Cellular operators in metros are willing to accept the entry of Mahanagar Telephone Nigam Ltd (MTNL) into cellular services if the government reduces licence fees from the current annual Rs 6,023 per subscriber. This proposal has been made in a letter written by P K Sandell, president of the Telecom Industry Services Association (TISA), to telecom secretary Anil Kumar.
This comes at a time when the Delhi and Mumbai cellular operators are fighting in the Delhi High Court the proposed entry of MTNL into cellular services in these cities. The eight metropolitan cellular operators are: Bharti Cellular and Sterling Cellular (brand: Essar Cellphone) in Delhi, Hutchison Max and BPL Mobile in Mumbai, RPG Cellular and Skycell Communications in Chennai, and Modi Telstra and Usha Martin Telekom (brand: Command) in Calcutta.
Sandell's letter says, "When cellular (service) was introduced from 1992 till now, all estimates could be based on predictions, including that of DoT, which today we know cannot be sustained by facts thereafter. In an era of high technological developments and uncertain buoyancy of a developing economy, usage prediction is unpredictable and even with the best techniques one cannot be certain of correctly estimating how the public will respond to an altogether new type of telecom service.
"Responsible financial institutions in India have pointed out that about 54 per cent of the subscribers pay about Rs 500 per month, that is, the total gross income earned from each such subscriber is around Rs 6,000 which is by itself insufficient to pay annual fee imposed per subscriber."
It further says, "The licence fee from the fourth year onwards was fixed by the government as a percentage of an assumed revenue. However, the revenue assumption drawn up at the bidding stage of Rs 29,280 per subscriber per year is completely at variance with the actual revenue achieved in the past years of operations and is approximately one-third of the assumed revenue, that is, Rs 10,000-12,000 per subscriber per year.
"It is obvious that by fixing the licence fee at a stated fixed amount per subscriber from the fourth year will create further hardship for the business.... It is to be noted that even in the last three years with the lower licence fees being applicable, the operators still have sustained substantial losses in each of the previous three years."
Sandell concludes, "...considering the entry of MTNL is more or less certain, we should facilitate conditions of fair competition and request the Telecom Authority (department of telecommunications) that licence fee is fixed on terms similar to that being offered to MTNL... it would appear that the licence fee of MTNL is ranging from nil to Rs 900 per subscriber per year as compared to Rs 6,023 being demanded from private operators of metros.
