The Hindu Business Line : A clash of wills… and bills

That, coupled with the presence of numerous international organisations such as the United Nations and Red Cross, fascinates the travelling scribe and gives him a much needed respite from the frowning Mumbai sun.

And when you have a line-up of telecom representatives such as A Raja (Telecom Minister), Sunil Bharti Mittal (Chairman, Bharti Enterprises) and J.S. Sarma (Chairman - Telecom Regulatory Authority of India), camping in the ‘Peace Capital’ for the ITU Telecom World 2009, no business journalist would complain!

While the Regulator talked of changing the billing regime for mobile telephony providers, the telecom minister said that 3G auctions will spill into the next calendar year. On the other hand, Indian industry representatives were categorical in their request for a more supportive policy framework from the Government.

The TRAI Chairman, J.S. Sarma, had come into some disfavour with telecom investors and company officials after his comments on per second billing caused the scrips of major telecom companies such as Bharti Airtel, RCom and Idea Cellular to tank on the bourses.

(For the record, Sarma said that the regulator was planning to ask operators to shift to a per second billing model from the current per minute billing model so that consumers can enjoy the benefit of paying only for their usage).

Per second billing

Even though per second billing could eat into 10-15 per cent of the telecom industry’s revenues, as estimated by a study from HSBC Securities, per second billing seems to be the way forward.

Interestingly, the need to move towards this model per second billing has also been felt by Vodafone Essar, one of the well-entrenched players in the crowded Indian telephony space. The company is currently in the process of testing the model in Madhya Pradesh, a spokesperson for Vodafone said.

“At present, we are just in the process of testing out what kind of a customer proposition and response we would get,” the spokesperson said, without divulging further details.

Says Raman K, Practice Head (Telecom Media & Technology) at Tata Strategic Management Group: “It all boils down to the plan that can offer the maximum value to the customer…and the per second billing plan looks like the best bet.”

Industry officials feel that the instant success enjoyed by some of the new operators — Tata DoCoMo (which pioneered the per second billing concept), Shyam-Sistema and Aircel (in some respective circles) — would have forced the others to put on their thinking caps.

Going may not be easy

However, the going may not be easy for incumbent operators such as Vodafone, Bharti Airtel and Reliance Communications if customers wholeheartedly take to per second billing. “Incumbent operators will find it more difficult due to the losses on the existing subscriber base. New operators do not have much to lose in any case as their topmost priority is to ramp up subscriber base,” says Raman. Companies such as Aircel believe that per second billing has opened new avenues of growth for them.

The Chennai-based company saw 15 per cent of its ‘switched off’ customers become active in the six circles where it offers a per second billing plan, Aircel’s Chief - Network & Engineering Operations, Mallikarjuna Rao, told eWorld on the sidelines of a news event recently.

“When you are a late entrant in any circle, you end up becoming the ‘second sim’ for the customer and hence the usage is quite limited. With per second billing, we have tracked that these 15 per cent customers have again become highly active,” he said.

The Maxis Communications-promoted firm has also seen a 40 per cent increase in the number of long-distance calls, in the six circles.

However, the regulator’s move — or at least the talk for the time being — did not seem to cut ice with Sunil Bharti Mittal, Chairman and Group CEO of Bharti Enterprises, who went to the extent of saying that TRAI should leave the decision of selecting the billing model to operators alone.

If the new operators are successful in garnering market share through the per second model, Bharti Airtel too will have to join the latest round of tariff wars at some point, given that close competitor Reliance Communications recently slashed rates for all local and national calls to 50 paisa a minute while Idea Cellular embraced the per second model in both Himachal Pradesh and Rajasthan.

3G or 4G?

Telecom Minister Raja used the Geneva meet to communicate to the world that 3G auctions would be delayed by a few more months. The delay is due to foreign telecom companies asking for more time since the auction dates clash with the Christmas break.

Even as the developed world prepares itself to adopt fourth generation or long-term evolution technological standards, Indian Government agencies have been toying with the idea of auctioning 3G spectrum for about two years now.

The delays raise an interesting question: Should India go in for 3G at all or should it straight away go for 4G auctions, Anil Tandan, Chief Technology Officer of Idea Cellular, asked during a panel discussion at the recently concluded 3G India conference.

“If there are more delays, obviously these kinds of questions would come into operators’ mind…should we invest in a technology like 3G or wait for a newer technology which will anyway be available in a few years,” posed Tandan.

“There should be a debate on whether operators should go in for a reduced 3G rollout and then move on to LTE (long-term evolution) or 4G,” he said.

The delay in the auction of 3G spectrum in the past two years has led to a loss of around $16 billion, according to a study by LECG Corp, a global consulting firm.

adith@thehindu.co.in

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