 India: Telecoms and technology background
FROM THE ECONOMIST INTELLIGENCE UNIT
India had one of the world's lowest levels of basic telephone penetration, or teledensity, in 2005, with just 4.5 main lines per 100 population. Mobile-phone use is, however, growing rapidly, and wireless subscriptions have now surpassed those of fixed lines. India's telecommunications sector is ripe for growth. Most segments of the Indian telecoms markets are still in an early growth stage. The mobile market in particular is in full swing, with penetration levels remaining below the presumed potential of the market. Broadband is still at an introductory stage.
Substantial progress has been made in liberalising the service sector over the past two years, and the impact on the telecoms market performance has been marked. There are still issues with regards to interconnection fees, a unified licensing regime and third-generation (3G) spectrum fees, but India has made significant progress in terms of regulatory clarity and authority.
The government-owned Bharat Sanchar Nigam Limited (BSNL) remains the dominant fixed-communications provider, with a fixed-line market share of close to 90%. Bharti Tele-Ventures, Reliance Infocomm and Tata Teleservices compete with BSNL and have taken market share from the incumbent. On the mobile side, BSNL was a rather late entrant in 2000, but has managed to become a significant competitor over the last few years, as a result of the reach of its network and its low-cost pricing plans. However, Bharti and Reliance have ambitious expansionary plans, which BSNL may find difficult to match.
India has emerged as a major supplier of software and information technology (IT) goods and services, although this industry is overwhelmingly export-focused. Growth remains strong in the main IT services and products sector, but the fastest-growing segment is IT-enabled services and business process outsourcing, which includes call centres, billing and payment services, and technical and customer support.
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SOURCE: The Economist Intelligence Unit
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