Still a Pipe Dream

While the world went in for an

open market system in the communication sector, we opted to play safe by starting with

duopoly. One of the needs to privatize the telecom sector in the country, besides

generating finance, was to introduce competition in the industry. Competition was expected

to bring in better quality of service at a reasonable price.

It has been almost five years of

privatization. Though we have been able to rope in private companies in basic, cellular,

and other such valued-added services, the situation is far from the one desired, where

privatization would mean innovation, sustainability, competitive pricing and services,

rather than just throwing up too many numbers to chose from.

In India, the industry has lagged

behind on many fronts when compared to her global counterparts. The giants of Indian

telecom industry look like pigmies, not only by size and revenues, but also by

techno-managerial capabilities, market capitalization and intellectual capital. And, the

root cause of these problems can be traced to the nature of poor competitiveness amongst

the players. According to the BT World Communications Report 1998/99, 92 percent of

the 53 top Indian business directors believe that India is behind the rest of the world as

far as a competitive telecom market is concerned. Let alone international comparison, even

at home, Indian telecom industry ranks uncomfortably low when compared to other

industries—be it for export, productivity, cost or financial competitiveness.

A survey for evaluating global

competitiveness of the Indian telecom industry identifies major weaknesses on almost all

fronts. As compared to other industries in the country, even the very concept of

competitiveness is quite poorly understood in the Indian telecom industry. Conducted by

the department of management studies, IIT Delhi, the preliminary study of this ongoing

research project compares India with Japan and Korea—the two Asian industrial giants.

The survey reveals that productivity—revenue/employee ($ million)—of the Indian

telecom industry scores a negative reading of -0.86 as against 1.10 of Japan and -0.24 of

Korea. Under customer satisfaction in products, India scores -1.02 as compared to 0.98 and

0.04 of Japan and Korea, respectively. Be it technological gap, switching digitization,

returns on investment, revenue/line, commercialization or working conditions, India scores

far below than expected. Not surprisingly, the only place where India scores the highest

(1.15) is on the employment (per thousand lines) front. Japan and Korea score -0.57 and

-0.58, respectively.

How does being competitive

actually help the telecom industry grow? Clarified Dr K Momaya, assistant professor,

department of management of studies, IIT Delhi, who recently organized an executive

development program for the industry on "Competitiveness for Survival and Growth:

Context of the Telecom Industry". "A competitive industry continuously enhances

her capabilities on many relevant components of industry value chain in current as well as

emerging market segments. That helps the firms to attain bigger share of the domestic as

well as global market", he said. "Japanese companies have systematically

developed capabilities to grow from pigmies to world giants by being innovative and

visionary. Fujitsu’s winning of WLL contract from MTNL for Mumbai at the lowest cost

is just a small proof of their competitiveness." he added.

However, being competitive does

not mean undercutting prices or just widening the service portfolio of the company. What

it really means is the sustainability with value-added creation while benchmarking

one’s quality and processes against the best in the industry. "Though there is

no single best approach for being competitive, each company or country must find its own

path," said Dr Momaya. "Competitiveness at the company level can be enhanced by

developing core competencies besides being more innovative or enhancing assets and

processes."

World over, telecom technologies

are changing at a much faster speed than anybody can comprehend. And, only with

competition can come the motivation to reap the benefits of technological progress. Since

speed is influencing the move with which process and product innovation are introduced,

the only way of long term sustenance—competition by innovation—becomes the

disciplinary force of the market. Telecom players in India can not afford to be left out.