Customer Emerges Winner In Telecom Battles

New Delhi | Updated: Nov 5 2003, 05:30am hrs
The customer has emerged the winner in the telecom feuds between cellular and wireless in local loop (WLL) players so far. And they may continue to enjoy the lowest telephone services rates in the world in the times to come.

Experts say that local voice calls considered to be a vanilla service will continue to be available at existing rates if not at lower than the current prices. Value-added services such as roaming, long distance calls, data access services, short message services (SMS), however, may get costlier as opeartors will try to balance their business model for financial viability.

The government and the regulator believe that competition or market forces will take care of the expected esclation in prices. The Telecom Regulatory Authority of India (Trai) has announced forbearance on all tariffs and does not have any intention to intervene in case the prices start going up, according Trai chairman Pradip Baijal. Rest assured, the competition will take care of it, he says.

The proposed unified licensing regime, once in place, will initially help keep telecom tariffs in check as it will allow more competition in the wireless telephony space.

However, in the long term, when the number of operators are expected to be reduced to three or four with nationwide networks, the prices of value added services could go up.

The government as well as the regulator seem to be of the view that voice should be available at the lowest possible rates while letting operators take the call on pricing of value added services.

For instance, Trai in its recent recommendations on interconnect and access deficit charges has left local calls untouched but has levied charges on long-distance calls.

Similarly, the group of ministers (GoM), while clearing the migration of WLL operators to join the cellular club, mandated WLL operators to continue offering limited mobility so that basic services continue to be available cheap.

If somebody wants a sada paan only, it should be available, says Union finance minister Jaswant Singh.

Mr Singh was chairman of the GoM on telecom.

Industry insiders say that the formula should work well for operators as well. Keeping local voice call rates lower will help them gain more and more subscribers or market share while value added services will help them maintain their Average Revenue Per User (ARPU).

Interestingly, operators would have a better business case to invest in better technologies and innovate with new value-added services.

The promotion of ring tones, picture messages and mobile phone games is an example of operators initiatives to earn more revenues. In fact, they will be in a hurry to offer third generation (3G) technologies that promise broadband access and streming video applications to rev up revenues.