The journey from Rs 24 per minute calls to subsequently free talk time for everyone defines the 25 years long telecommunication system in India. This began with the first-ever phone call when the then West Bengal Chief Minister Jyoti Basu, sitting in the The Writer’s Building in Kolkata, spoke to the then Union Telecom Minister Sukh Ram at Sanchar Bhavan in New Delhi, on the 31st of July,1995.
The
historic call was made on a GSM network, and between two Nokia handsets over
Telstra’s MobileNet service. This sparked the beginning of a communication
revolution in India - a movement led by the likes of Jio, Airtel, Vodafone, Idea
and BSNL today.
GSM vs CDMA Tussle
CDMA, pioneered by US-based
chipmaker Qualcomm, entered the picture in 2002.This was a second-generation
telecommunications standard. GSM was already a dominant standard for 2G
communications, holding 80% of the market, and several telecom companies in
India operated on a GSM-based network. But Tata Tele, Reliance and eventually
Hutch went ahead and began operating on a CDMA-based
network. As a result, CDMA was able to stabilise its market share at 20% for the time being.
Rise
of Grey Market
At
that time, Customs Duty made up around 60% of the cost of handsets made by
ERICSSON, SONY, Philips, Nokia, and Motorola. Further, sales tax and turnover
tax added to it. This made mobile phones pretty expensive.
Also, the lack of tracking systems and security measures at the time made
it easy for burglars to swipe these mobiles from unsuspecting people and
households. As a result, the grey market grew. People would often buy
smuggled phones in the grey market for half the price, since these
devices did not include customs duty. Thus, the retail market for mobile phones
was split between legal sales of branded phones and sales of smuggled handsets.
A Rapidly Growing Market
In spite of
mobile phone use having a growth, most of India that could afford telephone services
still relied on landlines, which were solely provided by the Government owned
entities- BSNL and MTNL. But in September 2004, for the first-time ever, the
number of mobile phone connections in the country overtook the number of fixed
line connections. However, for India’s mobile manufacturing industry to kick-start,
there was still time.
In 2014, ten
years later, India had only two mobile manufacturing units. But, with internet
becoming cheaper, the entry of ecommerce in India, and the rush of Chinese
brands keen to sell at low prices, the demand for smartphones rose to a great
extent. Chinese brands, having the experience of being the leaders, were very
quick to overtake native manufacturers like Micromax, Lava, and Intex in popularity.
The Advent of Jio
Initially, Mukesh
Ambani-owned Reliance Jio was launched with a beta version for employees and
partners. However, in September 2016, the service became commercially
available, launching 4G services with a great deal- free data and voice call until March 31, 2017.
This introductory bonanza by Jio brought it a huge chunk of Indian
subscribers (approx. 100 million subscribers) by February 2017. This boosted it
to the frontline of India’s
telecommunication sector. Its entry in the market triggered a massive reduction in data prices across
network that accelerated smartphone adoption all over India. As per latest data, it is the largest mobile network operator in
India and the third largest mobile network operator in the world with
over 387.5 million subscribers.
In 2017 itself,
the production and assembly of smartphones became a cornerstone of PM Narendra Modi’s ambitious Make in India campaign. The launch of JioPhone, a 4G handset in July 2017 by Mukesh Ambani further changed how Indians use mobile phones.
It is the first and only feature phone that has 4G connectivity.
Speaking of the
next endeavour, Reliance Jio is all set to seek spectrum in certain frequencies
from the Department of Telecom for holding trials of the latest 5G technology in India.
But Jio’s success came at a
price for the other players in the game. According to latest statistics,
Bharti Airtel gained a modest 0.85 million users, while struggling
Vodafone-Idea yet again lost 3.62 million subscribers.
2019 and onwards
By 2019, the
number of smartphone manufacturers in India grew from two to over sixty.
According to research from Counterpoint’s
Market Monitor service in 2019, India shipped 158 million smartphones in 2019, upto
8% year-on-year (YoY), overtaking the US to become the second largest
smartphone market after China.
Counterpoint’s reseach all the leaders in India’s smartphone
market are Chinese brands, with the
exception of Samsung, which is from South Korea. As per Counterpoint Research’s
latest rankings for Q1, 2020, India’s smartphone market is led by Xiaomi (28%
market share), Samsung (21% market share), Vivo (16% market share), Realme (14%
market share) and Oppo (12% market share).
Meanwhile, Chinese smartphones that assemble in India continue to
dominate our market, despite the recent sharp call to boycott Chinese goods. In a bid to arrest its declining market
share, Samsung is now looking to capitalise on the anti-China sentiments of the
people.
Initiatives such as the Production Linked Incentive (PLI) scheme for large-scale
electronics manufacturing, Scheme for
Promotion of Manufacturing of Electronic Components and Semiconductors
(SPECS), and the scheme for modified
Electronics Manufacturing Clusters (EMC 2.0), are steps undertaken by the
government to boost local manufacturing. These initiatives are expected to
attract investments in India, boost local production of mobile phones and
components to Rs 10 lakh crore by 2025, and start a new era of mobile phone
manufacturing in the country.
The recent lockdown due to coronavirus
has brought Internet access under the spotlight. Millions have been able to buy
essential commodities, do financial transactions, watch movies and catch up on
news; and study or work from the comfort of our homes only because of reliable
telecom networks. Telecom networks are clearly at the heart of our digital future. While most sectors are grappling with
a huge decline in business, telecom is slated to grow by 15-20% amid the
economic slowdown. There are optimistic days ahead as far as India’s telecom industry is
concerned.
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