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“Operator consolidation is needed for sustainability”

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VoicenData Bureau
New Update

The Indian telecom market in the past year has seen a number of highs and lows-falling ARPUs of operators, tariff wars, spectrum dilemas...coupled with a unique market that has 13 operators with a number of new entrants in the past year, and steadily growing teledensity with the highest number of mobile subscribers in the world. While urban wireless subscribers have continued to grow by leaps and bounds, rural teledensity, with increased mobility, has also helped India clock one of the fastest growing telecom market numbers. And various VAS schemes like m-wallet, and m-banking as well as mandi-bhav, are just some of the incentives offered by operators to provide relevant services to the masses, all at the touch of a button.This year also saw the coming in of 3G and BWA, with a few operators having already started 3G services, and a hope for widespread broadband penetration with the coming of WiMax by early next year. With 3G has emerged, a flood of applications, services and cheap handsets to maximize potential of greater voice clarity and high-speed broadband that 3G network promises. However, with the dearth of spectrum, the government recommends spectrum sharing between operators-and this may also mean leasing out 3G spectrum to operators currently operating only in 2G circles. Pricing will be a very important factor in the successful uptake of 3G services by the masses, and it is to be seen how operators balance offering quality services along with quick RoI on 3G spends. Dr Sarma sheds some light on these issues.

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Please comment on how Trai and individual operators can work together to provide smooth sailing for the telecom market, and a clear path for future success?

The Indian mobile telecom market is highly competitive with 12 to 13 service providers in each service area. More than 17 mn wireless subscribers are being added to the network every month and the total wireless subscribers base stands at 670.61 mn at the end of August 2010. Though intense competition and a right regulatory and policy environment has facilitated this kind of growth, it is felt that looking at the availability of spectrum, this high number of service providers may not be sustainable in the long term and some form of consolidation may be required. TRAI has already sent its recommendations to the government on May 11, 2010 on the issues of spectrum allocation, spectrum pricing, level of competition, merger & acquisition etc. These recommendations are based on consultation with stakeholders. It is expected that it will put India on a higher growth trajectory, particularly in rural areas where the tele-density is still around 28 and there is ample potential for growth.

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What do you perceive as the one main factor driving the growing mobile teledensity?

Today, in rural areas also, the mobile phone has started being recognized as a necessity. Moreover, inspite of tremendous growth in mobile penetration, rural teledensity is still around 28% and there is a vast market yet to be provided with basic mobile coverage. The need for getting connected, affordability, customized applications in a competitive environment facilitating growth is the driving force.

Please share your views on how M&As and sharing of active and passive tower infrastructure can help a number of operators provide good service in a highly competitive telecom market?

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Considering the large number of service providers in each service area, and the position relating to availability of spectrum, we are of the view that measures to consolidate spectrum should be facilitated. These measures include mergers & acquisitions and spectrum sharing. Trai has recently analyzed issues pertaining to M&As and infrastructure sharing and has forwarded its recommendations to the government in May 2010. Together with these recommendations, active/passive infrastructure sharing will help to achieve QoS parameters in the competitive market.

The rural mobile market is steadily growing by leaps and bounds. How have measures like the USO fund, financial inclusion and broadband rollout helped to bring rural areas on par with urban subscribers, and after what length of time do you forsee this change happening?

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The basic purpose for the creation of USO fund was to increase penetration of telecom services in rural areas. The government is providing funds for landline, mobile, broadband, tower erection, etc, in rural areas. Regarding financial inclusion, the mobile phone can act as a powerful tool to facilitate inclusion of those people into the banking mainstream, who still do not have bank accounts. RBI and Trai have taken steps to facilitate mobile banking especially in rural and remote areas. With the start of 3G & BWA services, the penetration of broadband service in rural areas will increase exponentially. Trai is also working on the National Broadband Plan and hopes to give its recommendations to the government very soon. I foresee visible changes in the rural areas in a 2-3 years timeframe.

3G and BWA are finally here. How do you foresee these two technologies faring in India as compared to other SAARC nations in terms of growth rate, popularity among subscribers, pricing, and competition between MTNL/BSNL and private 3G operators?

3G and BWA services are expected to drive the next phase of growth in the wireless segment with enhanced focus on providing data services and Internet. Development of applications useful to people will be the key to success. The Indian market is highly price sensitive, therefore, it is imperative that relevant applications be made available to consumers at affordable cost. It is hoped that availability of cheaper handsets together with useful content will drive the next phase of growth.

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How long do you expect it to take for India to be ready for future technologies like 4G and LTE, which are currently on trial abroad, so it doesn't fall too far behind?

It is always an endeavor of the Authority to bring the best available technology to India. Regarding future technologies like IMT advance technologies, Trai has already floated a pre-consultation paper on “IMT-Advanced (4G) Mobile wireless broadband services”. The comments received from various stakeholders are being analyzed and the Authority shall come up with a detailed consultation paper shortly.

What are some of the main challenges you foresee in the coming months for the Indian telecom sector, and how will Trai and the telecom operators work to solve them?

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The main challenges for the Indian telecom sector include ensuring adequate spectrum availability for existing and new wireless telecom services, to accelerate penetration of telecom networks in rural and remote areas of the country and proper spectrum management policies. Other challenges include ensuring QoS, protection of consumer interest, consumer education, enhancing broadband penetration, infrastructure sharing and introduction of NGN, etc.

What are some of the main expectations from the Indian telecom sector, keeping in mind its contribution to a booming economy?

The main expectation from the Indian telecom sector is to ensure availability of world class quality telecom services to consumers at affordable prices, ubiquitously.

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Beryl M

berylm@cybermedia.co.in

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