There's too much of a 'coincidence' in the way Delhi's two cellular service providers restructure their tariffs.

By Ashutosh Sinha

It was a coincidence the regulator couldn't ignore. Eleven months ago, when he was the Chairman of the Telecom Regulatory Authority of India (TRAI), R.S. Sodhi remarked to a room full of executives from TELCOs and the media that every time the two cellular service providers in Delhi sent him a fax informing about tariff-changes, the similarities made him wonder whether the two missives had originated in the same machine.

Sodhi was being facetious, but-alas, tragedy strikes-the joke is on us poor customers. A minor exercise by BT threw up the amazing fact that over the past three years, Airtel and Essar Cellphone-the two Delhi operators-have raised, lowered, or generally restructured their rates in tandem several times to be a coincidence. Today, the typical mobile user in Delhi pays Rs 4 a minute, the highest in the country. This, despite the capital boasting of over 444,000 subscribers-the most in any Indian city.

A perfect match

Even a superficial inspection of the tariffs quoted by the two service providers should be sufficient to prove that the numbers look strangely similar. Airtel's 'Business Lifestyle' package is built around a monthly rental of Rs 625. Airtel charges Rs 8 a minute for an outgoing call and Re 1 a minute for an incoming one. The details of Essar's 'Listen More' package? The same. Analogousness too is a characteristic of the standard package offered by the two: a monthly rental of Rs 475, and a flat per-minute rate of Rs 4.

The numbers by themselves, though, do not make a case. Nor does the fact that the two service providers have managed to avoid a price war-in a booming market, most marketers are mature enough to eschew the price card. What does is the fact that cellular-subscribers in Mumbai pay, on an average, 25 per cent less for their airtime; those in Bangalore, 25 per cent less too. Indeed, both Hutchison, which effectively controls Essar Cellphone, and Airtel, charge far less in the other cities in which they operate.

And what does is the fact that Orange, Hutchison's brand in Mumbai offers unbelievable-forgive the superlatives, but this correspondent is a deprived Delhi cellular subscriber-freebies like free calls to preferred cellular numbers, free calls between 9 pm and 9 am, and cheaper services like caller line identification. Surely, there's something in the air and it certainly doesn't have anything to do with the fact that the Essar and Airtel offices are located within a mobile phone's throw of each other.

The case for the defence

Both Essar Cellphone CEO Sudershan Banerjee and his Airtel counterpart Sanjay Kapoor admit that the rates are high in Delhi but that they would fall sharply in early 2001. That, for those who haven't read the MTNL story in this edition is around the time the monolith's cellular service will really kick-off. And Banerjee has explanations for the high rates and the absence of freebies in Delhi: ''The cost of equipment was higher then (Delhi was the first city in the country where cellular services were introduced, in October 1995) and that is why the tariffs are higher.'' And, ''nothing should be given for free.''

''That's certainly not true,'' rubbishes a former Essar Cellphone staffer. ''The pricing of equipment was the same for both Mumbai (services were launched in October, 1995) and Delhi. And if either of the players have added additional equipment, they did so when the equipment prices slumped.'' Indeed, both Airtel and Essar, BT learns, are profitable operations. Airtel CEO Sanjay Kapoor will not comment, but Bharti had announced at a press conference two years ago that it was the first telecom company in India to start making money.

Banerjee isn't done explaining yet. ''We're being hurt by non-criticality of size,'' he declares. That's a little difficult to digest once he tells you that Essar has over 180,000 subscribers in Delhi (Airtel has 260,000). The Delhi market for cellular services, for the benefit of the numerically inclined, has clipped along at 50 per cent in the past year, even as per-customer-revenues have increased from Rs 1,000 (a month) in 1997, to Rs 1,500 now. For the coming year, Kapoor says that they expect to add as many customers as they have at present.

Oops! We did it again

The desire of the Delhi-duo to milk the market is understandable: Hutchison and Bharti-the companies behind Essar and Airtel-have acquisition-bills to pay. And if customers aren't too bothered by the premium air in Delhi and if the regulator prefers to expend its energies on ensuring that there is a 'level playing field', than on trivial things like tariffs, why should they do anything else? Worse, these two companies (and every other cellular services company in the country) haven't passed the benefits of migrating to a revenue-sharing agreement on to customers as a January 2000 Delhi High Court-judgement suggested they do. The specifics: these two companies were to pay Rs 6,023 a customer as their license fee, an amount that was scrapped when the migration happened.

Ironically, despite charging a premium for their services, both Airtel and Essar have been loath to scale up their networks to meet demand. Since September this year, Delhi's airwaves have been choked. Calls that drop into nothingness are commonplace, as are interconnection snafus (See Please Try Later, BT, December 6, 2000). Evidently, this is one form of co-opetition that isn't good for the customer.

Additional reporting by  Shilpa Nayak

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