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Wednesday, 26 September 2012 00:00
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Bleeding telcos to take another hit on roaming

India already has one of the lowest telecom tariffs in the world, due to which the telecom industry is bleeding, but that doesn’t seem to be low enough for the government. Telecom minister Kapil Sibal’s announcement that subscribers no longer have to pay roaming charges from next year, at one stroke, will reduce revenues by R5,000 crore, most of which goes straight to the bottom line. Once roaming charges are removed, a subscriber from Bihar coming to the capital will no longer pay R1.5 per minute (R1 per minute for incoming calls)—she will, instead, pay the 50-60 paise Delhi’s residents do per minute for outgoing calls with incoming calls free. Theoretically, telcos can make this up with roaming subscribers talking more, but given how average revenues per user (ARPU) continue to fall even while tariffs have collapsed, this may not necessarily happen. And if, as a result of abolishing roaming tariffs, the telcos react by raising tariffs all around, surely that’s hurting non-roaming customers. The larger issue, of course, is whether the government should be looking at telecom tariffs as a whole, or in parts—telcos charge higher than costs for SMSs but this is made up by offering voice calls at below or very near cost; similarly, losses or low profits on voice are subsidised by higher profits on roaming from customers who can afford it.

There is then the issue of whether the government should be getting into areas that are outside its purview. Roaming charges are part of the Interconnect Usage Charge or IUC regime that the Telecom Regulatory Authority of India (Trai) administers. So, logically, Trai should have been asked to review the IUC to eliminate roaming charges—after which, Trai would have had consultations with all concerned and given players/users a chance to present their arguments. An announcement of the type made, however, ensures Trai is presented with a fait accompli. Barring the period during which Raja issued licences which the Supreme Court cancelled, the regulatory system has by and large worked well, so why interfere with it?

 

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