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Monday, Oct 21, 2019

A-roaming we will go

Telecommunications minister Kapil Sibal has laid out his vision of how the telephony business will shape up over the next 10 years. He is steering the telecom industry between big promise and big risks.

india Updated: Oct 12, 2011 02:35 IST

Hindustan Times

Telecommunications minister Kapil Sibal has laid out his vision of how the telephony business will shape up over the next 10 years. At its core is a one-market, one-platform view that does away with area- and service-specific permits. Clubbing data and voice traffic makes sense because telecommunications technology has blurred the distinction. The world's fastest growing telephone directory may swell a bit more as subscribers in cities get hooked to streaming cricket matches and villagers transfer money on their cellphones. The industry expects one in five Indians will be surfing a high-speed network for business or pleasure by 2015. The average data subscriber is expected to bring in much more business than what voice telephony fetches. Clubbing all telecom circles into one, however, will take some doing because it threatens a lucrative roaming market that brings in one in R10 the telecom companies earn. Proposals on number portability, spectrum trading, internet telephony, infrastructure status for the industry and an exit option for telecom companies are long-pending stakeholder demands that Mr Sibal appears to have heeded.

In a way, the writing has been on the wall for some time now. The money in emerging telecom markets remains in voice traffic while mature networks must seek extra rupees from data. Telecommunications investment in the country ought to top Rs 360,000 crore in the five years to 2012. Indian mobile telecom companies are, in the process, signing up 15 million customers every month, but the easy money is behind them. Every new subscriber brings less than Rs 250 of business a month and this number is falling precipitously as networks spread from cities to villages amid a bruising price war that was made possible by selling spectrum cheap. With cellphones getting smarter and cheaper, data services could emerge as the digital gateway for millions of Indians. Sales of smartphones are forecast to grow 40% a year till 2015 by when close to 200 million people ought to be on data networks. Value-added services like video conferencing, social networks, gaming and mobile television could be a Rs 6,000 crore industry in five years.

All this, however, comes at a cost. The extra revenue telecom companies are eyeing may not materialise in the hyper-competitive Indian market. Operators cannot afford a deadly price war after having paid jaw-dropping sums to get more frequency. Signals for a consolidation in the industry may be misleading when seven companies control nearly all of the market. It is imperative that the telecommunications industry prices data services right: companies cannot take too much pain, yet they cannot afford to price in all the costs because their future is inexorably tied to the growth of the data business. Mr Sibal's new policy will steer the industry between the big promise, and big risks, ahead for telecommunications in the country.

First Published: Oct 11, 2011 23:00 IST

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