Raja Seeks Mobile Tariff Cuts

[coolrajiv 1]

Raja seeks mobile tariff cuts

Pushes For Cost-Based Pricing Formula; May Lower Roaming Charges

TIMES NEWS NETWORK

New Delhi: The new year could well see your mobile bill coming down, with the telecom ministry initiating a review of phone tariffs which would not only lower the cost of text messages and local calls but could also see a steep cut in roaming charges, which pinch users the most.

A senior official in the telecom department said that communication minister A Raja is leading the push for a cost-based pricing formula along the lines of what is being adopted in sectors like power.

Sources said Raja has asked his department to approach the Telecom Regulatory Authority of India (Trai) on the issue of slashing telecom tariffs.

While India has among the lowest telecom tariffs in the world, the minister sees scope for further reduction since in purchasing power parity terms (a method for determining how much a dollar can buy across countries), the rates here don’t compare favourably with those abroad.

Besides, Indian subscribers pay roaming rates that are among the most exorbitant in the world. Regulators have had little success in reining in global roaming tariffs, but this does not seem to have deterred the ministry from taking a fresh stab at it.

But while the minister seems determined to bring telecom tariffs down, actually pulling this off organising may not be easy because of a mix of factors like resistance from companies and an aversion to state intervention in matters like tariff determination.

The minister himself is cautious on how to go about the exercise. Though he assured Parliament about the need to review tariffs in the wake of suspected cartelization by some operators, Raja has now asked his officials to take up the issue with Trai. Under present rules, the power to fix tariffs is vested with Trai.

Though the government can acquire that role by declaring tariffs a policy issue, Raja, already under attack over issuing new licences and awarding spectrum to carry signals, is in no mood to open another front. He, instead, wants the regulator to look into the issue.

When approached, Trai chairman Nripendra Misra said he had not received any communication from the department on the matter.

Though Misra refused to comment on DoT’s move, Trai has earlier been reluctant to be an arbiter on rates. A few months ago, when most operators moved in sync to raise tariffs citing higher costs, Trai took the position that the matter should be left to market forces.

Besides, officials also pointed out that undertaking a review was a difficult issue since operators had numerous tariff slabs and getting all the details on the cost and pricing strategy might be difficult.

The reigning policy bias against state intervention may also come in the way of a respite for the subscriber getting a reduced monthly mobile bill.

While operators were unwilling to disclose much about their pricing strategy, there were signs to suggest that a policy prod to bring down the rates will meet with determined resistance.

Company executives, not wishing to be named, argued that India offered among the lowest tariffs and there was no need for the government or the regulator to intervene.

Sources in DoT, however, countered this by saying that on a purchasing power parity basis, tariffs in India were not as low as was being made out to be. “You cannot compare the costs in India with those in the US or even China. Just real estate is so much more expensive abroad,” an official said.

Telecom minister A Raja says that in PPP terms, mobile call charges in India higher than those in the west

Cost-based pricing formula is used in sectors like power

DoT expected to approach Trai for slashing roaming, SMS and local call rates

Move likely to be bitterly opposed by operators. Even Trai has, of late, said market should determine tariffs

[shashank 8]

I just hope they bring back those free SMS days Nothing else is required

[Ramchi 0]

"While India has among the lowest telecom tariffs in the world, the minister sees scope for further reduction since in purchasing power parity terms (a method for determining how much a dollar can buy across countries), the rates here don’t compare favourably with those abroad."

Durig one of our recent discussions I have high-lighted this fact. Good that it is being addressed by the Telecom Minister. Hope this is getting translated into action instead of mere words.

[Honest 836]

^^^

Well, its a great news my dear friends. I'm eagerly waiting for the cuts in tariffs from mobile operators.

Regards.

[KumaarShah 143]

The GSM Gangsters will see to it that this is not implemented. They will together place many obstacles so that the Minister himself will get tired and eventually forget the matter as is always usual.

[Honest 836]

^^^

Yes my dear Kumaar, it can be possible. GSM Gangsters can do anything to block this.

Regards.

[sougatadc 358]

^^^

Yes my dear Kumaar, it can be possible. GSM Gangsters can do anything to block this.

Regards.

Yes, this COAI,`the GSM gangsters' never slashed tariff on their own. Only when the CDMA operators brought down theirs, they were compelled to cut the tariff.

Only what is attractive in GSM is the variety of handsets. Other than this, the GSM network is worse, tariff structure tends to hide subtle costs and always lags behind the offers made by Reliance and Tata. Despite enjoying better bandwidth in spectrum, they are always nagging for more from the Ministry and vying for slapping higher tariff on the customers.

So, let us hope that Minister doesn't succumb to the pressure from COAI.

Regards.

Edited December 21, 2007 by sougatadc

[KumaarShah 143]

Maybe the lack of attractive and feature-full handsets is the reason why CDMA operators are giving attractive tariffs and once they jump onto the GSM bandwagon, they will also join the GSM gangsters and loot us thoroughly. This is my say, others opinions may differ.

[kshah 452]

CDMA is cheaper because its efficient technology. GSM is expensive in India because they employed highly inefficient technologies and perhaps they never paid attention to improving efficiencis. That is the reason why entire GSM network of all the operator do not support EDGE. GSM has been winning because of its open standard and that is the reason why they have more varietirs of handsets.

CDMA technology is closely guarded technology, hence there is no open ended settings like GSM that handset can be used across operators with all features.

Even RUIM card can not transfer all features of network to another handset.

CDMA has lost its charm due to stupid policies of qualcomm.

[KumaarShah 143]

^^^

Yes, you are absolutely right. Qualcomm has truly messed up this great technology. What a sorry state of affairs to be in.

[Honest 836]

once they jump onto the GSM bandwagon, they will also join the GSM gangsters and loot us thoroughly.

@KumaarShah

You are 100% right my dear friend. Once the CDMA operators started their operations for GSM they will surely going to loot us by joining the GSM Gangsters lobby. But atleast in the start, as competition will rise, the customer will get the benefits.

Regards.

[ravi_patent 28]

choking competition (verizon ,at&t are last in the spectrum queue) , the minister wants tariff cuts . very strange

[kshah 452]

Right now no GSM operator is 100% indian. BSNL, Reliance and Tata are the only companies owned by Indian 100%. Hence all operators with foreign equity will try to hurdle entry of ALL INDIAN company.

Reliance, tata and BSNL, even if they wish to join existing GSM gang they will not be allowed.

[Ramchi 0]

All Indian companies tag alone is not sufficient to sustain in competitive markets.

Look at our legacy "all Indian" companies such as Bajaj, Godrej, Tatas, Birlas etc....(typically, marwari companies)....Indians never benefited from these companies until recently, either they are pushed out of the competition or forced to innovate new product lines - though they are nowhere near worldstandards in terms of features or quality, even today.

What is the use of such all Indian companies ? They never invest in R&D because marwari type companies never believe in innovations simply because they cant innovate anything beyond profit, nothing but profits;

It is time for Tatas, Ambanis to fightout with international players, otherwise they can only live in the past.

[Puneet 0]

This thread seems to be moving away from topic.

The house of TATAs has done more for India than any other company could ever think of. They have been the innovators and driving force of new industry since the beginning. They might have taken a back seat for a few years which can be attributed more to the license permit raj of the Indian government then anything else. And not just the economy, it was the house of TATAs which started/funded the research institutes for world class research in India (IISc/TIFR/TERI) to name a few. Apart form this TATAs understand their social responsibility more than any other company and do take affirmative action on that.

Ambanis have a totally different story to tell - they might have done everything for profit and their means to achieve that can be questioned but still you cannot blame them for not bringing the best in technology to India. A look at the Jamnagar refinery and the Reliance Communication's pan India network rollout tell a story of their own. Its another matter that the quality of handsets on Reliance leave a lot to be desired. In the western/developed markets most of the advanced handsets are available pretty much for free on signing up for 18/24 months contract, but the Indian market is still not developed to sustain the contractual markets.

PS: I am neither an employee nor a shareholder of either Tata or Reliance.

[Ramchi 0]

In Western countries mobile market is dominated by the Operators not by handset manufacturers. Due to this reason, Handsets are subsidized by the Operators by signing up long term contracts. Reliance infact started their services like that by giving handsets at subsidized rates forcing customers to sign 3 years contract or so. In India GSM market is almost left it to the handset manufacturers. This is the main reason why we have attractive handsets coming out every 2-3 months time in India while it takes almost one year for a decent handsets in US kind of countries.

Indian mobile market is no more underdeveloped in terms of experience or exposures. In India mobile density is around 20% or so (according to AT&T chairman). Even if there is an increase of 10%-15% rise in the customer base during next 3 years, our operators can easily reduce some of the tarriffs and make services affordable for common man.

There must atleast 4 technology-neutral operators competing against each other with different backgrounds (foreign, local, blended). If we have such divergent competition then there is no need for any governing body to determine the price.