Let’s skip a generation!

While auctioning of 3G licensing has been announced, there are still doubts on its successful launch

After much hype, debate and even delay (seems like a part of the protocol), it looks like the 3G spectrum mobile telephony would finally find its way into India. The Empowered Group of Ministers has put an end to all the deliberation by announcing that the auctioning of 3G licensing would start from Rs.35 billion, while the price for the WiMax has been kept at Rs.17.5 billion. There has already been a considerable delay in rolling out 3G services and many of our neighbouring countries such as Pakistan and Sri Lanka have already been offering these services for about a year now.

While it is a step in the positive direction, it does not guarantee when these services will be available.

According to the current agenda, the auctioning process would be completed in 90 days, post which, three to four companies would be allowed to offer next generation services. Then the telecom companies would have to, on their part, do an overhaul of the current equipments (especially established companies like Airtel, Vodafone, Idea, et al), and this process may take anything between 4 months to a year to be completed. Indian consumers would be able to use the services only after that happens.

Another major debate that has now surfaced is in regards to the pricing. Most of the Indians would be introduced to the world of the internet through this screen. And current pricing would be a major barrier for usage.

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Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

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Can India become a Telecom Manufacturing Hub?

Depite a Humongous Growth in The Telecom Sector, The Country has failed to build an Ecosystem that Promotes Telecom Manufacturing, Forcing Operators to Import most of The Equipment for their networks.

The latest joke doing the rounds in Electronic Niketan (IT and Telecom Minister’s Office) is that the import bill for telecom equipment will soon surpass petrol’s. It’s a telling comment on the Indian telecom industry, which has witnessed exponential growth in the last one decade but failed miserably on the manufacturing front.

Telecom industry in India has come a long way from having 5.07 million subscribers in 1991 to being the world’s second-largest market with a subscriber base 811.59 million by the end of March 2011. Ironically, in the year 2009-10, Indian products were able to meet just 3% of the telecom equipment demand in India. Equipment used for expansion of telecom networks was imported mostly from Europe and China. The figures highlight that the contribution of home-grown manufacturers to the great telecom success story has been negligible. Telecom manufacturing is one of the key areas for the government as well as telecom regulator to seriously look at, as the demand and supply chain will continue to widen. As per a TRAI report the subscriber base is expected to touch 1.5 billion by 2015, considering that India will continue to have 10% of the global market share.

Recently TRAI recommended to Department of Telecommunications (DoT) that manufacturing must be spurred to achieve the target of meeting 80% of the domestic demand. The recommendation was a little ambitious than the target for the XI Five Year Plan, which envisaged meeting 75% of the telecom equipment demand and handsets. If accepted in its present form, a cap on buying equipment manufactured outside the country cannot be ruled out. “The telecom ecosystem has so far failed to adequately spur the manufacturing segment. The demand and supply gap is widening. We need to have a proactive approach towards manufacturing of telecom equipment” says N.K. Goyal, Chairman, Telecom Equipment Manufacturers Association (TEMA).

India’s information and communications technology equipment consumption is expected to touch 11.5% of the global market by 2015 from the current level of 5.5%, as per combined estimates of ISA-Forst & Sullivan, CII and others. A TRAI report says that requirement of equipment for 3G, LTE and WiMAX services alone would be around Rs 232.85 billion by 2015-16. The report predicts that by the year 2020, the combined demand would be worth Rs 264.56 billion. But the question is: Can India become the next telecom manufacturing hub and will it be able to meet 80% of the domestic demand for telecom equipment by 2020? People in the industry believe that if China can do it in a span of 10 years than India can do it as well. But the road ahead for telecom equipment manufacturing appears full of pitfalls.

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Source : IIPM Editorial, 2012.

An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.

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