alt="BK Syngal, VSNL chief" align="right" hspace="2" vspace="2"
width="177" height="220">The
high-profile CMD of the state-owned VSNL BK Syngal
seems unfazed. Though sitting pretty, he seems to be at the
receiving end for the time being. Recently, there were reports
about his involvement in derailing VSNL’s proposed GDR
issue.
Given the turmoil in the South-East Asian economies and stock
markets across the world, he seems to be on the right track. To
add to the worries is the growing demand to open up global
telephony and the US pressure to reduce the rates of
international calls to India. He has positioned VSNL to combat
competition in the future, making forays into many value-added
services. In an exclusive interview with Anil Joseph,
Syngal speaks about his plans and strategies to take on the
competition in the offing. Excerpts ...
Â
How are you reacting to the
demands to open up global telephony?
It is inevitable that around the world telephony will have to
open up and that eventually it will be an entirely free market,
driven by customer needs. However, I believe it is important that
it is opened up in stages related directly to the state of
development of the individual countries and their economies.
At present, we have a great many western and
other companies from developed countries which are all looking to
make money by spreading their services to the less developed
countries. These have been through their years of protection and
monopolies which allowed them to be nurtured and to grow to the
size they are and prepare for competition. However, they now do
not want to allow countries like India the same protection that
they enjoyed. They want to impose their state of affairs on us
when we are not ready for it. We support the decisions made by
ITU and the process for liberalization agreed in Geneva. We have
every opportunity to become a competitive global player alongside
the best of the developed world’s companies but we still
need a little more time to prepare for this. Our monopoly is due
for review in 2004 and we are confident that we will be ready by
then.
VSNL is threatening its
subscribers against using the Net for voice telephony. At the
same time, you are planning to offer telephony over the Net. Is
it a strategy to grab a major chunk of voice telephony market
before private ISPs enter the market?
VSNL has always supported and encouraged the use of new
technologies. Technology and its advancements are a part and
parcel of our life. We cannot condone the independent use of
voice on the Net at present because it is illegal since it breaks
our monopoly on international telecommunications. However, if we
offer the service, the monopoly is not broken.
Taking the broader view, voice on the Net has
all sorts of implications particularly in terms of costs of
providing the service and revenues, and this is true for all
international carriers world-wide. We are examining the case
carefully. I think a few years from now you will find that the
tariff rates will balance out and that the cost of an
international Internet voice call will be roughly the same as a
normal international telephone call. It will then become a matter
of preference and quality of service that decides which service
you use.
What about the plans of VSNL
to enter DTH and data service business in collaboration with the
US-based Intelsat? What will be the advantages to Indian
broadcasters and data communication services?
size="2">
The advantages overall to Indian broadcasters are that they will
be able to deliver a very high quality picture direct to
people’s homes through a new and cheap technology. The
customer simply has to put up a very small satellite dish (1.5-2
ft diameter) on his house. On the data side, the technology
allows interactive communication so the broadcasters can offer
value-added services such as telebanking, teleshopping/booking,
pay while you view, video-on-demand, and even have audiences vote
on shows, do surveys and polls, etc. ...
What is VSNL’s strategy
on settlement of rates for international carriers?
size="2">
Our strategy is in accordance with the ITU policy on settlement
rates, i.e. they are the result of bilateral negotiations between
international telecom service providers. VSNL does not recognize
the FCC and its target bands. However, we believe that
international accounting rates will have to reduce over time but
this should be achieved in a dignified and well-planned manner
over time at some 6-8 percent per annum.
It is important to remember that VSNL receives
just Rs 10 per paid international minute. The bulk of the revenue
goes to DoT. India has very low telephone penetration rate and
huge investment is needed to build up the network. Traditionally,
almost all countries around the world have used revenues from
international and ISD calls to fund the development of their
domestic works. It is only when these domestic networks are in
place that international call rates are reduced.
India is actually reducing rates ahead of the
usual schedule than that employed by the developed countries in
the past.
We have every opportunity to become a competitive global player alongside the best of the developed world’s companies but we still need a little more time to prepare for this. Our monopoly is due for review in 2004 and we are confident that we will be ready by then. |
Given the low infrastructure
provided, ISDN is expensive when compared to the international
rates ...
First of all, the local connection infrastructure and charges for
ISDN are the responsibility of MTNL and DoT. ISDN calls are
treated just like any other call and all our gateways have been
configured to handle ISDN happily. Our infrastructure for ISDN is
certainly not low.
In almost all services, economies of scale lead
to price reduction. Services and products are usually more
expensive when they are first introduced and less expensive as
demand grows and they are produced in greater quantity–just
look at the cost of cellular handsets at the start and now. We
have been able to reduce the cost of Internet access for the same
reason and look at what ISDN used to cost in the UK when it was
first introduced. I am sure this will happen in India too. In
fact, we have just introduced last month Internet ISDN services
at competitive rates.
Adding bandwidth to Internet
... What are the plans? .... How is it decided? ... What is the
cost for VSNL?
At present, we are adding bandwidth with MCI, Teleglobe of
Canada, Telecom Italia, and others. For example, at current
rates, a further 2 Mbps with MCI and Teleglobe costs $144,000 per
month. We shall continue to add such capacity as it is required .
What are the hurdles faced
by VSNL?
In the short-term, the hurdles we face are mainly in getting
approvals—the final signing needed to broadbase our Board,
and the meeting needed to decide the tenders for the proposed
regional hub, for example. These hurdles are exacerbated by
intense lobbying from private parties who wish to frustrate our
efforts. We also have some hurdles in obtaining sufficient lines
from MTNL/DoT.
In the medium-term, the hurdles are mostly to
do with preparing ourselves for competition and becoming a more
completely customer-oriented company.
What about VSNL’s plans
to offer domestic telephony services? What is being done on this
front? Do you really expect getting that opportunity?
size="2">
It is our long-term strategy to diversify into telecom related
service areas to broaden our portfolio of services and revenue
streams. On the domestic front, we have been looking at domestic
long-distance service provision which our network is well suited
to. Also, the work we are doing on mobile global satellite
services will allow domestic communication also, and we may
consider joining other companies to bid for local fixed line
circles. Inevitably, we want to keep our specific plans close to
our heart at this stage ... I am sure you will understand.
In reference to whether we shall be allowed to
enter, we certainly hope that we shall be given the same
opportunity as other players to bid for licences and that TRAI
will ensure that the playing field is level; and not skewed
either towards private or government companies but in the best
interests of the customer.
How is tariff planning done?
It depends which tariff you are talking about. International
telephony tariffs are the product of discussions with DoT and
bilateral negotiations with foreign carriers. Value-added
services tariffs are established based on discussions with any
partners we have, the cost of providing the service, and a
reasonable return on our investment and the service provision. We
constantly look at tariffs offered by other companies and when
economies of scale etc. allow us, we revise our tariffs
downwards.
Of course, TRAI will be more and more involved
in tariffs in the future.
Do you foresee VSNL’s
gateway access monopoly slipping out of its hands in the near
future?
Of course by 2004, I expect that the monopoly will go and that we
shall be ready for the competition. We have had repeated
assurances from government that our monopoly review will not
happen before that.