With COAI confirming that more sops are round the corner, the future of GSM operators
depends on the government
Forced to announce another round of rate cuts due to the forthcoming entry of
Reliance Infocomm into the mobile telephony space, cellular operators are
depending on the government to weed out "policy anomalies" and revenue
bottlenecks before they can be sure about their future survival.
|
At a joint press conference in Delhi, the operators announced a hefty cut in
STD and roaming charges, from Rs 9 per minute to a flat Rs 2.99 per minute,
exclusive of airtime rates, and irrespective of the distance called. The
announcements, made on behalf of the operators by Union telecom and IT minister
Pramod Mahajan, come into effect from midnight on 2 January, 2003 and will be
applicable only to those service providers who are affiliated to the IndiaOne
network.
Another announcement was that of further reduction in airtime rates shortly.
However, COAI and the operators ruled out the prospect of free incoming calls
before the CPP (calling party pays) regime was implemented, subject to approval
by the Telecom Regulatory Authority of India.
"Our announcement of reduced STD and roaming rates today, and the other
sops that we propose to announce every week from now on, are a short term
measure–to ensure that our subscribers do not migrate to other service
providers or cheaper technologies. We are hoping that the authorities will
rationalize policies and remove anomalies like the interconnect charges to help
us survive," said TV Ramachandran, secretary general of the Cellular
Operators’ Association of India.
Asim Ghosh, CEO of Hutchison’s operations in the country, admitted that the
latest round of rate cuts would be a body blow for the industry. "We are
already bleeding and this will make the wound deeper. We expect the government
to make the necessary policy changes and provide us with a level playing field
in order to survive. GSM telephony rates in India are already the lowest in the
world. We can’t cut rates further for too long and still survive," Ghosh
said.
Apart from the burning issue of interconnect charges’–where cellular
operators pay a fixed sum of money for every call that moves from the cellular
to the fixed line or other government-owned networks–operators are also
struggling to face the challenge of some discrepancies in government policy.
"For one, there’s no entry investment or license fee payment made by WLL
players, while we made huge investments on that front. Also, spectrum
availability is an issue that needs to be resolved fast," he said, adding
that this was causing concern over future expansion of the subscriber base.
As against the world average of 16-18 MHz of bulk allocation of spectrum per
operator, Indian operators are allocated only between 4-5 MHz per player–this
severely hinders rollout plans. Analysts agree that for the cellular industry,
this has to be a "short-term move". Rothin Bhattacharya, head of
consulting (telecom) at KPMG, said: "Unless the government comes up with
substantial changes on the policy front–particularly on the spectrum
allocation front–the future looks bleak for the cellular industry. Operators’
fixed investments have already been made, and they can control operating costs
by rationalizing manpower, centralizing operations and restructuring
distribution in the FMCG mode. But those savings will only cover a minor
percentage of the extra losses that rate cuts will force on them now. The
government needs to act, and act fast".