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At Telecom CEO Conclave: Code Of Conduct, Taxes, Rural Challenges; DoT Approval For VAS?

SC Khanna, Secretary General of AUSPI (CDMA Association), called for a reduction on taxes on telecom services – “we pay around 28 percent of revenue to government. In comparison, in Pakistan, the taxes are 7-8 percent.” Khanna also played up intereference from the TRAI in tariffs, saying that mobile operators should be left to decide what charges they levy on the services they provide. He also expressed shock at the recommendations on Internet Telephony, saying “The Internet telephony chap can provide the same services with low license fees, unline the Universal Access Service License holders.” On 3G, he said that the success of Indian telecom is based on price. We’re the among the only countries that charge Rs. 1650 cr just for a license. and then have to pay for a rollout. These, he reiterated, are his personal views, and not representative of AUSPI members.

RN Prabhakar, Member, TRAI later during the discussion mentioned that the TRAI had issued a code of conduct, which is being violated quite significantly. “TRAI cannot take direct punitive action, but we might have to consider regulation.”

The Rural Rollout Debate
AK Saxena, Member Services for the Department of Telecom appeared to be fed up with the government looking at rural and urban separately, saying that the Department of Telecom has not given separate licenses for urban and rural, so all the norms should apply to urban and rural. Therefore, if there is a norm that a new connection should be given in X number of days, it should apply to rural as well. Prabhakar responded saying that the licensor had included a penalty clause to force rural penetration, but had to remove the rollout obligation, because operators felt it was all right to pay the penalty. Now the TRAI norms are – if the network is available, the norms should be followed.

On Numbers, Rollout Challenges, ARPU, VAS and DoT Approval For VAS:

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Some interesting numbers from Prabhakar: as of March 2008, Urban India accounted for 200 million of the 300.4 million telephone (wireline and wireless) subscribers. The teledensity in rural India was 10 percent, and around 70 percent in urban India. If we assume 500 million mobile subscribers by 2010, and a rural teledensity of even 25 percent – that means 100 million subscribers will have to come from rural India, and 100 million from urban.

Falling ARPUs
ARPUs are declining, even though connections are being provided mainly in the urban areas. What will happen when they start providing connections in rural areas? They need to figure out how to cut costs – by sharing infrastructure, use rural retail infrastructure already in place, like banks, and employ local population and marketing agents. They also need to come up with plans in order to retain customers for a longer period of time, since the cost of acquiring rural customers will be much more.

Rollout Issues
One operator who goes into the rural areas has few chances of surviving alone – due to difficult terrain, power shortage, less developed infrastructure like roads. In Bihar and Jharkhand, towers are run using 24×7 generators. With the current fuel prices, cost becomes unviable. That’s why we need intracircle roaming, and sharing of infrastructure. Alexadre Lozuine, CEO of Bycell Communications India said that in NZ and Australia, there is no technology mentioned – only spectrum, and you can use either GSM or CDMA. The equipment is ready for that. What you use depends on the customer and the marketing strategy. UASL can be used to provide any services, and so we need sharing of spectrum. Sandeep Bhargava of Nokia Siemens Networks suggested that for communication within rural areas, one could have a local loop, in order to use less of IP. Chandan Ghosh of Aircel pointed out the importance of interconnect agreements, and suggested that the ones with maximum interconnect win.

Value Added Services
Lozuine pointed out the problems for VAS as well – even if you can develop extraordinatry VAS, but if the customer doesn’t know how to use it, they wont pay for it. How will operators have so many marketers and sales professionals? It should be a co-operative move with institutions in those development of rural areas.

Approval for VAS?
During the Q&A, Sanjay Vijaykumar, CEO of MobMe, asked about whether there should be an automatic approval of products. They were launching a photosharing service with a mobile operator, and it took 5 months for them to receive and approval. Hence, shouldn’t there be an automatic approval, since otherwise the rollout of new products will take a lot of time?
The panelists weren’t quite sure about this, and said that products do not necessarily require DoT approval before being launched. Later on, some execs from the Industry suggested that the mobile operator probably used “DoT approval” in order to keep MobMe waiting.

The discussion at the Telecom CEO Conclave was moderated by Kunal Bajaj, MD of BDAConnect India

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