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Mobiles: Tools of inclusion with a caveat - Outside View by S.S. TARAPORE
Mobiles: Tools of inclusion with a caveat

The rapid growth of the mobile phone industry is indeed staggering. In a country of 1,200 million, there are almost 900 million cell phone subscribers. Nothing has fired up the spirits of the population as the growth of the cell phone industry. There are, however, some glitches which need constructive attention - rather like speedbreakers to prevent accidents.

Growth prospects for industry

Given the phenomenal growth of the industry in India, what does the future portend? Once a saturation point is reached, some sort of diminishing utility would set in, which would slow down future growth. With rapid technological developments, there would no doubt be a vastly improved quality of product and it could be safely predicted that consumer enthusiasm would ensure that the majority of users would be willing swap old sets and replace them with more sophisticated products. Thus, the prospects for the industry in the ensuing years would be bright.

Social effects

The phenomenal growth of the cell phone industry is largely attributed to Indians being very 'talkative.' Given the large tracts of extreme poverty, there is the sad paradox of the lowest income households having a proliferation of cell phones, but an absence of toilets. It is indeed a matter of concern that in the consumption basket of the lowest income groups, cell phones rank above nutritious food.

Utility of cell phones

Protagonists of the mobile industry would be enraged that doubts are being expressed about the utility of mobile phones. The intention of raising certain issues is not to deny the utility of mobile phones, but to emphasise the need for caution.

Mobile phones can be a great asset in the propagation of financial inclusion. The number of cell phone subscribers is well in excess of the number of individuals having a bank account. The challenge before the banking industry is to bring about financial inclusion for 600 million people in 600,000 villages in 600 districts. Mobile phones are a vital medium for taking banking services to remote areas. Some over-enthusiastic votaries of mobile phones talk about by-passing the banking system, though more sober persons recognise that the issue is not about supplanting the banking system, but of taking the banking system to the masses through mobile-linked bank accounts for financial transactions. There are legitimate concerns that there should not be entities without a banking licence, which create credit. While non-bank entities can provide payments services, such entities should not have access to customers' funds. Increased use of technology should be welcome, subject to the proviso that at no point of time should funds rest in the hands of any non-bank entity. Deposit-taking and leveraged credit creation should strictly be the prerogative of banks.

Some problems of cell phone usage

There is no gainsaying that mobile devices have a useful role in commercial activity, as they offer opportunities for effective and efficient transactions. But there are also some negative features which have to be taken note of.

For instance, mobile devices can distract users from their day-to-day work. There are studies to show that mobile phones are checked for messages on average a hundred times a day by each individual. It is not that all usage is related to business activity. A lot of time is spent on inanities. When distractions become excessive, such activity results in a drop in productivity.

Glitches in cell phones

One should not underestimate the power of telecom companies to force the system to greater usage of mobile phones. While persuasion, say through advertisement is permissible, provision of standard services being contingent on a mobile phone does appear to be a borderline case of misuse of facilities.

For instance, certain postal services are denied to users who do not have access to a mobile phone. Try sending a registered air mail package through the post office. The post office computer rejects the registration unless the sender reveals a cell number. A land line telephone number too would result in a rejection of the registration. The objective is to enable the customs at the exit point to raise queries if necessary. The important point is identification of the sender and it is unconscionable to make a mobile number as the only exclusive identity which is acceptable. The post office needs to rethink their system on this matter.

Yet another illustration is the supply of LPG cylinders. At one time it was being considered that all LPG users would have to provide a mobile number. Fortunately the authorities appear to have backed off from insistence of a mobile number.

There is a well-known instance of a newspaper with a record of phenomenal increase in circulation making it mandatory, while renewing subscriptions, to provide a mobile number as also the mobile numbers of three other persons. Even some grocery shops making home delivery make it a precondition that the customer provides a mobile number (a land line would not be acceptable).

While the mobile phone industry is free to grow, the industry should eschew strong-arm tactics. A pro bono publico (a person interested in the public interest) should approach the telecom commission, the competition commission and consumer courts.

Please Note: This article was first published in The Freepress Journal on March 10, 2014. Syndicated.

This column, Common Voice is authored by Savak Sohrab Tarapore. Mr. Tarapore, is an economist and he runs his own Multi-Language Syndicated Column. Mr. Tarapore's other column, which appears in The Hindu Business Line, is titled Maverick View.

The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Equitymaster do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed Terms of Use of the web site.


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