VoIP in India is yet to gain acceptance in India, but possesses great future prospects. Low call-rates as compared to conventional telephony and increasing Internet penetration are set to drive growth of the VoIP-based services in India. The market is expected to change the dynamics of the Indian telecom industry once the necessary regulatory changes are in place. The report provides a brief introduction to VoIP services, talking about its business and revenue models. The report touches upon the regulations on VoIP services in India, TRAI’s recent proposal and talks about DoT’s current stance for opening up the market. The report describes the current market conditions and its future potential. Low call-rates, Internet penetration, and end-user segments have been discussed at length. The competitive landscape identifies the services provided by the licensed service providers in the country and also talks about the grey market and government’s stance for the same.

1. VoIP Market - India
August 2009

2. Executive Summary
Legal VoIP service providers generated revenues worth INR x mn till March 2009
Market ILD outgoing calls accounted for x bn minutes in 2009 from wireless phones alone
Internet Telephony MoU account to less than xth of the ILD outgoing calls
LE
The Department of Telecom (DoT) recently gave green signal to Internet telephony within the
country, but the guidelines are yet to be notified
Regulations in
India
MP
An entry fee of INR x mn has been proposed by DoT for the Internet Service Providers (ISPs)
wanting to offer VoIP based telephony services on a pan-India basis
Factors
A
ISPs that obtain a license for VoIP based services within the country might be asked to share 9% of
S
their annual service revenues with the government
Low-cost call-rates are the biggest driver of VoIP services
High speed & good connectivity Internet are a prerequisite
affecting Increasing Internet subscriber base offers immense growth potential
growth Low spending power of an average Indian make the initial infrastructure unaffordable
Developing nature of the country promotes cross border businesses
Since 20--, when DoT opened up the Indian market to Internet Telephony, X VoIP licences have
been issued; only Y licence holders are reporting Internet Telephony Services
Competition The under-development of legal Internet Telephony services in India has led to unlicensed service
providers exploiting the large consumer base
VoIP MARKET – INDIA.PPT 2

3. •Introduction
•Regulations on VoIP in India
•Market Overview
•Factors affecting growth
•Competition
•Appendix
VoIP MARKET – INDIA.PPT 3

4. VoIP uses the Internet to transmit voice, which has its
advantages as well as disadvantages
Introduction Connectivity through the Internet Cloud
• Internet Telephony or VoIP (Voice-over Internet
Protocol) is a term for the technologies that use the Computer IP Phone
Internet Protocol's packet-switched connections to
LE
exchange voice
• It uses the more efficient route of Internet to
MP
transmit voice after breaking them into numerous
digital packets unlike Public Switched Telephone
A
Network (PSTN) which use a dedicated line
S
• This technology allows numerous users to send
information over the same line, providing a more
efficient utilization of the telecommunications
infrastructure
Internet
Internet
Cloud
Cloud
• --
• --
Mobile Phone Fixed Phone
• --
VoIP MARKET – INDIA.PPT 4

5. VoIP market in India is yet to take-off, although numbers
indicate immense growth potential
Overview ILD Outgoing Calls MoU (Wireless only)*
• Current call-rates in India promote intra-nation In mn
calling but act as a barrier to International Long 6,000 Z
Distance (ILD) calling x%
LE
• Still, ILD outgoing calls accounted for Z bn minutes in 4,000 Y
20-- from wireless phones alone, witnessing a x%
P
X
growth between 2007-2009 2,000
xth of the ILD outgoing calls
SAM
• Inspite of the fact that VoIP offers low cost ILD
service, Minutes of Usage (MoU) account to less than
• These figures indicate the impact of government
0
2007
VoIP - Minutes of Usage (MoU)
In mn
2008 2009
In mn
regulation on the VoIP services market in India but Quarterly
also exemplify its future prospects once the market is 150 Yearly 600
opened up f j k l
g
• At the end of March 20--, ISPs reporting the services, e h i 450
generated INR x mn worth revenues from Internet d
Telephony 100 c
a b Y Z
• The reported MoU have 300
Grown x% year-on-year between 2007-2009 X
Increased considerably ever since the recommendations
by TRAI were published in August, 2008 50 150
Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar
’06 ’06 ’06 ’07 ’07 ’07 ’07 ’08 ’08 ’08 ’08 ’09
* Approximate figures
Source: DoT, TRAI, ISPAI
VoIP MARKET – INDIA.PPT 5

6. Factors affecting growth
Low call-rates
• Low-cost call-rates are the biggest driver
of VoIP services
• PSTN call-rates expected to be slashed by
atleast 50% with advent of unrestricted
VoIP services
End user segment - Enterprise Internet penetration
• Target group ranges from large MNCs to • High speed & good connectivity Internet
Factors
SMEs are a prerequisite
• Developing nature of the country affecting • Increasing Internet subscriber base offers
promotes cross border businesses growth immense growth potential
End user segment - Consumer
• India has more than 400 mn telecom
subscribers
• Low spending power of an average
Indian make the initial infrastructure
unaffordable
VoIP MARKET – INDIA.PPT 6

7. VoIP market in India is currently fragmented, but is expected to
be organized once the ISPs are allowed unrestricted services
Competition Year-wise addition of VoIP Licenses
• Since 20--, when DoT opened up the Indian market to Internet 200
Additions h
Telephony, x* VoIP licences have been issued 1
Total
• The VoIP licences saw a drastic increase in 20-- in the wake of 150 g
LE
TRAI’s recommendations for unrestricted Internet Telephony f
d e
• Only x licence holders are reporting Internet Telephony 100 c
P b X
Services (see appendix), as of March 20--
M
• At present all telecom operators (offering wireline and 50
a
A
wireless services) have the licence to provide “unrestricted”
0
S
Internet Telephony in India
2002 2003 2004 2005 2006 2007 2008 2009*
• But, even after lapse of approximately e years, these services
have not been started by the operators Market Share of major ISPs
• --
Internet Telephony is Company 1
• -- provided by ISPs holding x% Company 2
• -- a cumulative of more
than three-fourth of the Company 3
market share
Company 4
Company 5
k%
Giants like Bharti t% Company 6
s%
and Reliance have 3% y% Company 7
v%
not yet forayed u%
into providing Company 8
w% z%
VoIP-based services Company 9
* As of 31st January, 2009 Company 10
Source: DoT, TRAI, ISPAI
VoIP MARKET – INDIA.PPT 7

8. Thank you for the attention
The VoIP Market report is a part of Research on India’s Telecom Industry Series.
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VoIP MARKET – INDIA.PPT 8