The phantom of the operators

14 May 2012

ITU Secretary-General Hamadoun Touré has urged regulators “to lessen the... burden on mobile operators by reducing license fees and taxation.”

While addressing regulators during this year’s Mobile World Congress at Barcelona, he also said that auctioning of spectrum “is far from ideal” and “alternative solutions” should be developed.

ITU doesn’t publicly criticize its members - especially the governments of developing and underdeveloped countries - on sensitive issues like taxation or spectrum. To remain politically correct, Touré also turned his gun at the “high charges” the mobile industry “imposes on consumers through roaming.” His comments were reported on in page 10 of the event’s official newsletter.

Hamadoun Touré had, actually, preached to the converts. Mostly the government officials from growth markets were his audience in GSMA’s “by invitation only” Ministerial Session. And many of them have retired from the state-owned monopolies, which ruled the telecom world during the pre-mobile era.

ITU’s Telecommunication Indicator Handbook coined the term “main line” while referring to PSTN. It also grouped mobile in “Other services” placing in-between telex and paging. Sri Lanka’s then regulatory chief Rohan Samarajiva often recalls, “Few people had PSTN phones and fewer had dial-tone.”

“Some 43 million people are on registered waiting lists for telephone connection in emerging markets and the average waiting time is more than a year,” said ITU’s indicator during mid-90s. Citizens not having phones despite making all payments were referred in the “registered waiting list.” But the fact remained horribly stranger than fiction until few years back.

Piling demand for PSTN among the urban middleclass forced the governments to deregulate. The state-owned incumbents saw no threat from the new entrants offering “Other service” like mobile phone.

GSM was intended to be a pan-European mobile telephonic standard. Its inadvertent emergence as an affordable alternative to PSTN in developing countries is a brilliant example of unintended consequence. Freefalling of handset prices and declining cost of networks have triggered the meteoric rise of mobile penetration.

Fierce competition sparked innovation everywhere. Grameen Bank’s village phone became the victim of its own success. Text messaging emerged as the forefather of social media. Bharti Airtel has redefined outsourcing. The “digital divide” tilted from having dial-tone to accessing broadband. The mobile industry has become the de facto provider of Internet and broadband services.

And the taxman has lowered axe ignoring fatal consequences across the growth markets. The GSMA has been consistently publishing various studies on tax issues. The ITU has also organized a workshop last year on “Taxation of Telecommunication Services and Related Products.” Such noble initiatives and scholarly publications are to be integrated to achieve the goal.

The ITU and GSMA should jointly publish conventional indicators along with telecom tax of each country every year. ITU uses the governments and GSMA uses the mobile operators from all over the world as respective source of data. Such credibly assembled numbers will distinctly present the private sector’s financial contribution to the exchequers while connecting the billions of people with modernity.

Authorities in developing economies are largely reminiscent to the Phantom in Andrew Lloyd Webber’s 1986 musical. The mobile industry, which has replaced PSTN, reminds the profile of Christine Daaé who was initially a proxy but later played regularly. The Phantom demanded her unequivocal allegiance in the original play. While celebrating silver jubilee of the show last year, Christine sang for four Phantoms instead. Isn’t the mobile industry doing the same in terms of taxation today?

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