile Telephone Service Introduced in Delhi.
1982 Stored Program Control Telephone Exchanges at Mumbai, Delhi and Chennai.
1983 First Analog Stored Program Control exchange for trunk lines commissioned at Mumbai.
1984 C-DOT established for indigenous development and production of digital exchanges.
1985 First mobile telephone service started on non-commercial basis in Delhi.
1986 MTNL Established.
1987 First Digital Co-axial 140 mbps cable between Ahmedabad and Rajkot commissioned.
1988 Gateway Packet Switched Service introduced.
1991 First Packet Switching Network I-net set up.
1993 First ISD Across sea on August 16, when R. Vasudevan, Director General, Shipping dialled the Tanker Jawaharlal Nehru anchored off the Coast of Kutch.
1994 Commissioning of SEA-ME-WE-2 Submarine Cable System.
1995 Commissioning of Satellite Earth Stations at Chennai and Calcutta.
1996 Integrated Services Digital Network (ISDN) Service went commercial.
1997 Telecom Regulatory Authority of India (TRAI) set up.
1997 Wireless in Local Loop (WLL) Telephone System introduced by MTNL, Delhi.
1998 Introduced New Frame Relay Services.
2000 On 1st October, DoT created BSNL as a Public Sector Unit.

Indian Telecom Sector

The telecom services have been recognized the world-over as an important tool for socio-economic development of a nation and telecom is one of the prime support services needed for rapid growth and modernization of various sectors of the economy. It has particularly become important in recent years because of enormous growth of information technology and its significant potential for the impact on the rest of the economy. The telecom sector, which has the multiplier effect on the economy, has a vital role to play in economy by way of contributing to increased efficiency. The available studies suggest that income of business entities and households increases by the use of telecom services; consequently it contributes to the growth in GDP.

Here is how the Government of India views the contribution of the Indian Telecom Sector on India’s GDP. The following news article has been reproduced from published on Thursday, 6th August, 2009.

Telecom sector contributes 1.5 p.c to India’s GDP

MUMBAI, INDIA: The contribution of Indian telecom sector to the growth of India’s economy is immense. It is directly contributing more than 1.5 per cent GDP of the country, and has a multiplier effect on growth because of connecting the people and business around it, said the Minister of State for Communication and Information Technology, Gurudas Kamat.

While launching Tata DOCOMO service in Mumbai today the minister also observed that the Indian telecom Industry is the second largest wireless market in the world with a total wireless subscriber base of 435 million.

He said India is targeting to reach a subscriber base of 771 million by 2013.

“In addition to this, we have nearly 37.66 million landline subscribers. India has one of the cheapest cell phone rates in the world,” he said.

The minister observed that “connecting rural India” for both voice and data connectivity is the main target of India’s telecom industry.

Expressing satisfaction over the fact that the 74 per cent of new wireless subscribers are now coming from our rural areas as compared to 42 per cent from urban, Kamat said that we also mandated the Government-owned telecom providers to accelerate rural broadband wireless deployment this year.

Talking about the India’s telecom equipment manufacturing sector, the Minister said this sector is also set to become one of the largest in the world, by 2010. These manufacturing facilities, apart from making India self reliant, generate a lot of secondary employment.

Sustained government efforts in this area have yielded results and have enabled to achieve the objective of making India as a leading manufacturing hub for electronics, IT and telecom, he said.

Kamat said that the government is working on many more initiatives to further improve the telecom sector.

These new initiatives include to bring inclusive connectivity to both rural and urban India;mobile number portability which will not only give more choices to customers but also lead operators to further improve their services to retain their customers and auctioning spectrum for 3G and WiMAX within this financial year.

Government of India recognizes that the provision of world class telecom infrastructure is a key to rapid economic and social development of the country. Telecom is one of the few sectors in India, which has witnessed the most fundamental structural and institutional reforms since 1991. In recent times, the country has emerged as one of the fastest growing telecom markets in the world. Indian telecom network had about 429.72 million subscribers as on 31st March, 2009 and about 562.21 million as on 31st December, 2009.

Growth in Subscriber Base

Growth in Subscriber Base

(Annual Report of TRAI (Telecom Regulatory Authority of India) 2008-2009)

With 525.15 million wireless connections as on 31st December, 2009, the Indian wireless network has become the second largest wireless network in the world after China. The future progress of telecom in our country is very encouraging. The current addition of about 12 to 15 million connections per month puts the telecom sector on a strong footing. It is worth noting that the target of 500 million connections by 2010 has been achieved in September, 2009 itself.

Present Status of the Telecom Sector in India

  1. Indian telecom market is one of the fastest growing markets in the world.

  2. With its 562.21 million telephone connections as on 31st December, 2009, it is the second largest network in the world after China.

  3. It is the second largest wireless network in the world.

  4. About 12 – 15 million connections are being added every month.

  5. The target of 500 million telephone connections by 2010 has been achieved in September, 2009 itself.

  6. Wireless telephone connections are increasing at a faster rate. The share of wireless telephone connections as on 31st December, 2009 is above 93% of the total phone connections.

  7. The share of private sector in total telephone connections is about 82.33%.

  8. Overall tele-density has reached around 47.88%. Urban tele-density has crossed 100% mark whereas rural tele-density is at 21.19% which is also steadily increasing.

Growth in Tele-Density

Growth in Tele-Density

(Annual Report of TRAI (Telecom Regulatory Authority of India) 2009-2010)

The opening of the sector has not only led to rapid growth but also helped a great deal towards maximization of consumer benefits as tariffs have been falling across the board as a result of healthy competition. Telecom sector has witnessed a continuous rising trend in the total number of telephone subscribers. From meager 22.8 million telephone subscribers in 1999, it has grown to 54.6 million in 2003 and further to 429.72 million as on 31st March, 2009. The total number of telephone connections stands at 562.21 million as on 31st December, 2009 showing an addition of 132.49 million during the period from March to December of 2009 only. Wireless telephone connections have contributed to this growth as the number of wireless connections rose from 3.57 million as on 31st March, 2001 to 13.29 million as on 31st March, 2003, 101.86 million as on 31st March, 2006, 391.76 million as on 31st March, 2009 and 525.15 million as on 31st December, 2009. The landline connections have shown an increase from 32.70 million as on 31st March,  2001 to 41.42 million as on 31st March, 2005 but then started declining to 40.22 million as on 31st March, 2006, 37.96 million as on 31st March, 2009 and 37.06 million as on 31st December, 2009.

A major aspect has been the growth in the wireless sector. The growth of wireless services has been substantial, with wireless subscribers growing at a compound annual growth rate (CAGR) of 60 per cent per annum since 2004. Today, the wireless subscribers are not only much more than the wireline subscribers in the country, but also increasing at a much faster pace. The share of wireless phones has increased from 5.26 per cent in 1999 to 93.41 per cent in December 2009. On the contrary, the share of fixed landline has steadily declined. The private service providers adopted wireless technology since it was easy to roll out wireless telecom services. Wireless phones have increased as they are preferred because they are convenient and affordable. As a result, telephones today have come within the reach of common man.

The following video (kindly right click the image to get options) gives the projection by ANI on 20th June, 2009 regarding the future of mobile subscriber base in India.

Mobile subscriber base to exceed 771mn in 2013

Key Points

According to my understanding the following are the key points of the Indian telecom sector and its growth.

Supply Severe competition has led to tremendous improvement in the quality of service to the customers
Demand The penetration is still low, particularly in the rural segment, and the tariffs are falling gradually, demand will continue to remain high in the foreseeable future across all the segments. There shall be greater demand for the value added services
Barriers to entry High capital investments, well-established players who have a nationwide network, high license fee and falling tariffs
Bargaining power of service providers There is intense competition for subscribers which has reduced the bargaining power of the service providers
Bargaining power of customers A wide variety of choices available to customers both in fixed as well as mobile telephony has resulted in increased bargaining power of the customers
Competition Competition has intensified with the entry of new cellular players in select circles. The gradually falling tariffs are going to make life difficult for the new players

Here is a very brief and interesting talk which very broadly shows how India is getting transformed from a slow moving elephant into an agile tiger, primarily because of the empowerment of the masses brought about by cell phones.


  1. International Telecommunication Union
  2. Telecom Regulatory Authority of India
  3. Department of Telecommunications, Government of India
  4. Cyber Media
  5. The TED Talks
  6. Rediff iShare
  7. YouTube
  1. anand says:

    Shubham, it’s a fantastic write up on the current state of affairs in India. Very informative!

  2. shubhamgoyal says:

    Thank you, sir !!

  3. […] that many in developing regions, nothing much was happening.  But an inflection point occurred, in India for example, around 2004. Much the same happened in […]

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