Computers Today, August, 1998, Telecomment

August 1998 TELECOMMENT

Is Corporatisation Enough?

By Jitendra Kohli

Jitendra Kohli Is corporatisation a panacea for the ills plaguing the Department of Telecommunications (DOT)? Would privatisation transorm it into an effective and responsive organisation? If corporatisation and privatisation are enough, how come there are so many inefficient, unresponsive and sick public sector corporations, as well as, private sector companies?

I asked Sir Iain Vallance, chairman of British Telecom, last month, as to what proportion of BT's success would he attribute to corporatisation/privatisation, and how much to the "other steps" taken by BT to improve its operational efficiency/customer-responsiveness. Sir Vallance replied that while he considered corporatisation/privatisation as necessary, it was not in itself sufficient to achieve success. He would attribute about 40 percent of BT's success to corporatisation/privatisation and about 60 percent to other steps.

Ever since the Committee on Restructuring of DOT made its recommendations in 1991, there has been so much emphasis on the word "corporatisation", that "the other steps required for enhancing efficiency" have been virtually put on the sidelines. But, as Sir Vallance also stressed, corporatisation may prove to be meaningless if not supplemented with other effective steps.

Also, I believe that if, for some reasons, the decision on corporatisation is delayed, action can still be taken in respect of operational-efficiency enhancement and work-culture improvement in the present departmental-structure. In fact, the main objectives of the proposed restructuring/corporatisation exercise are:

Enhance operational efficiency/ productivity/customer satisfaction.
Generate funds for modernisation and growth.
Offer level-playing field to competing private operators in India.
Build a management/organisational culture of long-term strategic-thinking to enable DOT to become the most successful and sought-after telecom operator in India and possibly grow to become a world player.

The Crux of the Recommendations

Separation of Roles: While some aspects of the Restructuring Committee's recommendations on alternatives for organisation structure seem debatable, the immediate attention should be regarding the separation of the DOT's primary role as policy-maker, and as regulator. While the separation of the "regulatory- function" was done last year when TRAI came into being, some grey-areas still remain.

Organisational Structure: The Restructuring Committee had considered various options in this regard including a Departmental Enterprise, a cent percent Government-owned PSE (Public Sector Enterprise), Government-controlled corporation with privatisation, etc.

Different organisational options would impart varying degree of freedom to DOT. In view of the heavy cost involved in corporatisation, it would be worth incurring such a cost only if the "intended gains" are maximised. Hence, the preferred options should include not only corporatisation but also privatisation in a phased manner which should be in line with the announced PSE-Disinvestment Policy of this Government.

Zonal Telecom Operating Corporations: In addition to the creation of an India Telecom Operating Corporation (as holding company) and a Long Distance Connector Corporation, the Restructuring Committee recommended the creation of four Zonal Telecom Operating Corporations. But it did not specify any convincing justification of the advantages of four zonal corporations vis-a-vis a single corporation. In this respect, the arguments of the unions/officers' associations of DOT cannot be disregarded. Since the basic operational functions of DOT are carried out at the Circle-level, the associations proposed that delegating additional powers to circles would be more advantageous than chalking out new zones.

If the decision on corporatisation as recommended by the Restructuring Committee is already firmed up and there is likely to be no delay in its implementation, then the following two aspects may be looked into:

Special attention regarding task-forces for enhancing operational efficiency and improving work-culture.
Review of the choice between four zonal corporations and a single one.

If for some reason there is any delay in the finalisation/implementation of the decision on corporatisation, then along with the previous two steps, one should separate expeditiously and in an unambiguous manner the three functions--policy formulation, regulation and operation.

The writer is a strategy and management consultant based in New Delhi.

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