TRAI's Misplaced Data Revenue Theory

Telecom Regulatory Authority of India (TRAI)'s calculation that an operator's share of non-voice services will increase to 50 percent of the total revenue by 2020 is misplaced, according to a recent study by PricewaterhouseCoopers International. (See PwC Estimates 30-Paisa Tariff Rise.)

The study says that the non-voice revenue as a percentage of the total revenue of operators currently stands at 14 percent. By no chance can this become 50 percent, as per TRAI's calculations. Currently, Japan is the only country where non-voice revenues contribute 50 percent to the total revenues of operators. In Japan, the contribution of data services to the revenue was 48.90 percent in 2011. Even in most of the mature telecom markets, barring Australia, the contribution of non-voice revenues is nowhere close to 40 percent, the study says.

Now, it is a matter of debate whether the non-voice revenues can cross that aspirational 50-percent revenue-mark for operators or not. But it has to be significant if one expects the telecom market to grow positively.

Then again, considering India's potential, it is difficult to say that TRAI's theory is wrong. "If China's operators can manage to double their data revenues from 15 percent to 30 percent in the last three-to-four years, why can't we replicate the same success in the next eight years? Opportunity exists in the form of mobile broadband, rural-driven applications and so on. Even if it is 40 to 45 percent of the revenue share, it will be huge," says a senior telecom consultant from an research firm on condition of anonymity.

With the country's operators already feeling the heat from the growing competition and falling revenues from voice services, increasing the revenues from data services is the only way out for them to stay in competition. New technology roll-outs and the operators' aggressive push for 3G by slashing prices by up to 70 percent clearly indicate that telcos are concerned about falling revenues and are committed to increasing their revenues from non-voice services.

The next four-to-five years are critical for the growth of non-voice services. A wider adoption of Internet on mobile, and services like M-Commerce and M-Education are expected to drive the change.

Nevertheless, it will be a conducive ecosystem where all stakeholders including device manufacturers, operators, VAS providers and developers need to work hard to make this possible.

Jatinder Singh, Principal Correspondent, Light Reading India