The Department of Telecommunications (DoT) has attempted to pacify the apprehensions about soaring of Mobile Tariffs.
The Telecom Segment has just witnessed one of the costliest Auctions and that too for one of the oldest telecommunications standards. Hence there were rising concerns that Mobile Tariffs could soon be raised by all the telecom companies to compensate for the expenditure. However, Telecom Secretary MF Farooqui laid the doubts to rest stating that competition will restrain operators from hiking rates,
“As a policy maker, I think the tariffs should hold. I am not the operator, nor I am the regulator, but I am saying that there are two elements here and these elements will actually act together to restrain any increase in tariffs,”
How does Farooqui justify this philosophy? It is a very routine practice to gradually increase tariffs to enhance revenues. Though the rise has traditionally being marginal, it has been an established trend so much so that Vodafone recently hinted openly that the days of low tariffs are numbered.
Telecom companies are reeling under heavy burden of fiscal deficits. Owing to cut–throat competition, coupled with rising operational costs and low Average Revenue Per User (ARPU), companies are finding it extremely difficult to sustain operations.
However, these are the precise conditions that will prevent the service providers from raising the prices, said Farooqui,
“One element is competition. So competition, will hold back any operator from kind of doing anything which is going to reduce his market share. So I think that is going to be one big restraining factor and the second thing is I think there is the technology, which exists in the market that allows many other services to gradually be loaded on”
Telecom companies have put in a total of Rs. 61,162 Crores (US$ 10 Billion) within the just culminated 2G Auctions. Fortunately, raising Tariffs is not the only option. Telecom Companies can start to offer multiple services at competitive rates to encourage users to start paying more. The Data Consumption patterns have already shown them the right track. Will the companies follow it?
Source| ToI
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