The Union government is set to provide a series of sops, including infrastructure status, reduction in excise duties and licence fees, and a waiver of junction line fees and liquidated damages to revive the paging industry, which has been registering losses of Rs 15 crore every month.
Telecom secretary A V Gokak confirmed yesterday that the department of telecommunications (DOT) had recommended these measures to the finance ministry. We have recommended that every industry that helps in the development of telecommunications in the country should be recognised as infrastructure, he said.
Gokak declined to specify a schedule for the issue of a government notification in this regard. However, Indian Paging Services Association (IPSA) president Pravin Kumar said he expected the notification to be issued within a week.
The 1997-98 budget had announced that the telecom industry would be accorded infrastructure status, but there were apprehensions that the paging industry would be left out. Only basic and cellular telecom services were mentioned in the budget. An infrastructure sector status for the industry will translate into major tax benefits for some 10 years of operations.
The budget had lowered the excise duty on pagers from 20 per cent to 18 per cent. In a meeting with Gokak last month, IPSA had sought a reduction in this duty to 8 per cent. Gokak yesterday noted that the excise duty on pagers was higher than that on cellular phones (currently 13 per cent). However, he did not quantify the reduced excise duty. Paging industry sources expect it to come down from the current 18 per cent to at least 13 per cent.
The sagging fortunes of the industry had received another blow some time ago after a fifth service provider Eider Paging was licensed to operate in 11 cities under a Supreme Court order.
With a fifth paging service provider being allowed in the cities, IPSA had requested that licence fee for the other four operators should be brought down by 20 per cent. We want the licence fee collected from Eider to be passed on to the other four operators in the form of a reduction in licence fee, Pravin Kumar said. I am convinced with their argument, Gokak said yesterday.
Liquidated damages are imposed on paging companies that cannot start the service within the time envisaged in the licence agreement. Some time ago, it was decided not to charge liquidated damages for a delay of up to four months. This concession is likely to be extended to delays beyond four months as well.
The junction line fee is a combination of the cost of constructing a 30-channel link the point of interconnect between the DoT and paging networks and the monthly rental (Rs 350 a line). According to IPSA, DoT had initially promised to provide the infrastructure required to start the services free-of-cost. However, paging companies were later asked to pay for junction lines. In return, DoT offered a 10 per cent reduction in the first years licence fee.
Paging service providers also want a share in the revenue generated by calls made on pagers, which are charged at the rate of local telephone calls. This revenue estimated at Rs 60 crore a year currently accrues to DoT.
Paging companies argue that they deserve a share in this revenue since it is generated because of their services. The industry is formulating a stand on this, which will be submitted to DoT very soon, said sources in the paging industry. However, there is no plan to move the Telecom Regulatory Authority of India on this issue, they said.
