Book review: Cell Phone Nation

Sunday, 6 April 2014 - 3:14pm IST | Agency: dna

Robin Jeffrey, Assa Doron
Hachette India
293 pages

This book celebrates "cellularity", pointing out the many ways in which the "ubiquity" of cell phones has led to serendipitous outcomes for many Indians, especially those at the bottom of our assorted pyramids of caste, class and profession. But it doesn't miss contextualising this positive outcome against the shameful fact that though one in two Indians owns a cell phone, every other one of us still doesn't have access to a toilet. Or adding that pornography, crime, scandal and terror have all found new traction in India because of the cell phone.

This even-handed listing and discussion of good and bad outcomes is interesting but there is not enough of a discussion on the two questions that the authors state they wanted to explore: How do different people use the cell phone? And has the cell phone changed their behaviour? To this, of course, I would recommend adding a third question: Did the government really decide not to auction spectrum in order to make the cell phone available to all?

This is the right time to consider the last question. Though spectrum auctions in November 2012 and March 2013 flopped, the 2014 2G auctions put Rs61,162 crore into the government's kitty. Time to celebrate? For the government, yes. For cell phone users, no?

Vodafone India boss, Marten Pieters, speaking to a business newspaper, stated that his company would have to increase tariffs every year because purchase bills for spectrum would increase his costs. Pieters spent Rs20,000 crore in this auction, and he says he needs to recover this. Bharti Airtel laid out an equal mount while Reliance and Idea put up Rs11,000 crore each.

As per the latest figures available from the Cellular Operators Association of India, Vodafone has 160 million users; Bharti Airtel 198 million; and Idea 130 million. When you do the math, it is clear that Vodafone now has an additional cost of Rs1,250 per user; Bharti Rs1,010; and Idea Rs846. Against these additional costs, the respective average revenues per user are Rs138.50; Rs143.54; and Rs122, meaning that payback could be less than one year for all these companies even if we assume, mistakenly, that no new subscribers will be added.

If instead of revenues, we factor in the reported profit after tax for these companies at 0.01%; 20%; and 5% respectively, it could take them four years or more for payback. But this is still considerably faster than payback periods for other infrastructure businesses.The idea that cell phone tariffs will rise after declining for the past 18 years only because companies paid more for spectrum than before is a fact with corporate topspin on it.

The confusion over what is real in India's telecom sector and what is not is still tricky and the lie of telecom land is like a Rorschach ink blot, capturing "underlying thought disorders." How does one believe the government's idea that its impugned 2G policy was aimed at reducing the teledensity gap between urban and rural areas?

Well, even if reducing this gap was not the government's policy, this has happened. The latest TRAI figures available have urban cellular teledensity (subscriptions per 100 people) at 138.94 and rural teledensity at 41.95, with total subscribers over 886 million. As of 31 March 2009 urban teledensity was 88.66 and rural teledensity was 14.8, with total subscribers at 430 million. This means the teledensity gap between urban and rural users has halved.

But this does not take away the problems with the absolute number of users. For mobile phones, the TRAI figures do not count users but SIM cards. By one estimate four out of 10 TRAI users should be dropped from any count because of this. This means the number of cell phone users comes down from 886 million to about 550 million. So what?

This is still a lot of Indians and as urban affluenzis we all know the cell phone has made it easier for us to speak with the driver, the dhobi, and the newspaper boy. We can reach them whenever and wherever we want. But they can reach anyone too and this fact will remake India in profound ways say the authors. The question that remains is how.

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