Telecom Sector: A Comparison between India and Developed Nations

Telecom Sector: A Comparison between India and Developed Nations

Dr. Anil

PhD (Economics), Jawaharlal Nehru University

Deputy Director (Economics), Competition Commission of India

Former Assistant Professor, Sri Ram College of Commerce, Delhi University

DOI: https://dx.doi.org/10.47772/IJRISS.2025.915EC0030

Received: 09 April 2025; Accepted: 11 April 2025; Published: 12 May 2025

ABSTRACT

The world’s total number of subscribers (wire-line plus wireless phones) was 746.14 Crores in 2019[1]. China holds the first position with 191.67 crores subscribers (wire-line plus wireless phones) followed by India with 117.25 crores subscribers (wire-line plus wireless phones). However, ranking of India is completely different when these numbers are adjusted with the population. India is no longer in the leading position, but far behind with other nations. The mobile phone tele density in 2018 was highest in Macao SAR (China) with 345 mobile phones per 100 people. The mobile tele-density of Hong Kong SAR (China) was 270 and was at the second position. Similarly, the mobile Tele-density of United Kingdom, Australia and United States are 118, 114 and 129. However, India’s mobile Tele-density is 87 which is quite low compared to most of the other nations. Despite the second position in total wireless subscribers, low wireless tele density reflects the huge gap between actual and potential subscribers. Hence, this article will make a holistic comparison of Indian telecom sector with developed nations using various parameters of telecom sectors and also explore various possible reasons for the gaps between telecom sectors of India and developed nations.

Keywords: Internet, Wireline, Wireless and

INTRODUCTION

With regard to the comparison of Indian telecommunication sector with other countries particularly China and other Asian neighbours, Venkatraman and Zhu (2012) analysed the factors that influence the Telecommunication Industry growth in India and conducted its comparative analysis with the People’s Republic of China. Telecom sector in the Indian economy contributes loftily to its GDP. It is the most vigorously growing sector amongst others in the Indian market, yet being the cheapest worldwide, and is the enabler of productivity and security across economies and societies. The authors outline the growth rate of the Indian telecom industry with the People’s Republic of China with respect to criteria such as performance of operators, market liberalization, and policy and regulation issues. The authors also opine about certain factors that they deem fit determine the growth of Indian and Chinese Telecommunication sectors such as the number of subscribers, government regulation and policies, and the extent of technological innovations. The study concludes that both PRC and India have their own combinations and different methods of influencing their industries towards growth and development. While the main focus of the Chinese government is to develop their own telecom firms, on the other hand, India is focused on making the telecom industry reachable and accessible to the remotest parts of its territory in order to improve productivity, connectivity, efficiency, and to develop better infrastructure. Gupta (2012) argued that India’s low rank in the world with regard to tele density and per 100 internet users can be attributed to its late start in telecommunication sector compared to other countries which are ahead of India.

As per a telecommunication report titled “Telecom Sector in India: A Decadal Profile” published by TRAI in 2012, India was at the second position in the world (i.e., 222 countries) in terms of telephone subscribers, which comprises 12 percent of the world’s total subscribers. It also had a very impressive compound annual growth rate (CAGR) i.e., 32 percent which was far ahead of average CAGR of world i.e., 17.34 percent. Despite all these spectacular numbers, the tele density of India was 64 which very less compared to world’s average i.e., 108. Hence, the total number of subscribers of telephone and internet do not reflect the true picture of telecommunication network of a country. Hence, for a better comparison, we should adjust total subscribers with population of nation such as per 100 mobile phones, per 100 fixed-line phones, per 100 internet users etc. Accordingly, in this article, the author will try to compare the Indian telecommunication sector with other major countries using the data available on the website of the International Telecommunication Union (ITU). This will enable us to determine the position of the Indian telecommunication sector vis-a-vis other countries.  For the purpose of comparison, the author has considered ten major countries in the world which have maximum numbers subscriptions (total or per 100 inhabitants).

Mobile-cellular telephone subscriptions Comparison

Here, the mobile-cellular telephone subscriptions include the number of post-paid subscriptions and the number of active prepaid accounts which offer voice communications. The top ten countries are China, India, the USA, Indonesia, Russia, Japan, Nigeria, Bangladesh and Pakistan. As per the ITU database, in 2018 China had the maximum number of mobile-cellular telephone subscriptions i.e., 164.93 crores followed by India which has 117.60 crores mobile-cellular telephone subscriptions. USA and Indonesia are at the third and fourth position in the world with 42.20 crores and 31.94 crores mobile-cellular telephone subscriptions. However, our neighbouring countries- Bangladesh and Pakistan have only 16.18 and 15.40 Crores mobile-cellular telephone subscriptions, respectively. A bar chart-1 below provides a graphical comparison of these top ten countries which have the maximum number of mobile-cellular telephone subscriptions.

Source: Chart is prepared by the researcher using the data available on the ITU website.

Given the above discussion and graphical depiction, it is concluded that the Indian telecommunication sector is the second largest telecom sector in comparison to other nations in terms of total mobile-cellular telephone subscriptions.

Tele density of Mobile Cellular Telephones

Situation is completely different when we compare mobile-cellular telephone subscriptions per 100 inhabitants. As per the mobile-cellular telephone subscription per 100 habitant data given at the ITU website, India’s rank is more than 125. There are many countries that have higher mobile-cellular telephone subscriptions per 100 inhabitants in comparison to India. For comparison, I have only considered ten famous countries. Mobile-cellular telephone subscriptions per 100 inhabitants of India was only 72.56 in 2018. However, mobile-cellular telephone subscriptions per 100 inhabitants of the UAE and Thailand were 208.50 and 180.18, respectively. Similarly, mobile-cellular telephone subscriptions per 100 inhabitants of South Africa, Russia and Mauritius were 159.93, 157.43 and 151.36, respectively. A bar chart-2 below depicts country-wise mobile-cellular telephone subscriptions per 100 inhabitants in 2018.

Source: Chart is prepared by the researcher using the data available at the ITU website.

Comparison of Fixed-Telephone subscription

Similarly, if we compare fixed-telephone subscriptions, India is at the eleventh position in the world. The name of the leading countries in terms of fixed telephone subscriptions which are ahead of India are China, the USA, Japan, Germany, France, Brazil, the United Kingdom, Iran, Russia and the Republic of Korea. In 2018, the fixed-telephone subscription of China was 19.2 crores followed by the USA with 11 crores and Japan with 6.4 crores. The fixed-telephone subscriptions of Germany, France and Brazil were 4.3 crores, 3.9 crores and 3.8 crores, respectively. However, the Fixed-Telephone subscriptions of India was only 2.2 crores. The Graphical comparison of country-wise fixed-telephone subscriptions is as under.

Source: Chart is prepared by the researcher using the data available at ITU website.

Fixed-Line subscription per 100 inhabitants

Considering the second highest population in the world, the rank of India will further go down in terms of fixed-telephone subscriptions per 100 inhabitants. As per the same database, India’s rank is more than 125 in terms of fixed-telephone subscriptions per 100 inhabitants. Fixed-telephone subscriptions per 100 inhabitants of India is only 1.62 in 2018. However, fixed-telephone subscriptions per 100 inhabitants of France, Germany and Japan were 59.42, 51.13 and 49.94 in 2018. In this regard, it may be noted that after the evolution of mobile-cellular telephony, the demand for fixed-telephone has significantly reduced.

Comparison of percentage of individual using the internet        

Another fascinating invention in the telecommunication sector is the internet. It has connected the entire world on a virtual platform to access knowledge which was previously not accessible beyond physical limitation. India’s internet users expected to register double-digit growth to reach 627 million in 2019 which is driven by rapid internet growth in rural areas, market research agency Kantar IMRB said. Internet usage in the country has exceeded half a billion people for the first time, pegged at 566 million, driven by rural internet growth and usage.

In 2020, India had nearly 700 million internet users across the country. This figure was projected to grow to over 974 million users by 2025, indicating a big market potential in internet services. India was ranked as the second-largest online market worldwide in 2019 and was second after China. The number of internet users was estimated to increase in both urban as well as rural regions, indicating a dynamic growth in access to the internet. Below chart-4 shows the number of internet users in India from 2015 to 2020 with a forecast until 2025 (in millions).

Chart-4 Number of Internet users in India from 2015 to 2020 with forecast till 2025 (Millions)

Source: Statista website

According to the ITU database, the percentage of individuals using the internet[2] in Kuwait was 100 per cent in 2017, whereas, in the Republic of Korea, UAE and the USA, the said percentages were 95.07, 94.82 and 87.27 respectively. However, in India, only 34.45 per cent population uses the internet and its rank is more than 125 in the world. The graphical representation of the percentage of individual using the internet for the selected countries is shown in the graph below.

Source: Chart is prepared by the researcher using the data available at the ITU website.

Hence, it can be seen from the above analysis that even if India is at the second position in terms of mobile-cellular subscriptions, its rank is more than 125 in terms of other parameters such as mobile-cellular telephone subscriptions per 100 inhabitants and percentage of individual using the internet which shows that India is far behind many countries.

Comparing India with China

India and China are emerging technological powers and are becoming increasingly important players on the global stage in terms of their gross domestic product (GDP) and their share in the world economy. The ICT diffusion index (ICTDI) has been constructed to identify within-country inequalities in terms of the digital divide across Indian states and Chinese provinces. The descriptive analysis indicates that India is far behind China on fronts like the maturity of the Internet ecosystem, ICT foundations, ease of Internet entrepreneurship, and ICT health. But Internet growth in India has been around three times more than China between the years 2000 and 2017. The constructed ICTDI indicates that Indian states such as Kerala, Maharashtra, Karnataka and Tamil Nadu are more digitalized than Bihar, Chhattisgarh and Madhya Pradesh. In China, the East region is dominant as Beijing, Tianjin, Shanghai and Guangdong show higher ICT diffusion.

In view of above analysis, it is clear that despite India’s large subscriber base of telephone and internet user in terms of absolute numbers, India is far behind other developed or advanced country in terms of per 100 subscribers. Hence, in the following paragraphs, the thesis will try to find out reasons behind the digital divide between Indian and other developed nations.

Reasons for the gaps in between telecom sectors of India and Developed Nations

By digital expansion, most of us mean ‘enlargement of the latest technology’ and ‘having a mobile phone[3]. In 2015, more than three billion people had access to the Internet worldwide (Internet World Stats, 2015). While that number represents slightly less than half of the world’s population, access is more widespread in developed countries, with almost 90% of North Americans having Internet access (Internet World Stats, 2015). Within this context, special attention is being paid to the technology usage of young people. There is a huge difference between developed and developing countries regarding digitization. In developed countries, machines and humans work together and adopt the latest technology, whereas in developing countries the change is hard, technology is costly, and the nation-state lacks potential. There are some basic causes in each developing country due to which there is a slow expansion in the digital field. These are some basic reasons why digitization is quicker in developed countries compared to India. So, let’s look at these factors in detail in the following paragraphs which led to slower digital expansion in India.

Lack of technical knowledge: Most of the population of India residing in rural areas. Many people are uneducated or lack technical education. This not only results in the slow growth of digitization but also slows down the growth of the economy. We can rightly assert that lack of technical knowledge is the principal obstacle in slow digital expansion.

Whereas in developed countries, the belief is that machines and technology can make human survival easy and also help them in earning more and spend their lives as they want. People of first world countries save more time, adopt change by the changing environment and changing technology, and fully use their potential to earn a good standard of living. Also, the people of these countries love to work with the best technology and they have the benefit of the speed of the internet. Not only the young generation but their older generation also believes in working with the aid of the latest technology. In terms of digitalization, the government of these countries puts their best effort in spreading the idea of getting the best and the latest technology and getting access to the highest speed of the internet.

Poverty: The purchasing power of people has a direct impact on the presence of cellular connections and tele density in a region[4]. Tele density in a given region is directly proportional to the overall purchasing capacity of the consumer. The greater economic growth of a particular region results in higher purchasing power of the consumer and consequently higher subscription rates. The TRAI in its 2005 report highlighted this factor wherein it compared tele density in the rural and urban regions of the country[5]. India is a developing country, and the lower GDP per capita, as opposed to developed countries, is one of the factors for lower number of subscribers per 100 people[6].

One of the most haunting problems of the developing countries is poverty. If we see the present scenario, most of the population of India lacks finance to get a digital phone or to get access to the internet. Even if they have a telephone, they don’t have money to get an internet subscription. The population of rural areas mostly says they even don’t have money to get food then how can they afford a digital phone. For example, a man living in a remote village earns and avails food not for himself but for his family too. He buys a smartphone for his daughter. But still, his daughter has to face a lot of problems other than the accessibility to the device. For example, that remote location of area, network issues, subscription for internet is costly for her to get access, and no sources available to get proper knowledge of internet access or that smartphone. Therefore, it can be concluded that mere purchase of cellphone doesn’t solve the problem of slow digital growth. In comparison to developed countries, whether its rural area or urban, every human with adequate education level consciously chooses to adopt the latest technology.

Remote locations: The third world countries such as India contain mostly hilly areas, jungle areas, mountainous areas, etc. In these areas, digitization becomes difficult. The slow speed of the internet, network issues and lack of technology, these are the basic issues seen in every remote location. These areas lack full-fledged electrification also, so the question of digitalization doesn’t arise here. Governments of developing countries often lack good policies to make easy digitization in these areas. However, in the first world countries, they have the best network speed and the government of these countries puts extra effort into remote areas so that people of these locations can also get full advantage of digitization.

Participation inequality: The people of developing countries have conservative thinking and also, they are less educated. They still don’t know what role technology and digitization plays in their day-to-day life. So, it’s necessary to educate them first about the technology and its importance in their life and then convince them to use the latest technology. Not only participation inequality, but even gender-based participating inequality lies in India. People in rural areas do not allow girls or women to get a smartphone or to get access to the internet. Girls are often not allowed to get education, employment, or purchase of a smartphone. In the first world countries though, such issues do not arise. So, the question of gender inequality or participation inequality does not arise. They empower women and treat both men and women equally. Also, in each field, women take equal share as men.

Network Externality: Unlike other infrastructure, more use of telecommunication network adds to positive externality. As the number of subscribers increases, this adds to utilities of existing customers. Now they can talk to more people. However, for the sake of understanding, with the increase in the number of cars on the road, the space would subsequently decline, resulting in negative externalities. Based on this argument, we can link the expansion of mobile telephone with a fixed telephone network. Countries with good fixed telecom network adopt mobile telephone more rapidly and early compared to other countries which do not have good fixed telecom network because they have already people to talk on a fixed landline. This argument can be supported by example two countries India and Australia. Indian mobile phone subscribers started picking up in around 2002 but Australia’s mobile subscribers had already started picking up in 1992. India’s fixed tele density was below 10 per cent but Australia’s fixed Tele-density was between 40 to 50 per cent, which indicates that at the time of invention of a new technology (mobile telephony), people of developed countries choose to accept mobile phone technology enthusiastically compared to developing countries because they already had people to talk on the fixed telephone network. The same trend can be seen in other countries.

Lacking Innovation: One of the major studies that assess global innovation is the ‘Global Innovation Index’ (GII) published annually by the World Intellectual Property Organization and Cornell University. In 2020, India was ranked 48^th out of 132 countries[7].

As one can see from the chart-6 below, which analyses the data for the last five years, India’s growth is improving but at a very slow rate. However, India is still one of the best performers in the low middle-income group and was ranked at 3^rd place in the 2020 index. Another reason for our low ranking in the world is that we spend very less of our GDP on venture capital investment.  However, one must note that India’s Rank in global innovation index is 48^th which is far behind China, which is ranked at 14^th in the 2020 Index[8].

Chart-6 India’s Rank in the global innovation index

Source: Global Innovation Index 2020: Who will finance innovation by Cornell University and World Intellectual Property Organization?

Historically Higher Tariff in India: For a major part of the Indian telecommunication history, internet connectivity and internet availability have been the primordial cause for lesser internet integration across the country. Higher tariff rates for calling and data connections were one of the factors responsible for adversely affecting the subscription over time,[9] which was a massive hurdle in the growth of the telecom sector and significantly delayed expansion of telecommunication in India. However, prohibitively expensive conditions for connection have changed in recent times with the introduction of greater competition in the market. Hence this resulted in greater access to cellular wireless connections particularly increasing the availability of 4G internet connection[10].

Lack of digital infrastructure in India: One of the major reasons that India is lagging behind the developed nations in terms of digital expansion is its dilapidated digital infrastructure and strict policies which favour only a few. Lack of infrastructure is one of the primary reasons for the low number of internet connection in India. Better internet integration of the country in a uniform manner requires better infrastructure available to the low-income strata of society. Indians do not have access to adequate fiber optic links, routers, handsets supporting speed internet[11]. As has been reported “A woefully inadequate public Wi-Fi infrastructure ensures the Internet is out of reach of millions. India has just around 31,600 hotspots, nowhere near global average of one hotspot for 150 people.”[12]   It must also be noted that merely investing in infrastructure does not ensure an increase in tele density. Additionally, it is also important to ensure investment in the enhancing telecommunication staff and technical know-how[13]. In India, therefore an increasing awareness about the telecommunication sector and the reducing reluctance towards shifting to the new models of communication can assist in significantly, increasing the access of cellular connections across the country[14].

Lack of technical education: India is at the bottom of the list when it comes to average education expenditure per primary and secondary student (purchasing power parity, or PPP, dollars). India spends only $1,248 per student and is behind countries such as Colombia and Vietnam in the same regard. Interestingly, handset penetration in India, especially of smartphones, has been restricted in India because of the lack of operational flexibility in the devices. Most smartphones use English as the primary operation language. However, as India is a diverse country with a multilingual culture and a less-educated populace, the absence of connectivity in a regional language is determinant to the increasing the number of internet users in India[15].

CONCLUSION

In view of above discussion, it is clear that despite that India was at the second position in terms of total subscribers (wireline plus wireless phones) with 117.25 crores subscribers (World Bank Database) in 2019, the ranking of India is significantly reduced when the said numbers are adjusted with the population. Similarly, as per the ITU database, in 2018 China had the maximum number mobile-cellular telephone subscriptions i.e., 164.93 crores followed by India which had 117.60 crores mobile-cellular telephone subscriptions. But India’s ranking drastically reduces when these numbers of adjusted with their respective country’s population. Likewise, in 2018, fixed-telephone subscription of China was 19.2 crores followed by the USA with 11 crores fixed-telephone subscription. The Fixed-Telephone subscriptions of India is only 2.2 crores. However, fixed-telephone subscriptions per 100 inhabitants of India is only 1.62 in 2018. However, fixed-telephone subscriptions per 100 inhabitants of France, Germany, and Japan are 59.42, 51.13, and 49.94 in 2018. In terms of internet user also, similar trend has been observed. According to the ITU database, the percentage of individuals using the internet in Kuwait in 2017 was 100 per cent. In the Republic of Korea, the UAE and the USA, the said percentages were 95.07, 94.82, and 87.27 respectively. In India, only 34.45 per cent population uses the internet and its rank is more than 125 in the world. Hence, it is seen that even if India is at the second position in terms of mobile-cellular subscriptions, its rank is beyond 100 in terms of other parameters such as mobile-cellular telephone subscriptions per 100 inhabitants and percentage of individual using the internet which shows that India is far behind many countries. Such ranking can be attributed to multiple factors such as lack of technical knowledge of Indian population, poverty, remote location of many Indian regions, participation inequality, poor network externality, lack of innovation, late expansion because of historically higher tariff, lack of digital infrastructure, lack of technical education, etc.

REFERENCES

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FOOTNOTES

[1] World Bank Database

[2] As per the definition given by ITU, Internet users are individuals who have used the Internet (from any location) in the last 3 months. The Internet can be used via a computer, mobile phone, personal digital assistant, games machine, digital TV etc. (As per the definition given by ITU).

[3] Colbert, A., Yee N., & George, G. (2016, May 9). The Digital Workforce and the Workplace of the Future. Academy of Management Journal, 59 (3). https://doi.org/10.5465/amj.2016.4003

[4] Recommendations on “Growth of Telecom services in rural India: The Way Forward” (2005, October 3, p. 34, Para 3.2)

[5] Ibid.

[6] Musa, P. F., & Meso, P. (2003, p. 9). Predictors of Growth of Teledensity in Developing Countries: A Focus on Middle and Low-Income Countries EJISDC. https://onlinelibrary.wiley.com/doi/pdf/10.1002/j.1681-4835.2003.tb00076.x

[7] Cornell University and World Intellectual Property Organisation (2020). Global Innovation Index 2020: Who will finance innovation? https://www.wipo.int/edocs/pubdocs/en/wipo_pub_gii_2020.pdf

[8] Ibid.

[9] Srivastava, R., & Sharma, B. (2015, p. 436). Analyzing and Forecasting the Mobile Teledensity Growth in India. International Conference of Advance Research and Innovation.

[10] Iyengar R. (2017, September 28). India poised for smartphone revolution. https://money.cnn.com/2017/09/26/technology/india-mobile-congress-market-numbers/index.html

[11] Wu, H. (2016, March 9). 900 million Indians can’t get online. Here’s why.

[12] Singh, S. (2017, August 8). Internet access isn’t as common as FMCG product in India. Read why. https://economictimes.indiatimes.com/tech/internet/internet-access-isnt-as-common-as-fmcg-product-in-india-read-why/articleshow/59960975.cms?from=mdr

[13] Musa, P. F., & Meso, P. (2003, p. 9). Predictors of Growth of Teledensity in Developing Countries: A Focus on Middle and Low-Income Countries EJISDC.

[14] Singh, S. (2017, August 8). Internet access isn’t as common as FMCG product in India. Read why

[15] Iyengar R. (2017, September 28). India poised for smartphone revolution.