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Roaming made cheaper

Every consumer loves a lowering of prices, never mind how that comes about. For the 15 million mobile phone users who use roaming services — the other 135 million do not — the order from the Telecom Regulatory Authority halving tariffs means a saving of about Rs.900 crore a year on their phone bills and, possibly, as large a fall in profits for the phone companies. The roaming charges, paid by those who use the phone when they travel outside their State, were typically four to five times what they pay for calls made from home territory. Everyone knew this was a hefty premium to pay; 90 per cent of cellular phone owners either could not afford it or had no real use for it. However, the 10 per cent knew they were getting in return the pleasure of staying connected even as they travelled. The service providers would be the first to concede that this facility is extremely lucrative for them: though roaming charges represent not more than a tenth of the revenue, they account for a large proportion of the profits. That explains their discomfiture with the TRAI ruling and their threat of putting up other charges to compensate for the reduction in roaming revenue.

The question is whether TRAI's intervention was needed, especially to set a ceiling on the tariff. That the new tariffs are less than a tenth of what they were ten years ago — roaming charges on incoming calls are Rs.1.75 a minute as against Rs.20 a minute in 1997 — both explain and reflect the transformation that has taken place in the telecom sector since the advent of the mobile phone a decade ago. If the number of mobile phone users has grown from zero to 150 million in 11 years, it is a tribute not just to the value of this handy instrument but to a government policy and a regulatory framework that ensured sufficient competition — there are at least five service providers in each State — to push regular voice call tariffs on a continuous downward spiral. But roaming services have seen no such intense competition. That is because while technical incompatibility prevents CDMA phone users from roaming on GSM networks and vice versa, Bharat Sanchar Nigam Limited has closed its GSM network to outside roamers. Had the public sector unit not done so, there might have been enough capacity and pricing pressure to drive tariffs down autonomously. In the event, it is good that TRAI has stepped in on the side of the customers. However, the prognosis is not all that unfavourable for the private service providers. Lower roaming tariffs might invite many non-users to come on board, in which case the virtuous cycle for both service providers and their customers will continue.

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