TRAI to be fair: Let’s be clear, telcos stand to lose from call drops

Going by Trai’s consultation paper on call drops, telcos are almost wholly to blame as they have either not optimized their networks or not invested enough.

call drop
The new rules framed by the Trai provides that mobile users will get a compensation of Rs 1 for every dropped call, with a maximum for three dropped calls in a day.

Going by Trai’s consultation paper on call drops, telcos are almost wholly to blame as they have either not optimized their networks or not invested enough.

While Trai refers to the shortage of towers, it talks of how telcos invested just Rs 9,325 crore in networks in FY14, a hike of just 4.6% as compared to voice minutes growth of 6.8%. Trai also talks of voice minutes rising 12% and 3G data 252% while the number of base transmission stations (BTS) rose just 8% for voice traffic and 61% for 3G.

Throw in the bit about 41% of billing taking place on a per-minute pulse, and Trai is saying telcos profit from call drops after, say 5-10 seconds, since they bill customers – 41% of them – for a full minute.

This misses the broader picture. For one, BTS don’t rise proportionately to voice/data usage, there is a basic network design, after which it becomes counter-productive to add too many more BTS/towers.

If Delhi has the same number of towers per sq km as Shanghai and Singapore do, it is for a reason; put in more towers, and the signals clash or create interference. Oddly, Trai cursorily dismisses the issue of spectrum shortage – more spectrum, however, means operators can do with less towers and Indian telcos have a third the spectrum their overseas counterparts have. Trai ignoring the non-spectrum capex of telcos also distorts the picture – for FY14, it says, telcos spent a mere Rs 9,325 crore on non-spectrum capex.

But while a Bharti Airtel spent Rs 4,156 crore in mobile services capex (non-spectrum), this rose to Rs 14,846 crore once you include spectrum. In FY15, this was Rs 9,310 crore and Rs 27,432 crore respectively under these heads. This is an important omission and Trai not using figures for later years when telcos raised investments is unfair.

But even if telcos had unlimited towers and unlimited cash, call drops can’t go away completely. A top telco in Delhi carries 49 hours of voice calls per MHz per tower as compared to 6.5 for Shanghai; for data, it is 3.4 GB per MHz per tower as compared to 0.2 for Shanghai. This can be fixed only by giving telcos more spectrum, not by putting up more towers/BTSs.

Since poor networks make users migrate to other telcos, it is unlikely telcos benefit from call drops or don’t want to invest in fixing them. The fact that subscriber ‘churn’ has fallen dramatically suggests telcos are investing heavily in fixing networks.

For Bharti Airtel, churn fell from 8.5% in September 2012 to 3.3% in June 2015 – since telcos have to spend money on acquiring new customers, a lower churn automatically leads to lower expenses and higher profits. Hopefully, Trai will recognize these facts when it comes out with its final recommendations.

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