Smaller Telecom Operators in India

In the complex telecom muddle, there are a few independent operators that have stood the test of time and branched out on their own. However, the biggest drawback is that I cannot comment on them because of simple reason that I have never ever used their services. Over the period of time, telecom policy was designed to give equal representation to anyone who could sign up for the licenses and collaborate with a foreign telecom company.

Most of the independent operators survived the hostile takeover bids in the name of consolidation, especially by Airtel. In fact, Airtel has consistently raised money and diluted its stake to be “aggressive”. All in the name of expansion and ramping up numbers. Independent operators like BPL and Spice have so far stood out.

Spice has a stake in Karnataka and Punjab. However faced with falling customer base, it decided to market its value added services with huge amount of advertising splash. The network remains pathetic and I would rate the customer care as below average. As for BPL, all I know is that they remain mired in family wrangles, the trouble spot between the son in law and father in law. It was recently featured in the mainstream media too. Interestingly, both of these operators have branched out in handset manufacture. Perhaps to offer low deals on new connections and keep the overheads low.

Idea remains a study of contrasts. Again, I have never used Idea ever. Yet I do know that Tata's have a stake in the same. This goes against the accepted grain of logic because Idea is pitted against Tata's in the same circles trying for the pie of customers for GSM and CDMA.

There were some rumors in the market that Idea may be sold off to some independent operators or those having pan Indian presence. Possibly Hutch. Obviously, these remain exactly that-rumors. I have a feeling that Idea may be sold off to some kind of a consortium in the near future. A consortium, which can consist of Japanese players or Russian operators. Possibly European too. It is strange that despite the 74% FDI limit, there have not been many telecom companies lining up still. Last heard, NTT's Docomo may enter the Indian market in a big way. This may mean that promised acceleration for the 3-G networks may be earlier than expected; the cut off date was about end of this year.

The fact is that most of the earlier starters had so far staked out in the cities and metros where they milked the consumers. Rural expansion is tricky, given the expected low costs of recovery and infrastructure risks. The other players so far limited to South India are Aircel promoted by the maverick investor Chinakannan Sivasankaran, who sold out his stake in the same. He had earlier invested in Dishnet to promote Internet through Digital Subscriber Line (DSL) and sold that to Tata, which has this under the brand name VSNL broadband. He is now promoting Dishnet Wireless in a big way. Arguably sniffed out an opportunity in North East, which is relatively under served, including parts of Uttar Pradesh. In what could be a money-spinner for him, is good for the customers since he promotes his ventures using a lot of hoopla. I am sure he is going to make huge amounts of profits for himself after he sells out. Interestingly he has opted for GSM. In any case, it would make much more sense to have 3-G networks ready since they can accommodate far number of subscribers in the same spectrum for voice calls.

Coming to the fixed line operators, Airtel has a sizeable customer base apart from BSNL. In fact, Airtel is spreading itself over the other circles, as it needs scale rapidly to make profits. The primary reason is that it knows that much of the future revenues would come from the data services. This is in contrast to HFCL Connect, which is currently localized to Punjab. However, the fact remains that it is on the verge of the sell out if the market rumors are to be believed. Their fixed line telephony is basically pathetic being let down by lousy services and CDMA is limited to a few cities only. Despite their claims, I do not have anything to recommend them about. Their DSL remains very costly. In fact, with just a download limit of 400 MB on DSL! This fact is generally not known to most of the people outside the state. I believe that recent advertising binge is surely for ramping up the customer base and they are eventually looking out to sell off to Airtel, possibly. They were in talks with Tata's recently, most likely for their Internet division, which for some reason did not work out, and talks broke midway. These are again market rumors, which have not yet been confirmed. Yet they do give an indication for the way telecom market is moving across.

Do we need these smaller players? Well the answer is yes and no. Smaller players lack the marketing muscle of the bigger ones. They are encumbered to localized regions and cannot offer economies of scale. However, the smaller players can offer faster customer response times. Sadly, this fact has not really reflected as far as Connect is concerned. I have mailed and personally talked to the people in charge for extending the services to my area, which they consistently refuse to do so. I gave up in disgust. However, I was lucky enough to try out their Internet services. Given the paucity of customers, the access speeds are better in both dial up mode and the “broadband” services. Still the Internet access is way too expensive.

This more or less is the round up of the existing operators in India. It remains to be seen as to how they scale up to the challenges in the future.

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