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Call drops to 4G: Full spectrum of bad, good for telecom

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New Delhi: A successful auction of airwaves and the launch of 4G services were the high points for India’s telecom industry in 2015 even as the lingering problem of call drops and bottlenecks in infrastructure, notably on transmission towers, remained major areas of concern.

Early in the year, the country saw the biggest auction of the spectrum when the government garnered Rs.1.10 lakh crore ($17.6 billion) to licence 380.75 MHz of airwaves in the 900 MHz, 1,800 MHz and 800 MHz and 2100 MHz bands across 17 out of 22 telecom circles.

The telecom service providers that participated in the marathon auctioning were: Idea Cellular, Bharti Airtel, Vodafone India, Reliance Communications, Reliance Jio, Tata Teleservices, Telenor and Aircel.

While the auction was welcomed, since the availability of spectrum was a major cause for concern, the high bid prices proved to be a dampener.

“The outcome of the auction, in whichever manner, eventually led to a significant outflow of funds and further burdened the industry, which remains under a debt of Rs.3.5 lakh crore ($53.8 billion),” Rajan S. Mathews, director general of the Cellular Operators’ Association of India, told IANS.

Mahesh Uppal, CEO of telecom consultancy firm Com First agreed but said: “The high demand for spectrum made auctions was unavoidable. The challenge is to design better auctions where there is less incentive to bid as high as last time.”

But the auction over two straight years could not stop the menace of call drops. The problem took such a shape that even Prime Minister Narendra Modi voiced his concern. Communications Minister Ravi Shankar Prasad even said he did not want to be remembered as “call drop minister”.

The watchdog, on its part, also intervened and in mid-October directed mobile phone operators to compensate subscribers on call drops from Jan 1 at the rate of Re.1 for each failure — a decision that left the industry upset with legal help kept as an option.

There was also a related problem. Across the country, many telecom towers became inoperational as citizens started complaining that radiation emanating from it are health hazardous. This took its toll on telephone connectivity.

“The government will have to help by releasing more spectrum and make it easier and cheaper to install towers,” Uppal said.

“Call drops will be resolved when operators invest in enhancing network coverage. This, in turn, depends on the current availability of spectrum, as well as a future roadmap in receiving spectrum,” Romal Shetty, partner and head for telecom sector with KPMG-India, told IANS.

India also tried hard to catch up with the world in telecom technology. Bharti Airtel launched its fourth generation (4G) communications services in 296 towns across the country. Britain-based Vodafone launched the same on Dec 14 while Reliance Jio was expected to do so anytime.

“The 4G ecosystem is still weaker than 3G. For example, 3G devices are cheaper and more numerous than 4G devices. The 4G technology is new and expensive. The nature and size of customer demand for 4G are unclear,” Uppal said.

“Internationally, it took three-four years to roll out 3G and 4G services. We are not far back. Issues causing delay have been obtaining towers, the right of way, RoW (right of way to deploy some crucial infrastructure) and power availability,” Mathews said.

“The availability of affordable smartphones has been another major constraint. Now that some of these issues have been addressed, we should expect to see the rapid roll-out of 3G and 4G services,” the association chief added.

Another trending activity was a lower sale by various operators. Industrialist Anil Ambani-led Reliance Communications signed a non-binding pact with the US-based Tillman Global Holdings and TPG Asia to sell its nationwide tower assets and related infrastructure for an undisclosed amount. Industry sources valued it at Rs.22,000 crore (nearly $3.4 billion).

State-run Bharat Sanchar Nigam also got Cabinet approval to hive off its tower assets into a separate company. BSNL’s chairman-cum-managing director Anupam Shrivastava told IANS that the valuation of it could be in the region of Rs.20,000 crore ($3 billion).

Among the big-ticket mergers and acquisitions was Reliance Communications’ accord to acquire the Indian telecom business of Russia’s Sistema, which operates under the ‘MTS’ brand, in a unique stock-cum-spectrum-fee payment deal.

The government also allowed spectrum trading in India to help telecom companies to buy and sell unused radio waves from each other, without waiting for the next round of auction. Also, spectrum sharing was allowed by the government, which is expected to improve the quality of telecom services.

Highlights of telecom industry in 2015:

* Biggest spectrum auction over 19 days mopped up $17.6 billion

* Government allowed spectrum trading and sharing

* Watchdog directs operators to compensate for call drops from Jan 1, 2016

* Tariff on national roaming sharply cut

* Service providers gear up for 4G launch

* Global leader Foxconn to invest $5 billion to make devices in India

* Debate starts over net neutrality with draft note awaiting government nod

* Mobile number portability made applicable pan-India

(Aparajita Gupta, IANS)

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Fresh Telecom War between Reliance Jio and Older Operators, Airtel and Vodafone-Idea

One of our competitors has imposed a rate of 6 paise for all off net calls made to other operators to cover the termination charge

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Telecom, War, Reliance
Telecom Regulatory Authority of India (Trai) Chairman R.S. Sharma did not respond to calls for queries on Jio' s contention that it has been forced to take the step due regulatory undertainty created by Trai issuing a consultation paper to review whether the regime timeline needs. Flickr

A fresh telecom war between Reliance Jio and older operators — Airtel and Vodafone-Idea — erupted on Wednesday after the Mukesh Ambani-led Jio said it would charge 6 paise per minute for making calls to other networks, even as Airtel described it as pressure tactics by Jio to reduce interconnection charges.

On account of taking a hit of Rs 13,500 crore due to network connection charges, or interconnet usage charges (IUC), Reliance Jio on Wednesday said it will charge customers 6 paise per minute for voice calls made to rival networks till IUC charges are eliminated. This is the first time that Jio users will pay for voice calls which has been free so far since September 2016.

Telecom Regulatory Authority of India (Trai) Chairman R.S. Sharma did not respond to calls for queries on Jio’ s contention that it has been forced to take the step due regulatory undertainty created by Trai issuing a consultation paper to review whether the regime timeline needs to be extended.

In a statement here, Airtel said: “One of our competitors has imposed a rate of 6 paise for all off net calls made to other operators to cover the termination charge of Interconnect Usage Charge (IUC). They have gone on to suggest that Trai has re-opened this issue”.

Telecom, War, Reliance
On account of taking a hit of Rs 13,500 crore due to network connection charges, or interconnet usage charges (IUC), Reliance Jio on Wednesday said it will charge customers 6 paise per minute for voice calls made to rival networks till IUC charges are eliminated. Flickr

“On 19th September, 2017, when Trai reduced the IUC from 14 paise to 6 paise and proposed a move towards Bill and Keep (zero IUC) with effect from January 1, 2020, they had specifically mentioned that the Authority shall keep a close watch on developments in the sector, particularly with respect to the adoption of new technologies and their impact on termination cost.

“The Authority, if deems it necessary may revisit the scheme of Termination charge applicable on Wireless-to-Wireless calls after one year from the implementation of the regulation”, the statement said.

Trai had, in 2017, slashed the IUC to 6 paise per minute from 14 paise, and had said that the regime would end by January 2020. Last month, however, Trai weighed the option of deferring the date for scrapping IUC.

The regulator a floated a fresh consultation paper to see if there is a need to revise the applicable date for scrapping the IUC, given the continuing imbalance in inter-operator traffic.

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The paper also sought to discuss with stakeholders what parameters should be considered to decide on an alternate date, if any. At the time Trai decided to scrap the IUC, Airtel, Vodafone and Idea had resisted the change, while Jio was in favour.

Jio said that the possible change of timeline for eliminating IUC, has led to uncetainity about the IUC phase-out deadline and it cannot continue to be at a loss of Rs 13,500 crore on acocunt of IUC by offering free voice calls to rivals’ networks from its own.

“The consultation paper has created regulatory uncertainty and therefore Jio has been compelled, most reluctantly and unavoidably, to recover this regulatory charge of 6 paise per minute for all off-net mobile voice calls so long as IUC charges exist,” the Jio statement said.

Trai’s aim was to evaluate two factors – the adoption of VoLTE, which TRAI assumed would bring the cost down and that the growth of smaller-sized operators would result in symmetry of traffic would ensue. Both these factors have not materialised.

Telecom, War, Reliance
This is the first time that Jio users will pay for voice calls which has been free so far since September 2016. Pixabay

There are still over 400 million 2G customers from the poorest sections of society living in rural areas paying less than Rs 50 per month who still cannot afford to buy a 4G device. Second, there is still significant asymmetry of traffic.

Accordingly, Trai issued a consultation paper in September 2019 to reassess the timeline of the shift from 6 paise to a zero charge.

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The telecom industry is in a state of deep financial stress since the last three years with several operators having gone bankrupt and thousands of jobs lost. Given the massive 2G customer base in India the cost of the call at 6 paise is already significantly below the real cost of the call. (IANS)