CELLULAR operators are bracing up for another fight with the Department of Telecommunication (DOT)—this time over the ceiling on monthly rentals being charged for their services.
Having failed to convince DOT that rentals should be increased to more realistic levels, the Cellular Operators Association of India (COAI) plans to approach the Telecom Regulatory Authority of India (TRAI) seeking an increase in monthly rentals for cellular phones from Rs 156 to Rs 600. The rental had been unilaterally fixed by DOT and incorporated in licence agreements between DOT and the private operators. "We would be filing our petition at the end of September or in the first week of October," says COAI executive vice-president T.V. Ramachandran.
DOT officials may well remember that the last time COAI petitioned the TRAI, after tariffs for fixed to cellular calls had been increased in January this year, the telecom regulator had quashed the DOT order. It had also ordered DOT to provide multiple-point connectivity to the service providers, which would help calls being carried on the private operators' network.
The COAI is comparing monthly rentals for cellular services with charges for alpha-numeric pagers (Rs 250) and DOT's bimonthly charges for basic services (Rs 380). Even the wireless in local loop service, which offers limited mobility and services for which have been provided in Delhi by MTNL, has a rental of Rs 1,000.
Another reason why cellular operators are raising a hue and cry about rentals now is that the revenues they expected to get from subscribers have fallen far short of projections. Says Ramachandran: "We're now looking into every way of raising revenues." Operators across the country have, for example, started levying charges for caller line identification and voice mail service, which were free earlier.
Says Peter Stok, marketing director, Essar Cellphone: "20-30 per cent of subscribers are not using the Essar network enough." He, however, admits it's also a question of what the operator describes as optimum usage. Around 20 per cent of all cellular subscribers are dormant: people who believe cellphones are for use in emergencies. While the operators have to incur fixed costs on the switching capacity, these subscribers give little back in revenue.
Cellular operators confess that some of them are bleeding and have asked DOT to extend their licence period from 10 to 15 years, hoping that even if they incur cash losses for six or seven years, their ventures would be very profitable for the remaining period. Of course, if the licence period is increased, the banks' view of the viability of the projects will also change for the better.
Ramachandran says the revenue figures are dismal in the metros—a monthly Rs 1,000 per subscriber against Rs 2,000 projected earlier—while in states they are even poorer. Ask him how much and he says: "The figure is so low it's embarrassing." Despite this, some operators are still going ahead with very low airtime rates. Koshika's peak tariff in Orissa of Rs 2.70 a minute is still being dismissed by the industry as a gimmick doomed to fail while company officials say that they have got their mathematics in place.
In the four metros, all licencees have to shell out Rs 5,000 per subscriber to DOT as royalty payment. If monthly rentals are not increased, operators could end up paying Rs 5,000 to DOT for subscribers whose annual cellular bill is less than Rs 2,000! Maybe you should use your cellphone more often.
