The Evolution of Mobile Communication in India

This is an exclusive article series conducted by the Editor Team of CIO News with Kallol Saha, Chief Technology Leader (CTO) at SMIFS LIMITED.

Over the past 30 years, India has experienced remarkable growth in mobile subscribers and mobile technology. Today, mobile communication stands as the most popular, fast, and feature-rich mode of communication, nearly overshadowing traditional voice communication methods. Examining the journey of mobile communication in India over the past three decades, along with the business challenges faced by the industry during its exponential growth, reveals a fascinating story.

The first mobile service in India was launched by Modi-Telstra in Kolkata on July 31, 1995. The inaugural call was made by the then Chief Minister of West Bengal, Shri Jyoti Basu, to the Communication Minister of India, Shri Sukhram. At that time, few could have anticipated that this event marked the beginning of a new era in Indian telecommunications. Within a year, several other mobile service providers entered the market, including Bharti Cellular (Delhi), BPL Telecom (Mumbai), RPG Cellular (Chennai), and Usha Martin Telecom (Kolkata). Over the following years, the number of mobile subscribers in India surged from just under 5 million in 2000 to approximately 1.2 billion by March 2024—a staggering 24,000% growth in just 24 years. What drove this unprecedented expansion? Let’s explore.

The advantages of mobile communication are well-known and experienced by the readers of this article. Initially, mobile communication provided the first means of two-way voice communication with mobility for the general public. Despite this, early mobile services faced substantial growth barriers due to high handset prices and excessive tariffs for both outgoing and incoming calls. As handset prices and tariffs decreased due to market competition, the subscriber base began to grow. The industry saw significant growth after incoming calls were made free in early 2003.

While price reductions and India’s massive population were key factors in the rapid rise of mobile usage, the continuous advancement of technology also attracted more users. The primary mobile technology in India is GSM (Global System for Mobile Communication). CDMA (Code Division Multiple Access), introduced by Reliance Communication in 2004, was phased out in 2016 when all CDMA subscribers were migrated to GSM.

As users sought more than just voice calls and SMS, the demand for mobile internet grew dramatically. Telecom network vendors, mobile manufacturers, and service providers focused on enhancing data speeds, recognizing the vast business potential in this area. This focus led to rapid technological advancements from 2G (second generation) to 2.5G or EDGE (Enhanced Data Rates for GSM Evolution), then to 3G, 4G, LTE (Long-Term Evolution), and eventually to 5G.

The download data speed of different mobile technologies is given in the below table.

The table shows that in just 27 years, mobile data speeds have increased more than 20,000 times. The average speeds listed are conservative; peak download speeds can be nearly ten times higher, with 5G reaching up to 10 Gbps or more.

As network equipment manufacturers like Nokia, Ericsson, and Huawei began offering high data rates, mobile handset manufacturers released devices capable of supporting these speeds. The first smartphone in India was introduced by HTC in 2007, and the iPhone officially launched in August 2008. With smartphones, the demand for data surged. This era marked a revolution in mobile communication, driven by contributions from network equipment manufacturers, handset makers, service providers, app developers, and users.

Despite this growth, the journey has not been without challenges. A significant setback occurred in February 2012 when the Supreme Court cancelled 122 telecom licenses of eight companies due to the 2G scam, which resulted in a loss of ₹1.76 trillion (1 trillion is equal to 1000 billion) for the government. The cancellation forced several service providers, such as Uninor, Loop Telecom, and MTS, to shut down their businesses, affecting the market significantly.

As smaller players exited, the market consolidated around a few major players like Airtel, Vodafone, Idea, and mid-sized players such as Aircel, Reliance Communication, and BSNL. Another blow came in 2019 when the Supreme Court imposed a massive unpaid due of around ₹1.69 trillion on telecom operators for unpaid AGR (adjusted gross revenue) over the previous 15 years. This included substantial amounts owed by Vodafone-Idea, Airtel, and Reliance Communication, leading to severe financial strain for some operators. The initial unpaid amounts of a few operators were as follows: Vodafone-Idea—around Rs 58,000 crore; Airtel—around Rs 44000 crore; and Reliance Communication—around Rs 17000 crore.

The high dues were due to a dispute between the COAI (Cellular Operators Association of India) and the DOT (Department of Telecommunications) over the definition of AGR. To understand this issue, we need to look back a few years. In 1999, the government introduced a revenue-sharing model for telecom operators. Instead of paying high license fees, operators were required to share a percentage of their adjusted gross revenue (AGR) with the government as annual license fees and spectrum usage charges. However, there was a discrepancy in how AGR was defined by the Cellular Operators Association of India (COAI) and the Department of Telecommunications (DoT). According to COAI, AGR included only revenue generated from the core mobile business. In contrast, DoT’s definition included income from other sources of income such as dividends, interest, profits from the sale or rental of property and assets, etc. The Supreme Court’s 2019 ruling in favour of the government pushed some major operators towards financial difficulty.

Additionally, the market faced disruption from Reliance Jio’s introduction of free voice and data services from September 2016 to March 2017. This aggressive pricing forced competitors to lower their tariffs, leading to financial losses and the eventual exit of some medium-sized operators like Aircel.

So, we find that the journey of telecom operators in India was never smooth barring the initial few years owing to high license fees, spectrum charges, intense competition, and a high amount of investment due to rapid technological advancements. Despite these hurdles, consumers have benefited from the competitive market and the fast technological progress. Today, the telecom market in India is more stable, with three major players—Jio, Airtel, and Vodafone Idea—dominating the landscape. Telecom operators are increasingly generating revenue from data services, global handset manufacturers are focusing more and more on India due to ever-growing demand, and customers are enjoying relatively low tariffs and cutting-edge technologies. This scenario represents a win-win situation for all parties involved in the telecom business. With continued support from government policies and the result of healthy competition, the telecom sector in India is poised for further growth, promising rising satisfaction for both subscribers and service providers.

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