1. The Telecom “Miracle” (2G/3G/4G Revolution) From Apply, Apply – No Reply To Haath Haath mein Telephone By DR T.H. CHOWDARY Director: Center for Telecom Management and Studies Fellow: Tata Consultancy Services Chairman: Pragna Bharati (intellect India ) Former: Chairman & Managing Director Videsh Sanchar Nigam Limited & Information Technology Advisor, Government of Andhra Pradesh T: +91(40) 6667-1191(O) 2784-3121® F: +91 (40) 6667-1111 hanuman.chowdary@tcs.com Talk @IIIT, Hyd: 28 Feb 2012

2. S661_Feb2012 PCI A X TSP Time (a) Affordability A PCI/ Tele-Service Price - PCI: Per Capita Income - TSP: Telephone Service Price - A: Affordability Formula for Mass use Bring down price to increase affordability THC_CTMS2

3. Affordability of Telephone 1951199420072010 Revenue /Line at current exchange parity $125$250$125 Rev. as % of PCI 2.510.120.06 S661_Feb2012 Affordability PCI ------------------------ Tel. Svce.Price THC_CTMS3

4. Technology brings down costs Wireless in the access to network Optical fiber as the electronic highway Communication satellites Computers: sampling, digitising, packetising, encoding, routing, compression, encryption S661_Feb2012THC_CTMS4

5. Competition brings down prices Structure of industry changed Regulator Economics of scale & scope S661_Feb2012THC_CTMS5

6. Multifunctional networks& devices Multi-band, multimode (TDMA, CDMA, OFDM…) multifunctional (phone, camera, radio, e-reader, computer, IPTV, Internet Access) S661_Feb2012THC_CTMS6

7. S661_Feb20127 Post office, Telephone, Broadcast studio, Soap Box, Auction House, Sound Recording, Movie theater, used car showroom, Insurance Office, Distributor ware house, studio for fashion designer, University Class Room…, Political Campaign, Medical Diagnostics, Mammoth Library Internet -8th Wonder (1)

8. Internet – 8 th Wonder (2) Encyclopedia ( Wikipedia); You Tube, Video service, Flicker photo repository, Huffington Post, blog compendium, world’s meeting House, chat, gossip, argue show off, flirt, court, Face book, Twitter, MySpace….social & anti-social networks THC_CTMS8S661_Feb2012

9. Internet – 8 th Wonder (3) Anybody can have his own website; his journal; linked to a portal: Most powerful and pervasive medium for news, views, commerce, purchases, conferences, payments, services (eg: e-sewa); public relations….. Convergence of Voice, images, text, data (multi-media) Wireless access; always on, i-mode, (9.6 kbps); 3G (384 kbps/2MBPS) 4G - 4MBPS both by DoCoMo of Japan; WiFi, WiMax…. Location-based services THC_CTMS9S661_Feb2012

10. THC_CTMSS661_Feb201210 Internet – 8 th Wonder (4) Network of networks; Information stored in de-materialised, electronic/photonic form, converged platform, Info-space Internet conceived & started in1969. WWW is just 20 years old; app. 500 million hosts 3,500 million users 1 Trillion pages of information 5 billion pages seen every day ( 10 pages/ Internet sub/ day) 3.5 bln E-mail addresses, growing 25% a year 14 bil [1400 crore] e-mails/day

11. Spectrum Electromagnetic radio propagation Acoustic is mechanical, motion of matter ( air), can’t travel in vaccum/space Long, Medium & short waves for radio broadcasting, – vhf, (< 100 MHZ) – uhf ( 800 to 1000 MHZ), – microwave (>1 GHZ) S661_Feb2012THC_CTMS11

12. 1G, 2G, 3G, 4G Generation(s) of technology Increasing bit rate ( faster down-load or transport) Intensive use of (freq) bandwidth ( like 2 lane, 4 lane, 8 lane….highways) 1G was analogue cellular like AMPS, TACS,NMTS… 2G Digital –upto 2 MBPS 3G- 10s & 100s of MBPS 4G – GB/Sec WiFi & WiMAX are 3G Broad-band – 64 KHZ, 256 KHZ, 2000KHZ about 10 mln subs. S661_Feb2012THC_CTMS12

13. Spectrum Allocation Different bands for different services (B’casting, civil aviation, maritime navigation, police, armed forces, telephony, satellite, coast-guard, amateurs…) Spectrum Band designation: L, S, K, KA, Ku…… S661_Feb2012THC_CTMS13

14. Treated as national resource and priced Bundled with licence, (Revenue share, licence fees) Beauty contest Auctions Cost of spectrum enters prices to customers 3G Netted = Rs. 67,000 cr WiFi, WiMAX Rs. 31,000 cr Proceeds utilised for subsidies Opium – addicting Welfare like NREG, loan waiver- None for R&D or Internet in Schools, Villages etc. S661_Feb2012THC_CTMS14

15. Price of Spectrum (1) 200120072011+ Connections/ month 400K8000K (20) 18,000 K (45) Price for all-IndiaRs. 1650 crRs.33,000* Rs. 74,250 cr* S661_Feb2012THC_CTMS15 * Linear projection + Jan 2012- 10 mln /m

16. Price of Spectrum (2) 3G got Rs. 67,000 cr Unitech sold 40% stake @ Rs, 6,100 Full price: Rs. 15,000 cr 17 Telcos (i/c BSNL & MTNL) Not all got all state-wide licences Equated licences app. 11 So price realisable from all telcos = (11 X 15,000)= Rs. 1,65,000 cr S661_Feb2012THC_CTMS16

17. Telcos (Airtel, Vodafone, RCom, TataTele, BSNL, Idea, Aircel, Uninor, S-Tel, Videocon, Shyan Loop, Systema, Dishnet Etisalat, Allianz Infra, MTNL) Linear projections are unrealistic 122 licences cancelled >Rs. 50,000 cr invested Norway, Russia, UAE.. Would intervene Indian corruption imperils FDI & economy S661_Feb2012THC_CTMS17

18. Spectrum Sales Dislinking spectrum from service licences illogical – leads to market /trade in spectrum We don’t licence & tax sunlight used for solar energy; but price the energy We should charge/tax product of spectrum i.e service (revenue share, entry fee, service tax, USF levy) THC_CTMSS661_Feb201218

19. Solutions (?) Satyam –type or Nationalise (like Banks & Insurance) and or Merge with BSNL Mergers & Acquisitions are a must; we don’t need more than 4/5 Telcos As 3G picks up, 2G will shrink As teledensity increases, ARPU falls – down from Rs. 1000 to < Rs. 200 THC_CTMSS661_Feb201219

20. Telecom Revolution Gains: Haath mein telephone: 770 mln Cellphones, 37 mln ( down from 48 mln in Y 2000) land phones Prices coming down Prepaid-greatest business invention App.Rs. 200,000 cr private investment came in Losses: Death of R&D & Ind. Manufacture Vulgar use of cell phones Decline of post Increased facilitation of crime S661_Feb2012THC_CTMS20

21. Technology & Society Technology is neutral Culture, Restraint, wisdom determine use – bliss or bane Enlightenment or Empowerment which should be first. E-waste (50 mln cellphones trashed/year + PCs + TVs+ radios) S661_Feb2012THC_CTMS21

22. Dhanyawad: Thank You Any Questions? S661_Feb2012THC_CTMS22