Presentation to the Media

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Presentation to the Media Delivering the
promise of improved Access, Coverage and
Teledensity in India AUSPI 16th November 2005
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Agenda

• About AUSPI
• Promoting advanced Telecom technologies - CDMA
• Fueling unprecedented domestic investment and
  improving teledensity
• Value for customers
• Enunciating a telecom vision for India
• Enablers for achieving teledensity improvement,
  and AUSPIs future plans

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About AUSPI

• Established in 1997
• Members
• HFCL
• Reliance
• Tata

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Objectives of AUSPI
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New Leadership
New Leadership
Mr. Ratan N Tata
Mr. Ratan N Tata
Mr. Anil Ambani
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Why CDMA ?

• Better voice clarity consistent quality
• Enhanced privacy
• Superior power control
• Lowest radiation level
• Increased talk time for mobile phones
• High Speed Data
• High speed Internet access
• India has less than 0.4 PC penetration
  (residential)
• CDMA 1x handsets with 140 kbps speed offers a
  superior alternative for e-mail and Internet
  access
• Advanced platform for building highly innovative
  applications
• Most successful 3G technology
• CDMA2000 controls 85 of the Worlds 3G market
  and adds 15 million new users per quarter
  Worldwide
• Even the GSM 3G evolution relies on Intellectual
  property created by CDMA!

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3G technology a large opportunity for India
Enabling affordable fixed and mobile broadband
access for urban and rural areas
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CDMA Today

• Operational in the country with 43 private
  networks
• Has more than 21 million subscribers in the
  country
• Created new markets for mobile services
• Over 1 Mn PCOs operational
• More than 285 Mn subscribers, 130 operators and
  210 networks Worldwide
• India is emerging as the key driver of growth for
  CDMA
• CDMA created a competitive landscape that made
  wireless affordable

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Rapid wireless subscribers ramp-up
Source TRAI
Over 61 Mn net wireless subscribers added since
competition from CDMA was introduced
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Affordable wireless services
Source CDG, AUSPI, TelecomWatch,COAI, TRAI
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Healthy competition in Handset market
Large number of Handset OEMs with lack of
dominant market share helps create a competitive
market place
Note Vendors with a market share under 5 have
been placed in the other category Source
Gartner
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Investments, subscribers and coverage by AUSPI
members
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Delivering enhanced value for customers

• Affordable service
• Subsidized handsets
• Innovative products
• Innovative applications

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Vision

• AUSPI share Prime Minister Manmohan Singhs
  vision of rural advancement and urban renewal
• Science Technology system can play a decisive
  role only when it advances the well being of all
  sections of society, not just a privileged few.
  It must play the bigger role of creating wealth
  for all, not just a selected few. A theme that is
  close to my heart is on making technologies work
  for the poor and the underprivileged. In other
  words, can we develop technologies, which will
  ameliorate the poverty, create jobs, remove the
  disease burden of the poor, and improve the
  overall quality of life? (Source Speech at
  CSIR)
• Indian IT and Telecom can jointly transform India
  into a knowledge society
• AUSPI will help define roadmap to achieve a
  dramatic increase in teledensity by end 2007

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Teledensity closely correlated with GDP growth
Source TMG, ITU

• 10 increase in teledensity corresponds to 0.2
  to 0.6 increase in GDP (Source Vodafone)
• In a country like India, a rapid increase in
  telecom infrastructure has multiple benefits-a US
  1 investment in telecom leads to US 6 increase
  in GDP (Source World Bank)
• Offering differentiated services (voice, Internet
  access, Multimedia etc.) via advanced wireless
  networks will boost Indias economic growth

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Enablers for achieving increased teledensity

• AUSPI already instrumental in establishing the
  early building blocks NTP 99, migration to
  revenue share license fee regime, and transition
  to Unified Access Service Licensing Regime
• AUSPIs future focus includes the following key
  enablers for enhanced teledensity
• Early resolution of spectrum issues
• Allowing technology innovation to flourish case
  of FWPs, Broadband
• Enhancement of rural teledensity, including the
  use of USO funds
• Sharing of National resources
• Expeditious interconnection
• Removal of ADC
• Redefinition of Adjusted Gross Revenue (AGR)
• Reduction in Revenue Sharing from 10 to 6
  including USO levy
• Identification and sharing of global best
  practices

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Early resolution of spectrum issues

• Technology neutral judicious allocation of
  spectrum to all service providers. Equality
  principle for all technologies.
• Sufficient upfront allocation to allow efficient
  planning, based on international average of 15
  15 MHz
• Additional allocation of adequate and
  appropriate spectrum to CDMA operators
• Additional spectrum should be allotted in 1900
  MHz band to CDMA operators as both Infrastructure
  and 800/1900 MHz dual band handsets are
  commercially available (unlike 2100 MHz band)
• Spectrum usage charges to be reduced to cover
  only cost of administration and management of
  spectrum
• CDMA operators should be migrated to a system of
  charging for Microwave access and backbone
  frequency comparable to GSM

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Allowing technology innovation to flourish
case of FWPs

• Developing nations around the world have used
  FWPs quite effectively to circumvent problems
  associated with the creation of last mile copper
  networks
• In India, fixed wireless services have
  contributed greatly to the growth of fixed
  services, were specifically authorised in the
  basic telecom licenses issued in 1997
• growth of copper fixed line connections for 12
  months ending Jun 30, 2005 0.2
• growth of FWP connections for 12 months ending
  Jun 30, 2005 - 138
• (Source TRAI)
• FWPs serve as highly functional family phones,
  with affordable fixed service tariffs
• There is a huge difference between mobility
  portability. Reclassification of FWPs as mobile
  phones will result in great loss for subscribers,
  besides creating an unhealthy monopoly of the
  incumbent
• FWP services must continue to be classified as
  fixed services
• FWP services have been classified as fixed
  services since inception
• BSNLs demands for IUC/ADC on FWPs will result in
  its unjust enrichment, beyond TRAIs earlier
  quantification of ADC eligibility
• ADC relates to provision of below cost services,
  not the portability/mobility of a device. ADC,
  like other tariff related matters, should be
  decided by TRAI
• FWP attract a much higher import duty compared to
  mobile phones, based on their different
  classification

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Allowing technology innovation to flourish -
Broadband

• For knowledge based society like ours, broadband
  penetration would be of top priority.
• Broadband would create jobs, increase
  productivity through infrastructure built up.
• Provide access to new and improved service to the
  population.
• Availability of broadband service at affordable
  price will have positive impact on GDP. To
  increase broadband penetration AUSPI suggests
• Reduction in Custom Duty to the extent of 5 with
  no CVD for broadband equipment.
• 100 depreciation in CPEs like PCs in the first
  year.
• Government subsidy in rural and semi urban area.
• Encouragement of e-governance by government.
• Adequate spectrum in one lot for wireless
  broadband through CDMA
• Streamline allocation of spectrum and the role of
  SACFA.

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Enhancement of Rural density
Source TRAI

• To bridge the Urban-Rural divide, Cost to Serve
  should be reduced
• Innovative mechanisms need to be introduced,
  including effective utilization of the USO Fund

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Sharing of National resources

• Infrastructure sharing is prevalent in countries
  like Malaysia, Hong Kong, Singapore, Australia.
  This is driven by a Code of Access to Telecom
  Infrastructure
• Infrastructure sharing reduces duplication
  waste of national resources
• Infrastructure sharing can be on reasonable
  commercial terms
• Standard policies are required from the Central
  and State Governments to facilitate development
  of telecom infrastructure e.g. cell site
  installation, Right of Way (ROW) permission

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Expeditious Interconnection

• Interconnection is to be treated as a right and
  must be granted without delay
• Interconnection terms should be reciprocal
• There must be flexibility in call handover
  principles to facilitate least cost in
  end-customer tariffs
• All subscribers of all networks should be
  allowed to access the services of any service
  provider

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Removal of ADC

• ADC regime is not only non-transparent but
  difficult to monitor and administer.
• USO Fund, (whereby all operators contribute 5 of
  their revenues), is in existence for providing
  services in rural areas imposition of an
  additional burden in the form of ADC on operators
  is not justifiable
• ADC has been withdrawn in most of the countries
  as it has been found to be inefficient, anti
  competitive and lacking in transparency

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Redefinition of Adjusted Gross Revenue (AGR)

• Presently AGR definition has serious flaws, also
  accepted by TRAI
• Following to be removed from AGR definition
• Interest dividend income from investments
• Revenues from sale of handsets, CPE and Capital
  Goods
• All payments to other licensed operators, ISP
  income (since no license fee is payable by ISPs)
• Reversal of debits and excess provisions
• Sale of assets

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Reduction in levies

• India has one of the highest tax regimens in the
  World, and levies must be
• reduced to bring them in line with
  International best practices
• Backbone spectrum charges extra Est. from
  Spectrum fees revenue of China Mobile (Source
  TRAI)
• High percentage of revenue share to be brought
  down to 6 including levy for USO fund
• High service tax of 10.2 to be brought down
  (already 1/3 of the total collection of service
  tax is estimated to be from telecom services)
• With growth of 3 to 4 million subscribers per
  month the additional revenues will in any event
  compensate for reduced taxes and levies

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Identification sharing of Global best practices

• Establishment of handset testing procedures
• International roaming settlements
• Benchmarking service delivery
• Facilitating establishment of common standards
• Facilitating interactions between operators
  through joint workshops and experience sharing

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In conclusion

• AUSPI committed to play its role in the
  fulfillment of Governments vision for enhanced
  telecom connectivity in India
• AUSPI members have contributed a sizable
  proportion of the growth seen in the Indian
  market
• AUSPI will continue to embrace the latest
  technologies with a view to speeding up the
  transition of the Indian economy into a
  knowledge-based information society

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Thank you !