NEW DELHI: After
announcing plans to abolish roaming charges for mobile users when
traveling within India from next year, the telecom department is likely
to ask operators to implement this consumer-friendly move from March.
Mobile phone companies have opposed the government's plans to do away with roaming charges, which accounts for about 10% of their revenues, and have warned they would be forced to increase tariffs to offset this loss.
According to an internal DoT note (dated November 23) reviewed by ET, the department has listed this consumer-friendly move amongst 'key initiatives to be completed within the next three months'.
By March, the department also wants to expand the mobile number portability (MNP) provision and allow consumers to retain their numbers when they move to a new city or any location in the country without having to pay roaming charges. At present, MNP, the facility that allows customers to retain their number while switching operators, is restricted to a circle. For instance, a Delhi customer can switch to any operator within the metro, as this is considered to be the 'base circle' for that number.
The Cellular Operators Association of India, the body representing mobile phone companies on the GSM platform such as Vodafone and Bharti Airtel, has criticised the government's plans to abolish roaming charges, and has maintained that the DoT must first sort out a slew of policy-related issues, including migration to the unified licence, before asking telcos to do away with this charge.
Telcos oppose free roaming
Mobile phone companies have cited reasons ranging from higher tariffs, to security threat, undesirable competition to end of the concept of STD in opposing the move to do away with roaming charges.
"Currently, the roaming charges are borne only by those who avail of the roaming service. Operators would need to recover this loss in roaming revenues leading to tariff increase which will be equally borne by the non-roaming customer base. To create a new tariff equilibrium, the tariffs in some non-affluent parts of country will go up and in other parts will drop," said an executive with a leading GSM operator.
Mobile phone companies also say that removal of roaming charges would lead to free-flow of SIMs across circles on a permanent basis.
"It is possible that sims or mobile connections of the circle that offers lowest STD tariff in the country, would be picked up by customer residing in other circles, who will use these to make discounted STD calls since the tariff in their own circles are higher. This potential revenue loss on account of this tariff arbitrage would make it necessary for the players to adopt a single tariff pan-India, thereby also resulting in a doing away of 'Local' & 'STD' as a concept," the executive quoted above added.
Executives with telcos also said that 'end of STD as a concept would lead to huge revenue impact to the operators', which the industry would not be able absorb, 'especially in the wake of high spectrum costs'.
"There are more than 10 national long distance operators (that carry STD traffic) - in the event of merger of carriage charges with local tariff, the manner in which these operators will be compensated is unclear. In any case, it is ultimately up to the operator who will need to absorb this cost. Hence, it is possible that this might lead to a scenario where the carriage cost has been removed, but a differential terminating cost would become necessary because of the interconnection and call-routing issues which would need to be taken up between operators afresh," said an executive with another mobile phone company.
Mobile phone companies have opposed the government's plans to do away with roaming charges, which accounts for about 10% of their revenues, and have warned they would be forced to increase tariffs to offset this loss.
According to an internal DoT note (dated November 23) reviewed by ET, the department has listed this consumer-friendly move amongst 'key initiatives to be completed within the next three months'.
By March, the department also wants to expand the mobile number portability (MNP) provision and allow consumers to retain their numbers when they move to a new city or any location in the country without having to pay roaming charges. At present, MNP, the facility that allows customers to retain their number while switching operators, is restricted to a circle. For instance, a Delhi customer can switch to any operator within the metro, as this is considered to be the 'base circle' for that number.
The Cellular Operators Association of India, the body representing mobile phone companies on the GSM platform such as Vodafone and Bharti Airtel, has criticised the government's plans to abolish roaming charges, and has maintained that the DoT must first sort out a slew of policy-related issues, including migration to the unified licence, before asking telcos to do away with this charge.
Telcos oppose free roaming
Mobile phone companies have cited reasons ranging from higher tariffs, to security threat, undesirable competition to end of the concept of STD in opposing the move to do away with roaming charges.
"Currently, the roaming charges are borne only by those who avail of the roaming service. Operators would need to recover this loss in roaming revenues leading to tariff increase which will be equally borne by the non-roaming customer base. To create a new tariff equilibrium, the tariffs in some non-affluent parts of country will go up and in other parts will drop," said an executive with a leading GSM operator.
Mobile phone companies also say that removal of roaming charges would lead to free-flow of SIMs across circles on a permanent basis.
"It is possible that sims or mobile connections of the circle that offers lowest STD tariff in the country, would be picked up by customer residing in other circles, who will use these to make discounted STD calls since the tariff in their own circles are higher. This potential revenue loss on account of this tariff arbitrage would make it necessary for the players to adopt a single tariff pan-India, thereby also resulting in a doing away of 'Local' & 'STD' as a concept," the executive quoted above added.
Executives with telcos also said that 'end of STD as a concept would lead to huge revenue impact to the operators', which the industry would not be able absorb, 'especially in the wake of high spectrum costs'.
"There are more than 10 national long distance operators (that carry STD traffic) - in the event of merger of carriage charges with local tariff, the manner in which these operators will be compensated is unclear. In any case, it is ultimately up to the operator who will need to absorb this cost. Hence, it is possible that this might lead to a scenario where the carriage cost has been removed, but a differential terminating cost would become necessary because of the interconnection and call-routing issues which would need to be taken up between operators afresh," said an executive with another mobile phone company.
Source : The Times of India, 4 Nov 2012
Its good move by the government. Operators should know that many people opt not to receive or call while roaming. But the same people will make and receive calls once it is roaming-free and this will increase their revenue other way.
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