The Telecom Regulatory Authority of India, or Trai, has moved to cap roaming fees for telecom companies, leading to an outcry from some of them. What, precisely, has been happening in the market? The most important thing, perhaps, is its structural transformation over the past five years. As Table 1 shows, in 2007, less than 20 per cent of Indians had a phone; now it is almost three-quarters. In the same time, average revenue per user, or Arpu, has declined precipitously, as Table 2 shows. Both trends show a slight reversal in the recent past - but that might be because telcos have cleaned their user rolls to remove duplicate users and unused connections. So, telecom has become a high-volume, low-margin business.
User behaviour has also changed. As Table 3 shows, the number of minutes that an average subscriber makes calls every month has also crashed over five years. To start with, people started sending SMSes instead of calls, as Table 4 shows. But that number, too, seems to have decreased of late - reflecting, perhaps, the increasing popularity of instant messengers, as well as Trai's controls on bulk and spam SMSes.
Thus, how telcos make their money has altered as well. As Table 5 shows, call charges are no longer completely dominant in their revenue stream. For CDMA networks in particular, there has been a decline of 20 percentage points in their contribution to revenue. SMSes, meanwhile, have not picked up all the slack, as Table 6 shows. Rental charges, too, have taken a beating of late, as Table 7 reveals. Table 8 shows why some networks will be more worried about roaming than others: it usually provides 10 per cent of GSM revenue, but under two per cent for CDMA. (Click here for table)
