Worldwide Telecom Regulatory Body Should Consider Charging Spectrum Fee Linked With User ARPU


We all are aware that Spectrum is one of the most precious assets of any country and regulatory body faces uphill task to manage the balance within different segment of Industry and most importantly defence sector.

We are also well aware that the auction of 3G spectrum in Europe triggered Telecom initiated global recession in 2001 to 2004 wherein many Telecom service providers put in multibillion $ bet in auction with a view that data centric products and services will fly off without any problem. Unfortunately, the limitation of 3G supported devices, concern around device battery, and lack of coverage delayed the maturity time from 5 years to 10 years. On a contrary, Japan, South Korea, USA, and China succeeded in adopting it and user responded back with higher adoption.

Given the successful adoption of Technology and growth, many countries only adopt the procedure without digging down deep to understand geo political condition. None of the Telecom Networks run by any service providers cannot be successful without the maturity of ecosystem which is combination of services, platform and Applications as it is the building blocks of Telecom service provider revenue stream other than voice services.

For Example, China government control Telecom services through three entities and ensure that Telecom service providers are supported in all way. That is one of the reason that the implementation of home grown 3G and 4G standard being adopted by even global equipment supplier to ensure that they capture most lucrative market.

If we look at the APRU both on Voice and Data, I want to keep it to abstract level and want to mention Japan, USA, South Korea, China, Germany, Switzerland, UK as some of the countries where ARPU is generating high APRU on both voice and data front. One of the major reason of the same is the voice an data package bundled with device which help user to shell out minimum to acquire data centric service. While package gets over and user device gets unlocked by the Telecom service provider; user understand the true value of offered services and subscription success rate achieve higher percentage.

On a contrary, Developing and nascent stage countries trying to connect their citizen with telecom services identified it as an opportunity to raise funds for the government without analyzing the cascading impact on overall economy. India is one of the unique examples of the same. With every auction of spectrum, the regulatory body raised the base price per Mz and focused on the number of user instead of APRU generated by each user. It shocking to know that even African countries where Airtel is offering their service generating higher ARPU than India both on the voice and data side. In that scenario why we call African countries poor countries.  I failed to understand the higher base price for the spectrum. If regulatory body is so confident about the Telecom growth then I challenge Indian regulators to put their skin in the game and offer free spectrum to Telecom service provider and be a partner of all Telecom service provider. In my point of view, the developed countries based regulators should consider giving free spectrum and they should take the path of revenue share to ensure recurring revenue for the government.

In the current form of Government policy of auctioning spectrum plus charging hefty direct and indirect taxes on the Telecom service provider which is landing Telecom service provider into debt and it's not far away that they will crumble into another segment with higher NPA. Most interesting post auctioning the spectrum regulators should not interfere the voice and data pricing as it is contracting to their statement that spectrum auction is on the basis of market discovery.

In my point of view, Regulator should recommend the Government of different demographics to be part of the ecosystem and enjoy the growth as well as they should burn their fingers if losses popup. It will release higher free cash flow for the Telecom service provider which in turn will get circulated within ecosystem and will have huge driver for the continuous growth irrespective minor hurdles
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