Premature Cell-ebration

Updated: Jan 24 2003, 05:30am hrs
In the recent telecom imbroglio, the cellular operators cartel has proved that only strong-arm tactics succeed in India. The industry managed to secure major concessions from the government by holding consumers to ransom and cutting their access to mobile phone networks. Although several of their grievances are justified, it now appears that the resolution of their problems will hurt the average consumer. Telephone subscribers in India would be advised to put their cell-ebrations on hold until the Telecom Regulatory Authority of India (Trai) announces its formula for leveling the playing field between cell companies and fixed line operators. So far, media attention has been focused on only two aspects of the telecom revolution the big drop in cellphone tariffs and the slashing of long-distance calls rates which were driven mainly by competition and the need to fulfill WTO requirements. However, the average fixed line user has seen no benefit at all. In fact, the Trai has protected flabby government operators by ensuring that local call rates are unaffected by the heat of competition when it refused to permit Reliance Infocomm to offer lower tariffs.

We can now expect two possible developments. The government-owned MTNL (Mahanagar Telephone Nigam Ltd) and BSNL (Bharat Sanchar Nigam Ltd) are threatening to reduce the pulse rate and increase rentals at the lowest end of the spectrum to offset their inability to cope with changing telecom technology and reduced costs. If Trai decides to force fixed line operators to pay access charges, these would only increase the cost of fixed line to mobile costs to the extent of the charge. How badly would this affect the average telecom consumer Startling as the statistics may sound, well over half of the Indian telephone users ensure that their bills are limited to the monthly rental charges. While the so-called telecom revolution is limited to the creamy layer of users, the vast majority of users will have to gear up for a big price shock. There is also another aspect to the tariff debate. If fixed line operators are asked to pay an access charge, it amounts to a backdoor entry to the Calling Party Pays (CPP) regime. Consumer advocacy groups had opposed this on the grounds that none of the tariffs charged either by cellphone operators or the fixed line ones are cost- based. In over five years of its existence, Trai has failed to build a databank of telecom providers costs, which would have been the basis of deciding fair interconnect charges. Instead, the trade-off between different segments of industry seems to depend on who can exert more pressure on the telecom minister and hence the Trai. The telecom industry seems to have decided that the rejection of Reliances lower tariff proposals indicates pressure on the government to protect MTNL and BSNL and makes the local call segment a captive market, ripe for a price increase. Such a short-sighted approach will stifle competition and keep local call charges high and will ultimately stunt the growth of the telecom industry and market.