Column : The consumer bogey again

Apr 13 2012, 01:01 IST
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SummaryThe 122 licences being cancelled accounted for just 4.3% of active subscribers and 2.8% of the industry’s revenues.

With the government finally deciding to make a Presidential reference in the 2G case and the Supreme Court agreeing to hear the government’s review petition relating to its right in deciding the allocation of natural resources through means other than auctions, the focus has once again shifted to the fate of the operators whose licences stand to be cancelled by June 2. This, despite the fact that the SC dismissed the review petitions of the seven operators last week.

There’s a view amongst a section of the industry that, irrespective of whether Raja was wrong or right, why penalise the consumers who may be subscribing to the services of the concerned operators? There are also voices apprehensive of a rise in mobile phone tariffs as a result of the cancellation. It’s therefore time once again to sift fact from fiction and illustrate that apart from the companies who stand to lose their licences, the consumer or the government does not lose anything. Overall, even the telecom industry does not stand to lose anything because even after the cancellations, the country would have 6-7 operators per circle, which is a world record and would ensure that the market remains competitive enough to protect consumer interests.

The numbers are as follows: as on February end, the country’s total mobile subscriber-base stood at 911 million. The 122 operators whose licences stand to be cancelled by June 2 contribute only 72 million to this. Thus, their combined market share is an abysmal 7.9%. There were nine operators who got the new licences that are to be cancelled, but the bulk of the 72 million subscribers are contributed by only two operators—Uninor and Sistema Shyam. Hold your breath, the Telecom Regulatory Authority of India now comes out with the active and dormant users and on this count the performance of the newer operates dips even further. Out of the 72 million, only 43 million are active subscribers, meaning the remaining already use another phone connection and hardly use the services of these new operators. If the active subscriber numbers are taken, their combined market-share drops to 4.3%. The numbers thus clearly bring out that no loss would accrue to the subscribers of these operators and definitely not impact competition or tariffs.

Still, let’s think of even this ultra-small base of subscribers. They have the facility of using the mobile number portability to port out to other operators. As

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