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Bharti Airtel VoIP move not very productive: KPMG’s Ghosh

Bharti Airtel has said data used in Internet calls made via Voice over Internet Protocol (VoIP) apps such as Skype or Viber would be billed separately and not part of a subscriber’s data packs.

my view overall is that telecom operators needs too be relevant and align their business models in tune to reality and what is happening and what is going to happen.

Jaideep Ghosh

Partner

KPMG

Jaideep Ghosh, Partner at KPMG in an interview to CNBC-TV18 spoke on  Bharti Airtel ‘s move to keep the data usage for the Voice Over Internet Protocol (VoIP) calls outside the data allowance under the bulk data packs.

According to Ghosh this is not such a productive measure for any telecom operator. Instead it is important that all the telecom operators align their business models than restoring to these kinds of short-term measures, feels Ghosh.

Moreover, customers according to him are very intelligent and would find other operators or ways and continue using lower cost calls.

In a move that directly violates the principle of ‘net neutrality’ (which calls for all data usages to be treated equally), India’s largest telecoms firm Bharti Airtel said data used in Internet calls made via Voice over Internet Protocol (VoIP) apps such as Skype or Viber would be billed separately and not part of a subscriber’s data packs.

Below is the transcript of Jaideep Ghosh’s interview to CNBC-TV18’s Senthil Chengalvarayan and Sonia Shenoy & Reema Tendulkar.

Sonia: Data operators at Bharti Airtel and Idea Cellular were aware of this fact for many years that this low cost economics of Skype etc will be hitting their revenues. It is not a new phenomenon so why did Bharti choose to do this right now? Do you think it is because of the fact that Whatsapp will be foraying into internet calls very soon?
A: As you said righty this is not particularly new so my view overall is that telecom operators needs too be relevant and align their business models in tune to reality and what is happening and what is going to happen. So, increasing rates for voice over internet protocol (VoIP) kind of calls may be a short-term measure but then customers will find other ways to mitigate that.

Senthil: If the telecom industry is really facing the threat of commoditisation because of technology do you see other operators following suite?
A: It is a very stagnant question. They need to align their business model. There is the concept of net neutrality. Even in the US now, President Obama is personally very pro net neutrality. What it means is that all the website all content needs to have equal access both in terms of unblocking, nothing need to be blocked, needs to have equal speed of access and need to have equal cost access.

So, this kind of differential packaging clearly is not very pro net neutrality.

Senthil: Is it against law? Because net neutrality is accepted but is not the law so is this against the law? Do you see government is now stepping in and making net neutrality kind of obligatory for all players?
A: It is not a law; there is nothing illegal in doing this. It is a commercial packaging of VoIP calls and stuff which is fine. Nothing to do with law but sooner than later the Telecom Regulatory Authority of India (TRAI) would step in to this. There is already a consultation paper on the over the top (OTT) applications. We potentially would see the TRAI getting slightly more active if they think that it is going entire net neutrality.

more to come

Bharti Airtel stock price

On December 26, 2014, Bharti Airtel closed at Rs 354.45, up Rs 0.25, or 0.07 percent. The 52-week high of the share was Rs 419.90 and the 52-week low was Rs 282.10.


The company’s trailing 12-month (TTM) EPS was at Rs 27.40 per share as per the quarter ended September 2014. The stock’s price-to-earnings (P/E) ratio was 12.94. The latest book value of the company is Rs 166.93 per share. At current value, the price-to-book value of the company is 2.12.

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