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.