A Question of Answers

Had it not been for revenue-sharing, the private telecom industry would not

have existed, says SC Khanna, secretary general, Association of Basic Telecom

Operators (ABTO). True. Have a look at this: 31 licensed circles apart from the

incumbents–Bharat Sanchar Nigam (BSNL) and Mahanagar Telephone Nigam (MTNL)

with private companies having a subscriber base of over a 5 lakh. If this number

sounds too tiny, think of the days when telephones were synonymous with the

telephone department in India.

Soon

after Bharti announced its plans for basic services coupled with long-distance,

Bharat Sanchar Nigam (BSNL) slashed rates and announced that it would remain the

cheapest service provider. Today, those in metros like Mumbai, Chennai and Delhi

have many options. Is this what one may call the liberalization of the telecom

sector?

"Why not? The number of telephone lines has gone up", reiterates a

department official. There are about 317.2 lakh Direct Exchange Lines (DELs) as

of January 31, 2002 and about 4.5 Lakh Village Public Telephones (VPTs) today.

"Policy reforms have ensured that an environment for growth of the telecom

industry has been created. As a result, the sector has started to grow rapidly

and the benefits are reaching the people. It is expected that the new

environment will catalyze the national growth and facilitate world-class telecom

services", adds the official.

It may so happen that initially, BSNL loses out around Rs 3,000 crore in the

first six months after the reduction in tariffs. The incumbent operator had an

annual revenue of Rs 12,000 crore from STD calls alone. However, in the

long-term, once the traffic grows, the revenues are expected to double.

The National Telecom Policy 1999 came into being with a single point agenda

to increase the tele-density of India, which was at that point of time around

2%. The actual implementation of the policy that talked about a level-playing

field with more and more number of players in the basic services segment, has

just begun. Finally, factors like limited mobility, a fourth operator in

cellular and competition in basic have happened. However, the basic service

operators are facing litigation from the cellular operators who feel that

limited mobility may eat into their revenues.

But, today we have only about six private operators offering services across

the country–Tata Teleservices, Hughes Tele.com, Bharti Telenet, Shyam,

Reliance and HFCL. The question that arises today is, has the telecom industry

finally started to chew the ‘liberalized pie’? The answer is ‘Yes’ and

‘No’. All the changes happening in the industry will give Indian customers

cheap mobile phones and low STD rates. For the first time, the customer has

become King and for the first time, the concept of telephone-on-demand is

catching up with the state-owned operators. Not to mention the linemen with

pagers for round-the-clock service.

Today, India’s teledensity is about to reach four per hundred and is

heading towards 15% by the year 2010. Industry analysts feel that unless the

industry sees some revolutionary changes in the decision-making process of this

sector, it will not see huge investments pumping in. At the same time, BSNL has

been losing out in its profitability in the last couple of years. If this is any

evidence of progressivism, the Indian telecom sector has made a major comeback

after the rough weather it was facing. In the words of N Vittal, Chief Vigilance

Commissioner (CVC) and the former DoT secretary who was the prime mover of the

1994 policy, "You should allow the goose that lays golden eggs to grow. If

you squeeze it as a gosling, it won’t work."

S Lakshmi in New Delhi