Telecom Industry is changing at a great pace as technology plays a great role in this industry. In the recent past many initiatives and reforms are undertaken by Telecom Regulatory Authority of India (TRAI) and telecom operators as well. We are far ahead some of the telecom companies spread around the globe in terms of reforms as the active infrastructure sharing proposed by TRAI stands testimony to this fact. Furthermore, sharp cutting in levies by TRAI and new norms and liberalization has helped in moving up the ladder. Not only TRAI but the operators too are innovative and aggressive. All these has contributed a lot in bringing a hell – heaven difference in the Telecom world of India from the way it used to operate ten years back. Some of the initiatives taken by TRAI are discussed below in detail.

Spectrum sharing – Not allowed anywhere else in world
TRAI is also looking forward to Spectrum sharing which is not allowed anywhere else in the world. Though it is still in initial stages of talks, we have a long way to go before anything like that comes up. It has many issues involved but if allowed it will turn out to be a boon for telecom companies as it will help in reducing their capital expenditure.

Formation of Consumer Education and Protection Fund
Setting up of a Telecom Consumers Education and Protection Fund is also proposed which will be utilized for educating consumers about their rights and protecting their interest. Currently, as per TRAI estimate a sum of 10 crores is lying undistributed with the operators because subscribers could not be traced. The amount can not be recognized as revenue as it will amount to unjust enrichment at the cost of consumer.

Capping of number of players in the circle
Recently a consultation process was initiated by TRAI in which views of the industry was invited regarding capping of number of players in a circle. Presently there are no norms as to number of players which should operate in a particular circle but the floor exists for the same and a minimum of three operators are required to start services in a circle. It will also decide whether operators like Reliance, Shyam Telecom and HFCL who are currently in CDMA technology and are willing to operate in GSM spectrum can be allowed to operate in both the technologies.

Address Verification and Do-not-call registry
TRAI also asked all the operators to carry out address verification for its subscriber base which will take care of security concerns as mobile phones are one of the biggest threats for mishaps in which technology plays a great role. TRAI has proposed setting up of a Do-not-call- registry for saving millions of consumers using the cell phone from frustration caused due to non stop telemarketing calls. It went to the extent of proposing a penalty of Rs 500-1000 per call for calls made to consumers who have opted for the scheme.

Cutting down Access Deficit Charges
We have come a long way in the sense that the government levies, basically access deficit charges which used to be 30% of revenue in late 90s are brought down to mere 10%. Time and again, ADC charges are brought down by TRAI. Few months back, ADC on outgoing International calls was completely wiped off where it used to be 0.80 paisa per minute.

As TRAI is liberalizing norms for the telecom operators, they are getting more and more aggressive to grab the unaddressed market by hook or crook. This is like first-come-first-serve basis where every operator is keen to get all the pleasure and don’t want it to share it with their rivals. Though low tariffs and low cost handset are one side of the story, they are offering freebies out of their skin to rule over the market share. Let’s look at the some of the innovative ideas applied by the operators in business which have worked wonders for them.

Bundling of Handset with mobile connections by GSM operators
One of the major problems a CDMA operator has to face is for every new connection a handset is also required to be sold to the consumer because in case of CDMA the handsets are operator specific and network interchangeability is an issue with them. In case of GSM the consumer can easily move from one operator to another without changing his handset. In a race to acquire more and more numbers CDMA operators are tempted to offer handsets at less than the cost incurred by them and they take the hit of subsidy. As Vodafone entered into Indian market, Mr Sarin very specifically said in his interview that there is a scope of bringing down the handset prices and he will definitely bring it down. To everyone’s surprise recently Airtel which is a GSM operator announced its plan to enter into handset bundling race. With the entry of GSM operators in the mad race of Handset bundling with a connection, CDMA operators are definitely going to feel the heat and it also means cheaper handset to consumers.

Hiving off towers
As of now there are around 125,000 towers in India and it is expected that the numbers will be more than double by 2010. We are moving into a business model in which the expansion of network and cell sites will be carried out by a separate entity and the parent company will concentrate on acquisition of subscribers. This will also help in leveraging out the balance sheet of parent company as all the capital expenditure requirement under this model will be met by Tower Company. Banks and financial institutions are betting hard on this and 9 giants were in race when Reliance Communication decided to hive off the tower business. Not only Reliance but other telecom giants like Bharti Airtel and IDEA are also moving into this model.

Free Insurance Cover to subscribers
Everybody wants to go mobile. In fact the landline phones are getting out of fashion and there is heavy churn in landline segment. BSNL has come out with fantastic marketing formulae which will not only keep the subscriber intact but also add new subscriber to the network. It will provide non – life cover of 50000 to each of its 78 million landline and mobile subscribers. It sounds pretty interesting and an innovative idea to stop the customer from leaving the network. It is a very good bargain as BSNL will have to shell out Rs 100 – 200 per subscriber annually for such a deal. Not only this, BSNL is also thinking of providing life cover along with a connection if this scheme works out. This is just too good a strategy to lure customer at a meager cost of 200 Rs.

E- Bidding to acquire subscribers
Even the consumers are not letting it go easy for the telecom operators. They can very well sense the hunger of these operators to acquire numbers and are taking every benefit of it. Recently, Citi Financial group in Mumbai required 5K connection for its employees. In order to get the best tariffs, they invited E- bidding from the telecom operators. If we see it from the perspective of telecom operators, they were more than eager to get the deal as the corporate customers are always preferred by them due to their credit worthiness and high usage pattern. Secondly, 5K connections are too good a number to vie for and that too corporate customer is like an icing on the cake. Believe me, the tariffs quoted were just unbelievable and Citi Financial went with a fantastic deal.

India is selling like hot cake for telecom world and it is further substantiated by analyst reports issued by I – Bankers and research firms. As per a recent report issued by Ernst & Young, an investment of $25 billion is expected in five years that follow. The credit goes to TRAI for all the liberalization approach undertaken by it. Needless to say, the operators also deserve kudos for spreading the network by making such huge expenditure on infrastructure and making mobile services affordable for common masses.

Hats off to TRAI and Indian telecom operators for making Indian telecom industry as the fastest growing telecom industry in the world in a stint of just 13 years!

(The author is a Chartered Accountant working with TATA Teleservices Limited)

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