Feature Special

Telecom Startups In India – Opportunities Galore

Telecom market in India
On one hand is the growing market in wireless communication. Closely on its heels is the widespread usage of broadband, internet, Wi-Max technologies in both commercial and domestic markets.

Indian customers are changing over to the wireless technology in a big way. The mobile sector has grown from around 10 million subscribers in 2002 to reach 150 million by early 2007 registering an average growth of over 90%. Currently the Indian Telecommunication market is valued at around USD 100 bn. The market is dominated by major players like Bharti-Airtel, Reliance Communication and international telecom companies like Vodafone, while others like Maxis-Aircel are trying to strengthen their foothold.

The slashing of the broadband rates to near international levels and the improved infrastructure has promoted good growth in the broadband sector. In 2006, India witnessed a surge in the number of broadband users with the total subscriber base in the country expanding by almost 200% to just over 2 million by the year-end. However, it is understood that this market still has a lot of un-tapped potential.

Broadband over mobile (3G) will play a significant role in Indian scenario. Since it is impossible to deliver broadband through copper or fibre everywhere in India especially the rural segment, 3G will help deliver these services. The mobile operators offer a number of value added services such as mobile gaming, personalized ring tones and messaging. This has led to a development of a new sector which caters exclusively to developing mobile content.

Growth of telecom industry in India
The government has contributed to the growth of the telecom industry In India with pro-business policies such as the decision to raise the country's foreign direct investment limit for the telecom sector. The cap on foreign investment has been raised from 49% to 74%, opening the gates for foreign direct investment. The end of the monopoly of the government-run MTNL has led to a number of operators offering services with many value adds to it.

Another factor that is working to build the telecom industry is the swift growth in the telecom infrastructure and slashing of the usage prices. This has helped to build a strong domestic market thirsty for the latest and the best technology. Providers are vying with each other to offer the consumers high speeds and improved services. The hardware and software for this is now available internally.

Fertile ground for startups in the telecom sector
This market is offering a fertile ground for the Indian startups serving the entire value chain in the telecom industry. These companies are working to develop products, software and technology to feed the growing industry. Observers are predicting a strong growth for the telecom startups. Many venture capitalists are focusing on the telecom side of the business. The telecommunications industry exhibited growth in the funding received, driven by the wireless subcategory.

Business models for startups in telecom industry
Some of the fields where startups have grown to success in the telecom industry are

• Networking products: These companies are involved with the manufacture of networking products for both domestic and global markets. Tejas is a Bangalore based optical equipment vendor set up in 2000. It has a strong R&D and has developed a family of software-differentiated, next-generation SDH/SONET products. Eisodus networks is into the relatively new space of developing equipment for converged services over Ethernetl

• Products for Broadband internet: They include end-to-end broadband solutions. Midas specializes in DECT, GSM, WiMax, Ethernet switching & routing, DSL, Digital Loop Carrier and Triple Play technologies. Telisma Corporation is engaged in Ethernet transport and broadband wireless equipment.

• Mobile content development: These include mobile gaming, shows and entertainment content development. Mauj is a startup specializing in providing gaming content and music and commerce content. They have tied up with Indian and global wireless operators for this purpose.

• Mobile networking: These software solutions enable the user to subscribe to specific sites, blogs, RSS feeds and creating communities similar to the networking sites. Link N Surf is one such product developed by a startup wirkle.com.

• Mobile payment services: These companies offer mCommerce or applications for payment facilities through mobile. JiGrahak and Paymate are some ventures in this category. Paymate offers application that enable users to shop online and conduct transactions just as you would with a credit or debit card.

• SMS messaging services: Messaging is a major part of the mobile services in India. Big Indian banks send out around 2,000 SMS messages to important clients per day for account management. These companies offer bulk massaging services and mobile messaging and marketing services for enterprises.

• Mobile marketing and advertising: This model deals with developing and tracking Mobile marketing programs. Enpocket is a company offering a mix of the relevant mobile technology and creative marketing strategies for mobile marketing.

• VOIP solutions: These companies provide a range of VOIP solutions to wireless, broadband and traditional wire line operators. These operators can use the solutions to provide a host of value added services. Nexge is a startup working in this space.

• Telecom Towers: This is a relatively new sector, but with huge scalability. There are many big players in this sector but it is a great opportunity for start-ups too. Investment companies are ready to pump in funds in such start-ups having the right skill sets. Xcel Telecom, the telecom tower firm was incubated by Q investment in October 2006.

We are looking at the tip of the iceberg to say the least. New ideas will come up and old ideas will be explored even as we read this.