GSMA calls for market forces to be allowed to bring down cost of mobile
The GSM Association, the global trade association for the mobile industry, has called on the Indian government to cut in half the 5% levy on telecom operators’ gross adjusted revenues, which is channeled into the Universal Service Obligation Fund (USOF). The levy is increasing operators’ costs and ultimately the cost of mobile services for consumers. The GSMA recommends that the unspent $2.5 billion in India’s USOF be used to help tackle the bottlenecks, such as a lack of backhaul capacity and electric power, currently slowing down the rollout of mobile networks into rural areas.
“Universal Service Funds are another telecoms-specific tax that increases the cost of access for consumers,” said Gabriel Solomon, Senior Vice President of Public Policy of the GSMA, speaking at the Commonwealth Telecommunications Organisation’s Connecting Rural Communities Asia Forum. “Globally, 75% of the cash in Universal Service Funds is unspent*. We strongly support the call by Nirpendra Misra, the Chairman of the Telecom Regulatory Authority of India, to cut the 5% levy by at least half and remove handset taxes as that would make mobile phones more affordable for rural consumers and spur industry investment in currently un-served areas.”
The extension of mobile coverage into rural areas can also be fuelled by infrastructure sharing agreements between mobile operators, which can make new base stations more cost-effective, according to a new GSMA report entitled: “Mobile Infrastructure Sharing”**. The report recommends that regulators should encourage the growing global trend among mobile operators to share more infrastructure, but should not mandate sharing, as doing so may curb competition and distort the market.
In India, the regulator has just increased the scope for infrastructure sharing in response to proposals from mobile operators. “Up to 40% of all new cell sites and masts are shared today and this will grow substantially,” said TV Ramachandran, Director General of the Cellular Operators Association of India. Indus Towers, Reliance’s RTIL and Bharti Infratel share more than 130,000 sites. “The vast majority of the sharing agreements will continue to be driven by market forces,” added Mr. Ramachandran.
“Infrastructure sharing is a potentially powerful tool mobile operators can use to cost-effectively extend mobile services, including broadband connections, to many millions of people,” added Mr. Solomon. “We congratulate the Indian government for its lead in granting operator requests to share the radio access network, along with sites and masts, and we call upon other regulatory authorities to follow the Indian example.”
* A GSMA report “Universal Access – how mobile can bring communications to all”www.gsmworld.com/universalaccess found that 15 of the 32 universal service funds have collected more than US$6 billion and spent $1.6 billion with only 7% of that going on mobile solutions.
** The report is available for download at www.gsmworld.com/sharing
About the GSMA:
The GSM Association (GSMA) is the global trade association representing more than 700 GSM mobile phone operators across 218 countries and territories of the world. In addition, more than 200 manufacturers and suppliers support the Association’s initiatives as key partners.
The primary goals of the GSMA are to ensure mobile phones and wireless services work globally and are easily accessible, enhancing their value to individual customers and national economies, while creating new business opportunities for operators and their suppliers. The Association’s members serve more than 2.5 billion customers – 85% of the world’s mobile phone users.
For more information please contact:
Mark Smith or David Pringle
GSMA
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