Now that it is certain that the Telecom Regulatory Authority of India (Trai) will shortly release two sets of telecom subscriber figures?one that will give an erroneous picture, taking into account the active and inactive customers, and the other that will be more realistic, taking into account only the active users?it?s time to change the way our tele-density figure is calculated. In fact, it would be more appropriate to replace tele-density with SIM penetration.
As already revealed by FE, the current tele-density of 59.63 per 100 on a user base of 706.37 million is erroneous. The more realistic number would be 38, using 450 million as the actual user base. Since the higher number is arrived at by including the inactive users (largely products of multiple SIMs), the current thinking is that once the release of the dual sets of figures starts, the real picture would emerge month after month. However, just releasing the two sets of figures will not solve the problem.
The reason is simple. Once the regulator starts releasing the active and inactive user bases each month, it will have to go further and also start providing the break-up of each operator. This is where the problem will start. There are a number of operators that have a larger base of inactive customers, recorded in the home location register (HLR), than active ones, reflected in the visitor location register (VLR). Higher subscriber figures may not get operators more spectrum these days but it still means a lot in terms of headlines and momentary glory. Remember, we still rank operators on the basis of subscribers rather than revenues. So the general tendency to show robustness and success in the crowded telecom market is to flaunt subscriber numbers and monthly additions to them. Since the sheen would be taken out of such boasts once the dual sets of figures are released, there is still a way to beat the system and continue to show inflated numbers. If this persists, the entire exercise by Trai to provide the real picture would fail. Currently, the definition of VLR is quite liberal. Even if a subscriber switches on his/her mobile phone once in a month, it gets registered in the VLR. To beat the new system, operators could start providing fresh connections under new, attractive schemes month after month around the time the VLR is checked. This way they would be able to show higher VLR than HLR, defeating the entire exercise.
So the problem doesn?t end with just cleaning the data. Much more needs to be done. Since investors and analysts care more about the profitability of a company than subscriber numbers anyway, the figures come in handy only in informing us about the tele-density i.e., what is the real penetration of telephones in the country. This problem will not get solved by merely releasing the two sets of numbers and, therefore, it makes sense to replace tele-density with SIM penetration.
The current method of computing tele-density is quite outdated. It was formulated in days when most households did not have even one land line phone and the lofty aim of the government was to make one available to every single home. Tele-density was thus calculated by dividing the number of land line phone connections by the population. Later, with the proliferation of mobiles, it was added to land line phones. Today it fails to give the real picture because an urban household has four to five or even more mobile phones. Thus, by the current definition of tele-density, phone penetration is increasing but only among the populace that earlier owned phones. It is not really addressing the digital divide by connecting the unconnected.
The best option for the government is to move to measuring SIM penetration. Since it is known and accepted that around 40-50% of SIMs are multiple SIMs belonging to the same user, the best way would be to take this into account while calculating the penetration. Thus only if SIM penetration is at, say, 150% should we assume that 100% SIM penetration has been achieved. This would certainly provide a much better scenario of connectivity than the current tele-density figures. Aside from this, the SIM penetration figures would also give a better picture to operators and investors in planning future investments.
rishi.raj@expressindia.com