Mittal:
Bharti chief & RCOM chairman Anil Ambani stress on regulatory consistency; Sibal asks telcos to keep national interest in mind
OUR BUREAU NEW DELHI
Mobile tariffs are set to go up significantly in future, Bharti Airtel chairman Sunil Mittal said on Monday, indicating that recent hikes in call rates by leading mobile phone companies were only the first step by the industry towards a structural shift in pricing. Speaking at an industry event, the chairman of India’s largest telco by both customers and revenues, said that call rates will have to go up as mobile phone companies seek to offset lower revenue from rural markets, where customers make fewer phone calls when compared with the metros and big cities.
“The pressure on this industry will be acute as operators will have to serve the rural markets, as well as low-end customers, who use only voice calls and SMSes. This correction is required to compensate companies for their rural operations because cost of operations has gone up exponentially,” Mittal said.
Bharti Airtel recently hiked tariffs by 20% in some regions across the country, the first increase in mobile telephony rates by any company in three years. This resulted in all leading operators, including Vodafone Essar, Idea Cellular and Reliance Communications joining the bandwagon marking the end of a twoyear era of savage price wars that destroyed profits, slashed revenues and eroded margins of all wireless firms. The increase in call rates has also attracted the attention of sector regulator Trai, which has asked mobile phone companies to explain the rationale behind the price hikes.
Mittal urged the government to be more liberal and judicial in allocating airwaves, while also adding that operators here had paid far too heavily for 3G spectrum during last year’s sale process. He acknowledged that wireless broadband was the future for both rural and urban markets. “We are at the cusp of moving from voice communications to broadband. It (broadband) must be given due recognition on a par with road, electricity and water infrastructure for the benefit of our industry," Mittal said. Taking a similar stance, Reliance Communications chairman Anil Ambani said that ‘data would form the root of convergence of all mobile services’.
Ambani called for regulatory consistency and pointed out that it was hard and challenging for Trai to manage different forms of communication services. “There needs to be timelines to decisions and more clarity for us to move forward,” he added without elaborating.
Sharing similar views, Mittal said that going forward, Trai must seek to have minimum regulations for the sector. But telecom minister Kapil Sibal, who was also present for the inaugural session of the event, cautioned mobile phone companies to keep national interest in mind in their quest for profits.
“If national interest is on one platform and you are on a profit-making platform, nothing is going to work. If the growth does not benefit the country, then there will be regulations,” Sibal said.
The telecom minister agreed that over-regulation would hurt growth but added that rules were key to ensuring that telcos did not abuse their market position. “If it is an over-regulated environment, then you can not get growth. If it's under-regulated, then you get abused. So deciding on an optimal level is a challenge,” he said. Sibal also assured the industry that the government would put in place a transparent and meaningful regulation that protects the interests of all stakeholders without compromising the growth of the sector. He also called for increased collaboration between telcos and said he favoured spectrum sharing between operators.
In July, during an interaction with ET, Sibal had said that corporate rivalry could end up destroying the sector. “Because the industry is at war with itself and because they are trying to destroy each other, the consequences are that we are destroying the hen that lays the golden eggs,” he had said.
Tariff Hikes
June 2011 Tata Docomo doubled STD call charges for new subscribers; raised local and national SMS charges by 67% and 25%
Mid July Bharti Airtel increased local and STD call tariffs by 20-50% in Delhi, Andhra Pradesh, Kerala, Rajasthan, Madhya Pradesh and Gujarat
July end Vodafone and Idea Cellular raised STD and local call tariffs by 20% in Delhi, Gujarat and Andhra Pradesh in persecond billing plans
August Reliance Communiations raises tariffs for its GSM & CDMA customers by 20% in 19 of the 22 circles it operates
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