Level Playing Field

Mobile communication till date was an exclusive domain of cellular service
providers, but with the recent TRAI recommendations on limited mobility, even
the basic service providers in the country can provide mobility to their
subscribers within SDCAs, if the government gives a go ahead. As per the
recommendations, the basic service providers in the country can provide mobility
at a cheaper rate to their subscribers by charging Rs 1.20 per 180 seconds for
the outgoing calls with free incoming calls. Limited mobility is a technology
enhancement, which uses the same frequency spectrum. This enables the basic
service operators to provide mobility to subscribers who cannot afford cellular
services.

Limited mobility provides voice connectivity and data connectivity at speeds
of 9.6 Kbps, whereas the cellular service providers are talking of higher
speeds, that is, in multiples of 9.6 Kbps for providing services like mobile
banking, mobile ticketing and mobile shopping. The basic service providers also
do not have the liberty to provide roaming, inter-city connectivity and
value-added services, therefore the two services cannot be compared. Limited
mobility is for the lower strata of the society and is only for voice, whereas
the mobile services move up the value chain and caters to a large market segment
with its complete suite of services to subscribers.

To provide level playing fields to the cellular service provider. TRAI has
reduced the revenue sharing arrangement from 17 percent to 12 percent. In the
short run, the limited mobility will result in a dip in turnover of the cellular
companies, but in the long run the cellular industry will benefit, as there
would be an increase in the cellular base. This dip will not affect the profit
margins of the cellular companies considerably, as there is a 5 percent
reduction in revenue sharing. Secondly, though intra-circle contributes around
60 percent of the calls, intra-SDCA contributes around 40 percent of these
calls. So the dip would be marginal if we combine the two. The cellular service
providers also have the advantage of data services, which accounts for around 10
percent of their revenues as claimed by many CEOs in different forums. In terms
of the long distance calls, the cellular service providers will retain 5 percent
to cover billing & collection costs, and bad debts. So, the winner would be
the cellular service provider.

Limited mobility will help in providing faster connectivity to the crowded
and inaccessible areas thereby achieving the targets of NTP’99 of a tele-density
of seven by the year 2005. The differential duty structure will act as a damper
for the growth of limited mobility in the country as the fixed WLL terminal in
the country has 35 percent duty in comparison to 5 percent duty for the cellular
phone. TRAI should make it at par. Rumors are that the limited mobility rental
would be at Rs 600, which is on the higher side, and TRAI should ensure that the
poor man’s cellular service with actually sees the light of day in practice.

Pravin Prashant