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Humble mobile's journey to be the greatest enabler of the century

India is now the world's second-largest telecom market by subscriber base

Malini Bhupta  |  Mumbai 

Humble mobile's journey to be the greatest enabler of the century

India's tryst with mobile telephony started 20 years ago, in July 1995, when the late chief minister of West Bengal, Jyoti Basu, made the first call using a cellular device to the then Union telecom minister, Sukh Ram. At that time, mobile phones were a luxury - calls were priced at Rs 16 a minute and mobile devices were not available for anything less than Rs 45,000. Clearly, the industry has come a long way since then. Today, it is as ubiquitous as electricity.

Mobility today is viewed as the most disruptive technology of the 21st century, as it has not only changed the way people communicate but also the way companies conduct business. Not only does the sector have a significant impact on the country's economic growth, it also has a multiplier effect. According to United Nations Conference on Trade and Development, there is a direct correlation in developing countries between growth of mobile teledensity and growth of per-capita gross domestic product. After the sector was opened up to private and foreign players, its contribution to gross domestic product increased from 0.7 per cent in the 1980s to 5.7 per cent in 2008, shows a study conducted by the National Council of Applied Economic Research. Since then, the figure has seen a steady increase.

India's telecom sector has come a long way from what it was in the 1980s. Before liberalisation, it was the domain of the government and telephone connections were more of a status symbol than utility.

Telephone connections (fixed line) grew at a leisurely pace from 980,000 in 1971 to 5.07 million in 1991. As India opened up its economy in 1991, the face of the telecom sector transformed, with foreign players investing billions of dollars in setting up mobile networks. A new era kicked in with the National Telecommunications Policy (NTP) of 1994, which allowed foreign companies to hold up to 49 per cent stake in telecom companies.

The policy also divided the country into 20 circles for basic telephony and 18 circles for mobile services. Bids were invited from private players to offer services in these circles with 15-year licences. Along with these changes, the Telecom Regulatory Authority of India was set up in 1997 to remove government control over policy-making and rates. In a systematic way, the sector was opened up and foreign companies were allowed to increase their stake in Indian telcos to 74 per cent.

What really propelled the sector was the NTP of 1999 which allowed the industry to move from a fixed licence fee structure to a revenue-share mechanism and cost-oriented telecom rates. The past 15 years have seen India's telecom sector growing at a scorching pace. Telephone subscriber base has expanded at a compound annual rate of 19.22 per cent from 200 million in 2006-07 to one billion in 2014-15.

Today, India is the world's second-largest telecom market (by subscriber base). Since 2000, the sector has had a very deep influence on the country's economy and people. From being a device that helped people stay in touch with each other, the mobile phone has today emerged as a powerful tool for various purposes. This has helped improve productivity substantially. India's teledensity - the number of mobile connections per 100 people - has improved from 2.33 in 1999 to 80 in 2015. Today, the penetration of mobile telephony is 45 per cent in rural and 55 per cent in urban India.

Thanks to the rapid growth in mobile users, India has also emerged as the second-largest country in terms of internet subscribers. India had 267.39 million internet subscribers as of December 2014, and a large part of these consumers accessed the internet on their wireless mobile devices.

With the option of staying connected 24x7, the mobile revolution has transformed the way Indians do things. This has far-reaching implications for governments and businesses. From being a communication device, the mobile phone has metamorphosed into an enabler in the digital world, where everything is connected. Mobility is one of the biggest disruptive technologies and the digital consumer is forcing businesses to go back to their drawing boards.

Roughly 17 years after the first call using a cellular network was made from Kolkata, the city saw the launch of the fourth-generation mobility services in 2012.

The deepest impact of new-age mobility has been felt by the financial services sector. A phone is now being used to deliver financial services to people who do not even have bank accounts. From banking to retail, the mobile is today a change agent forcing companies to think out of the box.

The rise of the digital consumer is not only creating new business opportunities but also posing a big threat to the existing ones. A constantly connected consumer is proving to be both a challenge and opportunity for businesses. Consulting firm KPMG says: "Mobile devices have changed the way people access digital content. Smartphones and tablets are delivering massive amounts of digital content to the fingertips of consumers. Mobile banking has emerged as one of the most innovative products in the financial services industry. Shoppers are increasingly using their mobile devices for everything from browsing to comparing and buying products. Governments are also reaching out to their citizens using mobile devices as an efficient channel. Enterprises must also jump on to the mobility bandwagon and ensure their applications are mobile-ready."

  • Wireless segment accounts for 97.36 per cent of total telephone subscriptions
  • Teledensity - the number of telephone connections per 100 individuals - increased from 18.3 in 2006-07 to 79.67 in 2014-15
  • Wireless subscriptions have seen a compounded annual growth rate of 24.78 from 2006-07 to 50 in 2014-15
  • Growth in mobile teledensity has a direct correlation with per-capita gross domestic product growth, especially in developing countries

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First Published: Wed, December 30 2015. 00:24 IST