Fixed-Mobile Interconnection: The Case of India

India Case Study

1 Welcome to the Subcontinent 6

1.1 Geography and Demographics 6

1.2 Human Development 6

1.4 Political Economy 7

2 The Growth of the Indian Telecommunications Sector 7

2.1 Historical Perspective 7

2.3 Basic Services 8

2.5 Trends in PSTN and International Traffic 15

2.6 Restructuring the Regulatory Framework 17

3 The Evolution of Mobile 20

3.1 Licensing Mobile 20

3.2 Market Structure 21

3.3 Growth of Mobile Services 23

3.4 Trends in Usage and Traffic 29

3.5 Interconnection Issues 29

3.6 Future Developments 30

5 Tariff Reform and Interconnection 31

5.1 Restructuring Mobile Tariffs 31

5.2 Fixed-Mobile Interconnection 32

5.3 The Proposal for a Calling Party Pays (CPP) Regime 34

6 Internet and Wireless Access 38

7 Concluding Remarks 43

Annex 1: List of Participants 45

Annex 2: Links to Related Websites 48

Figure 2.1: Main Telephone Lines and Demand for Services 9

Figure 2.2: Total Telecommunications Revenues (US$ million) 11

Figure 2.3: Metered Call Tariff for Urban Subscribers. 15

Figure 2.4: Number of Telephone Metered Call Units (in billions of units) 16

Figure 2.5: International Telephone Traffic (in millions of minutes) 16

Figure 3.1: Annual Growth in Total Mobile Subscribers since 1997 24

Figure 3.2: Monthly Growth in Total Mobile Subscribers since April 1999 24

Figure 3.3: Recent Growth in Circle Subscribers 25

Figure 3.4: Recent Growth in Metro Subscribers 25

Figure 3.5: Proportion of Mobile as Percentage of Total Connections in India 26

Figure 3.6: Proportion of Mobile as Percentage of Total Lines in Selected Low Income Countries (1998-1999) 26

Figure 3.7: “Mobiledensity” in Selected Low Income Countries (1998) 27

Figure 3.8: 1998-1999 ARPU for Selected Metros (in Rupees per annum) 28

Figure 5.1: 1999 India Internet Subscriber Base and Forecast (in millions) 39

Figure 5.2: India Internet Subscriber Break-Up by Residential and Commercial segments (1999-2003) 41

Figure 5.3: E-commerce Transactions in India (US$ Million) 41

Table 1.1: Selected Social Indicators 6

Table 1.2: Selected Economic Indicators 8

Table 2.1: Teledensity in India 10

Table 2.2: International Settlement Payments (US$ Million) 11

Table 2.3: Charges for Basic Telecom Services 13

Table 2.4: Call Tariffs (per minute) as stipulated by the TRAI Order 13

Table 2.5: DoT/DTS’s Revised Local Call Tariffs 14

Table 2.6: Incoming and Outgoing International Traffic (millions of minutes) 17

Table 2.7: The old TRAI and the new TRAI 18

Table 2.8: National Policy Targets for Network Development 19

Table 3.1: License Fee Schedule for Metros 21

Table 3.2: Mobile Operators in the Metros 21

Table 3.3: Mobile Operators in the Circles 22

Table 3.4: Trends in ARPU (per month) 28

Table 3.5: Annual Minutes of Usage (millions) for Circle Regions(Financial Year 1998-99) 29

Table 3.6: Annual Minutes of Usage (millions) for Metro Regions (Financial Year 1998-1999) 29

Table 4.1: Changes in Mobile Tariffs as set out in the Fifth Amendment (September 1999) 31

Table 4.2: Fixed to Mobile Tariffs as set out in the Fifth Amendment (September 1999) 31

Table 4.3: Data on “Actual” CAPEX and Operating Expenses provided by Operators (1997-98) 32

Table 4.4: Projected Cost of Rentals and Usage for Metro Operators 33

Table 4.5: Fixed-Mobile/Fixed-Fixed Tariffs (US$ per minute) 35

Table 4.6: Details of TRAI Proposed Revenue-Sharing Arrangements 36

Table 5.1: Key ISP Players 39

Table 5.2: Internet dial-up tariffs in South Asian countries 40