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Cell subscriber base to touch a crore by Dec `02

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CIOL Bureau
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NEW DELHI: Indian cellular sector, which has enjoyed unprecedented growth over 1995-2002 with a CAGR of 109 percent, is expected to touch a base of one crore by the end of this year. With a current subscriber base of over 80 lakh, the sector has already achieved the distinction of having overtaken the growth rate of fixed line telephony in the country during the last April-June quarter.



While there were 3 lakh new DELs established in the last quarter, cellular notched up 9.6 lakh new subscribers. It is estimated that around 25 percent of the new subscribers would be from small towns and cities. The sector has witnessed increased coverage beginning with just 249 towns and cities in 1998 to over 2000 towns and cities by March `03. A very laudable achievement of the cellular sector has been the 80 percent plunge in the tariff structure since 1986. The current Indian cellular tariff structure is amongst the lowest in the world when compared to statistics from International Telecom Union (ITU), EMC and PwC.



Cellular tariffs from EMC show that India at $16 per month has the lowest monthly cost of a 300 minute basket for cellular services. In contrast, a 300-minute basket costs $ 21 in China, $29 in Thailand, $ 40 in Malaysia and $ 42 in Indonesia. The tariffs in South American economies are far higher at $60 for Chile at the lowest end and $ 115 for Argentina at the highest end.



In the last three years alone, airtime tariffs have plunged over 75 percent. According to TRAI, the average monthly rental and airtime being realized for cellular services stands at Rs 202 and Rs 1.99 per minute respectively.



Pre paid services have been introduced by all operators with roaming charges also cut down by 70 percent from Rs 10 to Rs 3 in early 2002 and now to Rs 1.50 by several operators.



However, Indian cellular operators are paying one of the highest regulatory costs in the world. Operators are passing around 35-42 percent of their revenue to the government by way of various levies: license fees (8-12%); spectrum usage charge (2.5-4.5 %), service tax (5 %) and interconnect access charges (approximately 20% of revenues). In contrast China pays nil license fee, a negligible fixed usage charge for spectrum, no service tax and has very reasonable terms for interconnection with the fixed service operators.



Although industry tariffs have reached rock bottom, it is possible to pass more benefits to consumers if the government and regulatory agencies do away with some of this burden. Said Sunil Bharti Mittal, Chairman Bharti Group, "We can still pass on a large chunk of benefits to the consumer provided the government and regulator act fast to ensure that the end users are benefited."



Explaining the argument further, Manoj Kohli, Chairman, COAI and CEO of Escotel said, "For instance, it is only cellular operators who have to pay an access charge of Rs 1.20 to fixed line operators whenever a call is made from a mobile to a fixed line. This is completely illogical and should be removed at once."



Spectrum allocation is also one of the lowest in the world at 8 MHz in the metros and 6.2 MHz in other circles as against the world average of 17 MHz. This puts a huge strain on operators since spectrum is the basic component on which the entire business planning rests.

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