Call drops are a daily nuisance with little escape for anyone. The Telecom Regulatory Authority of India (Trai), which has a statutory responsibility to deal with quality of telecommunications services in the country, is right to pay urgent attention to this.
However, Trai’s new consultation paper, Compensation to the Consumers in the Event of Dropped Calls, focusses more on the price of unsuccessful calls and less on why they are so rampant. It also proposes an unwieldy solution.
The issue is not refunds for failed calls. Telecom customers must not be expected to pay if they do not receive a contracted service. This applies irrespective of whether or not the service provider was primarily to blame. For instance, an airline that is unable to fly, even for reasons beyond its control, such as bad weather, must still refund passengers booked on the cancelled flight. Warranties do not usually become void unless it is the buyer’s fault.
The Trai document implies that telecom operators have an incentive to ignore call drops since a customer could end up paying for more calls to complete a conversation. It contests the operators’ claim that dropped calls cost little to customers since billing is predominantly on a per-second basis. Trai says only 59% use this option. It ignores the lost revenue when a person does not return to a potentially long social call, if it fails midway. Trai offers no estimate of losses incurred by customers.
Further, Trai dismisses two widely-accepted causes of call drops, namely shortage of spectrum and towers.
Mobile operators claim that they support more minutes of usage with a fraction of the spectrum available to their counterparts overseas. They claim that the government and the regulator want them to buy expensive 3G broadband spectrum in auctions and then expect them to use it to make up for shortages of 2G spectrum.
They also complain about the struggle in erecting towers where municipal bodies demand whimsically high costs and delay approvals endlessly, causing disruptions and litigation. RWAs, fearful of radiation risks, oppose new towers and often want existing ones removed. This is serious strain on wireless connectivity.
Trai’s response to operators’ main complaint is casual and worrying. It is contained in section 2.11, the entirety of which is as follows: “So far as the spectrum issue is concerned, the allocation of spectrum is guided by the rules of the Government. On the other hand, resistance of the RWAs is a matter to be resolved by the TSPs with the involvement of the concerned stakeholders.” This is despite the fact that the body has a major responsibility, if not final authority, when it comes to spectrum and towers.
Trai makes a vague case that more calls fail because investments by operators have not kept with usage. It claims companies are prioritising 3G over 2G services. However, this ignores that 2G and 3G networks came up at different times. In most cases, companies obtained 3G spectrum later than 2G. 3G coverage is incomplete even now, with networks coming up for the first time in many parts of the country. It is therefore hardly surprising that companies need to invest more in the newer 3G/4G infrastructure. Also, investments in infrastructure hardly ever occur in line with usage; they take place in steps. A player invests in capacity first, even before use begins, and augments it at specific points later, based on a variety of commercial and technical factors.
Trai’s own revenue data demonstrates that no Indian operator can afford to ignore 2G services as they contribute over 80% of the total revenues. It is not a bargain for an operator if low investments lead to a flight of 2G users.
The issue of investments in 2G and 3G networks therefore deserves to be treated with more rigour than they are in the consultative document. Indeed, that would be a legitimate expectation from the consultation issued by a specialist regulatory body like Trai. For its arguments on investment and network optimisation to hold water, it must demonstrate why a company that pays billions in spectrum costs would withhold investments on a network that could use it.
A company in a competitive market has the right incentives to decide the size and timing of its investments and to deploy its network resources. Indeed, it is much more qualified than a regulator to do so.
The huge investments until today came without pressure from regulators and policymakers. It will be a sad day for regulation if regulators interfered in investment decisions instead of making them more attractive by promoting and enforcing competition.
The nature of competition in India’s telecom markets provides many insights and shows up flaws in Trai’s approach.
Over six national players compete in each telecom circle. If Trai is right, and the shortage of spectrum and towers are not the real problem, would we not expect players to respond appropriately? Would companies with smaller market-shares not attempt to gain market-share by offering services with fewer call drops? Many of the latter are formidably deep-pocketed (e.g. Uninor, MTS) and it costs a customer only Rs 19 to move to another operator. Why have the CDMA players not taken advantage of the market conditions? Why, at least, are the public sector players like BSNL, MTNL not exploiting the purported unwillingness of private players to improve quality of service? Do their networks have fewer call drops? Sadly, no.
Clearly, there is a problem with Trai’s diagnosis and therefore, the treatment of the problem.
Most international regulators rely on market competition to help improve quality of services. As Trai itself recognises, it is not trivial to set call drop thresholds and even more difficult to monitor and enforce them. It is not surprising that Trai found no other regulator, besides its counterpart in Colombia, actively regulating the billing of dropped calls. Almost all its other examples refer to how operators compensate their subscribers for dropped calls.
There is something here for Trai and enlightened operators to ponder.
The author is a telecom consultant