Ms. Shazna Zuhyle
: Project Head-SAARC telecom research
Why is the telecom tariffs are more within the SAARC countries rather than outside it?
Ms. Shazna Zuhyle, Project Head-SAARC telecom research at LirneAsia
An inter-operator tariff (which is the wholesale tariff) plays a big role in retail rates. Other potential reasons, besides this are as following:
- Lack of competition: Due to limited competition in the provision of wholesale IMR services, wholesale charges are high, thereby contributing to high retail prices.
- Roaming is not easily substitutable: Using a local SIM in the visiting country may be a substitute for IMR. However, this is user-dependent. While low income users may buy a local SIM, users on tight schedules will not. This solution, although cost effective, is far from hassle-free. The demand for IMT gives providers the bargaining power to maintain high retail prices.
- Lack of price transparency: IMR is usually sold as a bundled service and users tend to give it least priority when selecting an operator/service plan. In addition, users are often unaware of the high prices. The lack of uniformity in regional pricing is another reason for the confusion that results in bill shock.
- Potential double taxation: Inconsistencies in applicable taxes within the region may require consumers to pay tax on taxes levied in the roaming country. Why just SAARC countries?
Because we are a part of the SAARC region and we are talking about regional integration. Moreover, the purpose of regional organizations is to provide its citizens with some intra-regional benefits and to facilitate relationships that enhance economic development, among others. Cross-border communication is not only essential for regional organizations to function, but it has also become a basic need for many. International voice (that allows a user to dial a foreign number directly from a fixed or mobile phone) and international roaming (that allows a user to seamlessly operate a local SIM while abroad) are two main telecommunication services that foster regional collaboration.
Recognizing its significance, leaders of the South Asian Association for Regional Cooperation (SAARC) issued the following at the 15th SAARC Summit in 2008 “The Heads of State or Government observed that an effective and economical regional telecommunication regime is an essential factor of connectivity, encouraging the growth of people-centric partnerships. They stressed the need for the Member States to endeavour to move towards a uniformly applicable low tariff, for international direct dial calls within the region”. Despite the directive efforts have not been made to lessen or converge international voice tariffs in the region. How different is the SAARC telecom market, especially in terms of usage trends?
From our research of the Bottom of the Pyramid (BOP, people who fall in to socio-economic classification D & E) we know that there is high use of voice services. It was one of the first large regional studies to assess demand for ICT services among emerging Asia’s BOP in a systematic way. The 2011 study was conducted in India, Pakistan, Bangladesh, Sri Lanka, Thailand, and most recently, Java (Indonesia), focuses on if and how mobile phones are being used for productive purposes, especially within the agriculture sector. The study also contains a module on the knowledge and information needs as well as ICT use in the agriculture sector in India, Bangladesh, Sri Lanka and Thailand. How long will it take for SAARC to match upto the telecom standards of the rest of the world, in terms of market maturity?
In some ways the market is more mature (e.g. high in voice use) than others (broadband / access to the Internet). It cannot be predicted right away, as to how long it'll take for such markets to mature otherwise on other parameters.Why would telecom service operators do this or the legislation is to blame?
It is essentially because, the tariff are unregulated. And that is not necessarily a negative in the eyes of the regulator whose mandate is to protect the consumers of its country - not foreigners. However, if there is to be regional integration in telecom to aid other factors such as migration for employment, tourism, trade etc., then there ought to be some form of regulation. It's just a trade-off. What is there for India?
Looking at LirneAsia data, for people from SAARC countries using roaming in India is expensive. In most cases it is cheaper to buy a local prepaid SIM card and make an IDD call as opposed to using international countries. Even with these inconsistencies, it is still considerably cheaper for a user to make an international voice call home as opposed to a roaming call home. An Indian user may pay up to 10.75 times more to make a call home, while roaming.Why is there no transparency in deciding such tariff rates, even after the presence of telecom regulatory bodies?
There is no transparency in deciding such tariff rates, even after the presence of telecom regulatory bodies because these tariffs aren't regulated and retail rates are based on inter-operator agreements. Inter-Operator Tariff (IOT) is the predominant component of the charge for the origination of voice, SMS and data services. The visited operator charges the home operator for the origination of services, arranging for the transit and/or termination on other networks and for roaming specific costs such as negotiating agreements, testing the roaming platform, costs incurred in data & financial clearing houses etc.How is LirneAsia's role crucial in this whole scenario?
LirneAsia is a regional think tank. Through this research it has however attempted to inform users, policy makers and regulators of the region. This research on tariffs from operators (one operator per country - the operator with significant market share based on subscriber numbers) in the SAARC region was funded by the International Development Research Centre of Canada (IDRC). Research findings have been presented in many meetings including the South Asian Telecommunication Regulators' Council (SATRC).