India will miss the government-set target of 500 million mobile phones by 2010 if the market continues to grow at the current rate and issues related to allocation of radio waves are not resolved, said two consultants.
“On current trajectory, market will fall short of 500 million target by around 123 million by 2010,” said Arvind Subramanian, principal at Mumbai-based Boston Consulting Group. India has more than 209 million mobile subscribers currently, adding between seven and eight million new connections every month.
Meanwhile, the government and rival factions of telecom companies are locked in a battle over the allocation of radio waves, or spectrum, which telcos need to grow and, according to some of them, improve the quality of service. Any delay in resolving these issues and deciding how spectrum should be allocated could prove costly. “The industry could incur direct losses amounting to Rs16 crore every day until a decision is reached,” said Nanditha Krishna, senior research analyst, ICT Practice, Frost & Sullivan, South Asia & Middle East.
Krishna said her calculation was based on the returns any investment in the Indian telecom sector would earn and factored in the incremental impact of such investments on the country’s gross domestic product. According to Frost & Sullivan, a research firm, in 2006-07, an investment of Rs34,021 crore in the telecom business in India resulted in an incremental GDP of Rs5.72 trillion. In a report titled Telecom—Catalyzing India’s New Economy, the firm said: “The cost of delaying decisions” could result in a loss of Rs1,440 crore over three months.
Frost & Sullivan said India would reach the target of 500 million mobile phone customers by 2011 if the government delayed its decisions on the allocation of spectrum and other issues related to the telecommunications business.
On Wednesday, representatives of department of telecommunication, or DoT met with executives from telcos including Bharti Airtel Ltd and Reliance Communications Ltd, or RCom, in an effort to resolve the crisis over spectrum before it reaches the courts.
However, telcos such as Bharti that operate on the dominant GSM technology platform continue to question DoT’s decision to allow RCom, which offers services on the rival CDMA technology platform entry into the GSM market too. They have rejected DoT’s suggestion to withdraw their petition challenging the government’s decision.
On 19 October, DoT said telcos would be allowed to offer services using an alternative wireless technology because this would increase penetration of telecom service in the country.
To serve around 500 million customers by 2010, the country would need almost 333,000 telecom towers that transmit radio signals. “With around 1,30,000 towers currently, there is a need for more infrastructure sharing,” Anand Rangachary, managing director, South Asia and Middle East, Frost & Sullivan. said.