DE-MONOPOLIZATION: Move into the Fast Lane

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

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.

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)

  • 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.
    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?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?

  • 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.

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

  • 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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