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DE-MONOPOLIZATION: Move into the Fast Lane

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VoicenData Bureau
New Update

All

over the world the erstwhile monopolies, especially if they are

either government departments or government—owned

corporations, have been stubbornly opposing the restructuring of

the telecom sector the chief aims of which are promotion of

competition, customer care , and informatisation of society and

economy.

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Only a determined and

convinced political leadership can effect the reforming. This

has been proved in the UK, the European Union, Australia, New

Zealand, and Japan where the Prime Ministers and the

communications ministers acted as the prime movers and mentors

in their departments–educating and orienting bureaucrats and

the monopolies to implement the de-monopolization programmes.

Unless the minister acts

as the mentor, reforms cannot be effected . This is being amply

proved in our own country also . Sukhram had a mandate to

restructure the regime but he wanted to profit by the process,

profit for himself as well as the party. He acted as a mentor

but with an ulterior motive. The distortions in implementation

have been many but a beginning was made for the

de-monopolization of telecom.

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Jagmohan as the minister

for communications was a disaster. The techno-bureaucrats found

in him a champion and that too a moralist. His tenure saw the

maximum damage inflicted on the private telephone companies by

the DoT techno-bureaucrats. The Prime Minister himself had to

intervene, divest him of this portfolio and take over that

ministry himself with all the attendant mudslinging. Now we have

a new set of ministers. It is necessary that they fully share

the vision of the Prime Minister and the country in our

aspiration to become IT superpower. The fulfillment of this

vision totally depends upon ubiquitous and inexpensive

telecommunications all over the country. Many of the

liberalizing policies will come to naught unless the private

telephone and Internet service companies are helped during their

birth and growth. Unfortunately, the information that the

ministers are being furnished does not appear to be objective .

A number of biased views and statements are already afloat. A

few of these are commented below:

Village Public

Telephones (VPTs)

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  • Tapan Sikdar, the minister of

    state for communications, was reported to have taken the p-telcos

    seriously to task for their default on the commitment to

    open VPTs. The p-telcos are thus portrayed as profiteers and

    garners of licences without any concern for service,

    especially in the rural areas. But let us see the DoT’s

    own record in this regard.







    In the last five years, the DoT has consistently failed to
    achieve the target it itself set for opening the VPTs. Who

    in the DoT has been held responsible and how this default

    can be indicative of its service and not money-making

    mentality? If the mighty DoT with more than Rs 8,000 core of

    annual surplus, 25,000 exchanges, and with a claim for vast

    technical experience and rendering services day and night,

    has failed on its own commitment, how can we expect the p-telcos

    who don’t have more than two or three exchanges in the

    states for which they are licensed to open VPTs where they

    don’t have any network and significant investment in

    networks has been made impossible by their having to pay the

    mobilized money as licence fee even before they can put any

    network on the ground? n Another

    thing noteworthy is that the DoT consistently outperformed

    its targets in the urban areas. Obviously, this is because

    the urban public telephones produce lot of money; 30 percent

    of DoT’s revenues come from towns and cites. When the

    presumably service -minded DoT gives such high importance

    and priority to lucrative sectors, how are we to expect the

    embattled and financially crippled p-telcos to fulfil the

    VPT commitment?








  • n It is

    far less expensive and less investment -requiring for the

    DOT to install the VPTs rather than wait for the millenium

    to come to bless the villages with public telephone by the

    non-starter basic p-telcos which are only in a handful of

    states. If the DoT allows mobile p-telcos to open VPTs, we

    will have more of them in less time. Let the DoT keep a

    separate account of how much they are investing in VPT’s

    provision, how much is the subsidy they are giving and let

    all these deficits be made good from the future revenue

    share from P-Telcos from the licence and entry fees and

    revenue shares from the p-telcos. This is far more

    honorable, responsive and people-caring measure, than simply

    defaulting on the VPT targets by the DoT itself and then

    blaming the p-telcos for not doing their bit.

Telecom

Revenue Sharing

  • That some

    members of the TRAI differed from the majority

    recommendation that the p-telcos may share 5 percent of

    their revenue with the government, holding that the revenue

    share could be around 15-16 percent is amazing. Firstly,

    revenue sharing is unwarranted. Private couriers who compete

    with the perpetually deficit-ridden postal department do not

    share their revenues nor do they have an entrance/licence

    fee. Similarly, the private airlines and independent power

    producers do not share their revenues with Indian

    Airlines/Civil Aviation Authority and the State Electricity

    Boards or the NTPC respectively. Why is it that the p-telcos

    alone are required to share their revenues or pay licence

    and entrance fee? It is educative to note that the revenue

    sharing by p-telcos is proposed by the operator-licensor DoT

    but it itself does not share its revenues. In the 15-member

    European Economic Union, the p-telcos share mere 0.08

    percent of their revenues and the share is utilized to cover

    the costs of licensing and regulation and for nothing else.

    In Thailand, there was a revenue sharing agreement but five

    years into the business, the p-telcos have moved the

    government to convert their revenue share liability into

    equity of the government because they find that with revenue

    sharing of a significant amount, their business is not

    financially viable. The NTP’94

    and NTP’99, as well as the ISP’98, and the

    pronouncements of various ministers, envisage that

    telecommunications services, just like electricity should be

    affordable to ever larger number of India’s people. Why

    then should costs like revenue share (and entrance fees),

    not at all related to the provision of network and services,

    be imposed on the p-telcos, making the services offered by

    them costlier than what they could be? The argument of the

    minority of members in the TRAI that even with 15-16 percent

    revenue share, the p-telcos could be viable betrays the

    traditional animus of civil servants brought up in a

    monopoly, permit-licence-quota system, against

    non-government enterprises. It is tragic that the TRAI is

    consisting of retired and aged persons some of whom who are

    least familiar with economics, finance, business, sociology,

    consumer welfare and public policy making. It was expected

    that progressive governments not rooted in the philosophy of

    state capitalism equated to socialism, would at least have

    regulatory bodies staffed with young, energetic,

    liberalizing, progressive persons of eminence. Most of the

    former bureaucrats are just by their very training, practice

    and philosophy not equal to the task of a proactive,

    consumer and company friendly and monopoly restraining

    regulation.







  • The TRAI and

    the people of India should demand that revenues from telecom

    usage should not be diverted to cover government’s

    deficits but that they are utilized for the extension to and

    support of telecom and Internet services.

ISP Gateways

  • DoT has

    constituted a standing committee for clearing the

    applications of private ISPs for their international

    gateways. The committee includes Department of Telecom

    Services (DTS)–one of the Internet Service Providers–while

    it excludes other private ISPs. This is discriminatory and

    will be destructive and obstructive of the implementation of

    the government’s most lauded ISP policy. Fairness requires

    along with the DTS, the chief executive of the Internet

    Service Providers’ Association (ISPA) should also be

    included in the it. Coming closely on the heels of the

    including a serving full-time member of the DoT/Telecom

    Commission as a member of the TRAI, the nomination of the

    DTS into the standing committee raises doubts about the

    fairness and bonafides of the DoT in honest implementation

    of the government’s policies. The action of the DoT

    strengthens the demand that licensing should be removed from

    the DoT as long as its telecom operations including Internet

    Service Provision are not corporatized and its equity is

    disinvested to a significant extent by the government. Internet

    Service — Reduce Dial-up Access Charges

    • End of

      monopoly and introduction of competition in the provision of

      Internet services is having excellent results benefiting

      customers and the country. Prices have been falling (VSNL

      cut them third time on 27 December 1999). Best lowest

      tariffs are now as low as under Rs 11 per hour of usage in

      contrast to Rs 40 and above per hour in the days of

      monopoly. However, the cost of dial-up access at one unit

      call charge of Rs 1.20 per three minutes amounting to

      Rs.25.20 per hour is more than double the Internet usage

      charge per hour! This is fantastic and such expenses do not

      obtain anywhere in the world–Rs 25.20 per hour as

      telephone charge as against Rs 11 per hour of Internet

      accessing. The dial-up access charge must be brought down if

      this country is to benefit from Internet more extensively.

      Ultimately, competition in local telephone services will

      have the same beneficial consequences of reduced prices for

      dial-up access also, but in the meanwhile, the least that

      the citizen-caring government is to do is to rule that

      dial-up access should not be more than Rs 10 per hour for

      all educational institutions, libraries, primary health

      centers, and students from the high school and upwards. This

      special rate may also apply to all rural subscribers to the

      Internet, whether the service is from DoT, MTNL, VSNL or

      private companies.

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