PRIVATE BASIC SERVICES

On

the face of it, everything appears to be going wrong. The long

distance policy is yet to be finalized. There is no sign yet of

the new licensing for the remaining circles. There is virtually

no regulator. The announcement of the minister of railways and

the subsequent steps by Indian Railways has made many a plans of

Domestic Long Distance (DLD) hopefuls go astray.

Optimism in

the Air

Yet,

there is optimism. So what if it is a spillover from the dotcom

craze? The private basic service providers are quite hopeful

that the new regime of revenue sharing will bring back their

nearly lost fortunes. The Financial Institutions (FIs) are

returning with their bags full. Indian telecom again looks

attractive. After a long time, it seems we have a phase, when

the action on the ground is keeping pace with–if not surging

past–the talks.

On an

Expansion Spree

Today,

there are three operational private operators in India–Bharti

Telenet in Madhya Pradesh, Tata Teleservices in Andhra Pradesh,

and Hughes Ispat in Maharashtra. All of them are in an expansion

mood. Bharti''''s is the most familiar story. Not only has it

gone for network expansion, it has also significantly increased

its subscriber base. Tata Teleservices has also gone for network

expansion and is ready with experimental broadband DSL access.

And just when you thought

Hughes Ispat was going slow, there is news on that front. If

some sources in the company are to be believed, the company is

going for a major network expansion plan. Lucent Technologies,

the sources say, will supply equipment worth about $200 million

for the network, including the switch and broadband access

technology–DSL–for the network. The deal has been finalized

and might be signed anytime, claim the sources.

The other licensed circles

that remain are Rajasthan where the licensee is Telelink

Networks, Gujarat with Reliance as the licensee, and Punjab with

Essar Comvision–in which HFCL bought a major stake recently.

Telelink, promoted by Shyam Telecom, has already built a

significant portion of the network. After signing a $153 million

deal with Lucent Technologies to build the network last year,

Telelink has plans to launch the service initially in Jaipur and

Jodhpur. In the first year, the company hopes to add 50,000

lines, out of which more than half will be wireless, based on

CDMA technology, the equipment again being provided by Lucent

Technologies. It might be recalled that Telelink had signed a

MoU with Qualcomm for the CDMA equipment, before the latter''''s

infrastructure division was acquired by Ericsson. It is not

known whether Ericsson or Telelink opted out of the earlier MoU.

Telelink is also planning to deploy a mix of wireless, broadband

(DSL) and narrowband access technologies. HFCL, after acquiring

a stake in Essar Comvision is actively talking to suppliers for

closing the deal. And that leaves Reliance in Gujarat. Yes, what

about them? As you already know, no one knows.

Highlights

But while Reliance is

sitting over its licence for almost two years, there is Sunil

Mittal of Bharti who has gone to the extent of inviting RFPs for

Haryana. The company, according to industry sources, has already

studied the state''''s demographics thoroughly, and has even

prepared the complete network plan. Many go to the extent of

saying that it has even started talking to property owners for

its central offices and to vendors for transmission equipment.

Anyway it has the reach of its cellular network in places like

Gurgaon, Faridabad, and Ballabhgarh. It can, say sources, start

the service in six months flat–at least in some parts–if it

gets the licence.

Discernible

Trends

Things

are too much in a flux to say anything for definite. Even then,

there are a few trends that can be observed here in the Indian

telecom sector.

Circuit-switching holds its

ground



Despite all talks of IP and packet, most Indian local operators
are not willing to put their bet on the new standard–even on a

trial basis. Though NTP ''''99 explicitly allows use of packet-

switching in fixed networks, Indian private operators are going

ahead with traditional circuit-switched network architecture.

DSL is hot



DSL has found favour with most operators the broadband access
technology. Almost all the operators are going ahead with plans

for DSL-based access in



selected parts of their areas. With DoT also going in for DSL,
it seems the future of the technology is really bright in India.

Prices fall down drastically



Despite no major development in India, the equipment prices have
fallen sharply. The price, which the equipment suppliers are

talking of, is significantly–more than 40 percent–lower than

the price at which companies like Tata Teleservices and Bharti

bought their equipment. The new licensees are bound to

experience an advantage here.

Ascent of new vendors



Companies that were strong in traditional DoT market are losing
out to the new players. The European vendors, who almost ruled

the DoT market ten years ago are sidelined by vendors like



Lucent–a relatively late entrant on the scene. But everyone is
still waiting for Cisco to make the move, which is still

targeting only its traditional markets–ISPs, gateway, and the

DLD–which are predominantly data-centric network segments. But one thing is sure. As

the actions of these operators especially that of Bharti show,

no one is wasting time waiting for the government to make the

first move. The telecom industry is in a hurry to keep ready

whatever is required to start the operation. "There is no

rule that all these things should be done after the licensing.

Or is there?" Asks an association official.

Besides logic, what comes

out of this is of course, confidence. In a way, on India''''s

reforms. That is the most important requirement for the success

of the industry.