Comparing Telecom growth in India and China

Although India got telecom competition and telecom growth somewhat later than China, I had the impression that India’s rate of growth now matched or exceeded that of China at a comparable period in China’s development. In part that was caused by discussion in the blogosphere in February, the result of this press release from the TRAI.

China has been adding about 4 to 5 million mobile subscribers every month in last five years. India has also achieved this landmark in December 2005 when the mobile subscriber addition reached around 4.5 million in a single month for the first time since the launch of mobile services in the year 1995. Thus India seems to have really caught up with China in mobile growth.

But the press release is misleading. Yes, India’s mobile subscriber growth is ramping more steeply than China’s did when China was at a comparable teledensity (five years ago) and, yes, India did add 4.5 million subscribers in December 2005 (also 4.7M in Jan & 4.3M in Feb). However, China still leads in total telecom adoption rate, at that time and now.

The difference is in “fixed” line telephony which today means fixed wireless handsets, aka wireless local loop or WLL. But the line between WLL and mobile phone service is very blurry.  Indeed one might argue it only exists because regulators are trying to make technology choices.

Despite a national focus on GSM (and later on CDMA), China also incents its local politicians to attract outside investment.  One way or another, UT Starcomm and Huawei managed to sell PAS and other limited mobility WLL systems to a number of second and third tier Chinese cities. So today, there are many different technologies serving different parts of China.  There’s even some CDMA450, deployed in Tibet. Typically these WLL services are effectively mobile service, but it’s called “fixed” in government accounting.

I doubt is the following table provides the whole answer for the tele-density growth discrepancy, but it highlights a likely contributing factor.

Comparative regulatory levies as a % of revenue

	China	India
Svc Tax, GST	3%	8%+GST
License fee	Nil	5-10%
Spectrum Charge	~0.5%	2-6%
Total	~3.5%	15-24% + GST

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PS:  The data I used for the graph comes from the ITU World Telecom Indicators database for 1996-2003, from the TRAI for 2005 in India and from Yankee Group for 2005 in China.  Here are the numbers:

                    China        China        China           India        India        India

Year        Mobile      Fixed       Total        Mobile    Fixed     Total

1996            0.5                4.4            5.0                0.0            1.5          1.6
1997            1.1                5.6            6.7                0.1            1.9          2.0
1998            1.9                7.0            8.9                0.1            2.2          2.3
1999            3.4                8.6          12.0                0.2            2.7          2.8
2000            6.6               11.2         17.8                0.4            3.2          3.6
2001          11.0               13.7         24.8                0.6            3.8           4.4
2002          16.1               16.7         32.8                1.2            4.0           5.2
2003          21.4               20.9         42.3                2.5            4.6           7.1
2004
2005          30.3               26.8         57.1                7.0            4.3          11.3

   

Comments

[Babar Bhatti]

I wrote on a similar topic:
http://telecompk.wordpress.com/2007/06/17/telecom-markets-of-china-pakistan-and-india-part-1/

[vikram singh]

i want to start telecom industry in india...
i am still studyin engineering..
i want to know the requirements to start up a telecom industry...
what are the challenges that are to be faced...
how much capital,is requiredd....
how to start up..
i want ideas.. and knowledge how to start with full description...
mines id is
uxz6@yahoo.co.in
waiting for urs reply

[brough]

Vikram, the best advice I can give you is to find other entrepreneurial groups to talk with. I don't know where you are located or whether there is any entrepreneurial activity at your college or university, but you should look there for sure. In addition, I can recommend a group called "The Indus Entrepreneurs" or TiE ( http://www.tie.org/ ). They were started by Indians working in southern California, but now have chapters in many places including at least five chapters in India.