DE-MONOPOLIZATION: Move into the Fast Lane

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. 

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. 
  
  
  
  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?
• 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. 

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.