`

Feedback

Reader's Poll

Which of the following technologies/concepts are likely to witness significant traction this year?
 
Any data to show

Teledata

Tele Data

Mobile Subscribers Yearwise comparision

Error
  • JUser::_load: Unable to load user with id: 122

Operator perspective

December 15, 2009

tele.net organised a conference, "Road Ahead for Indian Telecom", which included the participation of leading industry players and experts. The following section on Operator Perspective brings forward the views of Anil Sardana, Managing Director, Tata Teleservices and Sanjeev Aga, Managing Director, Idea Cellular.. 

Per-second billing 

Anil Sardana: Almost all the players had been offering tariffs at Re 0.60 per minute or lower (Re 0.50 per minute). The only change is that, earlier, if customers made a call for three minutes and three seconds, they  were charged for four minutes. Now, the operator whose profitability depends on that 18-25 per cent extra talktime billed would feel the impact.  However, for us, this is not a lower or a path-breaking tariff.

Sanjeev Aga: The per-second tariff is just a fad and six months from now, nobody will even remember this. In the past, there were many similar fad tariffs which took everyone by storm for two to three months and were then forgotten. Nevertheless, I think we are in a spiral of prices heading south. It is even desirable, because this is the only way that the market works out extra capacity from the system. The stronger companies will feel the least pressure because their cost curves are more resilient.

However, at the current tariffs, the overwhelming majority of players will not be able to make profits in the coming two, five or even 10 years.

Impact of the entry of new players 

Anil Sardana: Most of the new players have already launched services and the remaining will soon do so. Assuming that all of them would have launched services in the next few quarters, one can clearly anticipate that for the new players, price will be one of the key drivers. For these players, the customer will clearly look at the value proposition with pricing being the main lever. Therefore, these could be challenging times for new and existing operators while the customers would have the privilege of picking from a number of choices.

In the future, consolidation is very likely. There are players who have been clearly delaying their launches, indicating that they may perhaps not launch services at all and instead tie up or sell stake.

Sanjeev Aga: The year 2009 has been the bubble period in Indian telecom. There was too much capacity built up and this resulted in price competition. Subsequently, everyone will be affected in terms of profit, but the very weak may not be able to survive. Now, whether such a scenario leads to consolidation cannot be forecasted, but three years from now, there will certainly be far fewer independent operators, maybe four in one circle and five-six overall.

Impact of 3G auctions 

Anil Sardana: There is no clarity on the 3G auction. We have no idea how many slots will be offered in which circles.

Sanjeev Aga: It is very difficult to forecast what 3G would do in the intermediate or in the long run. I think the key application is going to be faster internet access on the wireless. Such services will be limited by the kind of pricing that is available for similar access on wireline. Also, in the short run, the 2G spectrum crunch will be freed up.

I think 3G may become hugely popular, or may remain just another spectrum band. The demand for 3G is not necessarily going to come from only high ARPU customers. There is a correlation, but it is not a one-to-one correlation. The worry is that the ability to price the product is limited by what is happening in the market. Thus, having an economic justification for your investment based only on incremental revenues from 3G is not a promising prospect. However, things could change in two-three years and 3G may give a better return on investment.

Road ahead for Wi-Max 

Anil Sardana: Wi-Max is supposed to be auctioned two days after the conclusion of the 3G GSM auction. Earlier, one was looking at four slots in Wi-Max, which have now been truncated to two, and that too in a very unfavourable spectrum band. The Tata Group’s interest in Wi-Max is positive.

Sanjeev Aga: Wi-Max works better when there is a concentration of data usage. However, the problem is that to build up Wi-Max connectivity and transmission, very high costs may have to be incurred and therefore, paradoxically, Wi-Max deployment in hotspots works most economically where there is already an underlay of 3G.

Future trends

Anil Sardana: Every time one assumes that the industry has reached the height of innovation, it bounces back with a newer, game-changing paradigm. Today we are talking about innovations related to the customer. I would now look forward to innovations on the network side, which to a large extent has already been shown in terms of the cost prudence exhibited by most operators.

We might find a newer concept of how spectrum is to be sourced and shared. We have suggested that spectrum should be subsumed from the operator and RF planning done for the complete circle. Then an independent network authority can be created which will monitor and control the network operations.

Sanjeev Aga: This year is without doubt a tipping point, where there is a sharp discontinuity because there has been the sharpest ever reduction in prices.  It is very hard to predict whether the elasticity of demand increase in subscriber uptake will fully mitigate this.  I think the revenue growth rate for this sector will be less than Rs 240 billion. This is going to be a year of profit pressure, which will continue into the first half of 2010-11.

 
 

To post comments, kindly login

 Your cart is empty

Ciena

OFC conferenc

Monday morning