Consumer is not the king in this new telecom war

CDMA, GSM rates all time low, but basic telephony rate increases

The slugfest between cellular operators and WLL players has ended up injuring the very party, which everyone had sworn to protect--the consumer. The press conference saw the angry outburst of cellular operators decrying the unfair treatment meted out to only a certain section of consumers having to pay access charge of Rs 1.20 each time a call was made to a landline or a WLL phone. The cellular operators say that GSM subscribers shell out an additional Rs 1,600 crore of revenue as access charges which goes straight to the coffers of the basic operators or the WLL operators as the case of interconnect may be.

The standoff between the two sets of operators had resulted in the cellular operators snapping off interconnection to WLL subscribers.

However, as per the peace brokered by the Communications Minister, Pramod
Mahajan, it is the consumer who stands to lose out in the overall bargain. 

Cellular operators have agreed to connect to the WLL networks till the Interconnect User Charge (IUC) regime is in place and implemented with retrospective effect. The IUC is a charge levied by operators to connect a call from one network to another. Currently, only cellular operators pay an interconnect charge of Rs 1.14 to connect to a fixed line or a WLL operator. But the IUC regime is expected to levy an access charge of 38 paise per call as interconnect charge for all operators. This means that while the access charge for GSM subscribers comes down from Rs 1.20, this is likely to increase the tariff of basic and WLL operators. It may be argued that one set of operators (read GSM) could not care less about the interest of another set of consumers (fixed line or WLL). But, here we are talking of the entire base of telephone consumers and not just one set of consumers. 

So, while GSM operators raise the boogie of consumer interest to broker a deal for one crore consumers, we should also remember that the tariffs for four crore fixed line and WLL consumers have also been increased. Besides, most cellphone users also own fixed line phones. 

The basic service operators association-ABTO has already warned that there is likely to be an upward revision of call rates after the new IUC comes into effect. Since basic phones still outnumber GSM phones, so naturally the number of outgoing calls from a basic to a cell phone would be more than that from a GSM to a landline or WLL phone. According to COAI guesstimates, the percentage of calls made from a mobile to PSTN network stands at 45 percent. So a larger number of consumers would pay more to connect to a GSM phone, at least for the time being till the number of GSM subscribers outnumber the number of fixed line subscribers. 

The lobby for basic service operators is sounding the alarm bells. "All we are saying is that if there is an attempt by cellular operators to force a backdoor entry into CPP, it should be discouraged," said Ramji Srinivasan, counsel for ABTO in the WLL case. Basic operators contend that the "CPP regime has been overwhelmingly rejected in all TRAI open houses held since 1998."

For that matter even for GSM subscribers, the benefit from the new access charge would not be substantial. While the slab is expected to come down from three minutes to two minutes, a GSM subscriber would have paid Rs 1.20 as access charge for three minutes before, now the GSM consumer would pay 76 paise for a three minute call. Therefore, the net gain to the GSM consumer would be 44 paise for the same duration. The gain, however, for the GSM subscriber is the free incoming cell to cell calls. But the impact here is limited as only 15 percent calls are made from cell to cell. Cellular operators however expect traffic to increase in this segment.

Under the new ICU regime, basic services and WLL consumers would have to pay an additional 38 paise as access charge for every call they make to another network in addition to the Rs 1.20 call charge under the current tariff structure. Unless the current tariffs are revised, basic and WLL consumers would have to pay Rs 1.58 for any call they make to another network.

The new bargain also spoils the business case of WLL operators particularly the much-touted Reliance tariff of 40 paise per minute, which would become exactly double if the access charge is passed onto the consumer. 

Balaka Baruah Aggarwal

CNS