Year 2005 was a watershed year for the Indian mobile industry from every perspective. Not only did the Indian market enjoyed phenomenal subscriber growth, it also attracted significant investments made by leading global operators and vendors. This reaffirmed that India's telecom market is maturing very fast.

At the end of December 2005, India registered 60% growth. GSM continued as the preferred technology, accounting for around 78% share of the total mobile subscriber base. GSM operators accounted for four of the top five mobile operators in the country.

Alan Hadden, president, Global Mobile Suppliers Association (GSA)

Year 2005 was also the year of consolidation in the mobile industry with GSM operators seeing major mergers and acquisitions. The major ones included  Hutch India acquiring BPL for $1.15 bn, Vodafone acquiring a 10% stake in Bharti Telecom, which holds 45% of Bharti Televentures, for $1.5 bn, Maxis Communications Berhad acquiring Aircel for $1.08 bn. Other GSM operators also attracted continued interest from global operators. 

Also, in the year 2005, leading equipment vendors including Alcatel, Elcoteq, Ericsson, Huawei, LG, Motorola, Nokia, and Samsung among others made significant investments in setting-up manufacturing units in India for either GSM infrastructure equipment or GSM handsets. This has paved the way for the country to emerge as a key telecom manufacturing hub in the future.

Data services uptake is also increasing. According to a study by Pyramid Research published in November 2005, India's annual revenue potential for mobile data services is $466.5 mn.

The government's decision early in 2005 to raise the foreign direct investment limit in the telecom sector to 74% was a step in the right direction. The increase in foreign capital, which is now allowed, will give the Indian telecom industry a strong impetus to achieve its teledensity targets over the coming years.

But price is the single most important criteria for connecting the unconnected in emerging markets, for new customers to enter the market. The emerging market handset initiative from the GSM Association is a major step towards reducing the start up price for new subscribers, and will fuel economic growth.

All the major GSM operators are planning major network expansion initiatives in the coming years. The recent BSNL and Bharti RFPs for massive (60 mn lines) capacity increases are a clear indication of market expectations and the role of GSM in their business development.

Low average revenue per user (ARPU)  has been considered in the industry to be a major threat to the operators.  However, low ARPU in itself is not necessarily a bad thing. A low ARPU operator, managing a lean business system can be profitable when critical mass is reached. On these lines, GSM operator Smart in the Philippines is running a very profitable business at sub $7 ARPU. Similar cases can also be found in Russia and Thailand. And the industry looks forward to the government for resolution of the allocation of additional mobile spectrum at the earliest opportunity. This would allow the industry to grow.

Wideband Code Division Multiple Access (WCDMA) is the leading 3G standard globally and is the natural evolution for GSM operators. Increasing number of CDMA operators are facing falling market share and are switching to GSM and WCDMA/HSDPA for business growth.

GSA regularly surveys 3G network deployments. It had recently reported that there are 108 commercial WCDMA operators already in 47 countries.

In the beginning of the last fiscal, 355 WCDMA-capable devices have been launched by 41 suppliers, compared to 166 (from 25 suppliers) in May 2005, and representing growth of 114%.

Capabilities of GSM systems and user devices have evolved far beyond basic voice service. For many people their mobile phone is their prime means of accessing the Internet, or at least is regularly used for accessing content for entertainment, file transfers, audio and video file downloads, and more.