It’s free fall in number of mobile subscribers

GSM operators have revealed that their subscribers are down 7.1 million

September 15, 2012 01:25 am | Updated November 17, 2021 02:46 am IST - NEW DELHI:

Visakhapatnam:17/02/2009:Students of East Calcutta Girl's College, smsing their friends and relatives while enjoying an evening at the Ramakrishna Beach in Visakhapatnam during their college excursion in Visakhapatnam on Tuesday, Feb 17,2009.---Photo:K.R. Deepak

Visakhapatnam:17/02/2009:Students of East Calcutta Girl's College, smsing their friends and relatives while enjoying an evening at the Ramakrishna Beach in Visakhapatnam during their college excursion in Visakhapatnam on Tuesday, Feb 17,2009.---Photo:K.R. Deepak

GSM operators’ revelation that their subscribers are down 7.1 million from 679 million in July 2012 to 671.95 million in August adds credence to the widespread belief that the operators had been hiking subscriber numbers by as much as 40% in some cases to access more spectrum.

Earlier, telecom regulator TRAI’s data had revealed a 2.21% drop of 20.61 million subscribers to 913.49 million subscribers in July from 934.09 million in June. Even in June, the wireless subscriber base had grown just 0.5%, adding barely 4.73 million subscribers. This demonstrates that India’s subscriber growth story is clearly set to change.

The allocation of spectrum by the government has historically been linked to subscriber thresholds. But now, with mobile operators realising that they can no longer ride the gravy train of free spectrum, the true strength of India’s legendary subscriber base will be put to the test.

One of the aftermaths of the 2G and Coalgate scams is that scarce natural resources, at least where these two sectors are concerned, will now only be auctioned going forward.

For mobile operators this means that the cosy ‘subscriber-linked criteria,’ based on which they were being allocated spectrum for nearly a decade comes to a grinding halt. In fact, it is quite clear that India will never see free spectrum being allocated ever again, at least not for commercial purposes to private companies.

The result of this switch in allocation procedure, even though predictable, has caught several stakeholders unawares. In July, the subscriber numbers for urban India dipped to 587.90 million and 334.58 million for rural India. Interestingly and contrary to expectations, urban India appears to have far more duplicates or even fake subscribers, showing a 18.86% decline, while rural subscribers went down by merely 1.92%.

Just the beginning

Industry watchers and analysts across the board agree that this free fall is just the beginning.

Where teledensity is concerned, the impact seems minimal. In July, the 75.21% overall teledensity (for every 100 subscribers) was down from 76.99% in the previous month.

Earlier, the more subscribers one acquired (and declared) the more rapidly spectrum could be accessed. Normally, operators would get spectrum in tranches of 1.8 MHz beyond the contracted amount linked to a new subscriber milestone. This 1.8 MHz as per the 2012 reserve price for the 2G auctions set by the Cabinet is now worth a whopping Rs. 5,040 crore.

The genesis of the first come-first-served allocation process linked to the subscriber base is a practice that began in March 2001 during the NDA regime when limited mobility-related spectrum was first allocated.

Amongst the operators who first received additional spectrum based on number of subscribers, were Bharti and Hutch (now Vodafone) in Delhi in July 2002. The process that began in 2002 with a handful of operators grew into a menace over the next decade. In fact, this specific issue of subscriber-linked allocation of spectrum is under CBI investigation and goes beyond the UPA government well into the NDA regime when the practice first began.

Though the TRAI admits that based on VLR data, active subscribers were only 698.06 million, experts believe that the more realistic number is closer to 600 million, which means that nearly half a billion Indians are yet to make the first phone call from their own mobile phone.

This is both good and bad news. Good because it still means that there is a subscriber base of at least 250-300 million, which even with very low usage is a potential market that is still untapped. For policy makers and national planners who have routinely projected India’s growth from an infrastructure improvement and economic success parameter using mobile penetration as an indicator, it is a setback, considering that it now means that only 50-60% of the population owns a mobile phone.

However, given that with no further incentive to misrepresent subscriber base, the corporate cleanup process is under way, the government now has a clean slate from which to rebuild the sector.

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