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.