India tariffs some of the lowest in the world
A review of tariff statistics around the world by the Cellular Operators Association of India (COAI) has shown that cellular mobile telephony tariffs in India are the lowest in the world. Cellular mobile tariff statistics from EMC show that India at US$16 per month has the lowest monthly cost of a 300-minute basket for cellular services. In contrast a 300-minute basket costs US$ 21 in China, US$29 in Thailand, US$ 40 in Malaysia and US$ 42 in Indonesia, The tariffs in South American economies are far higher at US$ 60 for Chile US$ 77 for Brazil, US$ 96 for Mexico and US$115 for Argentina.
The airtime tariffs have plunged by over 75% in the last three years alone. It may be noted that these low tariffs are being offered by the Indian operators despite prohibitive regulatory costs, which are amongst the highest in the world. Indian cellular operators are passing 35-42% of their revenues to the government by way of various levies - license fees (8-12%), spectrum usage charges (2.5 - 4.5 %), service tax (5%) and Interconnect access charges (approximately 20% of revenues). In contrast it may be noted that the cellular operators in China pay Nil license fee, a negligible fixed usage charge for spectrum, no service tax and have very reasonable terms of interconnection with the fixed service operators.
As per industry data, the Indian cellular sector has registered a Compound Annual Growth Rate (CAGR) of 109% in cellular subscribers from 1995-2001. In fact, the growth rate FY 2001-02 stood at 79%. The current all India cellular subscriber base has crossed 80 lakhs and it is expected that with these highly affordable and extremely attractive tariffs the industry will cross 1 crore cellular subscribers by December 2002. Further, it is estimated that around 25% of these subscribers will be from smaller towns and rural areas.
Like most emerging economies, it is expected that the total number of cellular subscribers will exceed the number of fixed line subscribers within the next five years. In fact, this trend is already evident in India, since in the last quarter (April-June 2002), the number of additions in cellular subscribers was three times greater than the increase in the number of fixed line subscribers. The fixed-mobile cross over for India has been projected to take place in Year 2008 when the total number of cellular subscribers will exceed the total number of fixed line subscribers. |
