As I reflect on the past year 2009 it was a damp squib as far as the telecom sector is concerned with most of the big ticket Government initiatives getting delayed.
The much-awaited introduction of Mobile Number Portability, launch of third generation (3G) mobile services, entry of Mobile Virtual Network Operator and permitting unrestricted Internet Telephony – have all got delayed as the Government went back and forth on policy related issues. In fact in the entire year, there was no major policy announcement from the Government that could have taken this sector to the next level of growth.
Even the second phase of the rural mobile initiative, directed at the aam admi in villages, through the Universal Services Obligation fund is yet to be rolled out as the Communication Ministry kept sitting on the project through the year.
“This year has been fiasco. Promises that were made got delayed as the Government dilly dallied on policy making. The blame for this is not just on the Communications Ministry, but on the entire Government. On the regulatory front, lot of contentious issues are still unaddressed including delinking telecom licence from spectrum, anomalies with the existing 2G spectrum allocation and 3G auction rules,” said Mr B.K. Syngal, former Chairman of Videsh Sanchar Nigam Ltd and currently Senior Principal with Dua Consulting.
There was, however, some cheer for consumers with a number of new mobile operators, including Tata DoCoMo, Unitech Wireless, MTS and STel, entering the market.
The immediate impact of the intensifying competition was that the operators moved from minute-based billing to offer tariffs on per second. There was reduction in roaming and STD tariffs as well. As a result, the mobile subscriber base grew from 346 million in December 2008 to 506 million by November 2009 with 15 million new subscribers being added every month on an average.
The other good news was that while the world was being battered by the global economic slowdown Indian telecom was among the least affected sectors.
Going forward analysts predict that 2010 is likely to be a great year for the Indian telecom subscribers, but operators will face a reasonably tough year.
“Already with tariffs at one paisa a minute, subscribers are having a great time. The intense competition at lower tariffs could mean that margins could be hit for smaller operators in the immediate future. But, that should not be a major problem in the mid to long-term future,” says Mr Prashant Singhal, Partner & Telecom Industry Leader, Ernst & Young.
The big event slated for 2010 is the auction of 3G and broadband spectrum that would provide subscribers with quicker access to information on the mobile phone.
The migration to 3G will result in spectrum being released on the 2G network. In turn, these subscribers too will get better voice connectivity. Call drops that had become a feature of mobile calling in India would get reduced substantially.
This could set the stage for the introduction of other consumer-oriented initiatives such as number portability and Net telephony.
“India needs a regulatory roadmap that clearly defines the path ahead for the next few years. That one thing could make things a lot easier for the telecom industry. The Government needs to clear the confusion surrounding the future provision of 2G spectrum and a clear understanding of the merger and acquisition norms in the sector. Despite a couple of thorny issues, 2010 should be a reasonably good year for the Indian telecom industry,” says Mr Singhal.
Hopefully, the chances missed in 2009 will be taken in the New Year.
