Indian market overview

India Study
TEKES NETS and FENIX Programs

Vipul Chauhan
Country Manager
Finpro India

10. July 2004

Table of Contents

• Chapter 1: Market Overview
• Chapter 2: Service Providers
• Chapter 3: Internet Service Providers
• Chapter 4: Equipment Manufacturers
• Chapter 5: Content Business
• Chapter 6: Telecom Software Vendors
• Chapter 7: Future Challenges
• Chapter 8: Strategies
• Chapter 9: Finnish Companies in India
• Chapter 10: Conclusions

India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 2

Executive Summary

• Lowered call tariffs are a major industry growth driver
• Wireless Subscriber growth will continue around 10m users/year
• India is primarily a low priced handset market (100-150 Euro)
• Prepaid will continue to dominate in both GSM and CDMA segments
• Operators are experiencing low ARPU because of lowered call tariffs,
thus they are focusing upon content aspect
• Games and content should to be developed keeping local trends and
tastes in mind
• GPRS and MMS are here, but fail to gain subscribers as compatible
handsets are expensive
• SMS based applications, services are most sucessful so far
• Internet penetration is low but the industry is growing at a rapid pace
• Broadband & Wi-Fi are here, but too expensive for general public
• Dial-in is the most preferred mode for internet access
• To sell services to Indian companies, you need a local contact


Chapter One
MARKET OVERVIEW
VIPUL CHAUHAN

Evolution of Communications in India

EDGE

CDMA
2000 1x

Wi-Fi

GPRS

Broadband

GSM

Internet
Cable TV
First
Phone

1882 1990 1995 2001-02 2003 2004 - onwards


Evolution of Wireless communications
in India
No 3G Licenses have been
issued so far W-CDMA

CDMA
3G 2000 1x
EVDO

TD-
SCDMA

CDMA
GPRS
2.5G 2000 1x

MMS

2G GSM SMS WAP

1996 1999-00 2001 2002 -03 2003 2004 - onwards


The first GSM call was made in 1996 on Bharti Cellular Netwrok in New Delhi.

Dual Band GSM 900 & 1800.

SMS service started in the year 2000

Present CDMA standard is CDMA 2000 1X

Circle and License Areas Policy

• Entire Nation is
divided into 4 circles
– Metros, A, B & C
Metro circle – Delhi,
Mumbai, Kolkata &
Chennai

A Circle: States of
Maharshtra, Gujarat,
Andhra, Karnataka &
Tamilnadu

B Circle: States of
Kerala, Punjab,
Haryana, Uttar Pradesh,
Rajasthan & Madhya
Pradesh Circle Definition: Areas
classified on the basis of
C Circle: States of Faded area in the regions shows
subscriber and revenue
Himachal, Bihar, Orissa, potential, where Metro cellular network coverage
Assam, Kashmir and
circle has the highest
North East States
potential and C circle has
the lowest

Each circle requires a different license. As in case of Metro cities, each city license is
sold separately.

Operators can sell their license to any operator in case they are willing to exit from
the license area.

Call Tariffs in India

Call Specifications Tariff Basis Tariffs

Incoming Calls (fixed to • All incoming calls on • All incoming calls are free in Home Network
mobiles are free since (Postpaid & Prepaid)
mobile, mobile to mobile, mobile
April 1 2002
to fixed) • Incoming is not free on roaming, 0,02 Euro – 0,07
• Incoming calls on fixed Euro/minute
line are free

• Distance specific call • M to M outgoing in home network: 0,04 - 0,04
Outgoing Calls tariffs i.e. home network, Euro/minute
(all outgoing calls on all
51 - 200 kms, 200- 500 • M to M outgoing Intercity call < 200 km: 0,04 Euro/minute
networks (roaming,
kms, more than 500 kms • M to M outgoing intercity call > 500 km: 0,07 Euro/minute
interconnected) are priced
and International
between 0,02 – 0,8 • M to Fixed outgoing home network: 0,05 Euro
Euro/minute) • Calling Party Pays
• M to Fixed outgoing < 200 km: 0,06 Euro – 0,08 Euro
• M to Fixed outgoing > 500 km: 0,12 Euro
• M to International: 0,80 Euro – 0,35 Euro
• SMS Receiving: Free
• SMS Sending: 0,03 Euro (domestic) 0,09 Euro
(international)


India presently follows a CPP model, whereby calling party pays.

Incoming calls were made free since April 1, 2002 and that has substantially boosted the subscriber growth rate
in India. However, making incoming calls free also reduced operator ARPU.

For outgoing calls there are multi-level tariffs; (applicable to all Mobile and fixed)

•Mobile to mobile & Vice Versa
•Mobile to fixed & Vice Versa
•Mobile to CDMA & Vice Versa
•Mobile to International & Vice Versa

Roaming is another important aspect when talking about voice revenues

All Indian operators have bilateral agreements among themselves for providing national roaming facility (GSM
+ CDMA operators).

For International roaming, Indian operators have tied up with other operators elsewhere in the world to
provide International roaming services.

Tariffs in India are set as per the distance between the cities. There are four levels for this tariff structuring
based on distance, i.e.:
•Distance upto 51 KM is classified as home network
•Distance from 51-200 KM is the first level for determining inter-city calls, followed by
•200-500 KM
•500 and beyond KM

International calls are tariffed as per the regions like US and Canada, Europe and Pacific rim etc.

Fixed Line Segment Overview

• A monopoly sector controlled by Government until
1996
• Today 6 service providers, 2 State Owned, rest
private
• Subscriber base 43,18 million (May 2004)
• Sector growth slowed since mobile tariffs fell
• Only 1,83 million subscribers are added over last
one year (May 2003-May 2004)
• Increased competition from CDMA Services


Wireless Segment Overview

• 29 million GSM, 9 million CDMA subscribers (June 2004)
• Both GSM 900 & 1800 present
• CDMA operators use 1800 Mhz Band
• Number portability is missing
• Government is yet to make decision on 3G spectrum
• India's telecom sector is carved into 23 circles or zones, classified as
"metro" and "A", "B" and "C" circles, based on subscriber potential
• Unified licensing introduced in 2004
• As a part of Unified license policy, 15% of operator revenues go to
the government
• To operate, each circle requires a different license
• Lowest call tariffs in the world -- as low as one Euro cent a minute on
average


Mobile Value Chain Analysis
Billing

MMS, GPRS

Application Service
Provider (ASP)
Hosted Application
Instant Messenger

Infrastructure Network
Equipment Equipment Network Subscription Handset
Vendors Vendors Operators resellers Resellers End User

Revenue
Sharing
Model

Content Content Provider Content Ringtones, Logos,
Developers Aggregators/ Email, Wallpaper
Portals Downloads

In GSM segment opeartors do not offer handsets along with their subscription, like
in Europe or America. Consumers have to go and buy the handsets of their choice
at numerous handset Kiosks in each city. These Kiosks are multi purpose kiosks
and one can buy not only handset but also a GSM connection, phone accessories
etc.

MMS and GPRS are offered via operators, while majority of other content like
Logos, Ringtines, Picture Messages are offered via portals.

When speaking of revenues, operators are in dominant position. Major share of
revenues goes to operators. For example 80% of revenue from a Ringtone
download goes to operator, rest to the portal.

Road to 3G in India

Digital generations

2G 2.5G 3G

GPRS, CDMA EDGE W-CDMA?

No decision on
Nokia, Ericsson, 3G Spectrum yet !
Motorola have
delivered GPRS
networks

GPRS is widely offered by major operators. BPL was the first operator to Launch
GPRS in India, followed by Airtel, Hutch and Idea.

Recently the two GSM operators- Hutch and Idea, unveiled their EDGE Networks

According to a submission made to the Telecom Regulatory body “TRAI” by T. V.
Ramchandran, director-general of the Cellular Operators Association of India
(COAI), “The allocation of the PCS 1900 band would not only result in a major
interference to the services offered by operators using GSM technology but also
block the progress of 30 million subscribers to 3G.”

There are two important components in a mobile service: uplinking (a call or data
sent from your mobile phone to a base station) and downlinking (receiving a call or
data from base station to mobile phone).

While uplinking, the airwaves in the PCS 1900 band clash with those in 1800 band
(allotted to operators using GSM technology) that downlink the call and data.

While downlinking, the PCS 1900 band interferes with the IMT 2000, which is the
uplinking mode for 1920-1980 MHz paired with 2110 to 2170 Mhz (the core band
identified by the International Telecommunications Union for 3G services).

ISP Segment Overview

• Internet Services launched in India in August 1995
• 189 operational ISPs as of Dec. 2003
• Total Licenses issued 540
• Over 8.500 leased line customers, growth rate 9,6%
• 8.850 Cyber cafes as of Dec. 2003
• Total Broadband customers: < 150.000 (DSL, ADSL)
• 118 ISPs given permission to offer VoIP
• Minute usage in Q4 2003 for VoIP was 20,1 million minutes, a growth
of 41,5% over last quarter
• ARPU: 5 € approx.
• PC Penetration in India: 11 per 1.000 people
• Internet users: 18 million
• Internet penetration: 1,7 % of the population
• PC sales in 2003-04: > 3m units, 30% growth

•ISP License is one of the most liberal License, wherein no License Fee has been
levied on the ISPs till 31st October 2003.Thereafter, a token license fee of Rs. One
per annum is payable w.e.f. 1st November 2003.
•ISPs have been permitted to set up International Gateways by having business
arrangement with Foreign Satellites Providers and Collaborators.
•ISPs have been permitted to provide last mile access using Radio and Fiber Optics.
•ISPs have been permitted to provide ISP Services through Cable T V
Infrastructure / Operators.
•The Government has initiated an ambitious plan to developed National Internet
Backbone (NIB) in the country.
•100% FDI allowed through automatic route to the ISP (without gateways), 74% in
case of ISPs setting up International Gateways.
•ISP's permitted to set up Submarine Cable Landing Stations either singly or jointly
in collaboration with International Undersea Bandwidth Carriers.
•National Long Distance Services opened to private sector on non-exclusive basis.
•International Long Distance Services opened up to private sector on non-exclusive
basis w.e.f. April 1, 2002

•Internet Telephony Services opened up to ISPs w.e.f. April 1, 2002.
•De-licensing of W-LAN in 2.4 Ghz band using IEEE 802.11b technology
•Reduction of Performance Bank Guarantee by 50% for Category A & B ISPs and

Telecom Software Vendors

• Outsourcing gave boost to the Telecom Software
Industry
• Industry revenue: 1,2 billion Euro (2003-04) a
growth of 18%
• A middle level expert costs < 600 US$ a year
• Big pool of skilled workforce, 50 out of world’s 74
SEI CMM Level 5 companies are in India
• Multi level services
• Device architecture
• Symbian, Series 60
• Content Applications
• Web, GSM, GPRS, CDMA, 3G applications


For the ICT industry and its customers, the primary driver for offshore outsourcing
is the reduction of costs. Some estimate that costs can be reduced by 40 percent
and sometimes by as much as 70 percent for offshore destinations such as India,
China and the Philippines. These cost savings are directly attributed to reduced
labour and other business costs.

A snapshot of average base salaries for programmers around the world shows that a
US programmer cost on average approximately US$ 63,350 in 2002, substantially
more than many of their overseas counterparts. A professional of similar skills
costs US$ 40,000 in Australia, US$ 5880 in India, US$ 6564 in the Philippines, US$
7200 in Malaysia and US$ 8952 in China.
In some cases, like for China, IT and ITES outsourcing may assist global or
overseas firms to establish a presence in the region of the outsourcer (e.g. China or
Asia), hence assisting those companies to expand their businesses globally and
benefiting their home economies.
In the particular case of India, its success first in software development and now in
IT Enabled Services (ITES) is driven by a number of additional advantages. A
focus on demonstrating quality services has proven to be a significant factor in
gaining market share. According to NASSCOM, the Indian software industry
continues to receive international recognition for its quality in software
development. Out of the top 300 companies, more than 216 have already acquired
ISO 9000, SEI or other certification. As far as SEI CMM (Software Engineering
Institute Capability Maturity Model) Level 5 is concerned, the Indian software

Content Business Overview

• Indian content market is mainly SMS driven
• Almost 1 billion SMS per month
• Most of the downloads and service requests are oriented
through SMS
• M-banking also available – SMS based
• GPRS penetration 8-10%
• Overall content market estimated at 5 million Euro
• SMS and MMS account for 10% of operator ARPU
• Downloadable content available through portals, operator
portals
• M-ticketing is missing


Industry Growth Drivers 1(2)

• Fixed Line Segment
• Capacity expansion of fixed line exchanges helped consumers avail quick
connections
• Quick connection availability boosted no. of fixed line connections during 1985
- 1995

• Wireless Segment

• Vast geographic expanse of India acted as a catalyst to boost mobility
• Low call costs since 2002 fueled the wireless segment
• Narrowing gap of call costs between fixed and wireless convinced customers
to subscribe to wireless connections
• Nationwide roaming facilities on GSM
• SMS facility
• Internet + Subscription bundling
• Reduced cost of handsets (affordability factor)
• Customs duties have been reduced from 10% to 5%
• In remote areas where providing fixed line connections was difficult, wireless
did the magic
• CDMA fixed wireless gave customers 3 in one advantage – Mobility, internet
and messaging Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 16
India

Until 1996, India was a pure fixed line market.

Industry Growth Drivers 2 of 2

• ISPs
• Advanced communication options like instant messenger
• Voice Communication through VoIP and Instant Messenger
• Lowered tariffs
• Broadband availability
• Always on connection availability
• CDMA Systems helped internet spread further


•Over 78% of the Internet Users are in the age group 18 – 39 years and 75% of the
Internet Users are Males.
•The Capital Cities (New Delhi and Other State Capital) accounts for 79% of
Internet Connections of the Country.
•More than 86% of top Corporate Houses have endorsed that Internet and E-
Commerce is an integral part of their corporate strategic framework.
•Over 76 % of the Internet Users use E-mail Services
•Over 61% of the Users Access Internet from school, colleges, place of work and
Cyber Cafes while 27% access Internet from homes.
•Among the career conscious and education driven middle class, Internet is seen as
critical to success in professional life.
•There are approx 59 million telephone connections (including Mobile) and 8.5
million PC base in India.
•There are approx. 47 million Cable T V Connections out of 92 million TV Sets in
the Country

Growth Inhibitors

• Cultural misunderstandings
• Project management difficulties
• Infrastructure failures
• Language barriers
• Political factors


Market Regulations - Telecom

• The industry is governed under National Telecom Policy -
1999
• full competition through unrestricted private entry in almost all service sectors
• end to monopoly in the national and international long distance segment
• Provide a telephone on demand by 2002.
• Achieve a teledensity of 7 by the year 2005 and 15 by the year 2010.
• Increase the rural teledensity from 0.4% to 4% by the year 2010 with greater
reliability.
• Cover all villages by 2002.
• Provide Internet access to all district headquarters by the year 2000.
• Provide high-speed data and multimedia capability using the latest technologies to
all town with a population greater than 200,000 by the year 2002.
• Encourage rural telecommunications through affordable tariffs and imposing rural
coverage obligations an all fixed-service providers.

• Unified Licensing introduced in 2004
• No difference between fixed line and mobile segments
• Operators can provide ”ANY” service(s) to their customers by using “ANY”
technology


The NTP 99 has been a positive milestone for the industry.

After NTP 99, industry attracted foreign investments in form of equity from global
players like Vodafone, BT, AT&T, Warburg, Hutchison etc.

In early 2004, there was a major rift among CDMA and GSM operators because of
licensing conditions. GSM operators blamed that CDMA license holders are not
allowed to offer National roaming as their license permits them to offer service
within a Short Distnace charging area known as SDCA. The matters were taken to
Telecom Dispute Settlement Tribunal TDSAT. The government however
understood it basic mistake in license drafting and as a result offered Unified
Licensing. Now all operators can offer all services using any technology platform.
They will, however be supposed to pay unified license fee deficits.

Market Regulations - ISPs

• Industry governed under Indian Telegraph Act, 1885, Indian Wireless
Telegraphy Act 1933 and TRAI Act 1997
• A Company registered in India under the Companies Act, 1956 will
be eligible to apply for being an ISP
• Licenses area divided into Zones known as “Circles”
• Three categories of licenses
• A: All over India
• B: 20 Territorial Telecom Circles
• C: Remaining Areas
• The validity of license is initially for a period of fifteen years
• Interface Requirements
(i) Subscriber Dial up Access
2 wire access over PSTN for modem interface.
2 wire dial up access on ISDN Basic and Primary rate interfaces.
(ii) Leased Line Interface
64K, N x 64K or 2.048 Mb/s, N x 2.048 Mb/s Leased lines.
Frame Relay.
X.25
ATM
G. 703
• ISPs will be free to fix their own tariff

Since 1995, a number of countries have permitted VOIP as a technology option to
the classical PSTN as well as Internet Telephony so as to provide a cheaper
alternative to classical PSTN calls. In India, the ISPs were allowed to offer Internet
Telephony Services with effect from April 1, 2002. With the choice availability of
Toll Quality (PSTN) and Non-Toll Quality options, Internet Telephony has thrown
open Long Distance Telephony to those sections of Society, which could not afford
the same earlier. Further, Internet Telephony is proving to be a key driver for local
entrepreneurs to set up Community Information Centers / Cyber-kiosks, etc even
in small towns and villages. In fact it has made distance learning, Tele-medicine and
e-governance etc a reality in Indian context.
More than 90 ISPs have been granted license for offering Internet Telephony
Services. There has been a substantial growth in the Cyber Café / offering Internet
Telephony Services. It is expected that Internet Telephony will provide fillip to the
demand for network facilities including bandwidth, last mile access and other
connectivity resources and bridging the digital divide within the Country. However,
an important issue needing immediate attention is tackling the Internet Telephony
Grey Market which is estimated to be about 90 per cent of the total Internet
Telephony market in India and requires concerted efforts by Government and
industry. It is imperative that all leading ISPs including VSNL, BSNL and MTNL
join hand to tackle the menace.

IPR & DRM Issues

• Indian Copyright Act 1957 governs the IPR and Copyright issues
• India recognizes digital signatures and e-documents at par with
paper documents
• Anti Piracy laws are strict but…. wide scale illegal copying of
softwares, music cds, mp3s, DVDs and Video CDs
• Software Piracy is among the highest in the world
• Metro cities like Delhi and Mumbai have Piracy hubs, where almost each and
every software is available
• Software piracy exists beacuse consumers usually buy Assembled PCs having
illegal software copies
• Filesharing (software and music) through Kazaa and Morpheus are
prevalent
• Spam is an offence and it is madatory for operators and ISPs to
deploy spam filters
• Attempt to crack digital encoding of copyright software, music, movie
etc. is an offence ------ BUT ONLY IF YOU ARE CAUGHT !!!!!


Protecting the IPR is a complex issue in India altogether.Software and music piracy
is immense in the country. India is a huge piracy hub in Asian continent. Majority
of piracy is about softwares and Operating System.Though government has strict
laws, it is difficult to completely wipe out piracy.

In India the intellectual property protection with regard to a computer software is
governed by the Indian Copyright Act, 1957 (hereinafter called “ The Act” ). A
person claiming to be a creator of a software programme, can claim a copyright
over it. Unlike in the United Kingdom, which has a separate law governing a
database, be it computer generated or otherwise, called the “database right”, in
India there is no special right apart from the copyright that can be claimed by such
a creator. However under the Act, registration of a copyright is not mandatory, but
advisable. The Act, applies only to works first published in India, irrespective of the
nationality of the author. However the Government of India has the power to
extend the benefits of the Act to works first published in any foreign country.
Any work first published in any country which is a member of the Berne
Convention or the Universal Copyright Convention will be accorded the same
treatment as if it was first published in India. And for this purpose a body
incorporated under any law of a country mentioned in the schedule so brought out
by the Government of India shall be treated in the same manner as if it was
incorporated under the Indian law.
As per the Act, computer software falls under the category of “Literary work”,
which has been defined to include computer programmes, tables and compilations

Market SWOT Analysis
Strenghts Weaknesses
• Lowest call tariffs in the world
• Huge wireless subscriber potential
• Market strongly regulated by Govrenment body – Governing
• Fastest growing mobile market in the world
both ISP and Telecom sectors
• Consumers are ready to pay for cutting edge services
• Too many authorities ruling the sector
• Government proposes to hike FDI limit in Telecom to 74%
• Huge potential for low end and cheap handsets
• Unified license regime
• Wide scale Consumer churn in Telecom and ISP
• Wide spread VAS deployment is restricted due to language and
literacy problems
• Primarily a voice based market

Opportunities Threats
• To offer value added services on GSM, CDMA and IP • Low cost service providers – no possibility of breaking even in
short term
• Language independent services
• Weak IPR protection
• Mobile Marketing concepts
• Software and digital content Piracy
• Content influenced bu local culture and Global sucess stories
• Political instability
• M-Commerce
• Regulatory interference
• Unified messaging platforms
• Foreign investment in form of equity or technology


CHAPTER TWO

SERVICE PROVIDERS
Vipul Chauhan

Operators – Fixed, CDMA and GSM

FIXED LINE WLL/CDMA
• BSNL (state owned)
GSM • BSNL
• MTNL (state owned)
• Bharti • MTNL
• Bharti (Touchtel)
• BPL • Reliance
• Tata Telecom
• BSNL • Shyam Telecom
• HFCL
• Hutch • Tata Telecom
• Shyam Telecom
• Idea • HFCL
• MTNL
• Reliance
•Spice Telecom
6 Operators
6 Operators
8 Operators

Telecommunication Segments

Services Entry Policy Players in operation

Basic fixed line • No cap on number of • BSNL in all circles except Delhi & Mumbai held
licences. Separate by MTNL. 5 Private Operators with 31 licences.
licence for each circle.

Mobile • Present cap of 4 • MTNL in Mumbai and Delhi. BSNL in one metro
(GSM+CDMA) operators per circle and and 16 circles. 9 Private companies operating in
metro. 3 private and 23 circles and 4 metros, with 50 licences.
BSNL/MTNL

NLD (National • No cap on number of • Earlier there was a monopoly of BSNL. Now
Long licences. Only all-India Reliance, Bharti and VSNL have been granted
Distance) licences will be granted. licences.

ILD (International • No cap on number of • A monopoly of VSNL until April 2002. Tatas
Long licences. acquired controlling stake in VSNL. Recently
Distance) entry of Bharti, Reliance and Data Access.


The Indian Telecommunications industry is divided into four Service segments:
•Basic Services (Conventional Fixed line + CDMA Fixed line)
•Mobile (GSM + CDMA)
•National Long Distance (NLD) or Subscriber Trunk Dialing (STD)
•International Long Distance (ILD)
•ILD – Voice over internet (VoIP)
The entire country is divided into Telecom License Zones known as “Circles”.
Licenses are awarded to the operators as per the circles, not as per the states.

Each circle requires a different license.

Fixed Line Operators Subscriber Base

34,862,000

BSNL is a public
sector giant with a
huge market share
Public sector
companies hold
majority market share
in Fixed line telephony

4,475,000

609,047 100,438 160 71,932 371,148

BSNL MTNL Bharti HFCL Reliance Shyam Tata

State Owned Private Operators


BSNL (Bharat Sanchar Nigam Limited) is the public sector giant having majority
market share in fixed line telephony.

BSNL is followed by Mahanagar Telephone Nigam Limited (MTNL) which is again
Government owned. MTNL has licenses to operate fixed line services in the cities
of New Delhi and Mumbai only.

The private operator Bharti operates under the brand name Touchtel. Bharti has
been very lucky in penetrating the so called nest of public sector giants.

Fixed Line Market Share
Shyam

Reliance Tata

HFCL
Bharti
MTNL

BSNL

BSNL is a market leader with a
massive 86% market share


BSNL’s Telephone Network includes:

•Local Switching (as on 30.04.2004)
Total Equipped Capacity 46.3 million Lines
Direct Exchange Lines 35,4 million Lines
•Village Public Telephones as on 30.04.200: 4,50 million
•STD StationsNumber of STD Stationsas on 30.04.200431,733
•Transmission Systems as on 30.04.2004
Coaxial 6024 kms.
Microwave 63249 kms.
UHF 45,130 kms.
Optical Fiber 0,45 million kms.
•Satellite Based Services (as on 30.04.2004)
Total Number of MCPC –VSATs: 301
Number of IDR ROUTES: 71

STD: Subscriber Trunk Dialing (abbreviation for Intercity calls)

Operators
Operator Subscribers Range of Services Service Areas

BSNL 34,86 million Fixed line network, GSM, CDMA All over India
(WLL), Internet, MPLS VPN, Unified
Messaging, IN, ISDN,Leased line,
long sitance calling, international
gateway

MTNL 4.47 million Fixed line network in cities of DELHI Only in New Delhi and
and BOMBAY only. GSM, CDMA Bombay
(WLL), Internet, IN , Unified
Messaging, ISDN,Leased line, long
distance calling

BHARTI 609,047 Fixed line network, GSM, DSL, IN, Delhi, M.P,
VPN, International gateway

HFCL Infotel 100,438 Fixed line, Broadband DSL, CDMA Only in State of Punjab


As already described the entire country is divided into telecom circles and operators
are required to have licenses as per the respective circles.

With the entry of more and more private players in the fixed line telephony, the
competition is becoming fierce, as a result operators are now focusing upon
offering various services to the consumers along with their fixed line connections.

BSNL, which is a market leader in fixed line segment, also offers I-NET, India’s
x.25 based packet Switched Public Data Network is operational in104 cities of the
country. It offers x.25 x.28 leased, x.28 Dial up (PSTN) Connection) and frame
relay services. It had 4661 I-Net connections all over India as of Dec. 2003.

Operators

Operator Subscribers Range of Services Service Areas

Reliance 160 Fixed line network, CDMA (WLL), Gujarat, Haryana, Punjab,
Internet, VPN, Unified Messaging, Delhi, WB, UP(E),
IN, ISDN,Leased line, long sitance
calling, international gateway,
nationwide fiber optic network

TATA 371,148 Fixed line, CDMA, VPN, Centrex, AP, Delhi, Gujarat,
Broadband, ADSL, DSL, Karnataka, Tamil Nadu,
Conference services Maharastra

SHYAM TELELINK 71.932 Fixed line network, International Only in Rajasthan
gateway, CDMA


Fixed Vs. Mobile - Statistics

45
• Mobility is fast catching up with fixed line
Millions

40
35
30 • Mobile subscribers are expected to cross fixed
25 line subscribers by mid 2005
20
15
10
5
0
Fixed GSM CDMA
45

Millions
40

35

In Telecom circles like Delhi, Punjab, 30

Haryana and Mumbai Mobile users have 25

crossed over fixed line users already 20

15

10
Fixed Mobile


The difference between the numbers of fixed line and mobile subscribers is fast
narrowing.

Low tariff structures offered by mobile operators are attracting consumers to switch
over to mobile phone subscriptions. This trend has a two way side effect on fixed
line telephony, first fixed line operators are finding it hard to reduce consumer
churn, second their ARPU has taken a big leap downwards.

Reduced mobile tariffs could be explained as the most prominent reason for
increased mobile subscriber base.

Facilities like SMS, MMS further attract consumers to shift from fixed line services
towards mobile.

GSM Segment Overview
• GSM introduced in 1995
• One of the fastest growing mobile markets in the World for
GSM
• Subscriber growth rate for Jan. 2003-2004 was 200% approx.
• 35 networks on 900 Mhz, 11 on 1800 Mhz Technology
• Presently, approximately 1 million GSM subscribers are added
every month
• Unified license system introduced by government in 2004
• 3G spectrum decision is awaited


GSM Growth Drivers 1 (2)

• 1st wireless communication standard in India
• Nationwide roaming available in Prepaid and Postpaid
• European and USA roaming widely available
• Wide handset options - high end and low end
• Camera Phones
• Low call tariffs fuelled the growth since 2002
• Large unsatisfied demand
• Affordability: Middle class embracing cheap low-cost services
• Low entry barriers
• Large urban take-up due to aggressive marketing by Telcos


GSM Growth Drivers 2 (2)

Call costs have fallen 0.31
drastically over 90%
Fallen call costs have been a
major growth driver for wireless
industry (especially GSM)
0.16
Call costs in € from 1996 – Present day
Operators are worried over
falling ARPU, therefore a minor
consolidation is seen in costs 0.08
this year 0.06 0.05
0.04
During festivals, special offers
are introduced by operators for
international dialing 1996-97 1997-98 2000-01 2002-02 2003-04 2004-onw ard


Lowered call costs are the major driving force behind the industry growth. It is now
possible for an individual to afford making calls.

On one side where call costs have boosted the industry growth, as a side effect
ARPU has shown a negative growth.

From last year onwards, operators are now looking towards streamlining their
ARPU, therefore one can see minor escalation in call costs towards the end of last
year.

Wireless Subscribers Growth – GSM

India presently is one of the 28,153,674
fastest growing mobile markets in
the World, with Growth rate in
GSM segment during 2003 21,991,743
touching nearly 200%

10,600,000

5,478,932
3,107,449

Dec. 2000 Dec. 2001 Dec. 2002 Dec. 2003 May-04
Tim eline

*Subscribers in Millions


The subscriber growth saw a phenomenal increase from 2002 onwards. This was
mainly due to lowered call tariffs and full scale implementation of SMS services all
over India. December 2002, where India touched the 10 million mark could be
defined as a milestone for Indian wireless industry.

Subscriber growth continued from 2002-03 and there were close to 22 million
subscribers as of December 2003.

Two main elements for this phenomenal growth are 1. lowered call tariffs & 2.
Free incoming calls

Consumers who were once reluctant to subscribe to mobile subscriptions founded
feasible and convenient to avail as now there was hardly any difference between the
monthly bills compared to fixed line, and mobility was definitely a crucial element.

The above phenomena in India is taking shape because of the presence of huge
middle class population. On an estimate there are some 300 to 350 million people
belonging to this group in India. Unlike a car or a television set (where one is
enough in the family) with the lowered call tariffs it became possible even for family
members to own a mobile phone each.

Indian GSM Industry Revenues

1.56

1.18

Industry revenues show a
increase of over 30% over
last year Revenues in billion €

2002-03 2003-04


The increase in revenue reflects the new subscriber additions.

Market Developments since 2001

in 2001 in 2004
Bigger operators
acquired small
players to
18 GSM consolidate their 9 GSM
subscriber base
Operators and to be able to Operators
counter low tariff
CDMA operators


India is a vast country with over 3000 Kms of distance from north to south and
similarly from east to west. Covering this huge scope of land became a challenging
task for the operators, as a result many failed and vanished from the business
because the industry demanded huge capital investments and some of them were of
course unable to do so.

The above scenario triggered two situations:
•Smaller operators sold their licenses to big players
•The bigger players seeing an opportunity to expand, acquired smaller operators

Mobile Operators Subscriber Base -
GSM

Bharti is the undisputed 6,761,367
leader among GSM
operators
5,254,117 5,148,048
Bharti was the first
mobile operator in India

3,721,773

1,882,754

1,208,890
1,026,377
850,831

230,550

Bharti BSNL Hutch Idea BPL Spice Aircel MTNL Reliance


Aircel is recently acquired by HUTCH for an estimated amount of 223 million
Euro.

Market Share – GSM operators

Big private operators like Bharti and Hutch each
have recently acquired 2 other smaller operators
State Owned
25%
MTNL Reliance
1% 3%
Aircel
4% Bharti
Spice 26%
5%
BPL
7%

Private
Idea 75%
14%

Hutch
20%
Private operators lead the GSM business
BSNL
20%


Operator ARPU for 2003-04

9.90
ARPU dropped by 17% in 2003-04
8.43 8.36
Q4 compared to 9,9 € in Q1 8.05
7.32 7.35 7.60
Subscriber base of monthly ARPU 6.80
9,25 € or less has gone up to 46%
in 2003 compared to 28% in 2002

ALL INDIA
BPL

Hutch

Idea

Reliance
Bharti

Spice
Aircel

Amount in €


During the days when incoming was not free, operator ARPU was almost twice as
that of today.

Despite of offering various data services over their networks, operators have been
unable uplift the ARPU. This shows that India still is mainly a voice market.

On an estimate 80% of operator revenues are voice based and the remaining 20%
constitute of all the data traffic.

In such a scenario, operators have a big challenge not only to introduce more and
more attractive content but also to see that they add new subscribers on the basis of
content not voice. This however will be a big challenging task for Indian operators
as promoting data services where roughly 45% of the population is still completely
illiterate. To add to the complexity is the language scenario in India. There are 18
languages and 844 dialects and offering streamlined data services in all of these
languages is by no means a simple task.

SMS is the only thing which is available in different languages.

ARPU vs. Subscriber Statistics

29

24.43

ARPU
Subscribers

8.36

1.6

1999 2004

*ARPU in Euro
*Subscriber in Millions India Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES / / 42

Indian consumer is extremly cost conscious.

The cost syndrome is visible in the above figure, as call costs fell, no. of subscribers
rose! In a way, as operator’s ARPU declined, they experienced a surge in subscriber
additions.

PrePaid vs. PostPaid Subscribers

PostPaid
33%
The growth in Prepaid has
been 26.7% during 2003—04,
while postpaid segment has
just grown some 6%

Prepaid rules in India PrePaid
67%


Prepaid is a big phenomena in India. Although detailed statistics are not available
for each operator but on an estimate 60-70% of the subscribers (of all the
operators) are prepaid customers.

The reasons for prepaid being so successful in India are:
•During the days when incoming calls were not free, it was difficult to control the
individual expense limit which prepaid easily solved.
•To avail a postpaid connection one needed documentation like address proof etc.
•Roaming on prepaid further boosted the prepaid subscriber base.
•Teenage users whose parents wanted them to exercise restrain, founded easier to
give them prepaid connections.
•Retail channels earned good commission selling prepaid coupons to consumers
and therefore, they invested more on promoting prepaid

GSM Operators Business Model

Portals In India, third party billing doesn’t
Revenue Sharing
exist
Revenue share model is the
most prevalent mode of doing
ASP business
Revenue Sharing

Operator Billing End User
Revenue Sharing
TV Channels

Royalties
Movies

Content Revenue Sharing

Developers

The billing relationship in India exists exclusively between the operator and the
consumer. All the other contributors (value added service providers, ASPs, TV
channels and movie production houses maintain revenue sharing or profit sharing
relationship only with the operator.

Operators in India get to keep a major share of the revenues coming from all the
other services besides voice.

When a consumer downloads a ringtone or a logo from a website, operator gets to
keep 60% of the earnings, similarly;
•Almost 60-70% of the revenues for services hosted by ASP
•80% of the revenues for SMS based TV opinion polls
•75% incase of downloading a movie clip or a movie ringtone

M ticketing is missing in India, however, one can request for a ticket for an event
through an SMS but one cannot actually complete a transaction over his mobile
phone.

VAS Awareness in India

Basic VAS Advanced VAS

90
While roaming is well known, 76
MMS is surprisingly less
known, similar to M-Banking 62
56
Operators have to promote
awareness now, instead of 39
introducing any more new 33
27
services 21
10 7 5 4

Email

MMS
Roaming

M-Banking
Call Waiting

Messaging

Data services
Voicemail

Internet
Services

conferencing

Access
Call forward

Dial in

Voice
Call
Source: Voice and Data

As described earlier, literacy is a big factor which determines the success of value
added services especially, advanced services like email, M-banking and MMS.

Roaming, voice mail, call waiting, call forward are some of the services which
consumers are well aware of. Advanced services like call conferencing, email and
M-banking have so far been unable to penetrate.

One critical aspect to be considered here is the share of relevant consumers for
relevant services. Housewives and teenagers of course do not have any immediate
value added for advanced services. Operators here face a challenge to market their
services exclusively for corporate consumers.

GSM OPERATOR- BHARTI

• Brand Name: AIRTEL
• Network: GSM 900, 1800, GPRS, EDGE
• Network Coverage: 17 Telecom circles
• Subscriber base: 7,062,443 (May 2004)
• Market Share: 26%
• ARPU (Mar. 03-04): 8,4 €
• Subscriptions: Post Paid, Pre Paid


Bharti was the first mobile operator operational in India. India’s first GSM based
phonecall was made on Airtel network.

BHARTI

Services Business Model and Revenue Sources
• VOICE BASED • Content and Data Downloads
• Voice mail
• Offers Java games, logos, ringtones through their content
• Dial a service portal

• SMS BASED • Also in agreement with Yahoo India for basic content
download
• Info messages
• SMS Chat • Advertising Campaigns
• Email access via SMS • Latest movie ringtones, wallpapers available at their content
• Ringtones and Logo downloads portal
• Instant Messenger • Hosting third party campaigns like Coke and Master Card
• GPRS • SMS Polls on TV
• Mobile office • Users can vote through SMS for polls organized by TV
• Content Portal Channels
• Revenue sharing agreements with TV channels
• OTHERS
• Prepaid Recharging
• MMS
• Fax & Data, CLIR, Prepaid Roaming, • Subscribers can recharge either at ATMs using their ATM cards
Or
• Itemised billing,
• Location based services • Direct debit facility with the subscriber’s bank account (SMS
based service)

HUTCHISON TELECOM

• Brand Name: HUTCH
• Network: GSM 900, GSM 1800, GPRS, EDGE
• Network Coverage: 14 Telecom Circles
• Subscriber base: > 5 million
• ARPU (Mar. 03-04): 9,9 Euro (Highest in GSM segment)


HUTCHISON TELECOM

• Voice mail • Offers News, Java games, logos, ringtones over GPRS in partnership with
• Dial in services ( Dial a Pizza etc.) MSN and Mauj
• Voice Response • Also in agreement with Yahoo India for basic content download
• SMS BASED
• Info messages • SMS Polls on TV
• SMS Chat • Users can vote through SMS for polls organized by TV Channels
• Yahoo Email & Messenger access via SMS
• M-Banking
• Ringtones and Logo downloads • Mobile Banking
• Instant Messenger • HDFC and Bank of Punjab customers can access their accounts by SMS
• BBC News
• GPRS
• E-Mail and communications
• MSN & Yahoo email
• Users can access their office emails through GPRS or SMS
• Content Portal
• Hotmail and MSN Messenger
• OTHERS • Yahoo email and Messenger
• MMS
• PUSH TO TALK over GPRS
• Fax & Data, CLIP, Call forward, CLIR,
Prepaid Roaming,
• Location based services
• Unified messaging (UMS)

IDEA

• Brand Name: IDEA
• Network: GSM 900, 1800, GPRS, EDGE
• Subscriber base: < 4 million
• ARPU (Mar. 03-04): 8,05


IDEA

• Voice mail (Voice Courier) • Offers News, Java games, logos, ringtones over GPRS
• Voice response
• Also in agreement with Yahoo India for basic content download
• Dial and Buy
• SMS BASED
• SMS Polls on TV
• Info messages
• Users can vote through SMS for polls organized by TV Channels
• Chat – SMS, GPRS and PC
• Web and POP3 Email access
• M-Banking
• Global and Group SMS • Missing
• Language SMS
• City Guide
• GPRS • Web Mail and POP3 Access through SMS
• Surfing
• Content Downloads
• OTHERS • Prepaid recharging
• MMS • In agreement with Banks for Prepaid recharging through ATMs or
• Fax & Data, CLIP, Call forward, CLIR, through SMS (account debit)
Prepaid Roaming,

BPL Mobile

• Brand Name: BPL
• Network: GSM 900, 1800, GPRS
• Subscriber base: < 2 million
• ARPU (Mar. 03-04): 7,85


BPL Mobile

• Voice mail • Offers News, Java games, logos, ringtones over GPRS
• Dial and Buy Services

• SMS BASED
• SMS Polls on TV
• Info messages
• Chat – SMS, GPRS
• Web Email access
• M-Banking
• City Guide • Customers of HDFC Bank and ICICI Bnak can access their accounts (SMS
Based Service)

• GPRS
• Surfing This August 2004, BPL has introduced its first
• Content Downloads own manufactured handset in India
• OTHERS
• MMS
• Fax & Data, CLIP, Call forward, CLIR,
Prepaid Roaming,

BPL is a leading player in consumer electronics like TV, Fridge, Washing machines
etc. BPL has produced it’s own handset this August. Priced at around Euro 90, the
BPL handset will compete with the likes of Nokia, Motorola, Sony-Ericsson and
Siemens for a pie of the Indian handsets market. Industry sources said that the
handset will be part of the BPL consumer durables stable and will be manufactured
at its Bangalore unit.
Sources said that the company had tied up with Japanese electronics major Sanyo
for providing lithium batteries for the handset. The company is also planning to
launch handsets at higher price range.

Expansion Strategy of GSM Operators –
d
“Acquisition”
re d
ui ire
cq qu
A Ac

Sterling Cellular Airtel Hexacom
Hutch
Hutchison Essar
Aircel Digilink
With stiff competition in sight, bigger operators
Hutchison Max Telecom
are consolidating their subscriber base by
Aircel* acquiring other smaller operator licenses

d
re re
d
ui ui
Acq cq
A

Aircel* RPG Cellular Idea Escotel

*Aircel was recently acquired by HUTCH

As explained earlier, operators are constantly seeking to consolidate their standing
in the market. Indian telecom regulations limit the number of operators in each
circle to four but it does not limit operators acquiring each other. Airtel and Hutch
have been very active in this mergers and acquisition activity.

Hutchison Telecom (Hutch) recently acquired Aircel which operated in state of
Tamil Nadu.

Similarly, Airtel acquired Hexacoms licenses for states of Rajasthan and few north-
eastern states.

Understanding WLL(F) & WLL (M)

WLL (M) = Wireless in Local Loop (Mobile) WLL (M) = Wireless in Local Loop (Fixed)

• Classified as fixed
line telephones
• No Roaming
• Works within a city
limit
• SMS
• Data Baud for
Internet
• Mobile Handset (Just • Two options:
like GSM)
• FWP
• Roaming
• FWT
• MMS
• SMS
• Java
• Data Baud for
Internet

Understanding WLL services and how they are classified has been a big confusion not only for
consumers but even to an extent some services providers have taken a long time in understanding
the services completely.

CDMA in India is known as WLL (Wireless in local loop). This WLL is further divided into two
categories fixed and mobile. However, the technology standard is similar in both cases i.e. CDMA
2000 1X

WLL fixed refers to handsets which can replace the existing fixed line sets.

WLL mobile refers to handsets which have all the features like GSM handsets.

WLL fixed works within a city while WLL mobile functions similarly as that of GSM mobile.

There are 2 categories to choose from in WLL Fixed:
1. WLL- FWP: Fixed Wireless Phone (without wires)
2.If consumers are willing to keep their old phone set then they have an option to opt for WLL
(FWT) Fixed Wireless Terminal. FWT is connected to existing telephone set.

Both the phones come with a data port which can be connected to a PC/Laptop serial port through
a special data cable. The data cable comes along with an installation CD and it is available in the
open market for five to ten Euros.

Presently LG, Samsung and Nokia are the leading equipment suppliers for WLL mobile in India.
For WLL fixed, LG and Samsung handsets dominate the market.

WLL fixed phones have an option to send SMS.

CDMA Segment overview

• Present Standard: CDMA 2000 1x
• Started in March 2003
• Offered by 6 operators
• LG and Samsung hold majority device
market share
• Streaming media options
• Always on internet connectivity @ 114 kbps


CDMA growth drivers
Growth in Fixed line in 2003 (much due
to CDMA fixed wireless)
• Nationwide roaming
• Bundled internet facility
• CDMA phones come with a
data port where consumers
can connect to internet at
114kbps
• Easy subscription availability,
starting from Euro 10 only
• Huge variety of content
• Online bill view
• SMS based service activations
• Aggressive launch
Source: IDC Asia/Pacific Semiannual Telecom Fixed-
Line Services Tracker (2H 2003), March 2004


There was a big debate in India just before the launch of CDMA services that will it
succeed or not? Recent trends reveal that CDMA is here to stay, but that doesn't
mean that it is going to overpower GSM.

Nationwide roaming helped to boost subscribe base, option of connecting to
internet using a simple data cable proved as a catalyst in promoting CDMA services
in India.

The call tariffs over CDMA were initially lower as compared to GSM but today
CDMA and GSM call tariffs are moreover same.

The calls are tariffed again on the distance parameter which is already explained
earlier.

CDMA Operator Subscriber Base

6,414,047

Statistics include WLL(M) and WLL (F)
Reliance, a CDMA 2000 1x
operator, is a undisputed
market leader

Both WLL(F) and WLL (M)
have been immensly
sucessful in Indian Market 800,000
625,267

29,908 27,632 130,000

Reliance Tata HFCL Shyam BSNL MTNL

Private Operators State Owned


Reliance Infocomm was the first private operator to start with the CDMA services
in India. However, BSNL and MTNL offered CDMA before Reliance they were
unable to tap subscribers.

Reliance’s strategic alliance with LG and Samsung to offer their handsets along with
their subscriptions proved to be a catalyst in the process. Tata Indicomm which
was the second private operator to offer CDMA services initially failed to attract
consumers but since early 2004, it has revived its strategy and has been able to gain
some market share.

CDMA Operators Market Share
State Ow ned
12%

BSNL MTNL
Shyam
10% 2%
HFCL 0%
0%

Tata
8%

Private
88%
Reliance, having introduced its service in March
Reliance
80%
2003 has emerged as market leader with a huge
80% market share


CDMA Operator Business Model

Similar to GSM model, third party
Movies billing is also missing from
CDMA operators business model
Royalties
Due to spectrum availability,
operators find it feasible to offer
high end content themselves
TV Channels
Internet surfing facility over
Revenue Sharing
CDMA is catalyst in boosting End User
subscriber growth
Billing

Operator

Services hosted Content Downloads
and offered by
operator Java Games

Internet accessIndia Study for Tekes NETS and FENIX Programs/ Vipul Chauhan/ © TEKES // 61

Due to spectrum availability it is feasible for the operators to introduce enhanced
data services over their networks. This includes streaming media, JAVA games etc.

The possibility for offering enhanced data services has proved to be a catalyst in
promoting CDMA services in India.

Reliance Infocomm floated a company by the name of Paradox Studios which
develops interactive content for Reliance’s subscribers. Following the trend Tata
Indicom also formed an alliance with Nokia and some major content developers to
offer 1000 games to its subscribers.

The revenue sharing percentage between TV channels, movie production houses,
websites is moreover similar to GSM operators.

As mentioned earlier the sets come with a data port for internet connectivity, these
CDMA operators also function as a internet service provider. Consumers have to
dial in a specific number to activate their phone as a modem and they can use 114
Kbps internet almost everywhere in India.

CDMA Operators - RELIANCE

• Brand Name: RIM- Reliance India Mobile
• Network: CDMA 2000-1x
• Subscriber base: > 6,8 million
• ARPU (Mar. 03-04): Euro 13


Reliance

• Voice mail • Offers News, Java games, logos, ringtones
• Call forward
•Reliance has formed a new company called PARADOX
• 3 Way Call conferencing STUDIOS, which develops content for its network
• SMS BASED • View Bills
• Info messages
• Streaming media
• International SMS
• New songs from movies, Live News channels
• M-Banking
• Ringtones
• SMS Polls on TV
• Language SMS
• City Guide
• Movie info
• Song clips
• Mobile Banking
• OTHERS
• with HDFC bank
• CLIP, Call forward, CLIR, Prepaid Roaming,
• Itemised billing
• R-CONNECT – Users can use their
phones to connect to internet. Reliance • Missing
also serves as an ISP in this model.
• Users need a data cable to connect to their
PC serial port and configure the dial in
settings

TATA INDICOM

• Brand Name: TATA or TATA Indicom
• Network: CDMA 2000-1x
• Subscriber base: > 2 million
• Market Share: 8 – 10%
• ARPU (Mar. 03-04): Euro 10-12


TATA INDICOM

• VOICE BASED • Content and Data Downloads from their portal
• PUSH TO TALK • Offers News, Java games, logos, ringtones
• Voice mail
• View Bills
• Call forward
• Streaming media
• 3 Way Call conferencing
• New songs from movies, Live News channels
• SMS BASED
• Info messages
• International SMS • SMS Polls on TV
• Ringtones
• Language SMS
• City Guide

• Mobile Banking
• OTHERS
• Missing
• CLIP, Call forward, CLIR, Prepaid Roaming,
• Itemised billing
• SMART WIRELESS – Users can use their
phones to connect to internet. TATA also • Missing
serves as an ISP in this model.
• Users need a data cable to connect to their
PC serial port and configure the dial in
settings

CHAPTER THREE

INTERNET SERVICE
PROVIDERS
Priyanka Kapoor
Vipul Chauhan

Growth Drivers

• Falling tariffs
• Availability of acess options:
• Dial in
• Cable
• DSL
• ADSL
• Leased Line
• ISDN

• Internet subscriptions offered as freebies along with other hardwares
i.e phone connection, PC, mobile phones, office equipment etc.
• Content downloads – mp3, pirated software, movies etc.
• Yahoo and MSN Messenger voice feature lured consumers to
subscribe to internet
• Mobile and IP convergence – data downloads


Internet made its entry in India in the year 1995 when VSNL (Videsh Sanchar
Nigam Limited) started with dial-up connections. The first five years of internet in
India could be defined as an incubatory stage where speeds were limited to
maximum of 64 Kbps ISDN. Initially and even today most of the home users used
to access internet over 28.8 K and 56 K modems.

Using internet over phone connection with a modem has two disadvantages, first
the phone line is blocked and then one is subjected to pay the regular call charges.
This syndrome still exists today with the home users but they still prefer using
internet through 28.8 K-56 K modems at home. This situation means that there is
a huge potential for broadband service providers to attract customers for their
services but only at prices which are affordable. Always on connectivity will help
users (both home and corporate users) to keep their phone lines free and avoid call
charges.

Present day internet subscriptions are available as freebie item along with purchase
of a desktop PC, printer, fax machine etc. This is possible due to reduced prices.
Price range for internet subscriptions is as follows:
•For a dial-up connection: Euro 5 for the installation CD and then
consumers have to pay call charges for their minute usage, which is 0.02 Euro per
minute.
•Lease lines: Euro 9000 per year

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