Mobile services in India: Current issues and future outlook

Abstract

Indian mobile sector has grown rapidly since launch of mobile services in India in 1995. It is one of the fastest growing mobile markets in the world with subscriber base of around 415 million (as on May 2009). The mobile subscriber base is expected to grow at a compound annual growth rate (CAGR) of 14.3% till 20131 and subscriber base to swell to 771 million. One of the main reasons for this growth is the falling prices of mobile handsets and dropping call rates. India has presently one of the lowest call rates in the world. This has lead to increased subscriber base for the mobile service providers but reduction in Average Revenue per User (ARPU). Another trend seen in the industry is the rapid growth of prepaid subscribers as compared to post paid subscribers, with prepaid forming around 90% of total mobile subscribers. As the industry has matured, a lot of consolidation has been seen with emergence of large players with pan Indian presence. Presently the major players are BSNL, Bharti Airtel, Vodafone, Reliance Communications, Idea Cellular and Aircel. Such high growth rate has been also resulted into a number of problems being faced by existing consumers. These include falling Quality of Service (QoS), increased congestion in the network, billing problems, unsatisfactory customer service etc. These problems are primarily due to the fact that mobile service providers have not been able to grow their network infrastructure and spectrum requirement at the same rate as increasing customer base. The regulation of mobile services have been largely influenced by the Department of Telecommunication’s (DoT) National Telecom policy in 1999 which paved the way for entry on new players by lowering on entry barriers. Telecom Regulatory Authority of India (TRAI) is the market regulator for the industry, with the mandate to create regulations for the best interests of consumers and health of the industry. In the last few years the Industry has seen a number of changes these include rapid decline in ARPUs, entry of foreign players in the industry, entry of Mobile virtual network operators (MVNO), and increased usage of Value added services (VAS). Also the mobile sector is expected to undergo several new changes like 3G services, Mobile number portability (MNP), entry of new players etc. The whole focus of industry might shift from plain voice services to triple play services (voice, data and video). Looking at the rapid growth, problems being faced by existing customers and future changes in the industry; there is a need for regulatory authority (TRAI) to take proactive measures to govern these issues. In our study we have done secondary research on the industry, recent changes, impending future changes, present regulatory framework and major industry issues. We also conducted a survey to understand the major customer problems being presently faced. In the final part of our study we mapped the major industry issues and customer problems (both current as well as future) with the corresponding regulations for them. We then looked at the possible regulators solutions which can be thought over by the regulator to overcome these issues. We have elaborated on these issues with looking from both customer and service provider points of views. Also the various Pros and Cons of proposed regulatory changes are explored.