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As far as the fixed line business goes, the low penetration levels in the country and the increasing demand for data based services such as the Internet will act as major catalysts in the growth of this segment. The PSUs will however continue to retain their dominant position. This is on account of high capital investments required in setting up a nationwide network. As a result, the private sector players will have to rely on key business centers and pockets of high urbanisation for their growth.
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| Increasing choice and one of the lowest tariffs in the world have made the cellular services in India an attractive proposition for the average consumer. The segment's subscriber base has grown by over 39% YoY in FY11. As per Pricewaterhouse Coopers, India's mobile subscriber base is expected to exceed 1 bn by 2014 and will be driven by additions in the rural areas. India's rural tele-density for mobile subscribers currently stands at 32.75%.
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| During FY11, a number of things were carried out. The government finally implemented mobile number portability (MNP). The 3G spectrum was allotted to the operators who had been successful in the bidding process. The telecom scam was unearthed that highlighted the need for the new telecom policy.
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| The MNP was not as big a game changer as it was made out to be. As reported by TRAI, only 1% of the total subscriber base has opted for MNP. The other key development during the year was the rollout of the 3G services. Most operators have rolled out services in the circles for which they were granted the spectrum and license. And most of them are either in the process of or have already signed roaming agreements with other operators to provide 3G services in the circles for which they do not have the license. While it is still very early to judge the impact of 3G services, nevertheless, operators expect it to be the game changer in the future.
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| During the current fiscal year a lot of focus will be given to new policy initiatives in the industry. The new telecom policy is expected to address several key issues that include guidelines for charging spectrum fee and for mergers and acquisitions in the sector. The operators are hopeful that these guidelines would be conducive for the growth of the sector as a whole. The telecom minister has promised that the new telecom policy would be drafted by the middle of this fiscal year. He has also assured the industry that the policy would keep in mind the interest of the industry as well as that of the consumers.
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| In a latest move, some operators have raised their tariffs. The reason given by them is that such a move is essential to cover the increasing costs of servicing the existing as well as the new customers. However, they have rolled out these price increases only in select circles to view its impact on subscriber additions as well as on minutes of usage (MOU). Indian consumers are known to be highly sensitive to price increases. Therefore, there are fears that net additions and/or MOUs may come under pressure through such increases. Another fear that operators have is what if other operators do not follow suit? This would lead to a loss of market share. While tariff increase will have to happen eventually, it remains to be seen if all operators would make this move in the current fiscal or not.
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