Quality Concerns

Year 2009 will present challenges to Indian telcos on multiple fronts. First,
most of the operators will start feeling the heat of economic slowdown. Second,
quality of services will come under stringent scrutiny, thanks to a consultation
floated by Trai. Third, the current regulatory atmosphere, marred by a fight
between operators camps and bureaucrats, and between DoT and Trai, will continue
for some more time.

Operators may succeed in fine-tuning their strategies to improve top and
bottom-line during the slowdown. Recent regulatory developments are the result
of their quest for market leadership.

QoS, which had been ignored by many operators as they were busy acquiring new
users, will now top their agenda. This is because a growing number of users are
not satisfied with services in metros and towns, that are facing near saturation
amid the lack of additional spectrum. QoS will assume more importance as new
telecom licensees will use this as a tool to convince subscribers and grab
market share. Mobile number portability, which is expected to be available to
users in mid-2009, will add fuel to existing operators.

Existing operators are already facing the challenge of retaining subscribers.
According to the Voice&Data-JuxtConsult Mobile Satisfaction Survey 2008,
operators such as Aircel, Bharti Airtel, BPL Mobile, Idea Cellular and Spice
Communications (part of Idea Cellular) did not meet the Trai benchmark of 90%
satisfaction. This is a serious issue and cannot be ignored by the government
and telecom investors.

Quality can be measured on several parameters. But poor network coverage is
an obvious issue. Indian operators must start spending more on network
upgradation in their existing circles. It is important to note that most recent
contracts announced by telecom vendors are for new circles and expansions and
not for upgradation.

The recent consultation by Trai is a welcome step in this context. The
telecom regulator wants to put forward stringent measures to assess QoS. A new
parameter is proposed to assess the metering and billing credibility in respect
of charging pre-paid customers. Presently only post-paid customers’ billing
credibility is assessed through QoS regulations.

Operators must respond to the new benchmark positively. Positive response is
a must since quality issues will be more significant for the next 200 mn users
expected to join the network during the next two years.

Despite revenue constraints, operators launched services in rural areas in
2008. 2008 has also seen India overtakethe US as the second larges mobile market
based on user base. If they need to continue their winning spree, operators
should free themselves from the unwanted regulatory discussions, while focusing
on investing in network in 2009.

Baburajan K

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