A Year Of Services - FISCAL 1997-98

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Fiscal 1997-98 was a crucial year

for the Indian communications industry. It was a litmus year. A year of dividing the

serious from the non-serious players.

The year saw companies like

Harris Corp. and US West leaving their JVs to the hands of fate and packing up their

direct operations from here. Though the euphoria over the Indian communications industry

gave way to enough pessimism for many MNCs such as the above, the euphoria is not totally

unfounded.

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Interestingly, Indian

communications industry grew more than 30 percent last year, touching a new high of Rs

36,000 crore. The growth came in terms of services which made a major contribution. One

most identifiable trend last year was the emergence of the service industry. The year

1997-98 can be safely called as the year of services.

Cellular, the most acclaimed

value-added services, grew by leaps and bounds in subscriber base from the 3.39 lakh as on

31 March 1997 to settle at 8.82 lakh by the end of March 1998, registering an encouraging

growth of 160 percent. In the process, the cellular industry earned an estimated turnover

of Rs 1,250 crore. Though these numbers speak volumes of a relatively new service, there

were a few worries here and there. Impending payment of huge licence fees and continuing

low-levels of airtime usage were some of these.

Paging, another value-added

service, on the other hand, did not grow the way it was expected to. It grew to a net

subscriber base of 7.5 lakh from the previous year’s 5.33 lakh. And, made a total

turnover of Rs 200 crore. Lack of awareness and irrational policies of the operators are

to be blamed along with the callous attitude of the government for this dismal show.

For the VSAT industry, it was a

good year. At an estimated revenue of Rs 375 crore, most of the companies across the

industry witnessed 25 percent growth. And, the industry, with the prevailing conditions,

is expected to reach the size of Rs 700 crore by the year 2000.

The year 1997-98 also saw the

signing of licences and paying of the first instalment of licence fees by six private

basic service providers. Though two-three companies were expected to launch their

services, not even a single service did not take off from the ground. It is only this year

that Bharti Telenet has started its services in Indore in Madhya Pradesh.

After the initial mood of

cynicism among the radio trunking operators in the previous year, last year saw many of

them putting up networks and starting services. By the end of the current fiscal, the

industry is expected to have 10,000 subscribers in its fold.

Basic services and cellular

services were accorded infrastructure status. This fuelled the excellent growth of the

cellular industry.

On the public sector side, the

two PSU service companies–VSNL and MTNL–put together grew by 17.3 percent in

revenues. While the impact of VSNL came in terms of value-added services, MTNL tried to

spread its wings beyond basic services to cellular services in Delhi and Mumbai. It is

expected to start cellular services by the end of the current fiscal. ITI, the status

symbol of Indian telecom manufacturing, made a powerful comeback reaching breakeven after

incurring losses for three consecutive years. Another DoT company–HTL–did

extremely well last year and tested the foreign market successfully. Many of these

companies re-engineered their business processes and put emphasis on quality management.

DoT itself is estimated to have clocked around 20 percent growth in its total earnings.

As opposed to the services

segments, the telecom cable industry was seriously hit by lack DoT purchase. The onset of

various wireless and access technologies also aggravated the situation further.

Accordingly, these companies were forced to cut down their cable productions and move

towards diversification into other segments like power cables and LAN cables. Even

fibre-optic companies were not spared from this gloomy scenario. There are reports that

some of them may close down their business.

The other noticeable trend in

1997-98 was that of convergence. Indian IT companies strived to change their image of

hardware vendors by picking up the services trend. Several companies focused on

integration—network and systems. Many more were vibrant in CTI, and ERP kind of

applications. The borderline between telecom and IT was fast disappearing due to the

convergence phenomenon.

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providing and turnkey operation. These companies foresee the sweeping changes waiting the

Indian telecom industry and have positioned themselves to gain the maximum by adjusting

themselves to the changed environment.

The year also saw the country

come up with an Internet policy seeking private sector participation in taking Internet to

grass-root levels.

With globalization sweeping the

world, some of the Indian companies have gone really global. Companies like TCIL, ITI,

HTL, HCL, and NIIT made their presence felt in many more countries during the last year.

In the policy domain, we saw the

Telecom Regulatory Authority of India shaping up and starting to dictate terms. However,

of late, the Regulator has got into an on-going tussle with the policy-maker-cum-operator,

DoT. The latter has challenged many of the decisions of TRAI in the Delhi High Court.

Though last year was one of political

instability, some important desicions were taken none-the-less. One of them being the

announcement to constitute a National Information Infrastructure (NII). And, to end the

year with some consolation, we got a livewire minister in Sushma Swaraj. Now the reign is

in the hands of a young minister that symbolizes a new era. We hope her leadership will

deliver the communications industry the much needed acceleration in terms of policy

decision.