TRAI on overdrive ! Telecom business to see a complete overhaul…

The last 7-10 days have been filled with a lot of action in the Telecom sector, and the regulatory authority TRAI seems to be at the centre of it all.

TRAIConsider these:

– 3G policy is launched

– BSNL MTNL given a go-ahead for an early 3G launch

– Net Telephony proposed by TRAI supported by DoT

– Legal threats to GSM players for failing to provide interconnect to Reliance’s GSM

– Proposal to allow takeover of 2.5G players without the wait period

– Allow callers to choose their STD/ISD carriers

While the 3G announcements were much expected, a few others have indicated a growing discomfort of TRAI with the current players.Else why would all these suddenly be proposed in a matter of 3-4 days.

I personally feel the option to strongchoose the STD/ISD player /strongwill see the light of the day much earlier than other proposals. Here’s why:

– Existing players will not oppose it as much as other changes coz adoption of calling cards etc requires a lot of marketing muscle from stand alone players. I am unaware of the technical issues involved in ISD traffic where the current players will not be able to sell the purchased minutes of talk time. But am sure they will be able to adapt soon with some kind of a predictive tool.

– Customers will be happy with the announcement and TRAI would have scored a brownie point ot two.

– Primary impact would be the ISD calls as STD are not considered so costly that consumers would pull out a card punch the long series of numbers therein.Even if look closely at the ISD market, that itself is very segmented coz

a) Well off people who have relatives/friends/clients abroad will not bother too much unless the differential is high

b) most empeople with internet connection /emcalling family friends aborad are using Skype/Google talk for longer regular conversations. So they would rather wait for a Skype phone to be allowed in India

c) People without internet access typically calling Middle East SE Asia locations will be the first ones to adopt this. But typically here also, the Indian party more often than not recieves the call- not originates it.

d) Corporate- they should be the only ones to see significant cost reduction by choosing the service provider. And they would want some smart solutions, wherein the code is automatically punched in when the user calls from an enterprise connected device.

The most disruptive proposal of it all would be the Net Telephony– as that would not only take away the key revenue drivers for all existing players, it would suddenly reduce the entry barriers in a very significant way.As consumers we should welcome this, coz the rates would surely plummet, but if you have expsoure to telecom in your investment portfolio (through the current players)- it could hit you hard. Though the new players waiting to enter the market with their Net-Telephony-only services, highlight that this is as secure as the incumbent technology- I have my doubts that they would be able to convince the final decision makers. Given the strong lobbying from existing players the recent terror experiences – security issues could become the Achilles heel for Net Telephony.

The other proposal to do away with the waiting period for a new player strongto take over an existing player/strong- seems to send a very strong and positive signal for Foreign players- Indian Telecom sector is now ripe for M&As. With

– Vodafone already having its wide operations

– Virgin running an MVNO with TATA Tele

– MTN having courted dumped both Airtel Reliancebr /Indian Telecom market is already high up in the radar. With Chinese market still being unaccessible- many more foreign players will try come down to experience the Incredible India.

One might ask- what will tempt them to come here with falling ARPUs and an even worse scene predicted. Apart from the sheer numbers, I think Indian players have been able to sell the idea to the world that they know how to operate on a large scale with lower costs (playing on volumes rather than margins). This was what everyone felt when the MTN courtship was taking place in full media glare.

Phew! So much action is anticipated that most of us had forgotten about the iPhone launch for a while…. Over to some more exciting glamorous developments in the business of staying connected !