Bharti Airtel<\/a>, Vodafone-Idea<\/a> and Reliance Jio<\/a> did not respond to ET’s questions. The basic, seemingly insoluble, problem, as telco executives put it, is that India is talking a lot more — voice service consumption has nearly doubled in two years — in part because voice rates are down to bare minimum, even free in some cases, but telecom infrastructure is geared towards data, and even data rates are being driven down by competition. So, telcos have little incentive or resources to maintain, far less upgrade, the part of the infrastructure that cater to voice.
Following the PM’s reported observations, telecom secretary Aruna Sundararajan said the department was looking for solutions. But as she said, operators (like Airtel and Vodafone-Idea) were phasing out their 2G towers, and installing 4G towers, so nobody was making investments in 2G towers any longer, the predominantly voice spectrum, increasing call congestion on networks. Reliance Jio uses voice over LTE (VoLTE) for voice services.
Rajan Mathews, director general of Cellular Operators Association of India (COAI), which represents Vodafone Idea, Bharti Airtel and Reliance Jio, told ET: “This is what happens when you start giving away voice services for free.” Naveen Kulkarni, telecoms expert and head of research at Reliance Securities, said: “The call drop<\/a> problem will reduce only if tariffs go up, which would see a sizeable chunk of users moving back to a la carte plans from cheap bundled offers, reduce consumption, and in turn ease pressure on mobile networks,” Kulkarni said.
Ex-Bharti Airtel CEO, Sanjay Kapoor, blamed cheap bundled telecom plans. “In an age of bundles, the upsurge in voice calling is straining networks and isn’t generating much incremental revenue for incumbents,” Kapoor told ET.
PAYING HEFTY PRICE<\/strong>
Airtel, Vodafone Idea were forced to migrate to bundled plans to stop Reliance Jio Infocomm from taking away their highpaying customers after the Mukesh Ambani-owned telco disrupted markets just over two years ago by offering free voice calls for life with generous chunks of data under a single bucket plan at a fixed price.
Jio’s move sparked off two years of savage price wars that still show no signs of ebbing, eroding telco revenue\/profits, and rapidly bringing the curtain down on an era when voice services set the cash registers ringing.
Some analysts believe incumbents are paying a hefty price for blindly replicating Jio’s bundled offers to hold on to customers, without realising that the latter’s pure 4G Voice over LTE (VoLTE) network economics works very differently from their hybrid networks which straddles the legacy 2G and 3G technology with 4G. Cost of a call is far lesser in a VoLTE network than the hybrid, or circuit switch, networks of the older operators.
Rohan Dhamija, head of India & Middle East at Analysys Mason, said an immediate solution for incumbents to optimise costs would be “a quick switchover to cost-efficient VoLTE-based 4G networks”. COAI’s Mathews though countered, saying rising demand for voice could induce operators to continue using 3G networks as a better and more efficient technology for voice in parallel with 4G, which has become the dominant network technology with the advent of Jio. In the immediate future, though, calls will drop, maybe even the PM’s.
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