Strategic Thought Transformation - The IIPM Think Tank

S T R A T E G I C I N S I G H T
launched in 1988. India followed in 1995,
when the government issued eight licenses
to eight companies for mobile
services in the four major
metropolitan cities
of Mum- bai, Delhi, Chennai
and Kolkata. This was continued with 34
licenses for 18 territorial telecom circles to
14 companies. It took another two to three
years for services to actually cover many
of the cities in these circles – including
bidding wars to overcome fragmentation
(Box 2).
Today, India is divided into metro
(including Mumbai, Delhi, Calcutta and
Chennai), and three major cellular circles
A, B, and C. In fall 2005, these had 25
percent, 36 percent, 32 percent and 7 percent
of the market, respectively. Between
1996 and 2001, mobile service revenues
grew tenfold in India, to US$980 million.
The same recurred by 2005, when these
revenues soared to US$9 billion. Between
1999 and 2005, Bharti’s mobile subscriber
base, for instance, grew from 122,000 to
12.8 million. As in China, growth has been
driven by pre-paid cards, not by postpaid
contracts (Figure 3).
In mid-2004, the Telecom Regulatory
Authority of India (TRAI) 10 began to move
from the service-specific licensing regime
toward a fully ‘unified licensing regime,’
in order to ensure a technology-neutral
proposition to subscribers, and a balance
between technology and service. 11 Due to
cost efficiencies, Indian operators have
shifted from deploying landline to
deploying mobile. 12
GSM services dominated
almost 80 percent of the
Indian market in 2005.
Introduced initially
as a Wireless Local
Loop (WLL) service,
the role of CDMA
has increased in
India, as well.
Price wars in mobile
services and
drastic falls in the
price of handsets
have boosted the
growth rate and
volume of penetration
dramatically, while contributing
to the rapid consolidation of the operators
and equipment manufacturers (Figure
4). 13 The implications During the past two
years, the minimum effective charge in India
has been halved, while mobile tariffs
are said to be the lowest in the world.
By September 2005, four leading mobile
operators – Bharti (14.1%), Reliance
(20.0%), BSNL (19.0%) and Hutchison
(14.9%) – dominated 68 percent of the
Indian marketplace with their combined
65.1 million subscribers (GSM 50.9 million,
CDMA 14.2 million). Add the shares
of IDEA, BPL, Aircel and TTSL, and the
top-8 operators had almost 84 percent of
the entire marketplace (Figure 5). 14
“India cannot truly move forward unless
we carry with us 70 percent of our
citizens who reside in rural areas,” said
Shri Dyanidhi Maran, Minister for Communications
and Information Technology
last February. 15 In the past, the mobile
handset was the luxury of the wealthy;
today, it is the utility of people. With saturation
in the urban centers, operators can
sustain their growth strategies only by extending
penetration strategies into the vast
rural market – which supports the efforts of
policy authorities to overcome the digital
divide (Figure 6). 16
Competition for the Future:
Mobile Value-added Services
Until the mid-1990s, mobile services were
driven by voice communications and, to
some extent, by text messaging (short message
service, SMS). Today, multimedia cellular
and wireless broadband enable vast
new opportunities. “Global multimedia is
the next big trend,” says Dr. Paul E. Jacobs,
Qualcomm’s new CEO. 17
The trend is rapidly moving toward
mobile media, including mobile phone
television.
From Texting to New Mobile Services
The new mobile services represent four
groups of connectivity:
rich voice and data
the Internet (mobile Internet, mobile
intranet/extranet)
messaging (location-based services,
people communications, such as SMS,
MMS)
personalized content (including information,
entertainment, transactions, data
bases) and, over time, mobile phone
TV.
In the global mobile industry, it was
the music business that first heralded the
new mobile services. In India, the timing
has differed, but not the logic. “The market
for the mobile music downloads is growing
at a scorching pace – over 50 percent a
year, whereas growth of legal conventional
music is stagnating,” says
68
STRATEGIC INNOVATORS
An IIPM Intelligence Unit Publication