Separate Licenses in the Internet Era!

All over the world, Information Infrastructure (II) is now realized to be
distinct and different from the Information Services (IS), which include
telephone, fax, video, data communications and digital content required for
electronic commerce, banking, funds transfer, governance, etc. Underlying the II
and IS are the advances in micro-electronics and photonics, computers,
satellites and radio frequency reuse. The information infrastructure for
shortage, transmission and exchange of digitized information consists of optical
fibers and satellite microwave radio systems. Optical fiber cables buried in the
ground, laid on the bottom of the seas and also hung from electrical poles will
provide this infrastructure. The bandwidth that optical fiber cable systems
provide is becoming almost infinite, heralding the possibility of communications
with hardly any cost. The inexpensiveness of communication is obliterating the
distance and time dependence of cost for transmission.

Therefore, there is absolutely no meaning in giving separate licenses for
local service, inter-state, national, international and mobile telephony. The
Internet, which is based mostly on optical fiber transport and a little on
communication satellites, is our global platform on which information can be
stored, transported, routed, exchanged and delivered. In several countries
telephony is allowed on the Internet. Cellular mobile radio telephony is
becoming so cheap that even developing countries like China are installing more
mobile telephones than fixed telephones.

In the Internet Service Providers Guidelines1998 and National Telecom Policy
(NTP) 1999, India has rightly made the distinction between infrastructure
providers and service providers. For the first two categories, there can be ISPs
and an unlimited number of suppliers. Once such an infrastructure is
established, then a variety of services can be provided by an unlimited number
of enterprises. The licenses must be technology neutral.

Transmission Capacity

The annual leap in the transmission capacity of Trans Atlantic Optical

It is absolutely unwise, restrictive and protective of monopoly to require
that the new service providers in India must use equipment similar to what the
incumbents — BSNL, MTNL, VSNL and P-Telcos already have. The new ones that
would come in for domestic, long distance and international services can
leap-frog into the use of the Internet for transport and provide whatever
service they wish to market. In the conditions laid down for Domestic Long
Distance (DLD) licenses, it is presumed that the DLD operators would be free to
use gateway switches, which can be reached by the existing wired and wireless
telephones. Voice will be routed via optical fiber to the destination towns. The
voice packets would be converted at the destination gateway to analog voice and
delivered to the telephone, through the incumbent’s existing switches.

The government intends to gather different amounts as entry fees, revenue
shares, universal service levy and R&D cess for different types of services,
separately licensed, for different territories. These would be utilized to put
public telephones, Internet PCs and connections as a matter of public policy for
the community, to be used at subsidized prices in rural and remote areas,
schools, libraries and primary health centers. In order that these subsidies
cost the least, the government may invite bids from companies to provide these
mandated services in the designated areas. The company, which asks for the least
amount of subsidy for capital as well as maintenance and operation of public
telephones or Internet kiosks, may be given licenses. It is for the company and
not for the government department to deliver service. Such a competition will
make private companies research and develop new products, services and systems
to be most cost-effective and economic in order to retain their competitive
position.

The problem that may arise is–what to do with the incumbents whose license
conditions and services for which they are licensed, are different? All of them
must be given a date, after which all the existing license conditions will be
rescinded and everybody will be required to give a certain percentage of the
revenue to the Universal Access Fund. Nobody will be required to roll-out his
services according to any schedule laid down by the licenser or the regulator.
The competition and markets will bring in new enterprises, extension of services
to new areas, introduction of new services, etc.

The emergence of numerous ISPs, the fall in prices, the phenomenal increase
in Internet users and the numerous international Internet gateways that are
coming up indicate what unlimited competition, unburdened by service unrelated
imports, can do for consumers. There is absolutely no possibility of any area
going unserved. The public policy of serving unserved areas quickly and least
expensively can be accomplished by driving the BSNL, if no other enterprises are
forthcoming, to provide specified services and compensate it for the deficit in
revenue over expenses. The capital required for public policy mandated network
extensions and services may be given to BSNL or any such provider — at
preferential rates of interest. What is necessary is clarity in thinking, the
end to the old mind-set and deciding what is good for the people.

Today, the private sector telecom companies have much more knowledge and
expertise in telecommunications, computers and networking than DoT/MTNL/BSNL.
The ministry and the regulator shall forebear from micro-management of the
telecom and information sector. We should have two sets of information
enterprises–those who provide infrastructure and those who provide services.
The services companies may be required to part with a share of their revenue to
serve all public service objectives.

Dr TH Chowdary is the chief adviser, Information Technology, to the Andhra
Pradesh government, and is chairman of the Centre for Telecom Management
Studies. He can be reached at thc@satyam.com