No Per Second Billing- Please!

7 10 2009

The latest Buzzword in Indian Telecom Fraternity is ‘Pay-Per-Use’ or ‘Per Second Billing’. After successful launch of its services across few circles, certainly Tata DoCoMo is riding high on success. Other Indian Operators like MTS & Aircel also eagerly joined the stream to offer the billing plans in few selected circles. And now reports say that TRAI will soon launch the consultation paper on the subject, with no timeline for new billing regulation set yet. Wow! That’s certainly interesting!

Why are we so impatient about Per Second Billing?  The offering is certainly attractive for consumers who are willing to pay the money as per their usage. But then should regulator seek urgent notice and issue consultation paper on the subject within two months?

In latest interview to ET, Mr. Sunil Bharti Mittal reportedly said that already the tariffs offered in India, have hit rock bottom and there is little room to lower the tariff prices further (It should make economic sense after all). But what is happening around is exactly opposite of what is expected. Innovation much beyond the necessity in tariffs had already hampered the prospects of improvement in revenues for telcos and with pay per use getting implemented, the picture seems gloomy.  With pay per use tariff in offering, it is believed that the annual revenues may further fall by 10-15% and already telcos stocks have stumbled down (Reliance’s ‘Simply Reliance’ failed to create magic ), then why are telcos running after it? Only too woo customers in deeply fragmented market or trying to make differentiating point to grab attention?

With already close to ten operators operating in most of the telecom circles and new to join soon, prospect of per second billing looks bright for new operators, who can only bargain on price differentiator. With less congested network and superior portfolio of VAS services DoCoMo may sustain the losses in revenue, provided they manage to sell their services to enough subscribers with price differentiator tag. That’s the trick for new telcos to think about, but then when regulator joined the speculations it will have some wider impact than mere tariff competition.

Should we leave the tariff to operators to decide and let the market play the catalyst for innovation in offerings, than regulator come in and force it? After all Telecom is a service industry where looking beyond just revenues figures mayn’t possible in current scenario (MOU or Customer Acquisition Cost may highlight the boardroom discussions), but then what should have been priorities for regulator. Telecomblogs, in a highly popular article earlier, said that we have already few things in pipeline to look after and certainly Per Second Billing isn’t among them.

With 3G/WiMAX spectrum auction getting delayed, and only 6 million broadband connections in India, there are enough challenges ahead to address on priority. With existing urban circles coming close to saturation point, release of extra 2G spectrum may ease the tension lingered around QoS for majority of telcos in ring. Had regulator shown such urgency to said issues, we would have seen better picture ahead. Bringing competition in market is okay and making it level playing field would benefit in long terms, but then are regulator concerned about rural tele-density figures or digital divide? Where shall telcos bring money from for rural rollouts? Don’t just rely on USO fund amount; regulator is wary of pictures shown. Telcos are already forced to diversify from their core competence (Voice Telephony), to look for new sources of revenues and many of the existing operators are offering wide range of services in their bucket. What impact will we see on service diversification in coming months? We may get to see some positive impact on service diversification front to compensate for drop in voice ARPU figures, but then why regulator isn’t bargaining for cheaper broadband rates? When shall we get to see cheaper data/VAS services? Will new billing regulation bring negative impact on prices of VAS services offered? Will newly added subscriber figures will compensate for falling ARPUs? Certainly, as said some of the telcos mayn’t be concerned about new offerings, but they even can’t ignore it too.

Per second billing isn’t what we expect from TRAI to issue a consultation paper about. As said earlier too, just look beyond and act wisely. After all looking for short term gains for the sake of long term benefits isn’t expected from regulator. TRAI, Please act wisely!