Diffusion of Mobile Phones_S-shape Growth Curve Model

8/11/2019 Diffusion of Mobile Phones_S-shape Growth Curve Model

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The diffusion of mobile phones in India

-

Sanjay Kumar Singh*

July, 2006

Address for orrespondene!

Dr. Sanjay K. Singh

Assistant Professor of Economics

Department of Humanities and Social SciencesIndian Institute of Technology Kanpur

Kanpur !"!#$

%ttar Pradesh& India.E'mail(sanjay)iit*.ac.in

+a, ( -#'/#'/'0/#!

Phone ( -#'/#'/'0/!# 123 ( -#'/#'/'"44 153

6 Assistant Professor of Economics in the Department of Humanities and Social Sciences atIndian Institute of Technology Kanpur& India.

!
mailto:[email protected]:[email protected]:[email protected]


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Abs"ra"

7o8ile phones& 9hich 9ere introduced a decade ago in #/'$ in India& are 8ecoming the

dominant means of accessing communication. At the end of !!/'!$& there 9ere ! million

mo8ile su8scri8ers in India in comparison to /! million su8scri8ers for landlines. The

increase in mo8ile phones has 8een phenomenal in comparison to landlines since the

introduction of mo8iles in the country. The main aim of this paper is to estimate the future

trend and analy:e the pattern and rate of adoption of mo8ile phones in India. The paper uses

S'shaped gro9th cur;e models for the same. It is found that mo8ile'density 1num8er of

mo8ile phones per #!! inha8itants3 in India 9ill increase from ".# in !!/'!$ to 4$./ in

!#!'## and 0# in !#/'#$. !! 8illion from ser;ice ta,3 in !#/'#$. The projected rapid gro9th in mo8ile sector

9ill ha;e important implications for future plans of mo8ile operators& infrastructure

pro;iders& handset suppliers& and ;endors. 7o8ile operators should 8e ready 9ith

contingency plans to deploy and operate infrastructure including customer care& 8illing&

applications& etc.& faster than that they might ha;e initially planned. Infrastructure pro;iders&

handset suppliers& and ;endors should 8e prepared to respond to such plans.

J#$ lassifia"ion!


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&' In"rodu"ion

The mo8ile phone industry in India is e,periencing an astonishing gro9th since the

introduction of mo8iles in the country. 7o8ile phone su8scri8er 8ase has increased from a

meager !.!4 million in #/'$ to ! million in !!/'!$. 7ar*et oriented regulation that

encouraged competition in terms of 8oth the num8er of competitors and the 8readth of

ser;ices that they can offer has played an important role in stimulating the demand. India?s

B%nified icensing for Casic and !!! 1ayaram& !!>3. Since 9ireless can 8e deployed more

rapidly& cash flo9 and return on in;estment is faster for the operators. Although corporate

sector and home data users 18asically& internet surfers3 are still going for landlines& the

general pu8lic are opting for mo8ile ser;ices& 9hich are no9 really cheap. It is unli*ely that

this trend 9ill change anytime in the near future.

An effecti;e management of mo8ile ser;ices re=uires an understanding of the factors

that underlie the e;olution of the mar*et. +actors such as mar*et potential and timing and

speed of adoption are of great importance for telecom operators for capacity planning.

%nderstanding the e;olution of mo8ile phone mar*et and its li*ely future trend is e=ually

important for policy ma*ers. The diffusion of mo8ile phones has 8een e,hausti;ely studied

in de;eloped countries 1see& for e,ample&


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analysts concerned a8out assessing the impact of pu8lic policies in the e;olution of

telecommunication sector.

The paper is organi:ed into the follo9ing sections. Section deals 9ith the historical

data of mo8ile phone demand in India. Section 4 discusses the diffusion model 9hereas

Section > presents the model estimation and its analysis. Section / contains concluding

remar*s.

2' (obile phone demand in India! &))-)6 "o 200-06

+igure # presents historical data of mo8ile phone demand in India. 7o8ile phones& 9hich

9ere introduced a decade ago in #/'$ in India& are 8ecoming the dominant means of

accessing communication. At the end of !!/'!$& there 9ere ! million mo8ile phones inIndia in comparison to just /! million landlines. There has 8een /'fold increase in mo8ile

su8scri8er 8ase in a span of just fi;e years from !!!'!# to !!/'!$.

Although India?s mo8ile net9or* 9ith ! million connections ran*ed among the

largest in the 9orld& its mo8ile'density 1num8er of mo8ile phones per #!! inha8itants3 is still

among the lo9est. Ho9e;er& gro9th in mo8ile'density has 8een phenomenal during the last

/ years or so. 7o8ile'density in the country has increased more than 4'fold from !.4/ in

!!!'!# to ".# in !!/'!$.

Deregulation& li8erali:ation& and competition ha;e played a *ey role in incredi8le

gro9th in mo8ile net9or*s in India. There has 8een a dramatic fall in mo8ile tariffs 9ith

increased competition. 7o8ile telephony prices for local calls ha;e dropped from 5s. #$ per

minute in !!! to 5s. #.! per minute in !!/. The pu8lic sector operators& Charat Sanchar

igam imited 1CS3 and 7ahanagar Telephone igam td. 17T3& ha;e launched the

2ne'India Plan? 9ith effect from 7arch #& !!$. This ne9 plan 9ill ena8le the customers of

CS and 7T to call from one end of India to other at the cost of 5s. #.!! per minute&

any time of the day to any phone. Similar schemes are getting introduced 8y the pri;ate

mo8ile phone operators. At the same time& there has 8een significant increase in a;erage

income of the people. +or e,ample& per capita gross domestic product 1FDP3 in India has

increased at the rate of almost /J per year from the last fi;e years or so. The reduction in

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tariffs and increase in a;erage income of the people is stimulating the demand for mo8ile

phones in India.

+igure &' ro%"h in mobile subsriber base in India

' .iffusion model

The inno;ation diffusion literature re;eals that the spread of a successful inno;ation o;er

time typically follo9s a sigmoid or S'shaped cur;e 1see& Friliches 1#/03& 7ansfield 1#$#3&

Artle and A;erous 1#043& 7ahajan and Peterson 1#"/3& 5ogers 1#/3& Feros*i 1!!!3&

Cotelho and Pinto 1!!>33. This happens primarily 8ecause during an early phase of

diffusion only a fe9 mem8ers of the social system adopt the inno;ation 9hereas& o;er time&

due to net9or* consumption e,ternality& dissemination of information a8out technical and

economic characteristics& etc.& many people opt for inno;ation as the diffusion processunfold. +inally& during the maturing phase& the rate of diffusion goes do9n 9hen diffusion

cur;e approaches a saturation le;el. In line 9ith these& 9e hypothesi:e that the gro9th in

mo8ile'density o;er time in India follo9s an S'shaped cur;e.#+or a time series li*e mo8ile'

#7any empirical studies related 9ith diffusion of communication ser;ices emphasi:e that the factors such asincome distri8ution& the price and =uality of communication ser;ices& competition& technological de;elopment&

>


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density& it is concei;a8le that the time series con;erge to a certain ma,imum as time passes

8y. There are a num8er of different functional forms that can descri8e S'shaped cur;es& for

e,ample& the logistic& Fompert:& logarithmic logistic& log reciprocal and cumulati;e normal

functions.Among these& the logistic and Fompert: functions are the t9o most 9idely used

functional forms. Therefore& it is decided to use these t9o functions to model and forecast

the de;elopment of mo8ile'density in India. The logistic model can 8e 9ritten as(

t

t

ttime

Md

+

+

=

331e,p1# /&

9here tMd is mo8ile'density 1representing the num8er of mo8ile phones per #!!

inha8itants3 at period t& ttime31 is ;alue assigned to timeat period t& is the saturation le;el

and tis an error term at period t. Parameters and determine the location and shape of the

cur;e& respecti;ely. All the parameters( & and are positi;e. The logistic function ranges

from a lo9er asymptote of ! to the upper 8ound as time ranges from ' to -. The

logistic cur;e reaches its ma,imum gro9th rate > 9hen tMd L & that is& at half of the

saturation le;el of mo8ile'density. Thus& the logistic cur;e is rotationally symmetric a8out its

inflection point 1the point at 9hich ma,imum rate of diffusion ta*es place3.

Similarly& the Fompert: model can 8e 9ritten as(

ttt timeMd += 3331e,p1e,p1

/2

9here all the ;aria8les and parameters ha;e their pre;ious meaning and tis an error term at

period t. Again& all the parameters( & and are positi;e. The Fompert: function also

ranges from a lo9er asymptote of ! to the upper 8ound as timeranges from 'to -. In

this case& ma,imum gro9th rate e is achie;ed 9hen tMd L e& that is& 9hen mo8ile'

density reaches around 40J of its saturation le;el.

regulatory mechanism& etc.& play a significant role in e,plaining the o8ser;ed diffusion pattern 1see& for

e,ample& 3& and 7ohamed andCodger 1!!/3.

/


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7odels /& and /2can easily 8e estimated using non'linear least s=uare method.

These t9o models can 8e estimated once 8y assuming no restriction on the saturation le;el

and then 8y imposing restrictions on the saturation le;el. This should 8e done primarily

8ecause there is no guarantee that the final estimate of the saturation le;el& & is close to the

glo8al optimum 1Heij 3.

The saturation le;el of mo8ile'density for a country is li*ely to depend on 9hether it

is an early adopter or a late adopter of telephones. De;eloped countries 9hich are early

adopters of telephones are e,pected to ha;e lesser reliance on mo8iles 9hereas de;eloping

countries 9hich are late adopters of telephones are e,pected to ha;e lesser reliance on main

line telephones. This is 8ecause de;eloped countries ha;e a 9ell esta8lished land line

net9or* and as a result face high s9itching cost if they mo;e from land line to mo8ile

net9or*. S9itching cost is minimal for the de;eloping countries and they can easily adopt

mo8ile phones in higher proportion. Analysis of mo8ile share in de;eloped and de;eloping

countries re;eals that the saturation le;el of mo8ile share in de;eloped countries could 8e

any9here 8et9een /!J and 0!J 9hereas the same 9ould 8e 8et9een "!J and !J for the

de;eloping countries 1+igures and 43. Analysis of the le;el and gro9th in teledensity 1total

num8er of telephones per #!! inha8itants3 in de;eloped countries re;eals that the saturation

le;el of teledensity in de;eloping countries could 8e any9here 8et9een #! and #/!

telephones per #!! inha8itants. Therefore& the de;eloping countries 9hich are late adopters

of telephones are li*ely to e,perience the saturation le;el of mo8ile'density 8et9een #!! and

#! mo8ile phones per #!! inha8itants. Since India is a late adopter of telephones& its

saturation le;el of mo8ile'density is li*ely to 8e 8et9een #!! and #! mo8ile phones per

#!! inha8itants. Ho9e;er& 8oth logistic and Fompert: models can 8e estimated for different

saturation le;els 1e.g.& 0!& "!& !& #!!& ##! and #! mo8ile phones per #!! inha8itants3 not

only to illustrate the different possi8le paths of mo8ile'density 8ut also to find out the most

appropriate saturation le;el. The mean a8solute percentage error 17APE3 4for the last fe9

o8ser;ations 1say& last three o8ser;ations from !!4'!> to !!/'!$3 can 8e used to find out

the most appropriate model and saturation le;el.

4The 7APE is commonly used in =uantitati;e forecasting methods 8ecause it produces a measure of relati;eo;erall fit. The a8solute ;alues of all the percentage errors are summed up and the a;erage is computed.

$


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+igure 2' Teledensi"y and peren"age share of mobile in sele"ed de1eloped oun"ries

+igure ' Teledensi"y and peren"age share of mobile in sele"ed de1eloping oun"ries

0


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' (odel es"ima"ion and analysis

The logistic model /&and Fompert: model /2is estimated using the econometric soft9are

I7DEP Gersion ".!. Coth the models ha;e 8een estimated for si, different saturation le;els

10!& "!& !& #!!& ##!& and #! mo8ile phones per #!! inha8itants3 along 9ith 9ithout

imposing any restriction on the saturation le;el. Annual data of mo8ile'density from #/'$ to !!/'!$ is used for the estimation of the models 1+igure >3. >The ;aria8le timeis ta*en

as # for #/'$& for #$'0& 4 for #0'"&MM& and ## for !!/'!$.

Ta8le # reports the estimation results for 8oth the models. According to the 5and

Adj. 5;alues& models fit the data ;ery 9ell. All the estimated parameters ha;e the e,pected

sign and most are highly significant. Ho9e;er& 9hen no restriction on the saturation le;el is

placed& logistic model predicts the saturation le;el of around # 9hereas corresponding

figure for the Fompert: model is around #". It is clear that the saturation le;el of mo8ile'

density in India can not 8e as lo9 as # or as high as #". As e,plained in the pre;ious

section& final estimate of the saturation le;el need not 8e glo8ally optimal. Hence& models

9ith restriction on the saturation le;el should 8e e,amined.

>Data on mo8ile su8scri8er 8ase and mo8ile'density is ta*en from Telecom 5egulatory Authority of India1T5AI3 pu8lications 1999.trai.go;.in3 and telecom sector data8ase from 999.infraline.com.

"
http://www.trai.gov.in/http://www.infraline.com/http://www.trai.gov.in/http://www.infraline.com/


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To choose the 8est model and saturation le;el& 9e also compared the predicted ;alues

9ith the actual ;alue of mo8ile'density for the last three year period from !!4'!> to !!/'

!$. The 7APE for the last three o8ser;ations from !!4'!> to !!/'!$& reported in Ta8le #&

is in the range of /.# to /.>$ for the logistic models and >.0! to /.#! for the Fompert:

models. According to 8oth 5and 7APE& the Fompert: models fit the data 8etter than the

logistic ones. Among the Fompert: models 9ith the restriction on the saturation le;el& the

one that is associated 9ith a saturation le;el of #! mo8ile phones per #!! inha8itants has

the lo9est 7APE. Therefore& the Fompert: model 9ith the saturation le;el of #! mo8ile

phones per #!! inha8itants should 8e used to depict the diffusion of mo8ile phones in India.

+igure / presents the future mo8ile'density trend in India up to the year !#/'#$

using the estimated Fompert: models for the saturation le;els of #!!& ##!& and #! mo8ilephones per #!! inha8itants. +urther analysis in this paper 9ill primarily 8e 8ased on the

estimated Fompert: model at saturation le;el of #! mo8ile phones per #!! inha8itants as

sho9n in e=uation /.

31#$4.!>.#$

#!time

eeMd

= /

9here timeis # for #/'$& for #$'0& 4 for #0'"&MM& and # for !#/'#$.

2n the 8asis of the estimated Fompert: model for the saturation le;el of #! mo8ile

phones per #!! inha8itants& projected path of mo8ile'density in India is presented in +igure

$. The analysis re;eals that the inflection point of the cur;e 9ill occur in the first half of

!#'#4. This implies that the rate of gro9th of mo8ile'density 9ill increase till the first half

of !#'#4 and start declining after9ards. 7o8ile'density trend in India sho9s that during

the year !#/'#$& there 9ill 8e 0# mo8ile phones for #!! people in the country 1+igure 03.

To project the mo8ile phone demand in India during the ne,t ten years& 9e re=uire

population estimates up to the year !#/'#$. Cased on the World Population Prospects: The

2004 Revision Population Databasepu8lished 8y the %nited ations Population Di;ision&

population of India is assumed to gro9 at the rate of #.>#J per annum from !!/'!$ to

!#!'## and #.0J per annum from !#!'## to !#/'#$. Cased on the estimates of mo8ile'

density and population of the country from !!/'!$ to !#/'#$& mo8ile phone demand has

8een projected 1see& +igure "3. It is projected that almost 4/! million ne9 mo8ile su8scri8ers

9ill 8e added 8et9een !!/'!$ and !#!'##. 7o8ile su8scri8er 8ase in India is e,pected to


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increase from ! million in !!/'!$ to >44 million in !#!'##. At the end of !#/'#$& 9e

can e,pect around !! million mo8ile su8scri8ers in the country.

Projected rapid gro9th in mo8ile su8scri8er 8ase in the India 9ill ha;e important

implications for re;enues collected 8y mo8ile operators and the go;ernment. 7o8ile

operators? re;enue depends on the num8er of mo8ile su8scri8ers and the a;erage re;enue

per mo8ile user. Although a;erage re;enue per mo8ile user in India is declining o;er the

years& it is e,pected to sta8ili:e 8y the year !#!'##. A;erage re;enue per user 1A5P%3 in

India has declined from 5s. ###4 per month in !!!'!# to 5s. 40/ per month in !!/'!$

1+igure 3. Ne can safely assume that this 9ill sta8ili:e at around 5s. 4!! per month 8y the

year !#!'##. The A5P% is not e,pected to decline further from !#!'## on9ards at least

up to !#/'#$ due to inflationary and income effect.

/

Cased on this assumption a8out theA5P% and estimates of the num8er of mo8ile su8scri8ers& mo8ile operators? re;enues

during the year !#!'## and !#/'#$ ha;e 8een estimated and presented in Ta8le .

During the year !!/'!$& total mo8ile spending in India 9as around 5s. >!/ 8illion&

an amount 9hich 9as #.0J of the country?s FDP at factor cost at current prices.$ India?s

FDP at factor cost at current prices in !!/'!$ is estimated to 8e around 5s. 4!!! 8illion&

#./J more than the pre;ious year. In fact& India?s FDP at current prices is increasing at the

rate of around #./J per year from the last fe9 years. Assuming that the gro9th in FDP at

current prices 9ill 8e at this rate up to the year !#/'#$& India?s FDP at current prices in

!#!'## and !#/'#$ 9ill 8e around 5s. /0$!! 8illion and 5s. #!4$"! 8illion& respecti;ely.

Nhen 9e assume a;erage mo8ile spending of 5s. 4!! per month per user during !#!'##

and !#/'#$& total mo8ile spending in India during !#!'## and !#/'#$ is estimated to 8e

5s. #// 8illion and 5s. 44$ 8illion& respecti;ely. India?s mo8ile spending 9ill 8e

e=ui;alent to .0J of its FDP in !#!'## and 4.#J of its FDP in !#/'#$ 1Ta8le 3. This

suggests that the re;enues of mo8ile operators may pro;e significantly greater than the

amount that might ha;e 8een commonly assumed. The high gro9th in mo8ile su8scri8er/Although change in the A5P% in the coming years 9ill 8e determined 8y the factors such as competition in

the mar*et& technological progress& producti;ity of operators& inflation& income of the users& relati;e spendingfor mo8ile ser;ices 8y the users& etc.& inflation and income effect is li*ely to 8e strong enough to offset the

do9n9ard trend in the A5P% due to technological progress& producti;ity gain& competition& etc. 2ne should

note that the relati;e spending for telecommunication ser;ices increases as income increases. Therefore& the

assumption that the A5P% 9ill 8e sta8le from !#!'## on9ards at least up to !#/'#$ seems to 8e plausi8le.$In this paper& Bmo8ile spending and Bmo8ile operators? re;enue 9ill 8e used interchangea8ly.

#!


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8ase and re;enues 9ill ha;e important implications for operators& infrastructure pro;iders&

handset suppliers& and ;endors. 7o8ile operators should 8e ready 9ith contingency plans to

deploy and operate infrastructure including customer care& 8illing& applications& etc.& faster

than that they might ha;e initially planned. Infrastructure pro;iders& handset suppliers& and

;endors should also 8e geared up to respond to such plans.

5apid increase in mo8ile su8scri8er 8ase and mo8ile spending 9ill ha;e e=ually

important implications for the go;ernment re;enue particularly in the form of regulatory

charges and ser;ice ta,. 5egulatory charges in India are in the form of license fee 1including

uni;ersal ser;ice o8ligation le;y3 and spectrum charges. icense fee ;aries from /J to #!J

9hereas spectrum charges ;ary from J to $J of the re;enue. 2n an a;erage& annual direct

regulatory cost faced 8y the operators in India is more than #4J& much higher than that inthe compara8le de;eloping countries. The corresponding figure for Pa*istan& Sri an*a&

7alaysia& and South Africa is >./J& !.4J& $./J& and /J& respecti;ely. It is remar*a8le that

despite the hea;y regulatory charges 1and other form of ta,es such as ser;ice ta,& sales ta,&

;alue added ta,& etc.3 in India ;is'O';is many other countries& tariffs for mo8ile calls in the

country are among the lo9est in the 9orld. Ho9e;er& there is a case to reduce the le;ies

particularly regulatory charges to further 8oost the sector. The sector paid more than 5s. /!

8illion to the go;ernment as regulatory charges during the year !!/'!$. E;en if 9e assume

a reduction in regulatory charges from #4J to say #!J in forthcoming years& contri8ution of

the mo8ile sector to the go;ernment?s re;enue 9ill 8e more than 5s. #/! 8illion in !#!'##

and 5s. 4!! 8illion in !#/'#$.

The mo8ile sector is already one of the largest contri8utors of ser;ice ta, in India.

During the year !!/'!$& this sector contri8uted around 5s. >! 8illion in the form of ser;ice

ta,. The rate of ser;ice ta, faced 8y the sector has increased from /J up to 7ay !!4 to "J

up to 7arch !!>& #!J up to 7arch !!$& and #J from April !!$ on9ards. If 9e include

the education cess of J 1of #J3& ta, 8urden on the sector 9ould 8e #.>J from the

financial year !!$'!0 on9ards. If this rate persists& go;ernment?s re;enue from the ser;ice

ta, on mo8ile phones 9ill increase from around 5s. >! 8illion in !!/'!$ to 5s. #! 8illion

in !#!'## and 5s. >!! 8illion in !#/'#$.

##


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Table &' 3arame"er es"ima"es of "he logis"i and omper"4 models /%i"h "-s"a"is"i in paren"heses

(odel #s"ima"e

5o res"ri"ion on "he sa"ura"ion le1el

ogistic /& L #". 14."3& L !.04>0 1##.!3& L >44#. 1.3@ 5L !.0@ Adj. 5L !.0@ 7APE L /.>4

Fompert: /2 L #0. 1!.03& L !.#4 14.#3& L #/. 1".03@ 5L !.0@ Adj. 5L !.0@ 7APE L >.0!

Sa"ura"ion le1el, 70

ogistic /& L !./0! 1$.3& L /4$#.$ 1>.43@ 5L !./@ Adj. 5L !.$@ 7APE L /.#

Fompert: /2 L !.#/> 14.#3& L #".$ 1#$.!3@ 5L !.0@ Adj. 5L !.0@ 7APE L /.#!

Sa"ura"ion le1el, 80

ogistic /& L !./# 1$.$3& L /"/.$ 1>.43@ 5L !./@ Adj. 5L !./@ 7APE L /.

Fompert: /2 L !.#"$/ 14.$3& L #0. 1#0.!3@ 5L !.0@ Adj. 5L !.0@ 7APE L /.!>

Sa"ura"ion le1el, )0

ogistic /& L !./""4 1$.43& L $>>!.! 1>.43@ 5L !./@ Adj. 5L !./@ 7APE L /.4!

Fompert: /2 L !.#04 144.!3& L #0.> 1#0.3@ 5L !.0@ Adj. 5L !.0@ 7APE L >.

Sa"ura"ion le1el, &00

ogistic /& L !./"/4 1$.#3& L $#.> 1>.3@ 5L !./@ Adj. 5L !./@ 7APE L /.40

Fompert: /2 L !.#044 144.3& L #0.! 1#".$3@ 5L !.0@ Adj. 5L !.0@ 7APE L >.>

Sa"ura"ion le1el, &&0

ogistic /& L !./"" 1$.!3& L 0/>0.$ 1>.3@ 5L !./@ Adj. 5L !./@ 7APE L /.>

Fompert: /2 L !.#$"4 144.>3& L #$.$ 1#.43@ 5L !.0@ Adj. 5L !.0@ 7APE L >.#

Sa"ura"ion le1el, &20

ogistic /& L !./"!" 1/."3& L "#!0. 1>.3@ 5L !./@ Adj. 5L !./@ 7APE L /.>$

Fompert: /2 L !.#$4 144.$3& L #$.> 1#.3@ 5L !.0@ Adj. 5L !.0@ 7APE L >.""

+igure ' (obile-densi"y in India be"%een &))-)6 and 200-06

#


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+igure ' Assump"ions and proje"ions of mobile-densi"y in India

+igure 6' 3roje"ed pa"h of mobile-densi"y in India

#4


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+igure 7' +u"ure mobile-densi"y in India7

+igure 8' +u"ure mobile subsriber base in India8

07o8ile'density figures ha;e 8een rounded off to one decimal place."7o8ile su8scri8er 8ase figures ha;e 8een rounded off to :ero decimal place.

#>


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+igure )' .eline in a1erage re1enue per mobile user per mon"h in India

Table 2' #s"ima"es of mobile opera"ors9 re1enue

#/


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o. of mo8ile

su8scri8ers

1in million3

7o8ile A5P%

per year

15s.3

5e;enues from

mo8ile ser;ices

15s. in 8illion3

FDP

15s. in 8illion at factor

cost at current prices3

7o8ile re;enue as a

percentage of FDP

!!/'!$ ! >/!! >!/ 4!!! #.4

!#!'## >44 4$!! #// /0$!! .0

!#/'#$ " 4$!! 44$ #!4$"! 4.#

' :onluding remar;s

In this paper& the gro9th of the mo8ile phone and mo8ile'density in India has 8een analy:ed

using S'shaped gro9th cur;e models. The result sho9s that the Fompert: model ade=uately

descri8es the path of mo8ile phone diffusion in India. The analysis sho9s that the high

gro9th phase of the diffusion of mo8ile phones 9ill continue for another se;en years till

!#'#4. It is estimated that there 9ill 8e 0# mo8ile phones per #!! inha8itants in India atthe end of year !#/'#$. The num8er of mo8ile phones 9ill e,ceed the num8er of people in

the country 8y !'4. 2n an a;erage& mo8ile phone demand in India 9ill increase at the

rate of 4$.J per year 8et9een !!/'!$ and !#!'## and #/.0J per year 8et9een !#!'##

and !#/'#$. As a result& total mo8ile phone demand is projected to increase from ! million

in !!/'!$ to >44 million in !#!'## and nearly !! million in !#/'#$. It is =uite li*ely

that the rapid e,pansion of mo8ile ser;ices 9ill pro;ide economic& logistic and strategic

challenges to the operators. As operators e,pand co;erage into ur8an& semi'ur8an& and rural

areas& they 9ill 8e confronted 9ith the daunting tas*s of de;eloping a country9ide

infrastructure and impro;ing and maintaining the =uality of ser;ice. The e,pected high

gro9th in mo8ile su8scri8er 8ase in India 9ill ha;e important implications for future plans

of operators& infrastructure pro;iders& handset suppliers& and ;endors. 7o8ile operators

should 8e ready 9ith contingency plans to deploy and operate infrastructure including

customer care& 8illing& applications& etc.& faster than that they might ha;e initially planned.

Infrastructure pro;iders& handset suppliers& and ;endors should 8e prepared to respond to

such plans.

5apid gro9th in mo8ile su8scri8er 8ase in the India 9ill ha;e important implications

for re;enues collected 8y the operators and the go;ernment. 5e;enue collected 8y the

mo8ile operators is projected to increase from 5s. >!/ 8illion 1#.4J of FDP3 in !!/'!$ to

5s. #// 8illion 1.0J of FDP3 in !#!'## and 5s. 44$ 8illion 14.#J of FDP3 in !#/'#$.

#$


18/19

The go;ernment?s re;enue from regulatory charges 1license fee including uni;ersal ser;ice

o8ligation le;y and spectrum charges3 and ser;ice ta, 9ill increase su8stantially due to rapid

increase in operators? re;enue. The go;ernment?s re;enue from regulatory charges is

e,pected to increase from 5s. /! 8illion in !!/'!$ to more than 5s. #/! 8illion in !#!'##

and around 5s. 4!! 8illion in !#/'#$. The go;ernment?s re;enue from ser;ice ta, is

projected to increase from 5s. >! 8illion in !!/'!$ to 5s. #! 8illion in !#!'## and 5s.

>!! 8illion in !#/'#$.

3 Cotelho A. and Pinto . 3& BThe diffusion of cellular phones in Portugal&

Telecommunications Polic+"1/'$3( >0'>40.

1/3


19/19

1##3 Fru8er H. and Ger8o;en +. 1!!#3& BThe e;olution of mar*ets under entry and

standards regulation the case of glo8al mo8ile telecommunications& )nternational

Journal o )ndustrial /r"aniation#103( ##"'##.

1#3 Fru8er H. 1#3& BAn in;estment ;ie9 of mo8ile telecommunications in the

European %nion& Telecommunications Polic+410'"3( /#'/4"$

1#43 Heij 3& BEconometric methods 9ith applications in 8usiness and

economics& 2,ford %ni;ersity Press& e9 Qor*@ pp !.

1#>3 ayaram Anup 1!!>3& B+i,ed ines . This is a;aila8le at 999.8usiness9orldindia.commay!4!>co;erstory!/.asp.

1#/3 7ahajan G. and Peterson 5. A. 1#"/3& B7odels for inno;ation diffusion& Ce;erly

Hills& 3( 0>#'0$$.

1#03 7eade . and Islam T. 1#"3& BTechnological forecasting model selection& model

sta8ility& and com8ining models&Mana"ement Science>>1"3( ###/'##4!.

1#"3 7eade . and Islam T. 1#/3& B+orecasting 9ith gro9th cur;es( an empirical

comparison&)nternational Journal o *orecastin"##13( #'#/.

1#3 7ohamed aid and Codger Pat 1!!/3& BA comparison of ogistic and Har;ey

models for electricity consumption in e9 ealand& Technolo"ical *orecastin" and

Social #han"e01"3( #!4!'#!>4.

1!3 5ogers E. 7. 1#/3& BDiffusion of inno;ations 1>thed.3& e9 Qor*( +ree Press.

1#3 Singh S. K. 1!!!3& BEstimating the le;el of rail' and road'8ased passenger mo8ility

in India)ndian Journal o Transport Mana"ement>1#3( 00#'0"#.

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Diffusion of Mobile Phones_S-shape Growth Curve Model