The Hindu Business Line : Will frequent tariff cuts retard telecom growth?

The Cellular Operators Association of India (COAI) contend that frequent tariff cuts may retard telecom growth. Perhaps they are a bit apprehensive of reduction in profit margin. But the revenues of most telecom operators have been on the upswing despite steep reductions in tariff over the last few years. So, going forward, a further cut matching the `one India one rate' would only help in expansion, increased revenues and, thereby, profits too.

A. Jacob Sahayam, Thiruvananthapuram

Tariff cuts take into account the cost of operation of the telecom players. They reduce their profit margins to build a wider subscriber base. While roaming rates are definitely improving, all packages are linked to higher monthly rentals. The schemes are expected to benefit those who talk more while travelling. Thus, consumers have to compare the offers and read the fine print.

Telecom players can afford to lower their rentals while reducing roaming rates, stage by stage. They can envisage a scenario in which rentals match those of landlines. Rural packages should aim at lower rentals.

Separate packages for rural and urban population can be worked out. Thus, for true free roaming, the wait is far from over.

T.S. Sundareswaran, New Delhi

For any venture to succeed, both costs and income should be fairly predictable. Unless profits are reasonably assured on a sustained basis, long-term investments will not flow in.

So long as there is overall volume growth, there may not be any major issues. The telecom and other related services have already become volume driven. When the economy slows down, the users and the companies would enter into a vicious cycle. While the users will not be willing to pay more, the companies may not be in a position to jack up the tariffs. At that point, there will be a shake out in the market and only players with deep pockets will survive.

Krithivasan, e-mail

The fear of the COAI that frequent tariff cuts may retard telecom growth is unfounded. Due to the reduction of tariffs, more students and those from the low-income group are subscribing to mobile phone services. The subscriber base is expanding beyond expectations. All these factors contribute to the enormous growth of cellular business. As the volume of business grows, naturally the profit also grows benefiting, in the process, the cellular operators.

Cellular operators should co-operate with the Government in its efforts to spread the mobile revolution.

S. Nallasivan, Tirunelveli

The success and popularity of any service depends on its affordability to the lowest section in society. While telecom facility is easily available to the urban population, the situation in the rural areas is still far from satisfactory. The loss of revenue from reduction of tariff will be more than offset by the increase in the volume of traffic due to better affordability.

T.R. Anandan, Coimbatore

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