 "TDSAT order on 3G roaming changes little for telcos")
The Telecom Disputes Settlement and Appellate Tribunal (TDSAT) quashed Department of Telecommunications (DoT) order to impose a penalty on Bharti Airtel, Idea Cellular and Vodafone of Rs 50 crore per circle for providing 3G services through intra-circle roaming (ICR). TDSAT has in fact gone a step ahead in allowing the operators to provide these services.
TDSAT order is a step in the right direction for the telecom industry and should ideally help the companies in growing their 3G services. ICR related issues was cited as one of the reason for poor growth of 3G services.
However, the order seems to have come a little late in the day. Firstly, 3G Services have not picked up the way industry would have liked it to. Telecom operators were already offering 3G services through ICR agreements, thus order changes little in terms of subscriber addition. It helps the operator to save on penalties- to the tune of Rs 350 crore for Bharti; Rs 300 crore for Idea and Rs 550 crore for Vodafone. These penalties itself are not large enough given the size of operations of telecom players.
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3G services which were meant to increase data speed have not picked up the way it was envisaged despite their launch after the 2010 auction. Take the case of Idea Cellular. As per its March 2014 quarter results, the company has 135.8 million subscribers out of which 3G subscribers are only 10.5 million or 7.5 per cent.
In order to increase 3G subscriber base, operators resorted to sharp price cuts as a result of which the difference between Average Revenue Per User (ARPU) of a 2G data user and a 3G data user has narrowed sharply. In the fourth quarter of 2013, ARPU of a data subscriber of 2G+3G user was Rs 55 with their data usage being 163 MB. At the same time a 3G subscriber was using 385 MB and giving an ARPU of Rs 105. This picture has drastically changed in March 2014. Data ARPU of total (2G+3G) users has increased to Rs 104 and usage to 410 MB while a 3G users ARPU is now at Rs 111 and his usage has increased to 462 MB. In other words 2G still remains a preferred source for data and non-voice usage.
The same is more or less the case with other operators in the industry. TDSAT order will do little to change the scenario, especially as it comes on the eve of a 4G services launch by Reliance Jio. It's the threat of a migration of 3G services to 4G which is playing on the mind of these operators, especially since Reliance Jio is rumoured to be looking at attracting the 2G subscriber base rather than the smaller 3G base.