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BUSINESS,
TELECOM
Monopoly,
So Long!
The
Government's vice-like grip over telecom gets a jolt with the opening
up of the long-distance sector without a limit on the number of entrants
By
Sumit Mitra
 |
| Paswan
opened up the NLD sector more than he wanted to |
Two
years ago, when it became de rigueur for the better run companies to get
their offices networked through e-mail, there was a simultaneous clamping
down on std calls from office phones. In a leading tobacco company, instructions
were issued to managers to change the dynamic std codes of their telephones
at regular intervals lest junior staff got to know them and made long-distance
calls on the sly.
The management's
anxiety was justified. Though the formal e-mail is no substitute for a
personalised telephone conversation or a tele-conference, the difference
in cost is enormous. To have an Internet-based e-mail facility, the user
is charged a fixed amount annually per user-regardless of the mails' volume
or length or the distances across which they are moved. However, the long-distance
phone bill is metered on the clock as well as the distance. And in the
rush hours the clock ticks every four seconds between, say, Delhi and
Mumbai, costing the caller the price of one local call in that period.
The charge is multiplied by the country's limited "bandwidth",
or the speed of data transmission, as fax messages take aeons to roll
out of the machine.
RELIANCE
TELECOM Mukesh Ambani: Reliance holds licences for seven
cellular circles and one basic circle, but nowhere has the group rolled
out a network. This could be to opportunity it was looking for.
BIRLA-AT&T-TATA
Ratan Tata: The conglomerate was formed with AT&T participation
after the Tatas and the Birlas made a halting start in telecom. Now
hopes to grow aggressively.
BPL TELECOM
Rajeev Chandrasekhar: BPL runs cellular services in Maharashtra,
Mumbai, Chennai and Kerala and is an aggressive player. Now venturing
out into new telecom areas.
STERLING GROUP C. Sivasankaran: He began with his cellular
service in Delhi, sold it, now runs Dishnet, an ISP, and is entering
the bandwidth market with submarine cables. Promises to be a price
warrior.
BHARTI TELEVENTURES Sunil Mittal: Apart from running
successful cellular services in six places including Delhi, it has
a 3,000-km basic service backbone in Madhya Pradesh. More expansions
on the cards. |
It is true
that National Long Distance (NLD) charges have been falling, being halved
last year when the regulator, Telecom Regulatory Authority of India (TRAI),
"rebalanced" the tariff. Another rebalancing is due soon. The
charges, however, have still remained high, and the services are poor
because NLD is in the monopoly grip of the Department of Telecom (DOT).
While launching the New Telecom Policy last year, the Government decided
to open up the sector to private investors. Last week, it fulfilled the
promise by throwing the NLD sector open to private companies without any
restriction on the number of operators. It was a plunge from state monopoly
to free market. Will it bring down the price of long-distance calls within
the country?
Of course
it will, for DOT keeps the long-distance charges artificially high as
it uses the revenue from NLD calls to cross-subsidise its local calls,
this being its own variant of socialism. In 1998-99, DOT had an income
of Rs 10,320 crore from NLD though its fixed and operational cost on this
count was only Rs 1,383 crore. Only a small part of this mega-profit from
long-distance calls is used to extend telephones to rural and inaccessible
areas, the bigger chunk being spent on installing telephone lines to people
living mostly in a dozen big cities or in VIP constituencies. Competition
will naturally drive down the prices and improve service quality. Rajeev
Chandrasekhar of BPL Telecom Business Group, a potential entrant into
the NLD market, says that "competition will bring down the prices
of long-distance calls within the country exactly the way Internet access
charges dropped from the day VSNL's monopoly was broken".
more...No
Room For The Frivolous
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