Indian Telecom is a Farce

The old adage of the business rule is that it takes ten times more cost to earn a customer than to retain one. I am sure no one high up in the mobile company has ever heard of this saying. Why spend crores on celebrity endorsements and try to entice people with empty promises? However, since we do not have a regulator worth its name, this routinely is ignored. That is discussed later.

GSM mobile companies started their services as a lifestyle and luxury product. I remember the atrocious rates they used to charge as a premium. The interest of the consumer be damned. Perhaps at that time this industry was besotted with high taxes and an indifferent government regulation. This did not help the matters at all. In fact overestimating the demand and the invisible middle class potential, these companies fell over each other to buy out the spectrum and license. Much of the details remain out of scope here. However, fact of the matter is that until to date, voice calls remain prohibitive, perhaps with the exception of Reliance.

GSM companies have tried to communicate their message through various means and make people adopt the cell phones more out of necessity. The central aspect of any mobile service remains the billing. This one area remains ignored. There have been many complaints of customers who have been facing the wrong billing cycles or difficult to understand across the board tariffs. Incase one is not happy with the settlement, the only way out remains that of the consumer court. One knows how long the court cases can linger on.

The different plans that seem to be flooding the market are in a way designed to fool the customer in parting money more than it’s due. For example, much of the value of recharge card is taken upfront. This almost amounts to half of the talk time value. If the needs to be connected there is no choice.

The private operators tried very hard to prevent the entry of BSNL as the third service provider. However, the entry was delayed. The main reason why this was done so because the operators has so far concentrated only on the towns and cities which had potential to cough up the exorbitant charges put to them. Over the past few months there have been reports that BSNL’s sim cards are not available or only at high premiums. I fail to understand the artificial scarcity as well inattention of the persons concerned. This is perhaps an unproven allegation that private operators have so far tried to stem the spread of BSNL or cause frequent disruptions thus an insider job. However, it remains unproven but anything is possible in this country.

This coupled with the ineffective network, which dropped after one moved out of the city limits. Call drops and frequent disconnections were routine. Adding salt to the wounds was the problem one had to face while dealing with a vast army of morons. The so-called customer care executives.
Surely, logistics define the scale of operations. Yet a careful analysis reveals that much of the spend is in advertising little realizing that word of mouth advertising is much better than hiring celebrities to endorse. What of those fancy MBAs these companies hire? This has indeed spawned a whole subculture of studies to analyze consumer-buying patterns. Yet the media agencies apply little brains when it comes to working on the actual brass tacks. That is another sob story.

Hutch advertised with minimal investments with the result that it has the highest Average Revenue per User (ARPU). Given the fact that Hutch laid much emphasis on the quality of the network. However, this is from the media reports and I have no reason to take them for their word. Since the accounts of these private companies are not publicly listed, it would be difficult to prove the extent of their claims. ARPU is sacrosanct in the mobile industry and each operator tries to shore up its ARPU given the need to have returns on investments.

The recent controversy over the increase of the FDI in the telecom sector is again an unwise decision. This is because Indian companies are not content to raise money through the Indian banks or lending agencies for reasons best known to them. In fact, the decision not to hike the FDI limit from previous 49% to present 74% was taken in the interest of the nation. This is because the nature of the telecom is that it is a crucial industry and in the event of the national emergency, the foreign investor would sell its stake in distress and devalue the national currency. This fact is somehow not apparent to Bharti Group that was at the forefront of calling for increased investment. Perhaps to a host of other operators also.

The Calling Party Pays regime or free incoming has resulted in the hike for the landline rates. The biggest windfall has been for the BSNL who owns the largest number of lines. This has helped them to cross subsidize their mobile operations as well as shore up the balance sheet with the free money of ADC regime levied on the mobile companies.

Despite the spread of the network, the roaming costs remain the highest for the GSM companies. I fail to understand the tactic arrangement these people have among themselves; the fact remains that it is an open loot of the customers. The Cellular Operators Association of India is in constant tussle with the fixed line of operators. As I had mentioned, it is just another bunch of trade unionists who have platitudes to mouth to media.

Data is one big issue with GSM. GSM remains an uneconomical way of providing data services as it hogs a lot of spectrum. This means that the voice spectrum is affected, which would lead to the detioration of the quality; and spectrum is a scarce resource. Voice remains the main bread and butter of the operators. Hence, the best way is to price the data component higher than average (totally unjustified) and sell the same as value added service. This helps them to set up a differential feature from other networks. However, still way to expensive. Contrast to this, is the CDMA, which can support high network speeds of up to 144 kbps. This has explained the success of Reliance’s Fixed Wireless Terminals, which have an inbuilt modem too. There is no doubt about the superiority of the CDMA over the GSM platform despite the claims of the operators.

The only way to make these operators make the services far cheaper than they are is to complain to them. Not in the Customer Centre because those poor brainless sods are overworked anyway. Write back to the top heads and the TRAI. Fight them on the facts and refuse to become a willing victim to their loot. TRAI needs to get its act together and exert its superiority. Sadly, it has been reduced next to nothing after constant court rulings cutting its jurisdiction. Shifting over to other operator is also not feasible because none of them offer any real differentiator on service upfront.

So much for Indian Telecom Revolution. Just eyewash. A farce.

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This post was submitted by Dr. Abhishek Puri on the Broadband Blog on Techwhack.

How to change the BAND into BROAD

Hi all

We all have been reading this and many other forums on the condition of broadband in here (INDIA).
Even a petition has been filed but i am 100% sure TRAI won't be able to do anything.
We need some other way to ensure that these ISP's provide us with broadband. Maybe go on Gandhi jee's foot steps..
Can we have some unique ideas on what should be done so that we can bring these ISP's to their knees.
Pour in your suggestions(Bucket ful)

Source: India Broadband Forum

Experiences with BSNL and their Internet Connections

BSNL’s perfidy is legendary. They have monopolized the services to an extent that they resort to anti-competitive policies. More on that later. Over the past few years, Internet has played a dominating role in the way people access resources or connects to others. It is a whole new way of communication. I remember much of it was made when people talked of getting on the information superhighway. Internet access was controlled by VSNL, which remained the sole service provider way back for a number of years. High access charges remained the order of the day. Being the only service provider meant that it had no intention to improve the access. This underwent a qualitative change when the VSNL was sold off to Tata and BSNL stepped in to provide the services.

Leopards do not change their spots at all. Internet access was taxed heavily and the access charges remained all time high. In fact one of the highest in the world. This was marked by frequent disconnections and abusive “Customer Support Staff”. In fact, these idiots have these fancy names, which do no justice to the purpose with which they are hired for. Early on BSNL found out a way to manage the whole charade and signed up the customers who often were hampered by lack of choice or high cost option of other ISPs. Much of the reason was that their bandwidth was provided for by BSNL who charged them high carriage access fees. This ultimately was passed on to the consumers. Why was it so? I believe it is the scheme of the things that these government officials need to comfort themselves for shoddy services. No one has questioned them on this count at all.

This underwent a rapid change when the telecom sector was opened up for private players. Overnight BSNL’s thrust was to hold on to customers. They introduced a line exclusive for Internet access for about Rs.500/- per month. This was done in the name of the public service. However, a closer analysis revealed that BSNL’s officers were jittery about falling revenues and shift towards the other private payers who needed to woo for their own sustenance. Each of the ISP was provided for with a digital number access starting off with 172XXX and the line for exclusive internet access was restricted to that number only.

My love hate relationship with BSNL started with that connection. It was during my frequent complaints to the Internet section that shed light in the innards of this organization. Repeated complaints had no effect on the same. I had to email to the top heads of BSNL’s headquarters; some of them surprisingly responded. Indeed, barring a few honest do gooders, it is staffed with unfortunate imbeciles who cannot even type in the URL in the address bar. This was perhaps the reason that repeatedly my mails bounced back. Once the complaint landed on the table of the node in charge (insider story), he scampered off to set my connection to the desired level. Such is the power of being heard after complaining.

In my city, VSNL had happily launched their services. However, I could not access through my line for exclusive internet access because it was barred. However, in the initial clause it was clearly mentioned that all numbers starting with 172XXX would be provided for. Complaints to the relevant staff had no effect. Things took an ugly turn when the General Manager was caught in a corruption scandal. Thereafter the policies went out for a toss. It did make headlines in the local newspapers but that was that.

Ultimately, I sent across a mail to the VSNL to try to follow up on their level. However, in the reply fit for an idiot, they repeatedly mentioned that BSNL has blocked the access. This was in fact the same issue that I had highlighted. Subsequent emails went unanswered. Now I hear that by month end the connectivity would be provided for.

VSNL is spending a huge amount of money in staffing those people who do not deserve to be there anyway. I fail to understand how do these people get hired in the first case. That’s a mystery wrapped in an enigma, which has clearly no answers.

The above account is first person one. Repeatedly I have had complaints with the phone line, which only got resolved by knocking the telephones of the higher ups. Why are these people not accessible when they are supposed to be at all times? BSNL has set up a mechanism wherein each lineman has to report back the action taken report at the end of the day for resolution of customer complaints. This invariably gets faulted with no action being taken against the defaulting linemen.

Why this happens is beyond my reasoning.

The biggest fault is in the attitude that reflects the Indian society that does not reward merit and encourages inefficiency. Many a times I have faced enough hassles against those people who do not match up to the work they are expected to do. BSNL is no different. Perhaps the major reason that it is a government organization, which demotivates the staff even more. I cannot name names but in my interaction with the various levels, I have come across brilliant officers who have their hands tied because of the mediocrity around them. In fact, for the broadband launch there have been extremely efficient people working behind the scenes who have toiled day in and day out to launch the services. However, what did them in was the lousy package of prices, which seems to be beyond their control. The end mechanism has to be effected by the junior level staff, which has no clue as to how to go about. This reflects on the entire machinery anyway. I had earlier mentioned that BSNL has indeed set up a world-class infrastructure for broadband access. I have come across real people who have sought to make the best of the available resources and provide a decent service. These examples remain far and few though.

One cannot change the entire system overnight. This is not a log of my frustrations in here. However, an honest appraisal that people who are reading this ought to take initiative and question the same people who are supposed to act and make an effort. Falling customer levels and increased focus on efficiencies only would make these people wake up from their deep slumber. I shall try to rebut their claims with action on the ground. It is this way only that a change can be brought about in the same organization that has been funded by huge amounts of taxpayers money. We seek answers and soon.

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This post was submitted by Dr. Abhishek Puri on the Broadband Blog on Techwhack.

Telecom Muddle in India - Part 2

Over the past few years there has been supposed expansive growth of telecom in this country. For the same reason it was envisaged to have a regulator for this growing industry. Telecom Regulatory Authority of India was hence set up as an autonomous body in 1999.

TRAI has clearly failed its objectives with which it was set up for. It has perhaps become a paper pushing organization in a permanent intellectual rigor mortis. Occasionally it breathes life into itself and then we hear some active pronouncements, which are invariably turned down. I was happy when they had suggested the policy paper on the spread of broadband in India, whose coverage remains pathetic. However, it was comfortably turned down by our “dynamic and young” Minister of Telecommunications. In the scheme of the things, they quoted some obscure studies and thwarted an excellent opportunity to improve the infrastructure in “IT Superpower” of Asia.
What do these people get in protecting the monopoly that is harming us contrary to their pronouncements? I believe it is the patent insecurity complex that they are saddled with and refuse to see reason howsoever good it maybe. Perhaps it has become a part of the system to ignore the same electorate that voted them into power in the first case. None in the public eye ever wishes to be asked uncomfortable questions that they wish to avoid at all costs.

Department of Telecom and its two daughters BSNL and MTNL have legendary notoriety. Be it the customer care where there exists none or the idiotic telecom pricing which is inflationary and anti economic. The main reason is that they have refused to look beyond their cobwebs and officials used to the cushy life that only son in laws can envy. All at the taxpayers expense. It is for the same reason that media and self-styled experts refuse to ask them uncomfortable questions and thereby effect policy change. I was appalled when the media happily reported the launch of broadband and conveniently ignored the bastardization of the resources. Not even one single daily ever bothered to ask the way pricing had been done. Why is it so?

Another aspect of this great scheme of things is the constant tussle between the telecom operators and their respective unionization. One is the Cellular operators and the other is the fixed line operators. It is the same thing as we see on the streets but with a difference. These people ride in sedans that have astronomical price tags and regularly haunt the five star hotels. They own the media by giving them handouts or coercion so that their voice is heard the loudest in the corridors of power. To confuse the customer they have a surfeit of tariff plans and profess to do everything for the customer. Even though the whole thing maybe a charade, they seem to get away so easily that it is surprising why TRAI ever exists in the first place. Again being paid for indirectly by honest taxpayer.

The growth of telecom is a notional concept here in India. I had earlier mentioned that figures are routinely inflated and claimed and counter claimed to improve the valuation of the company. One needs to see their claims with trepidation. Why the customers in effect pay and subsidize the government behemoths in form of Access Deficit Charge? BSNL and MTNL remains overweight, over bloated and lethargic company, which needs money to sustain its uneconomic day-to-day expenses. Who cares if it is coming for free? All they have to do is to make noise. I wish that things change and they ought to be sold off and privatized. Or else they should stop whining and complaining about the rural telephony (for which the ADC is supposedly charged).

It is reasonably clear that ADC is unviable and hurting the interests of the consumers. In fact, Universal Service Obligation fund has been set up to subsidize the cost of the operations in economically unviable areas. I have read somewhere that BSNL's utilization remains nil out of that fund. Why so?

The benefits of robust telecom infrastructure remain untold. We would gradually move towards a knowledge-based economy. South Korea demonstrated this by being the most wired nation of the world. At present 30% of the GDP is transacted online. It works to almost $148 million dollars! Its interesting to see that the broadband penetration in Japan was almost nil till a few years back. In fact same as India. However, keeping the larger interests of the nation in mind, Japan explored all the avenues and opened up its sector for rapid spread of the same. It is in fact now lagging only behind US in the reach of the broadband services. US passed the bill to ensure that broadband access is universal by the year 2007-08. This is the kind of commitment that is needed to speed up the reforms. Yet all that we hear is the fictional number of people who would supposedly sign up for broadband. This is in the range of millions! Oh my God! How is it possible with such expensive and pathetic tariffs?

I find it strange that majority of the broadband access thrust is in the major cities of the country and ignoring the smaller towns. It clearly flies in the face of the logic. Corporate customers tend to pay the most but they also manage to extract the best deals from the service providers so that it works out to be cheap in the long run. No one wants high operating costs that reflect in their yearly statements anyway. . Businesses suffer losses on the downtime and penalty clauses are inked in the deals for any downtime. However, it is the individual customers who would be willing to pay for a cheap and reliable service and the real potential exists here. It is strange the MBA s from leading institutes of the country is in effect chasing the same set of customers who would otherwise sign up anyway. The real skills of their marketing would be tested in the small cities and towns where they have to create a robust demand. This business of telecom, as everyone knows, remains of long gestation and profits on investments accrue only after a few years. How can they be so mentally challenged to this fact? I am further more surprised that these mental retards are paid huge salaries without producing any effect on the ground. Here is this concept of First Mover Advantage. Move in first, capture the market and have loyal customers. Simple isn't it?

I suggest that tax holidays be given to promote the same on the lines of IT industry. The fact that ISP license is available for a token fee of just Re 1/- in this country has not had many people lining up to set the services. This reflects the high costs of the bandwidth and monopolistic attitude of the operators (VSNL, Reliance, and Bharti) who operate the Internet gateways. The hardware to access the same needs to be made cheaper. The corporations do tend to donate used computers but their impact remains minimal. In fact, I came across a news report that in a village in Kerela, a silent revolution is going on to educate the people in use of computers. One learns and teaches five others. It is here in these ideas that the prospects remain bright. The spread of the Internet would foster the demand for educated people operating the systems. It seems to be a perfect avenue for self-employment by setting up access points just the way STD revolution spread across the country in the 1980s.

The benefits are unlimited but it takes a person with a vision of come to conclusion about that. Sadly, the levers of power are wrongly engaged. I hope that situation on ground improves soon for the betterment of the nation as a whole.

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This post was submitted by Dr. Abhishek Puri on the Broadband Blog on Techwhack.

The Great Indian Telecom Muddle

The Great Indian Telecom Muddle

The telecom is in a mess in this country. What gets me is the hypocrisy behind the announcements. We lack behind the developed countries in the extent as well as execution of the same but cover up our inferiority complexes with the tall promises.

Here are the series of the truths that would give you the extent of the rot.

1) The telecom base is increasing:
The fact is that it is not increasing at the rate it is claimed to be growing. The operators routinely lie about the number of the subscribers. There is no standardized way of counting the number of subscribers. The fact is that more the number of the subscribers, the better are the valuation of the company. This maybe important when the company is planning to raise funds from the market to fund its expansion.

2) Tariffs are the lowest in the world:

This is blatant lie since the tariffs need to be calculated based on the paying capacity of the market overall. The media, ever the faithful lapdog of these bozos merely repeats what the wise and intelligent men seem to mouth. Part of the reason is utter incompetency of the people reporting. Hence, no tough questions are asked. Favours received and favors given. Routinely these companies seem to give out press handouts or a press conference. Announcements made and the news is published.

Tariffs are high keeping in mind the service tax that the government imposes on us and the all-controversial Access Deficit Charge that needs to be paid to fund the inefficiency of BSNL and its cohorts. It is all in the happy family with each other feeding on in public but partners in crime in private.

3) Broadband broadband and more broadband.

I d give you an analogy, which would explain the current mess. Reliance is the largest producer of petrochemicals in this country. The fact is that they have been able to manipulate the prices to their advantage. The import tariffs remain high, which makes it unviable to import the same. The prices remaining high mean that they act as CHOKE points in the whole system. Production and distribution remains in their hands, which jacks up the prices.

The same analogy applies to bandwidth constraints artificially remaining high. VSNL remains the choke point for the gateways. Hence it means that no ISP otherwise is in a position to lobby for lower prices or look for any alternatives.

What it means to you and me? It means that prices for bandwidth remain high and the access suffers. It is a double whammy anyway. Everyone wants to make profits by hook or crook. Hence no broadband worth its name in this country. I have mentioned the same in my earlier post. This remains the telecom muddle.

A further reflection of the same. Traditionally, the operators depending on the size of the order, for the setting up of networks, are able to sweeten the deals for themselves and the final cost turns out to be very low. However, in part they are to be blamed for bidding outrageously for the telecom licences. This ultimately led to high prices.

The government in its own scheme of things changes the rules to suit the player in question. It depends on the lobbying potential of the operator in question. I was amazed at the Unified licensing being introduced after Reliance came in the picture. It was all made to look as if it was imminent.

The private operators in their licenses had specifically mentioned the setting up of rural telephones. Since it is economically unviable to maintain, the onus was on BSNL. It is now extracting its pound of flesh in the form of subsidies in the name of Universal Access Funds. It is very convenient to forget that it was our TAX PAYERS money with which the whole thing was set up. Indians were taxed to death to fund the expansion of the telecom network, which remains pathetic to date. It is no mean achievement if the whole country is wired up. However, it does not give exclusive right to BSNL to refuse to open up the local loop for broadband in order to protect its own monopoly.

The fact is that anti competitive policies deny the fair share of access to citizens at an affordable cost. This despite the fact that we have no say in the policies because that’s the way these governments have functioned. The democracy is a pipe dream.

If this makes for a pessimistic read, there is enough reason to despair. However, the government needs to do its bit. The tax structures need to be rationalized. Impetus to be given to handset manufacturing in this country, which is currently imported. Moreover, of course some one needs to shut those sarkari imbeciles and make them aware that their policies are having a negative effect on the spread and growth of services. Perhaps they could act less greedy for a change. Media needs to look into itself and realize that it has become a cesspool of outmoded and outdated ideas. For a change, they could report with much more conscientiousness and having head on their shoulders. That is the only way one could get out of the muddle. The great Indian Telecom Muddle.

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This post was submitted by Dr. Abhishek Puri on the Broadband Blog on Techwhack.