Indian Telecom Operator Roaming Tariff Packs – Self Induced Potential Showdown with Regulators

Indian Telecom Regulator( TRAI) last month came out with amendment to enforce roaming tariff ceiling for Incoming and Outgoing calls. Regulators also approved second mechanism of voucher offering by Mobile Operators to enable free roaming. Regulators agreed to Mobile Operators and its association strong view that scrapping of roaming charges is going to have negative impact on Mobile Operators financial health. On 1^st July, two leading mobile operators came out with voucher offering to offer free roaming packs. It is interesting to observe that one of the leading operator reduced incoming call tariff while on roaming under voucher packs. It also enables subscribers to roam in its licensed geography and the tariffs are more or less same as if subscribers are making or receiving voice call to/from its home circle network. Aggressive tariff plan is nothing but another new tool for mobile operators to attract new subscribers from competitor network. Post TRAI directive, Reliance Communications showed their unhappiness regarding roaming regulation and within 24 Hours, Honourable Telecom Minister argued for frees roaming and promised to discuss potential second look regarding TRAI roaming directives. It would be extremely difficult for mobile operators to argue that they are going to lose billions of Dollars in case roaming is fully free. On one side, mobile operator’s initiates tariff war and then raise their concerns about loss and talks about raising tariff. Mobile operators recently only cut data tariff by 90% and it raises eyebrows; when they can make money by offering such a low tariff then why mobile operators kept on charging such a high tariff till now. It is going to be tough for mobile operators to raise tariff in coming years. I strongly feel that any upwards tariff move by mobile operator is going to face stiff regulatory resistance.

Bharti Airtel May be Slapped with Another Penalty of 650Cr and Impact

In its ongoing hate and love with Indian regulators, Bharti Airtel may be slapped with another fine of 650Cr for its violation of subscriber local dialling (SLD) based on PTI reports. Telecom ministry blamed Bharti Airtel that Bharti unabatedly offered national and international dialling service as local call even though DoT warned Bharti Airtel in 2003 but Bharti Airtel continued the service till 2005 inflicting heavy loses to BSNL and government exchequer. I am surprised to see the potential upcoming fine. Recently, DoT slapped 350 Cr fine on Bharti Airtel for 3G roaming violation. Two fine is more or less equal to last two quarter profitability. In ongoing situation of legal and regulatory bottleneck, I don’t see FDI would flow back in Indian Telecom Sector

India National Roaming Tariff Ceiling Set by TRAI – Effective from 1st July 2013

The Telecom regulators came out with new mobile services tariff ceiling for National roaming and also mandated STVs and Special Vouchers offering by service providers.
On-going Tariff Rates for National Roaming

• Outgoing Local Calls – 1.40 INR/Min
• Outgoing STD Calls – 2.40 INR/Min
• Incoming Calls – 1.75 INR/Min
• Outgoing SMS – Under Forbearance
• Incoming SMS - Free

New Tariff is going to be effective from 1^st July 2013

• Outgoing Local Calls – 1 INR/Min
• Outgoing STD Calls – 1.5 INR/Min
• Incoming Calls - 0.75 INR/Min
• Outgoing Local SMS – 1.0 INR
• Outgoing STD SMS – 1.5 INR
• Incoming SMS- Free

Next post will be focussed on its impact.

India Mulling FDI Limit Removal in Telecom Sector – Should Government focus Policy Clarity &Implementation OR FDI ?

In view of shoring off confidence in Indian Telecom sector, GoM are mulling removing FDI cap to bring in value investment from outside. Barring Bharti Airtel Stake sell, the Indian Telecom Sector little FDI investment in the last 2 year. The 2G scam, 3G auction saga, one time license fee, 3G roaming, security clearance, spectrum re-farming are some of the on-going contention which got lots of media glare and created negative sentiment about India Telecom Story. The cancellation of 2G license and loss of $ Bn’s , International Telecom giants burnt their investment. If we really want to attract FDI in Telecom; the policy clarity and implementation of above mentioned few contentions would send positive signals to potential investors

Free roaming in India – Full of hidden Opportunities

Post NTP-12 policy approval, there are round of assessments regarding the impact of One License-One Geography on the potential revenue stream of mobile operators and its spill overs on the ecosystem players. Regulators are pushing to the limit to make sure that the intended policy comes into force by March 2013 which seems little difficult. The GSM association is raising concerns about the impact on revenue and job losses. One of the CDMA operator welcome the move and sees opportunities around it.

I see huge benefits for Telecom industry ecosystem players’ barring the OEM’s involved in roaming related product or service offerings.

According to TRAI documents, the GSM and CDMA operators are generating 8.5% and 3.9% roaming revenue out of total mobility revenue and it is decreasing every quarter. On a consolidated basis, roaming revenue contribute around 7% of the total mobility revenue which translate to $2.25Bn. At high level, it looks like that it would have major impact on mobile operator revenue stream, EBITA and EBIT level. It is true that it would impact OEM’s offering roaming product or services to mobile operators on network utilization and revenue share model.

According to reports, around 10% of the total mobile subscriber base contributes to roaming revenue. It is also noteworthy that there are around 71 Mn subscribers carry more than one SIM’s. The voice usage pattern of frequent travellers in India is to use local SIM to bypass high roaming charges.

In the recent quarter, mobile operators raised tariff by 20% in some circles. They also indicated that the cost structures of offered triple play services are still very high and would be forced to increase tariff in coming quarters to be able to sustain.

In case of free national roaming under one license, one geography regime, it is widely expected that mobile operators is going to increase the tariff again. The recent tariff front initiatives by mobile operators would be beneficiary to wireless ecosystem players

The tariff would be raised for on the pretext of roaming charging abolishment and would be applicable to all user bases. The tariff uniformity across service geography is going to be positive for mobile operators as against current scenario of different price point for different circle based on the user paying capacity.

In my point of view, Metro applicable voice price point would be enforced across the service geography. It is going to increase voice realised revenue per minute for most of the mobile operators. The network MoU per subscriber is going to witness healthy growth as it is going to remove the user mental block of different tariff points.

The price points for data and MVAS would be kept same across service geography. It would have direct positive impact on MVAS ARPU. The MVAS APRU is going to increase from current $1.98 per active subscribers. The negative growth factor inflicted due to MVAS regulation might see a reversal with rise in MVAS price points even with reduced level of active MVAS userbase. It is also expected that carriage charges go down drastically as the carriage cost would be based on bandwidth centric rather than content centric as per the NTP-12. It will have direct positive impact on content price points and subsequently usage.  On higher realisation of revenue the revenue realization of MVAS provider is going to be higher. It would enable higher data, MVAS user adoption, usage.

On the data adoption level, it is widely expected that license service area would carry same tariff points and would trigger huge growth in data segment, revenue realization and higher share of data revenue out of total mobility revenue.

The most probable above mentioned dynamics is going to trigger higher revenue realization potential across userbase and technology upgrade from segregated service delivery to centralized service delivery mechanism. It would create millions of $ opportunity for technology enabler for network upgrade.

In my point of view, the upcoming revenue opportunity through one license-one geography across services would be much higher than the lost revenue from abolishment of roaming revenue. The government is going to get the higher revenue realization through multiple charges and tax which accounts for 35% of Gross revenue.

The struggling MVS ecosystem players are going to experience growth moving forward.

In conclusion, it is very good opportunity for mobile operators to mitigate any tariff wars and increase revenue across triple play service and products. The clarity on Unified licensing regime is going to define and refine wireless ecosystem segment. It is going to be positive EBITA contributory for wireless sector. It would be interesting to see how Tier2/tier3 mobile operators position themselves given the attached legal, financial issues with them. The challenging regulatory directives can be easily played out to create business opposition. We just need an eye to catch it.

One Nation –One License -Free Roaming Policy offer India Full MNP vision achievement

In approved NTP 12 document, the Indian government clearly stated long term vision for telecom sector - to exploit the already built foundation to create unprecedented communication reach across Indian geographies. It also set very aggressive targets on teledensity, potential network deployments to serve and offer Indian people very cost effective communications services.

I have already highlighted in my earlier blog posts, MNPRegulation – Regulator’s Vision Verses Reality and UnrealisticNational Telecom Policy vision to achieve 70% Teledensity by 2017 & 100% by2020, the current pattern of broadband and logical challenges in achieving the set goal by the government. But the most interesting vision is to

1. Strive to create One Nation - One License across services and service areas.
2. Achieve One Nation - Full Mobile Number Portability and work towards One Nation -Free Roaming.

The above mentioned clause took telecommunication service providers by surprise and it is even more surprising when there was lack of visibility on the licensing issues.

Currently, Two MNPO’s are managing dipping database and service providers in the respective zones and are integrating their networks through centralized database development to get the real time update.

In a current scenario, the mobile user can only make donor to receipt mobile operator switch within their current service geography or circle.

Is there a need of “Full MNP” when one license across services and service area is going to be implemented?

In a scenario of national roaming abolishment; Intra circle roaming would be abolished and all operator level switch would not be limited to specific circle level. Once intra circle level roaming under one license regime comes into force, it would automatically enable ported out user free movement and flexibility of keeping same MSISDN across service geography. It would automatically offer full MNP across recipient’s mobile operators’ service geographies.

The mobile operators would be forced to pay carriage fee in order to correctly connect and deliver voice call and SMS respectively. On the capex and opex front, the Mobile Operator’s, International Long Distance Operator’s would be forced to remodel centralized ported user database, SMS aggregation platform as well as realign their service logic and business logic in order to correctly redirect voice and SMS traffic. I have not seen any updated regulatory document about the changes required to be done on the dipping database update side.

Even more surprising that regulator are in consultation with stakeholders, post deciding on the policy without zeroing in on the licensing, potential solutioning impact on the user and network performance and cost attached with it.

In my point of view, free roaming would remove the need of Full MNP. The existing mechanism of limited MNP would automatically be extended to Full MNP. The regulators may opt for the clear specifications defining all the raised concerned points by the stakeholders to reduce the revenue loss fear and associated cost. The consultation regarding the licenses and associated cost, post policy approval is bit surprising. I must stress that there are multiple hidden business opportunities for ecosystem stakeholders out of the unwarranted challenges around Full MNP and free roaming.