We all are aware that Spectrum is
one of the most precious assets of any country and regulatory body faces uphill
task to manage the balance within different segment of Industry and most
importantly defence sector.
We are also well aware that the
auction of 3G spectrum in Europe triggered Telecom initiated global recession
in 2001 to 2004 wherein many Telecom service providers put in multibillion $
bet in auction with a view that data centric products and services will fly off
without any problem. Unfortunately, the limitation of 3G supported devices,
concern around device battery, and lack of coverage delayed the maturity time
from 5 years to 10 years. On a contrary, Japan, South Korea, USA, and China
succeeded in adopting it and user responded back with higher adoption.
Given the successful adoption of
Technology and growth, many countries only adopt the procedure without digging
down deep to understand geo political condition. None of the Telecom Networks
run by any service providers cannot be successful without the maturity of
ecosystem which is combination of services, platform and Applications as it is
the building blocks of Telecom service provider revenue stream other than voice
services.
For Example, China government
control Telecom services through three entities and ensure that Telecom service
providers are supported in all way. That is one of the reason that the
implementation of home grown 3G and 4G standard being adopted by even global
equipment supplier to ensure that they capture most lucrative market.
If we look at the APRU both on Voice and Data, I want to keep it to
abstract level and want to mention Japan, USA, South Korea, China, Germany,
Switzerland, UK as some of the countries where ARPU is generating high APRU on
both voice and data front. One of the major reason of the same is the voice an
data package bundled with device which help user to shell out minimum to
acquire data centric service. While package gets over and user device gets
unlocked by the Telecom service provider; user understand the true value of
offered services and subscription success rate achieve higher percentage.
On a contrary, Developing and
nascent stage countries trying to connect their citizen with telecom services
identified it as an opportunity to raise funds for the government without
analyzing the cascading impact on overall economy. India is one of the unique examples
of the same. With every auction of spectrum, the regulatory body raised the
base price per Mz and focused on the number of user instead of APRU generated
by each user. It shocking to know that even African countries where Airtel
is offering their service generating higher ARPU than India both on the
voice and data side. In that scenario why we call African countries poor
countries. I failed to understand the
higher base price for the spectrum. If regulatory body is so confident about
the Telecom growth then I challenge Indian regulators to put their skin in the game
and offer free spectrum to Telecom service provider and be a partner of all
Telecom service provider. In my point of view, the developed countries based
regulators should consider giving free spectrum and they should take the path
of revenue share to ensure recurring revenue for the government.
In the current form of Government
policy of auctioning spectrum plus charging hefty direct and indirect taxes on
the Telecom service provider which is landing Telecom service provider into
debt and it's not far away that they will crumble into another segment with
higher NPA. Most interesting post auctioning the spectrum regulators should not
interfere the voice and data pricing as it is contracting to their statement
that spectrum auction is on the basis of market discovery.
In my point of view, Regulator
should recommend the Government of different demographics to be part of the
ecosystem and enjoy the growth as well as they should burn their fingers if
losses popup. It will release higher free cash flow for the Telecom service
provider which in turn will get circulated within ecosystem and will have huge
driver for the continuous growth irrespective minor hurdles
Reader’s feedback will be highly appreciable.
