I have been an Airtel customer since two years now. The phone connection was in a friend’s name. 4 days back I applied for a new connection in my name. I wanted a phone line along with their broadband connection.

Everything seemed to be fine. Their representative was at my place within 30 minutes. He took the documentation and a check of Rs. 850.

The documentation provided was:
1.Photostat copy of the most recent bank statement. (Address Proof)
2.Photostat copy of my driving license. (To prove that I exist)

Yesterday, they completed the wiring process. Today another individual came and activated the phone.

Looks alright till now.

10 minutes later the dude said that they would have to disable the connection as my identity was not verified correctly by their back end system. So, I would now have to wait for another couple of days to sort out the problem. They can potentially reject me as a customer.

Duh. I provided them more than enough documentation to show that I exist and live at the place where the connection was to be installed. It’s an owned place and I am not living on rent.

I have now given them a photostat copy of my PAN Card. I am seriously hoping that this should satisfy them enough to give me a bloody Airtel Connection. Or I would consider getting a Tata line.

I have the numbers finally. Something that I have been alleging but could never get the right numbers because it was impossible to break in through the opaque structures.

Roaming charges have a rip off for years. I was wondering as to how does Airtel or for that matter any other company could declare profits (obscene profits) for years on end quarter after quarter. Sunil Jain has written an article in Business Standard which has been reproduced on Rediff.

Much of it was motivated by TRAI’s consulation paper. However, this paper is full of legalese and in case you don’t have patience, read the salient features below. (Emphasis mine)

The government, the order goes on to say, reduced the carriage costs (an important determinant of roaming costs) in February last year, but this “does not appear to have been fully reflected in the retail tariffs applicable for long distance calls and roaming services”.

Similarly, the sharp reduction in access deficit charges on long-distance telephony (again, a significant cost) was not fully passed on to customers; the sharp reduction in licence fees, from 15 per cent of revenues to just 6 per cent, was not passed on, either.

Just how much all this adds up to can be seen from the fact that while the GSM (cellular) firms charged between Rs 2.89 and Rs 3.09 a minute for outgoing local calls while roaming, Trai reduced this to Rs 1.40 in January this year; outgoing long-distance calls were charged at Rs 3.09-3.79 a minute and this was cut to Rs 2.40; incoming calls were charged at Rs 3.09-3.99 a minute and this was cut to Rs 1.75 a minute.

As for the funds-starved argument, the tariff order cites various reports, including one done for the Cellular Operators Association of India, to show this is not true. The PWC/COAI study, for instance, says EBITDA margins of the industry have grown from 15 per cent of net service revenue in 2000 to 44 per cent in 2005.

Trai has estimated this cost and it ranges from 7 paise per minute for the most efficient firm to Rs 1.09 for the most inefficient (for seven firms, it is around 25 paise and for five it lies between 30 and 50 paise).

While you’d expect the regulator to benchmark against the best, Trai decided to use a cost of 75 paise (of the 17 firms, only two have a cost higher than this-one is 76 paise and the other is Rs 1.09). So there’s a huge cost benefit already. In the case of long-distance outgoing calls, the benefit allowed is even more.

Even after taking an inflated 75 paise cost of roaming, Trai arrives at a total cost of just Rs 2.05 per minute-yet, it has allowed the firms a ceiling tariff of Rs 2.4 a minute. Trai says the costs incurred by the telcos when their subscribers send SMSs do not increase when they’re roaming, yet it chose not to regulate this-as a result, telcos charge Rs 3.45 for outgoing SMSs, a number that is far more expensive than even a phone call!

And the piece de resistance: Trai’s cost calculations were based on the 2003-04 subscriber data. Since the number of subscribers has trebled since then and the call minutes by even more, it is obvious the costs of offering roaming (the 7 paise to Rs 1.09) would have declined even more.

These firms are in hand in hand with the media and the Government to rip off the consumers and as highlighted above, none of the benefits have been passed on to the customers.

Sunil Jain then raises a pertinent point:

As for not having funds for funding capex, how do you explain the world’s largest cellular operator buying Hutch at an enterprise value of $20 bn if there aren’t huge profits to make?

So there it is. I have been vindicated. So far, the exact costs have never been reflected in the mobile bills. You get to pay a lot of “shit money” to pay those “executives” and line their pockets. All the while they shed crocodile tears about loosing money.

This is nothing but oligopolies and shutting out the new incumbent who would otherwise have to pay huge licence fees and administrative costs to set up brand new infrastructure.

(Another interesting article appears on the regulatory bodies for infrastructure on Rediff; while not related to the present write up but would nevertheless give you an idea about the way Government of India escapes accountability).

Rajesh Jain has posted a series of articles on Mobiles being your next PC. I would strongly encourage you to head over to the links below:

1) The Emerging Internet: From PCs to Mobiles

2) The Emerging Internet: From Reference Web to Live Web

3) The Emerging Internet: From Search to Subscription

4) The Emerging Internet: From Advertising to Invertising

5) The Emerging Internet: The Next Google

To quote from his last post :

Let us summarise the key points so far. My contention is that the next Internet – what I call the Emerging Internet — will be built around mobiles, rather than PCs. It will be a window to the Live Web, rather than the Reference Web. Subscriptions, rather than Search, will be the way we will interface with the Live Web. Invertising, and not Advertising will be dominant business model in the Emerging Internet. And to take it one step further, the company that will dominate this new Internet will not be Google or one of the existing players…. I believe that emerging markets like India offer a great opportunity for giving rise to the new leader because they are where this new world built around mobiles, the Live Web, subscriptions and invertising will first emerge. Because shifts are going to happen on multiple dimensions, it will be hard for the existing leaders to match. Exciting times lie ahead – as they have always! Innovation and entrepreneurship-led change is the only constant.

I believe that Rajesh Jain is “partially correct”. The tiny mobile screens are a dampener and the market dynamics have not yet matured to be able to support the services that are being talked off. 3G would be a non starter, in my opinion. Unless, they have something really as exciting as a dirt cheap handset or vendor supported handsets with lock in periods. This, I believe, would spur on some usage.

Indians are not exactly as wired as their western counterparts are. Primarily because of lack of access and beyond stupid game shows, these SMS based services have not been good enough money spinners; even though they account for an estimated 10-12% of the operating margin. Still, as Rajesh points out, the future is “bright”. We do have an oppurtunity to be able to taken the lead and develop some applications which can be replicated on a large scale (and perhaps get a mention on this blog)!