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C. Shivkumar
Vishwanath Kulkarni

Says will launch services when Govt gives the go-ahead

Bangalore May 22 Tata TeleServices Ltd (TTSL), the telecom business holding company of the group, is ready for its foray into the Voice over Internet Protocol (VoIP) services.

TTSL President (Access Business Unit), Mr Vikas Shah, told Business Line, "We are ready to launch when the Government and telecom regulator gives the go-ahead." The VoIP service is provided free of cost by providers such as Skype and search engine Google Talk.

Skype and Google's VoIP are both Web-based. Google Talk currently is not available on PC to telephone. Skype Out allows for PC to telephone connection, though this is chargeable.

Domestic telecom service providers are currently not permitted to offer VoIP services. This has resulted in both Google and Skype grabbing a major share of the burgeoning market, leading to a downside pressure build up on international long distance routes especially between India, US and the continental routes. These routes have seen consistent increase in traffic, both data and voice.

Tariff pressure

Mr Shah admitted, "Yes, there will be tariff pressure on account of advances in technology." ISD usage was equivalent to about 15,000 million minutes per annum, according to figures by the Telecom Regulatory Authority of India (TRAI) for 2006-07, and this has been growing at an annual clip of 47 per cent. Mr Shah said that VoIP accounted for at least 10 per cent of this. But indications are that given the tariff differential there has been substantial migration to VoIP.

The migration, he said, would pull down the yield per minute (currently it is about 60 paise a minute) for TSPs. The yield per minute is the revenues earned by TSPs per minute of talk time. In fact, this has already been happening with the consistent tariff drops.

However, Mr Shah said, the migration and the consequent slide in tariffs would have little impact on telecom revenues. "No telecom company will lose money due to VoIP." This was largely because VoIP subscribers would have to use the backbone of the TSPs. Besides, he explained, the "throughput" would actually increase as TSPs optimise the use of their backbone infrastructure. This implied that quantum increases in telecom traffic alone would sustain the revenues of the domestic telecom service providers. The net effect would be that the average revenue per user, or the ARPU would actually improve for the TSPs. Currently, TSPs in India have the lowest ARPUs in the world at around Rs 5,000 ($125) per user per year.

As a result, Mr Shah said, that TTSL and other service providers would actually be making additional investments during the current year. Tata Tele's network infrastructure usage was over 65 per cent.

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