Beeping SOS

If you ever wanted to witness Darwin's theory of evolution at work, look no farther than the Indian paging industry.

Pagelink, Mobilink, RPG Paging and Modipage "� paging companies that were once household names "� are today running call centres.

Amidst the rumpus over mobile services and WLL limited mobility, what's been lost sight of is that paging services are dying "� India will have the dubious distinction of becoming the first country in the world where paging beeps become extinct.

The Telecom Regulatory Authority of India (Trai) and the government have combined to kill paging services, the first through apathy and the second through inaction.

"The government and the regulator have completely ignored the paging industry. They are busy dolling out tens and thousands of crore rupees as compensation to cellular operators," says a bitter Deepak Malhotra, chairman and managing director of Pagelink, owned by the Delhi-based Himachal Futuristic Communications Ltd (HFCL) group.

Agrees Pravin Kumar, managing director, Mobilink, a part of the DSS group: "The TRAI recommended a number of initiatives for the paging sector since 1997; the union cabinet also in 2002 decided to give it a compensation package, though it was discriminatory. None of these has been acted upon by the department of telecom. Every time we go to the regulator seeking expeditious implementation of these decisions, it completely ignores us."

Kumar and others have since gone to the Telecom Dispute Settlement Appellate Tribunal (TDSAT) seeking compensation.

A look at the paging numbers shows why the industry is beeping SOS. The subscriber base has declined from 10 lakh in 1998 to just about a lakh now.

The number of paging companies has come down from 15 in 1995 to 9. Six companies, including two circle-based paging operators, have closed shop.

The Indian Paging Services Association, the lobbying body for the paging companies, has been wound up because the operators do not have money to sustain it.

Revenues of these companies have come down by over 70-80 per cent. Pagelink, the largest paging company today with 50,000 subscribers, for instance, has seen a decline in revenues from Rs 45 crore to Rs 10 crore.

A part of this loss is being made up by its call centre solutions, which contribute about Rs 20 crore annually to the bottom line.

Similarly, Modipage's revenues have declined by 80 per cent. Says Y K Modi, chairman of Modi Telecommunications Ltd: " The government has overlooked our concerns. When we signed the licence agreement with the government, text messaging was the sole domain of the paging companies. Slowly, cellular companies started offering short messaging services, that too without paying any licence fee. So the government should waive our licence fee also"� or at least compensate us, from the revenues earned from SMS services."

Modi's sentiments on cellular companies echo the crux of the paging companies' problem. Both cellular and paging services launched services simultaneously in 1995-1996.

The government thenlevied a fixed licence fee that service companies had to pay. Because of the high licence fee, cellular tariffs were as high as Rs 16 a minute.

At the same time, paging services were available for about Rs 300 a month. This meant that there was a huge gap between the cost of paging and of cellular services.

But in 1999, the government switched to a revenue share regime for cellular service companies. Paging companies, on the other hand, were asked to pay a fixed licence fee for the first three years of operation and then switch to revenue sharing.

The result was that mobile phone tariffs came crashing, reducing the cost differences between paging and cellular services. Topping this, SMS also gained popularity, with a single cellular service company reporting over 5 million messages being sent a day.

"If cellular operators can be compensated for the government's decision to allow basic operators to offer full mobility services on grounds that the terms of the licence agreement have been changed, even the paging companies should be given a relief package for the government having allowed cellular operators to introduce SMS," says Kumar.

The paging companies on their part have put forward a four-point demand:

They were forced to take a fresh licence for offering voice mail messaging services. So cellular service companies should be asked to take a licence for SMS.

SMS has been the primary reason for the decline in the number of paging subscribers. So a part of the revenue mobile service companies earn from SMS should be shared with the paging companies.

Paging companies want to be shifted to a revenue share regime from the first year of service, not from the third year.

Paging companies want a share of the interconnect usage charges whereby access providers like basic and cellular service companies pay a share of the revenue from calls made to send a paging message.

Says Malhotra: "If these demands are met, paging will survive. Maybe not as a mass market service but as a niche product. This will improve our books and put us in a better position to raise external funds for investment. All this would cost the government about Rs 200 crore, much less than the sops given to cellular companies in December 2003."

But clearly, the demands are difficult to accede to. For one, cellular and basic service companies will fight any moves t o share SMS or IUC revenues. Going by the shear lobbying strength, it's clear who will win that battle.

"Paging as a technology has become obsolete. It's got nothing to do with bad policy making. No one can stop the march of technology," says a cellular company executive.

"Not true" etorts Malhotra "Cellular technology existed in 1995 also. From 1995 to 1999, paging reached its peak despite cellular technology. It's all the folly of bad policy making that has put paging where it is today."

Department of technology officials who spoke to Ice World say that the issues raised by paging companies are being looked at.

TRAI officials said that the regulator is sympathetic to the paging operators' woes and may come out with a paper on this soon.

While paging companies in India may migrate to become some other species in the telecom world in order to survive, their future looks bleak.

Even in the US, the number of paging users has declined from 45 million to 18 million. So the next time you hear a pager beep, that just might be the last one you get to hear.