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Telecom operators to benefit from SC's verdict on call drops; Digital India hurt

Neeraj Thakur | Updated on: 10 February 2017, 1:49 IST

The Supreme Court, on Wednesday 11 May, ruled that the Telecom Regulatory Authority of India (TRAI) cannot penalize telecom operators for call drops in their network. The SC has essentially killed the order from TRAI back in October.

TRAI wanted telecom operators to pay a fine of Rs 1 on every dropped call from 1 January of 2016, restricting such penalty to three occurrences per subscriber per day.

Thought the Supreme Court has firmly put the ball back in the government's court by saying that Parliament can make and enact a call drop compensation rule, the ruling would certainly give a relief to the telecom operators who were under pressure to improve their quality of service after two years of debate with the government on the issue.

The call drop menace

There is hardly any mobile service user in India who would not be facing problems of call drops or less than promised internet speed.

While the NDA governent, under Ravi Shankar Prasand, had been warning telecom companies to improve the quality of their service or face penalties, the telecom operator's lobby blames the government for issuing low amount of spectrum to them at a very high cost.

Casualty of Digital India

One of the reasons why the NDA government has come down heavily on telecom operators for poor quality of service is its Digital India mission. Prime Minister Narendra Modi and his government have set a vision of 650 million internet connections and broadband speeds of up to 2 Mbps by 2020. At present, the country has close to 200 million internet connections and average broadband speeds of just 512 Kbps.

Before TRAI started talking about levying penalties, most telecom operators were blaming the low amount of spectrum per operator in the country. On the other hand, the telecom ministry was of the view that it had given enough spectrum to mobile operators. The government blamed the telecom operators for not investing enough in creating new infrastructure to cater to the increased subscriber base of the operators.

A Businessworld story quotes Price Waterhouse Cooper (PwC) data that shows that the consumer base of mobile services grew from 57.4 crore in 2010 to 97 crore in 2015, an increase of 66 per cent. But the growth in mobile towers was only 33 per cent from 3.29 lakh in 2010 to 4.4 lakh in 2015.

Fear of penalties

The scare of penalties had actually made telecom operators leave their rigid stance and loosen their purse strings. According to government data released back in December of 2015, private telecom operators had installed around 29,000 mobile sites across the country while the state-owned BSNL added 4,144 new sites in April-November 2015.

The real question is, without the fear of some penalty, will telecom operators still invest money in creating infrastructure to improve their quality?

After the Supreme Court ruling in their favour, Rajan Mathews, director general of the Cellular Operators' Association of India, in a statement to IANS said, "Now, let us move forward and fix the real issues - like having more cell towers, affordable spectrum and working with the local authorities to get the infrastructure in place".

But in case the mobile operators fail to keep their promise, the NDA government is likely to go to the extent of making a law to ensure its dream of Digital India does not go sour. This means that the telecoms operators have a small window, which they must not take for granted.

Edited by Sahil Bhalla

First published: 12 May 2016, 12:09 IST
Neeraj Thakur @neerajthakur2

As a financial journalist, his interface with the two dominant 'isms'- Marxism and Capitalism- has made him realise that an ideal economic order of the world would lie somewhere between the two.

Senior Assistant Editor at Catch, Neeraj writes on everything related to business and the economy.

He has been associated with Businessworld, DNA and Business Standard in the past.

When not thinking about stories, he is busy playing with his pet dog, watching old Hindi movies or searching through the Vividh Bharti station on his Philips radio transistor.