2) PHS Service in India


- Mr. Paul Berkowitz, Vice President, Strategic Markets Sales of UTStarcom Inc. -

Congratulations on FITEL's achievement of more than 300,000 subscribers in less than one year from its service commencement.

To begin with, the Chinese market update is as follows.

- Total PHS subscribers exceed 9 million and UTStarcom's market share is 55-60%.
- UTStarcom has sold 2.2 million handsets in the 1st half of 2002 and its systems are already in operation in approximately 270 cities.

Indian Telecommunications Market:

The Indian telecommunications market is open to private operators unlike other markets such as China, with basic services (wireline and limited mobility service) licensed in 22 circles and cellular services licensed in 21 circles and 4 metro cities. License fees for basic services are low to lighten the operator's burden. Teledensity is still low and accordingly, future growth is quite promising. Current telecommunications services generate US$8 billion compared with China's US$40 billion.

There are 2 public Basic Service Operators (BSOs), BSNL and MTNL, and 6 private BSOs. There are 2 private Cellular Mobile Service Operators (CMSOs) plus BSNL and MTNL as public CMSOs as well. BSOs can provision wireline or WLL (Wireless Local Loop) services including Limited Mobility (LM) services. A license is not technology specific and mobility is allowed within the local area with a radius up to 50 Km.

Spectrum allocation for PHS is 5 MHz in the 1880-1900MHz band. However, it also has a possibility of be expanded into the DECT band and unused military band (1900-1910MHz).

It's interesting that the usage tariff and rentals for WLL services including LM services should be equal or less than wireline services.

Public MTNL (licensed in Delhi and Mumbai) and BSNL (licensed in other than Delhi and Mumbai) account for 99% of the subscriber base and the other operators have just started their service. In all of India, monthly ARPU (Average monthly Revenue Per User) for basic service is approximately US$13 and monthly rental tariff is approximately US$5 for wireline and US$4 for LM services, respectively.

The India Imperative/ PHS Opportunity in India:

70% of India's population resides outside urban areas where teledensity stands at less than 1%. Sub-urban and rural areas in India are typically characterized by scattered high-density population clusters. A high proportion of sub-urban and rural population coupled with low affordability makes PHS an ideal solution for these areas. PHS is also an ideal solution for private BSOs with a pure wireline roll-out as it extensively leverages existing infrastructure. Further, PHS is also emerging as a complementary solution to CDMA for (i) highly dense areas of large cities and (ii) for a broader suite of cost effective data services.

MTNL and BSNL are late in mobility services and struggling against private operators so that PHS enables them to competitively offer a wider basket of services by optimally leveraging their existing nationwide wireline infrastructure. PHS is also a solution for the large population of areas where copper is exhausted and it is not feasible to lay additional copper.

PHS sees stiff competition from CDMA, which has established footprints for WLL services in large cities and has experienced a sharp drop in prices. corDECT(DECT variant in India) is also being aggressively promoted by domestic manufacturers for provision of WLL services. However, PHS has various advantages over those technologies in being a cost effective, flexible solution, economical handsets (35% cheaper than CDMA), advanced data services at nominal incremental infrastructure cost, etc. Operators are quite interested in PHS having seen its success in China.

PHS Market Progress:

The UTStarcom has an office in New Delhi (includes R&D Center) and is conducting a PHS trial with MTNL. Subscriber terminals for trial are 1,000 fixed (for business use) and 4,000 extended cordless phones. This trial has attracted interest of the mass media.

PHS MoU India Chapter:

The CDMA Development Group (CDG) and the corDECT group are conducting strong domestic lobbying activities and we need to increase the visibility of PHS in India. Not only UTStarcom, but as a whole, the PHS industry should work to open up the market to PHS.

India is one of the largest and fastest growing telecommunications markets globally and a large opportunity is just opening up.

Detailed material is available