So what went wrong? Paging service providers point their finger at the cellphone. To begin with, the price difference between the pager and the mobile has steadily narrowed. "When we started out, the monthly rental for a pager was Rs 150 and for a cellphone it was Rs 600. Today, cellphone rentals are Rs 475, while for paging it's Rs 300," reveals P.N. Uppal, secretary general, Indian Paging Services Association (ipsa). Paging operators complain that while generous government packages have allowed cellular service providers to bring tariffs down, the paging industry has been left high and dry.
Cellphone operators had 10-year licenses, but were allowed to migrate to revenue sharing after three years. In effect, this meant that from the fourth year onward, they were to pay the government about Rs 150 per month per subscriber instead of the earlier Rs 500. License fee arrears were calculated only up to August 1999. This was a tremendous boost—rentals came down even to Rs 200 in smaller towns. Call rates fell from the initial Rs 16 to about Rs 5 a minute. Paging operators too moved to revenue sharing after three years with five per cent of total revenues to be paid as license fee. But this did not bring much cheer—the operators' contention is that because of the immediate competition from cellphones, they were not able to build a subscriber base. Further, thanks to a trai financial feasibility study, they had to increase rentals to Rs 300 in 1999.