TRAI forcing the shut down of 2G networks – Idea Cellular CEO

Idea Cellular CEO Himanshu Kapania said sector regulator TRAI was forcing telecom operators to shut down their older networks as it pushes for the adoption of newer technologies, seeking urgent intervention from the government.

Kapania said the move towards phasing out of older technologies could have a negative impact on connectivity, especially in areas like the rural parts of central and eastern India, in states like Madhya Pradesh, Bihar and Orissa.

The CEO said there are many customers who spend only 10-20 rupees per month, but are kept on the network by GSM operators because they generate incoming calls.

These incoming calls generate 14 paise per minute, but the TRAI last week slashed it to 6 paise per minute. This will make it more difficult to maintain such ‘incoming only’ customers as they will generate less money if call volumes remain static.

“Consumer who spent 10-20 rs per month are looking forward for continued subsidy by the 2G operator, which are not in a position to create any more subsidies,” Kapania said at the India Mobile Congress.

“The government has to decide, does it only want forward looking technologies, or will it allow co-existence of 2g with 4g. The TRAI has clearly pushed us to a level that only one technology will survive and all older technologies will close down,” Kapania said.

Companies such as Idea Cellular and Bharti Airtel are keen to continue to keep operating their 2G and 3G networks as long as possible, as they have invested lots of money into them.

However, the TRAI believes that older technologies cannot be subsidized by newer, more efficient technologies.

Buy cutting charges like interconnect, the TRAI is indirectly forcing companies to modernize their equipment, and put in more efficient and low-cost infrastructure.

TRAI believes that if operators put in place more efficient, modern equipment, prices of calls and data will continue to fall, benefiting customers and driving the economy.

Kapania said the industry is undergoing “severe financial as well as mental stress” as prices of voice calls have come down by 50% in the last one year, while data prices have fallen by more than 90% in one year.

These, he said, are ‘below cost’. Eventually, Kapania said, the industry expects to generate an average revenue of 175 to 200 rupees per subscriber from 4G services per month.