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.

Private
Telecom Operators in India
OperatorNo.
of Circles
Circles
Reliance18All
circles except Jammu & Kashmir, North-East and Assam
Tata
Teleservices
5Andhra
Pradesh, Gujarat, Delhi, Karnataka and Tamil Nadu
Bharti
Telenet
5Madhya
Pradesh, Haryana, Delhi, Karnataka and Tamil Nadu
Hughes
Tele.com
1Goa
and Maharashtra
Shyam1Rajasthan
HFCL1Punjab
Source:
ABTO

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

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