Loans linked to mobile bill payment?

Credit Info Cos Seek Access To Telecom Details To Create Complete Database

Chennai: Credit information companies are seeking access to payment details of mobile phone bills to enable a 360-degree view of customers credit history. Simply put, in an extreme case, if you default on your telecom bill, your credit scores could get impacted, thereby affecting your loan.

Credit information firms collect details of loans taken and repaid by individuals from various banks and financial institutions and form a database comprising credit history of the individual. This database is shared every time the individual seeks loans. As of now, the sharing happens only between lenders and credit firms. “Globally there is a strong correlation between telecom and banking defaults,” Mohan Jayaraman, MD of Experian Credit Information Company, said. “Getting access to telecom payments, besides other things like utility bills, will help us form a 360 degree view of the customer.”

In a nation where there are more mobile phones than bank accounts, sharing telecom details will help improve credit profiling borrowers. However, since privacy issues bar telecom operators from revealing details with outside agencies, data sharing can happen only with regulatory push from telecom operator TRAI and banking regulator RBI. “Telecom service providers are using the CIBIL TransUnion Score for making instant decisions on post paid mobile phone limits,” Arun Thukral, MD, Credit Information Bureau of India (CIBIL) said.

When a consumer applies for a postpaid telephone facility, the service provider will pull her/his credit score and credit history basis the information provided in the application. This information in the credit report and the score will enable the service provider to assess the consumer’s financial standing and assign an appropriate credit limit on the postpaid connection. As of today, telecom service providers do not share any data with credit bureaus.

“Several World Bank studies have indicated that inclusion of reporting of non-financial payment data (alternative data) like telephone bill payment and electricity bill payment records, prove extremely beneficial for making lending decisions-—specifically for the segment not having access to credit,” Thukral said. Sharing telecom payment data between credit information companies will help form a complete view of the individual. “While there are lots of positives in sharing data as a lot of first time borrowers can get profiled meaningfully. However, there is very limited negative aspect which may suggest a telecom default may cost you the loan. Banks will definitely take a calibrated view of telecom defaults for loan disbursals,” Experian’s Jayaraman said. He added that “the process can presumably take reasonable time because of the involvement of multiple regulators.”
Courtesy:
Rajesh Chandramouli TNN
http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Archive&Source=Page&Skin=TOINEW&BaseHref=TOIM/2013/04/24&PageLabel=22&EntityId=Ar02200&ViewMode=HTML

Telecom Cartel Killed Spectrum Auctions: CAG

GOVT FAILED TO ACT AGAINST THEM
The national auditor has alleged that telcos acted as a cartel in the recently concluded spectrum auctions and accused the government of wittingly or unwittingly aiding and abetting mobile phone companies by not acting against them. This is the second instance the Comptroller and Auditor General (CAG) has raised the red flag over the government’s spectrum policy, the first being in 2010, when it indicted the UPA government and former communications minister A Raja for causing a loss of up to . 177,000 crore by selling airwaves at a fraction of their original value.

CAG, in an April 9 communication to the telecom department, said cartelisation by telcos in the last two auctions had resulted in spectrum valued at thousands of crores being wasted. It also contended the failed auctions had led to the government losing out on funds. The national auditor’s intervention may create fresh controversy for the beleaguered UPA government as well as the troubled telecom sector. The absence of all major operators in both rounds of the auctions had led to speculation they had collectively decided to not participate, but this is the first time that an official body has directly accused them of cartelisation.

The spectrum sales were held after the Supreme Court last year quashed all mobile permits issued by Raja in 2008 and directed the government to issue new licences through auction. The first round of sales in November 2012 evoked a tepid response with the Centre garnering just . 9,407 crore from 2G spectrum bids, less than a quarter of what it expected. Close to 60% of the airwaves remained unsold. In addition, the government was forced to cancel the sale of CDMA airwaves, as there were no bidders for these frequencies. Despite reducing the base price, the government’s attempt to sell the unsold GSM spectrum in the second round in March ended in a failure after all companies pulled out of the sale process.

Sistema Shyam, the sole bidder in the sale process, bought 40% of the CDMA airwaves on offer at the base price. According to an internal note of the telecom department, CAG has based its charges on the fact that mobile phone companies had been demanding additional spectrum for years and had repeatedly said supplementary airwaves were necessary to meet Trai-prescribed service quality standards. Before the recent auctions, the Centre has not awarded 2G airwaves, largely used for voice services for over four years, and telcos had blamed the lack of spectrum for call drops, poor reception, slow data speeds for basic services among others. Subscriber Nos Questioned

But by failing to take part in the auctions and secure airwaves, telcos have negated their earlier position, the auditor said. It also pointed out that incumbent companies were catering to several times their earlier subscribers despite not getting any additional airwaves for several years. This has also led to the auditor questioning the credibility of the customer numbers reported by mobile phone companies and also the authenticity of the quality of services audits undertaken by Trai. CAG said if the government had enforced prescribed quality standards for mobile services set by the telecom department and Trai, it could have forced mobile phone companies to buy airwaves in the recent auctions. The government’s failure to act had emboldened telcos to demand further reduction in the base price in future auctions, it said.

Prior to the recent auctions, India had a followed a controversial practice of allocating spectrum based on companies’ customer base, and was the only country in the world that subscribed to this method. According to these norms, most mobile phone companies had been eligible for additional spectrum since 2008. At the same time, CAG pointed out that mobile phone companies may have been able to cater to rapid increase in their customer numbers without additional airwaves by using extremely efficient technologies, increasing the number of towers, or compromising the quality of their services. It has also said operators may not have required additional airwaves as they may have been inflating their customer numbers. The national auditor also acknowledged that telcos could be using their 3G spectrum secured in the 2010 sale process to offer voice services, enabling them to skip the recent auctions.

The telecom department’s internal note adds that CAG had sent 20 ‘inspection memos pertaining to Bharti Airtel, Vodafone and Idea’ on these issues and adds that the department was preparing replies for the same. The national auditor also used the example of Delhi to explain its position and pointed out that one operator had been catering to 91 lakh customers with 10 MHz in the Capital while another was offering services to just 26 lakh users with 12.4 MHz of spectrum and yet another was servicing 28.51 lakh subscribers with 4.4 MHz.
COURTESY:
JOJI THOMAS PHILIP NEWDELHI
http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Archive&Source=Page&Skin=ETNEW&BaseHref=ETM/2013/05/21&PageLabel=18&EntityId=Ar00101&DataChunk=Ar01803&ViewMode=HTML