Who's afraid of Net telephony?

After much dithering, and nine years after Internet telephony was introduced in India, the DoT is reportedly considering offering full-fledged access as a part of its new perspective on Telecom Policy. Despite a few regulatory glitches, that can easily be worked out, it is a welcome move. If allowed, the new order will permit calls to landlines and mobile phones in India through the Internet, though it is uncertain if the tariffs will be any lower than they are on existing conventional services. Countries such as the US and the UK and, closer home, Singapore, Japan and Malaysia have allowed the service over the last five or six years. The DoT is considering allowing Internet service providers to offer this service, but mobile operators are not too happy.

For operators with a universal access licence, which allows them to offer mobile services, including Internet telephony, the bone of contention is the lack of a level playing field, as they have paid Rs 1,650 crore to get the licence. But ISPs, who gained the licence for a fee of just Rs 10-20 lakh, are also eligible to offer this service. The ISPs pay six per cent of their revenues from Internet telephony as annual share to the regulator, while the universal access licencees pay up to 10 per cent. A higher entry fee can be considered for ISPs, but that could turn out to be burdensome. BSNL, MTNL, Reliance Communications and Bharti Airtel control 88 per cent of all Internet subscribers and most ISPs lease their back-end network from these players and merely re-sell them to consumers. Mobile operators fear that the service will affect their regular voice minute revenues, which is why they have not offered the service even three years after being allowed to do so. Their reluctance seems inexplicable. Broadband connectivity reaches a mere 12 million people in India. Even if all of them start using Internet telephony, which is highly unlikely, that would still make up only a small fraction of mobile voice minutes. Second, with telecom tariffs being just 1-1.2 paisa a second, it is hard to imagine any Net telephony provider being able to beat that. Why? Any provider has to contend with network access charges, interconnection fees and termination costs. This means, to stay profitable, the tariffs will have be reasonably high. Finally, Internet telephony being allowed on mobile phones poses a simple question to the user. Why take the pains to download a software package and then call, when mere punching of numbers on a phone pad will do the trick, at existing rock-bottom rates?